As I See It
Small businesses deserve more than box ticking
Producing strategies and reports is a growth industry
Scottish Labour has launched a small business strategy, and for that we should be grateful. At least it recognises that capitalism has its place in Scotland, even if it is only to fund the public sector.
Strategies for economic growth, cultural development and every social ill we face are ubiquitous. We know, because the Scottish Government archives are creaking with the weight of ring-bound folders and glossy brochures as strategies have become Scotland’s greatest growth industry in the last twenty years.
Scottish Conservatives have also contributed to the caseload, establishing an “expert group” of business entrepreneurs to recommend pro-business policy. That was back in October last year, but it has still to report.
Labour has therefore stolen a march by publishing first, though the seven-page strategy is rather thin gruel. No business, other than a political lobbyist, is likely to become fat on the back of it.
The key recommendations focus on more public sector procurement opportunities; ensuring procurement contractors pay their suppliers within thirty days; creating fairer business rate valuations and appointing a Small Business Minister to argue for SMEs’ interests.
The proposal to open up more opportunities for smaller businesses to win public procurement contracts is little more than an offer of greater state largesse – which says everything about Labour’s big government approach.
It may seem churlish to say so but Scottish SMEs are hardly going to drive the economy to greater heights if they have to rely on delivering more government services. All this does is put government at the top of the food chain and make public finance the determinant of success. It is all too predictable and the least that any Labour administration could offer. So what else is there?
The promise to ensure businesses bidding for public sector contracts pay their suppliers within thirty days sounds good but is of course a double-edged sword. One of the most significant problems for small businesses is the late payment of invoices by the state sector, so there is a real danger that forcing businesses that win contracts from the state to pay on thirty days will only create a cash-flow problem.
What if an SME is not paid by a local authority or government agency for 60 , 90 or 120 days, but has to settle its own creditors within 30 days?
If there is to be any naming and shaming of late payers in public procurement, as some trade bodies such as the electrical industries body Select suggests, then it must not be limited to the private sector contractors but include the public sector paymasters, too.
More radical would have been to take up businessman Ken Lewandowski’s idea of following the German example of encouraging payments within 30 day or face a VAT penalty – something that would have given Labour an edge with small businesses.
Another Labour proposal is to have annual reviews of business rate valuations. More impressive would have been a commitment to reduce the business rate poundage so that Scottish enterprises are given a comparative advantage against competitors elsewhere in the UK (or beyond).
The promise of a Minister for Small Business to champion the case for SMEs merely highlights Labour’s belief that businesses are just another sector that needs a voice in the central planning of organised outcomes.
Labour should be commended for thinking about business, but much harder thinking is required. A strategy to get out of the way of business and stop introducing new social regulations that limit trade – by evaluating the impact on business of any new Holyrood legislation – would be a refreshing start.
Brian Monteith is a former member of the Scottish Parliament