Business: New Deal for Business Group minutes - June 2023

Attendees and apologies

• Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (Co Chair)
• Dr. Poonam Malik, Head of Investment - Strathclyde University (Co Chair) 
• Minister for Community Wealth and Public Finance, Tom Arthur
• Liz Cameron, Scottish Chambers of Commerce (SCC)
• Sandy Begbie, Scottish Financial Enterprise (SFE)
• Julie Ashworth, Institute of Directors (IoD)
• Clare Redi, Scottish Council for Development and Industry (SCDI)
• Colin Borland, Federation of Small Businesses (FSB)
• David Lonsdale, Scottish Retail Consortium (SRC)
• Marc Crothall, Scottish Tourism Alliance (STA)
• Louisa Macdonell, Business in the Community Scotland (BITC)
• Mairi Spowage, Fraser of Allander
• Nathalie Agnew, Muckle Media
• Hugh Lightbody, Convention of Scottish Local Authorities (COSLA)
• Barry White, Chair of NSET Board 
• Gopalan Rajagopalan, Head of Tata Consultancy Services (TCS) Scotland 

Items and Actions

Opening remarks – Cabinet Secretary

• thanked the group for coming together again and welcomed the extremely hard work at fast pace that the Group and each of the 5 subgroups had done to get to this stage
• expressed thanks to all of the Group, subgroup members and contributors and his delight that such a breadth of experience and expertise had helped to shape the recommendations
• noted that the report set out recommendations across a range of issues which aim to bring about a high-quality functioning relationship between government, business and other partners
• welcomed the final collated recommendations and invited co-chair Dr Malik to share her opening views before moving on to hear from each of the subgroups

Opening remarks – Co-Chair Dr Malik

• thanked all of the NDBG members and their subgroup contributors, cognisant of the tight turnaround time pressures. Dr Malik appreciated Members’ positive engagement in representing views of businesses by coming together on several occasions.  Useful to arrive at key recommendations to put forward to the First Minister from such a range of sectoral, industry and regional experiences and expertise that has helped to shape the recommendations
• keen to hear from the subgroups and their recommendations and to continue the momentum shown to date to ensure progress with implementation
• invited updates from each of the subgroups followed by an open floor for comments and questions

Sharing Key Metrics Subgroup Overview – Professor Mairi Spowage (FAI)

• work focused on sharing metrics in both directions: government to business and business to government
• noted there is no shortage of data collected, however, the key is how to make best use of it in a timely manner. The business resilience metrics the subgroup has looked at can feed into the Business Regulatory Impact Assessments. The subgroup looked at a number of case studies, including the work of the Business Support Partnership
• one of recommendations aims to improve understanding of the business climate, to improve business and industry understanding of market opportunities and contribution to National Strategy for Economic Transformation (NSET) (short term recommendation)
• another recommendation is to improve coordination across sectoral and industry surveys with a view to agreeing a core set of questions (medium term recommendation)

NDBG members response

Scottish Chambers of Commerce (SCC): welcome discussion of measurements of progress, keen this is a priority.

Cabinet Secretary: the implementation plan and baseline for measuring the NDBG work as a whole is important.

Dr Malik: recommendations need to be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART), and contributions to align with the Government’s National Strategy for Economic Transformation (NSET).

Scottish Financial Enterprise (SFE): organisation is taking forward work with the University of Edinburgh to look at ways of sharing commercial data on a monthly basis.

Scottish Council for Development and Industry (SCDI): need to acknowledge a lot of data is backward looking and it is important to consider how Scottish Government (SG) continues to engage with business organisations about emerging issues that may not be showing yet in data. 

Fraser of Allander Institute (FAI): metrics about how business are feeling will be important going forward. Need an innovative set of metrics that mean something to business rather than another national indicator set.

Institute of Directors (IoD): need effective stakeholder mapping to prevent over engaging with too many people.

Non-Domestic Rates (NDR) Subgroup Overview – Minister for Community Wealth & Public Finance

• Minister reaffirmed that the subgroup’s objective – to ensure the most competitive environment to do business and deliver a growing economy whilst supporting our communities and recognising the importance of non-domestic rates income in funding the delivery of local public services
• recognised that businesses perceive the current system to be overly complex, inflexible, inefficient and a barrier to investment and growth
• welcomed the New Deal for Business Group as a way to build on the reforms already begun since the Barclay Review and to start the discussion about how those can be improved
• noted that over the summer, officials will work with subgroup members to consider a forward work programme and how that will be configured
• highlighted that two of the recommendations reflect the consensus that NDR needs to align with other areas of taxation work across Scottish Government including the Joint Working Group on Sources of Local Government Funding and Council Tax Reform, and be considered as part of the new Tax Advisory Group
• noted that while these two recommendations enable meaningful progress across all of the Group’s recommendations, all of those identified by the NDR subgroup have equal weighting

NDBG members response

Scottish Chambers of Commerce (SCC): welcomed commitment that SG will look at all considerations, that the Minister mentioned “reform” and that the NDR assessors were part of the subgroup discussions. Noted that among the most challenging objectives will be business expectations around the request for extending the NDR appeals process and recognised this is not an easy ask. Emphasised the cost of NDR to business is a significant issue but had confidence that, with the right engagement and partnership, we can get this right together. 

