New Deal for Business Group: progress report and recommendations

2. Executive Summary

There are over 360,000^[1] enterprises in Scotland sustaining over two million jobs. These businesses, companies both large and small and comprising enterprises within a range of industries with different business models, 99.4% of them Small and Medium Enterprises (SMEs), contribute vital goods and services as well as supporting supply chains and communities across Scotland. A healthy, successful business sector is a foundation of a healthy, successful country.

It is long established that effective engagement between government and businesses of different sectors and sizes will enable positive outcomes in overcoming the broader economic, societal and environmental challenges we face as a nation.

More effective engagement will also allow a greater understanding of the needs and interests of businesses and removal of potential barriers to the success of government policies. This is a key ingredient for ensuring that Scotland is the best place to do business.

Business also understands that there is a role for regulation when for wider societal benefit, that government will require them to do things that they may not choose to do and that may come with a cost. When these situations arise it is even more important to involve them to find ways to deliver the purpose and outcomes desired of the policy in a way that delivers for business and society. Ultimately, better engagement results in better policy implementation, which delivers better outcomes for everyone.

Structure of the New Deal for Business Group

As part of the policy prospectus announced by the First Minister on 18 April 2023, the Scottish Government committed to "engage widely with business leaders to develop and agree a 'New Deal' with the private sector, for how we will work with business to deliver a growing economy that increases wellbeing."

The New Deal for Business Group (NDBG) was quickly established to fulfil this commitment. Co-chaired by Dr Poonam Malik, Head of Investments at the University of Strathclyde alongside the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy, Neil Gray MSP, the Group had four key areas of focus linked to economic and public policy. These are:

• Shared awareness of the Economic and Business Environment;
• Developing the Best Environment to do Business;
• Enhanced Partnership Working; and,
• Contribution to a Wellbeing Economy.

Five subgroups sat under the main NDBG, each led by Group members who brought in representatives from the wider business community to provide advice and experience.

The Subgroups are:

• Regulatory Review – linked to the Joint Regulatory Task Force chaired by the Minister for Small Business, Innovation and Trade
• Business Partnership
• Non-Domestic Rates – a consultative group linked to the work led by the Minister for Community Wealth and Public Finance
• Wellbeing Economy
• Sharing Key Metrics

New Deal for Business Group Membership^[2]

• Cabinet Secretary for Wellbeing Economy, Fair Work and Energy, Neil Gray MSP (Co Chair)
• Dr. Poonam Malik, Head of Investments - Strathclyde University (Co Chair)
• Dr Liz Cameron, Scottish Chambers of Commerce (SCC)
• Sandy Begbie, Scottish Financial Enterprise (SFE)
• Julie Ashworth, Institute of Directors (IoD)
• Sara Thiam, Scottish Council for Development and Industry (SCDI)
• Colin Borland, Federation of Small Businesses (FSB)
• David Lonsdale, Scottish Retail Consortium (SRC)
• Iain Baxter, Scotland Food and Drink (SFD)
• Marc Crothall, Scottish Tourism Alliance (STA)
• Louisa Macdonell, Business in the Community Scotland (BITC)
• Professor Mairi Spowage, Fraser of Allander
• Nathalie Agnew, Muckle Media
• Cllr Gayle Macgregor, Convention of Scottish Local Authorities (COSLA)
• Barry White, Chair of NSET Board
• Gopalan Rajagopalan, Tata Consultancy Services (TCS) Scotland

Main Recommendations

The sub-groups have each provided reports on their work to the NDBG along with recommendations. These have been considered collectively by the main NDBG and have been sent to the First Minister for his consideration. To ensure that we are able to follow through on our work we will develop an implementation plan covering the recommendations in full.

In order to have the greatest impact we have prioritised those key recommendations that will make the most immediate difference. These are as follows:

1. A new Business and Regulatory Impact Assessment and Toolkit, developed with business, that has a stronger focus on small business and consumers.

2. A return of the Independent Regulatory Review Group (chaired by Professor Russel Griggs) which will work with industry and government on a renewed remit to advise Ministers.

3. A full and deep dive into the Scottish Government policy development cycle to reinforce the need for and capability to undertake effective engagement at all stages wherever possible – including pre-policy – particularly when regulation is a potential outcome.

4. Systematic mapping of current engagement with business by policy areas across Scottish Government to properly capture a wide range of business voices in the development of particular policies.

5. Keep all Non-Domestic Rates policy reforms under review to ensure that the Non-Domestic Rates system delivers the most competitive environment to do business whilst also supporting our communities.

6. Review the design of the administrative and digital processes of the Non-Domestic Rates system to ensure a more productive and efficient environment for all.

7. Early work should be taken forward between business and government on labour market participation, with a focus on supporting parents and carers into work, and on the skills and support businesses need to transition to Net Zero.

8. Scottish Government, businesses and others should work together to create a simple description of what the Wellbeing Economy is and how business can contribute. This should build on the work of the Business Purpose Commission and include metrics to measure the impact of business actions on the economy, workforce, community, society and environment.

9. Share and use data on the type of support businesses are searching for to help government understand business needs.

10. Review and share information on key sectors and market opportunities, building on the work in NSET on new market opportunities.

Next Steps

The membership and frequency of the group will be reviewed further as we move to implementation phase but there is an expectation that this group could continue in some form for up to 18 months to oversee efficient implementation. While this group is of course only part of our engagement with business, which needs to be wider and broader across Government, the leadership of this group will ensure accountability for effective delivery of the recommendations. This will be essential to yield the changes we need to deliver successful outcomes, that is business growth leading to Wellbeing Economy transformation.

To ensure that the Group's work realises its full potential, it is vital that these critical recommendations are adopted in full and followed through with achievable and impactful implementation plans. These will include short-term, medium-term and long-term actions that wherever possible are specific, measurable, achievable, realisable and time-bound (SMART). We will develop those over the summer. We will need to prioritise what we do and when we do it to maintain focus and maximise our collective resources.

The Group has identified the key outcomes we seek to achieve and the recommendations that are most important in delivering those. These will be integral to delivery plans alongside other supporting actions. We will also need to keep our progress under constant review. That means: ensuring progress on delivery of actions is monitored; reviewing to make sure that what we are doing is having the desired impact; and, maintaining effective dialogue between business and government. While it is vital we make early progress and deliver on the critical recommendations set out, this is a longer shared journey, and the steps taken here will make us better able to evolve and adapt our plans together for all our benefit. That shared approach is consistent with the Culture of Delivery set out in the National Strategy for Economic Transformation.