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Response to Higgins

Ministers accused of failing to provide early fix for firms

Andrew McRae

Andrew McRae: ‘businesses are quickly running out of road’

The Scottish Government has been accused of producing long term plans to help the economy recover from the coronavirus pandemic when many businesses need help to get them through the next six months.

Ministers today issued what was described as an “action plan” to help rebuild businesses that had been shattered during the four-month lockdown.

In a response to a report from the Advisory Group on Economic Recovery, chaired by Benny Higgins, the government offered measures to make it easier for SMEs to compete for public sector contracts and more support for skills.

It said it would “explore options to alleviate planning restraints” and “continue working closely with business leaders to ensure we are doing all we can”.

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But Andrew McRae, the Federation of Small Businesses (FSB) Scotland policy chairman, said these were issues that had been “on the agenda for many years” and more detail was needed on how to achieve them.

He said: “In normal circumstances, Scotland’s smaller business community would warmly welcome many of the commitments made today by Ministers in response to the Higgins review.

“Few would disagree with many of the identified objectives.  For example, for decades FSB has warned that too few local businesses win public contracts, and today we see the Scottish Government promise to reverse this trend.

“Likewise, action to address both patchy broadband infrastructure and the dearth of digital skills have been on the agenda for many years. 

“None of this is in dispute, but what we need to see is some detail about how policymakers will actually achieve these outcomes. These are thorny long-term problems that will take years to fix.

“The Scottish Government needs to remember that businesses are quickly running out of road and their priority today is making it to tomorrow.

“Ministers need to apply resources to help firms through the next six months, and they should start with detailing how they will support smaller businesses subject to local lockdowns.”

The government said it had “accepted all the recommendations” from the report and has identified six key areas for action, although there is no mention of setting up a Council of Business Advisers.

It says: “The report by the Advisory Group on Economic Recovery validated our overall strategic approach to the economy while sending a strong message about pace and partnership. We accept its recommendations.

It adds that it will take forward its recommendations and use these “to strengthen what we are doing to respond to the economic crisis.

“We are also committing to going further. The economic crisis provides an opportunity to re-imagine Scotland and to begin building a greener, fairer and more equal society: a wellbeing economy.”

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There was criticism immediately after publication of the Higgins report in June that it made only one mention of SMEs. The government, in its response, notes that the Advisory Group report proposed a number of actions to support a return of economic activity that is more aligned with a wellbeing and green recovery.

“Our response… includes our priority actions, with a stronger focus on enabling recovery through procurement, better planning and regulation and digital transformation.

“Crucially, we recognise the importance of supporting our small and medium sized enterprises, and early stage companies.”

Critics also said the action group report missed an opportunity to call for reform of the economic development agencies.

Fiona Hyslop

The Scottish Government’s focus will be on protecting jobs, creating jobs, ensuring quality jobs and supporting skilled jobs

– Fiona Hyslop, Economy Secretary

In its response the government says it recognises that “needs and opportunities are varied across Scotland” and will work with Scottish Enterprise to support its “shift to a more bespoke, regionally-focussed approach across the SE area by the end of 2022.”

On Higgins’ recommendation that the government take stakes in trouble firms the government says it has “discussed how businesses, impacted by the pandemic, can be recapitalised, also continued to engage with the UK Government on this.”

It says it will now establish a short life working group to scope out the capability that may be required to manage these stakes in Scotland and consider the optimum delivery model. The working group will be led by the Scottish Government but will draw on independent expert advice.

The group will report its findings and recommendations in the autumn.

Economy Secretary Fiona Hyslop said: “The Scottish Government’s focus will be on protecting jobs, creating jobs, ensuring quality jobs and supporting skilled jobs.

“We are working quickly to achieve this and many of the actions outlined today are already well underway.

Comment: Ditch the bluster. Here’s a 10-point plan to get the economy moving

See also: Aberdeen firms may need more help

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