Scottish Retail Consortium (SRC): welcomed opportunity to work with subgroup and noted a number of good things in recommendations.  Reassured by plans for further development, noting that many may consider the current recommendations “thin” in detail.  Business concerns are about the rates burden rather than any focus on administration and efficacy of the system.  Suggested that the recommendations don’t currently address the commitment for business rates to boost business.  Noted that expectations have been raised with the Business community and so far it seems to be a missed opportunity to signal change on the NDR policy front.

Cabinet Secretary: welcomed honesty and reiterated a previous ask, that where there are ideas for reform and preferably those that are fiscally neutral, he invited those to be brought forward.  Minister CWPF also welcomed those, highlighting the challenge of getting the NDR balance right.

Scottish Trade Alliance (STA): echoed comments about raising of expectations, stressing the importance of highlighting the areas of significance that will continue to be discussed over summer.  Suggested there may be feedback from business that would need to be managed.

Scottish Financial Enterprise: noted the Group’s focus on the business environment and that includes cost alongside regulations and access to skills, however, suggested the main focus is improving engagement. 

Dr. Malik: welcomed feedback and recognised the considerable amount of work that has been done so far, suggesting that if NDR challenges have not been resolved over many decades, at least the recommendations from this group create a focus for further discussion and meaningful engagement.  Noted that communication will be key and invited views from group members on what they feel they could say.

Scottish Chambers of Commerce (SCC): agreed with Dr Malik’s comment, offering that messaging is needed to reflect that we have started a process and that it is not the end. 

Scottish Retail Consortium (SRC): indicated that Regulation, the next agenda item, is the substantial issue for its members and the benefit of this process is by far the biggest win for them.  Noted that on NDR there is still some work to do.

NSET chair: noted that NDR is one of the most difficult areas and suggested that highlighting a September deadline could signal a leisurely pace. May need to consider messaging carefully around that.

Scottish Chambers of Commerce (SCC): suggested that there is a subgroup discussion over the summer and to focus on extending appeals process.

Minister: agreed that there will be work with subgroup members and officials over the summer to bring to the meeting in September a detailed plan for discussion and agreement.

Dr. Malik: asked Minister about the deadline for appeals and noted that is something that needs to be considered swiftly given the current deadline is end of July.  Suggested to Cabinet Secretary about looking into extending till 30th September to allow time for businesses to relieve immediate pressures.

Cabinet Secretary: agreed to work with the Minister to find a form of words to aid communication. 

Regulations Taskforce (subgroup) Overview – Scottish Government

• helpful discussions about specific regulations such as Deposit Return Scheme (DRS)
• the recommendations are framed round the process in which SG develops policy
• the two main recommendations are a review of the Business and Regulatory Impact Assessment (BRIA) system, including how we use BRIAs to better understand cumulative impact of regulation on business, and re-establishing the Regulatory Review Group (RRG). That is a forum for business regulators, business, academics and others, to consider the detail into how regulation could be implemented in a way that still achieves the policy objectives but minimises unintended consequences on business

NDBG members response

Scottish Retail Consortium (SRC): this is a very strong paper which is timely, as a number of regulations are in the pipeline. Outcomes of these regulations will be key. Programme for Government (PfG) is coming up and SG is keen for early engagement with business, then PfG is a test of this approach. SG have created unique ideas for PfG in the past and business will give an honest review. SG need to involve Parliament in this process. too. For example Local Government committee asked for views on the Visitor Levy Consultation by 1 September which is over peak trading times, which makes this challenging. Need to consider how the Parliamentary process can work alongside the review of regulations and how we take forward with opposition parties.

Scottish Council for Development and Investment: keen to see the improvement around involving business earlier in the policy development process. How do we make sure we have regulations in process that also support with the economy we want. For example the Innovation Strategy, how do we ensure that the strategy aligns with future regulation. Regulations can help drive Economic Growth and investment in business.

