Budget review

Swinney offers limited help to ease business pain

John Swinney
John Swinney: forced to make cutbacks

Scotland’s businesses were offered no additional financial support from interim Finance Secretary John Swinney yesterday but welcomed moves to review the impact of red tape and tackle late payment of invoices.

A Joint Taskforce with business, COSLA, local authorities and agencies will consider the differing impacts of regulation on business.

The measure was among a few scraps handed out to businesses by Mr Swinney as he announced a further £615m of cuts to healthcare, education and the justice system in his Emergency Budget Review.

See also: Construction sector activity ‘deteriorating’

Liz Cameron, chief executive at the Scottish Chambers of Commerce, said: “Concerns have been expressed over the impact of new regulations being brought in at a time where they face intense cost pressures, so the commitment to seek a balance is a step in the right direction.

“We will continue to engage with Ministers on how to redress the balance to ensure Scottish businesses are not burdened with additional regulations during this current economic crisis.”

Andrew McRae, policy chair for the Federation of Small Businesses’ Scotland said there should be a moratorium on “all but the most essential new rules”, but he said there seemed to be “room for a serious conversation about the proportionality and consistency of regulation and we look forward to details of the promised taskforce.”

Mr McRae said there was positive news on retaining the lifeline Small Business Bonus Scheme and moves to ease cashflow by urging all public sector bodies to pay all small business invoices without delay. There will also be action to improve the planning system.

“Changes to the planning system to prioritise applications which help businesses diversify or adjust their operating arrangements will free firms to innovate and adapt – unlocking investment potential,” said Mr McRae.

However, he accepted that business and the economy will also take a share of the cuts.

“This was undoubtedly a review delivered against a very sombre backdrop and there’s no doubt that savings will have to be made – indeed, there will be £3.3m less across the finance and economy portfolio,” he said.

David Lonsdale, director of the Scottish Retail Consortium, said: “There was little by way of immediate relief for the costs crunch facing firms – the only fixed point in a world of flux for retail seems to be rising supplier and government-related costs which are difficult to absorb and add to the pressure on shop prices.

“Hopefully, this can be addressed in next month’s Scottish Budget – in particular, the business rate set by ministers remains onerous and has escalated to a 23-year high.

David Lonsdale
David Lonsdale: firms face costs crunch (pic: Terry Murden)

“An inflation-matching hike in the business rate next Spring would add £65m to Scottish retailers’ rates bills, sapping investment and making rejuvenation of our high streets and retail destinations even harder.”

Mr Swinney said he expected further deep spending cuts in the Chancellor’s autumn statement, with a consequent reduction in Scottish funding.

Noting the combined effect of Brexit, Covid recovery and the energy crisis resulting from the war in Ukraine, Mr Swinney told MSPs that he had never known a time of greater pressure on the public finances.

Announcing “reductions and reprioritisations” across a range of departments, as well as committing to cost of living support and public sector pay deals, he brought total cuts – when added to previously announced cuts of £560m – to almost £1.2bn.

The deputy first minister said he had intended to present his long-awaited emergency budget review last week, but paused the announcement for Jeremy Hunt’s 31 October fiscal statement, which was then postponed until 17 November.

He told MSPs he had concluded he could wait no longer. “The scale of the challenge is so severe, and the impacts and uncertainties for people, households and businesses so significant, that the imperative consideration must be to provide as much stability, certainty and transparency as possible,” he said.

He added that inflation meant the Scottish government’s annual budget was worth £1.7bn less than when it was published last December, and the scrapping of the plan to cut the basic rate of income tax in the rest of the UK would reduce block grant funding by £230m.

Mr Swinney said he had committed more than £700m of additional resources to fund public sector pay settlements, and he announced about £35m for cost of living support, including doubling the Scottish child bridging payment to £260, doubling the fuel insecurity fund, and a new £1.4m island cost crisis emergency fund to help island households manage higher energy costs.

Scottish Conservatives’ finance spokesperson, Liz Smith, questioned why there had been no further cut to the allocation for fighting an independence referendum.

“The obvious conclusion to be drawn is that he and his colleagues … prefer a divisive referendum to practical support measures,” she said.

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