Scottish Trade Alliance (STA): a strong paper. The formation of this group was to address the existing policies that are contentious such as the Short Term Lets Licensing (STLL) which have not been raised as one of the areas for consideration. Regarding the Visitor Levy, STA wrote to the convener of the Parliament Local Government Committee about timing of this, which does not take into account the busy trading period for business.

Federation of Small Businesses (FSB): welcome this as a good strong paper. Great to see comments made by business members are in the paper with clear language. Very encouraging to see that early engagement is key and the point about when we bring people in to discussion. The Visitor Levy consultation is an example of a need for culture change with regards to bringing in business early. FSB will be very supportive of this subgroup.

Dr. Mailk: good to hear general consensus around the room from members on this paper. If Scotland is to aim to be the best place to do business, it is key how we drive this and this work from NDBG supports that aim to be the best innovative country and best place to do business with and invest in.

Business Partnership Subgroup Overview – Louisa Macdonell BiTCS

• the overall aim for the work of the Business Partnership Sub-Group  is to transform the relations with business in the next 12-18 months. The biggest concern to meet that aim is building trust between government and business
• there are a number of steps we need to take to develop that trust and turn that into a high quality functioning relationship with business
• starting with the long term – this will involve an institutional change in the culture and create a more open and transparent environment where government and business are engaging at the right time and in the right way
• in the short term we need to have a firm understanding of the current position with regards to engagement with business. Therefore, the subgroup’s short term goals, for the first six months is to get a clear picture of how and when engagement currently happens. This will include a full and deep dive into the policy development cycle and review the process map to ensure engagement happens at all stages of the policy cycle – including pre-policy engagement
• in the medium term the subgroup’s 12 months goal is to consider the means by which we engage with business including a review of the systems and processes that are used when seeking input from business in order to streamline the process, provide better coordination for all and improve the customer experience

NDBG members response

• Institute of Directors (IoD): need to ensure we have visible assurance that the subgroup actions are being taken and it's working

Wellbeing Economy Subgroup Overview – Nathalie Agnew, Muckle Media

• the sub-group widened their approach, bringing in more businesses and were pleased with the reception from the business community, who have a desire to do good and contribute to a Wellbeing Economy
• the sub-group built on the solid foundation of the Business Purpose Commission and referenced their recommendations for both the Scottish and UK Governments. At the start the subgroup members asked themselves how Scotland could be one of the best places to start and grow a purposeful business. A key barrier identified to growing interest in a Wellbeing Economy is the language used, especially by government
• the subgroup identified that a Wellbeing Economy is not like Corporate Social Responsibility, it's about the purpose of the business. Running a good business is good business as it leads to better productivity, as happy and healthy teams do better work
• the subgroup drew on a number of case studies. Homes for Good have raised £20m in inward investment to buy and renovate dilapidated properties, to rent to those who struggle to find tenancies. They had been negatively impacted by the well-intentioned policy to cap rents. The Tartan Blanket Company gave examples of fair work and improvements along supply chains, while Jerba Campervans modelled employee ownership which had led to better productivity and quality of product
• the subgroup looked at a number of standards including B-Corp and found that there was not one solution for all, the key would be for every business to take their own journey
• finally, there was a short run through of the subgroup's recommendations, highlighting that the first recommendation on labour market participation should see engagement starting in coming weeks, and noting that the Wellbeing Economy cuts across the work of all the other sub-groups
• the Cabinet Secretary noted that sustainable businesses with good wellbeing for their people were the most successful businesses

NDBG members response

• Scottish Financial Enterprise (SFE): discussed wording of the report passage related to finance supporting a Wellbeing Economy. It was agreed that the wording could be amended to reflect financial services support for Wellbeing Economy

Finalising report and next steps

• Dr Malik (co-chair) sought approval of report – report endorsed and agreed by all members
• there was some discussion on how indicative the timeframes of 6, 12 and 18 months were, noting that they were included in the final report.  There was general consensus that while months were indicative, adopting short-, medium- and long-term timeframes were more appropriate. It was agreed that these would be drawn out in the implementation plan to best reflect what is realistic for delivery and impact
• Dr Malik confirmed that the final agreed report would now be shared with First Minister for consideration. Scottish Government team will be working towards the framework and implementation plan together with co-chairs for the next 18 months for outcome delivery
• the Cabinet Secretary advised an implementation plan will be shared with members for views by end of August 2023

Actions

• officials (NDR-leads) to work with communications to support messaging around the recommendations as the beginning of a process
• officials for all subgroups to follow up with members to share next steps and begin drafting implementation plan for recommendations, including considering timescales for delivery
• secretariat to collate subgroup implementation plans and provide members with a draft implementation plan for all recommendations by 31 August 2023 for comment

Official to amend wording of the final draft around financial services supporting the Wellbeing Economy.