New Deal for Business Group minutes - pre-budget discussion: November 2024
- Published
- 9 January 2025
- Directorate
- Business and Better Regulation Directorate
- Date of meeting
- 6 November 2024
Minutes from the meeting of the New Deal for Business Group (NDBG) on 6 November 2024.
Attendees and apologies
- Dr Poonam Malik, NDBG Co-Chair
- Kate Forbes MSP, Deputy First Minister and Cabinet Secretary for Economy and Gaelic
- Shona Robison MSP, Cabinet Secretary for Finance and Local Government
- Ivan McKee MSP, Minister for Public Finance
- SG Officials
- Katie Miller, Confederation of British Industry (CBI)
- Stacey Dingwall, Federation of Small Businesses (FSB)
- Catherine McWilliam, Institute of Directors (IoD) Scotland
- Nathalie Agnew, Muckle Media
Apologies
- Mairi Spowage, Fraser of Allander
- Nora Senior, Co-Chair of ILG Chairs Roundtable
- Barry White, NSET Delivery Board Co-Chair
- Karen Meechan, ScotlandIS
- David Lonsdale, Scottish Retail Consortium (SRC)
- Liz Cameron, Scottish Chambers of Commerce (SCC)
- Iain Baxter, Scotland Food and Drink
- Louisa Macdonell, Business in the Community Scotland
- Marc Crothall, Scottish Tourism Alliance
- Sandy Begbie, Scottish Financial Enterprise (SFE)
- James Fowlie, COSLA
- Sara Thiam, Prosper
Items and actions
Welcome, DFM and Dr Malik opening remarks
The Deputy First Minister (DFM) welcomed and thanked all for their time and engagement in the previous development of the Programme for Government (PfG) and thanked members for valuable input into the preparation for the Budget.
Dr Malik thanked DFM and her colleagues for meeting with the group. She noted that the discussion will allow the group to highlight their concerns about the UK Budget and their ambitions for the forthcoming Scottish Budget. In particular Dr Malik highlighted the increase in employers National Insurance (NI) contributions as a significant concern from the UK budget.
The Cabinet Secretary for Finance and Local Government thanked members for engaging with this discussion; advising that the Scottish budget considerations are ongoing, and the timing of this meeting will allow the group’s views to be taken into account. Dr Malik highlighted the one-year anniversary of the 18-month New Deal for Business Programme, recognising progress achieved and ongoing work on the programme. Business’ viewpoint and role remains critical. The Cabinet Secretary stressed the government’s continuing commitment to strengthening the relationship with business and the work of the New Deal programme.
Questions and comments from members
Rates Relief
The tourism sector hasn’t been able to benefit from the rates relief that has been available to the sector in England (and Scottish Island communities). A recent survey of over 300 businesses has highlighted the extent of financial difficulties the sector is experiencing. Call of Scottish Governement (SG) to replicate the retail hospitality and leisure rate relief being provided by the UKG and scrap surtax on larger grocery stores – this would demonstrate the SG is listening to business and the New Deal is working.
NI Employer Contributions
All members were deeply concerned about the impact of UKG increase in National Insurance Contributions for business and tax divergence between Scotland and the UK. It was highlighted that many SME businesses, which are already struggling, are likely to fail, result in job losses to survive, higher price for consumers or business migration from Scotland. Some members were aware of businesses making plans to move.
It was noted that the Retail Sector estimate that the NI increase will cost business an additional £190m per year. Findings from the Banking Barometer show a negative reaction to NI increases and early discussion suggests this could affect investment and slowdown interest rate cuts.
Tourism
The reduction in Visit Scotland’s budget will negatively impact the sector and marketing of Scotland as a destination. Call for funding to be reinstated. The National Strategy for Tourism was noted with the need for actions to be implemented to improve the sector. The Visitor Levy was also highlighted as a further concern with increased cost not only to businesses but also to the consumer.
Cumulative Impact
The range of UK Government initiatives are having an impact on businesses, such as employment policy and the Extended Producer Responsibility. UK budget has left a challenge for SG to develop a pack of measures to support existing business/ estate, stimulate and support investment in Scotland, without continuing to squeeze business.
Investment
The range of UK Government initiatives are having an impact on businesses, such as employment policy and the Extended Producer Responsibility. UK budget has left a challenge for SG to develop a pack of measures to support existing business/ estate, stimulate and support investment in Scotland, without continuing to squeeze business.
SG to work with UKG for clarity on successor program to the Leveling Up Fund and ensure the continuation of City Deals where improvements are being realised. SG must ensure that Scotland’s plays an active role in the UKs new Advisory Council including receiving a fair share of investment from the Mansion House Reform and new Investment Wealth Fund.
Taxes
Looking to the SG Tax strategy, expected to be published with the December Budget, to provide clarity and certainly for multi-year budgets, at least over two years. This would complement UKG’s Corporate Tax Road Map and provide further stability.
Promotion of Scottish food and drink
Food Standards Scotland’s (FSS) work on improved food safety was noted. FSS accreditation provides opportunities for economic growth.
Public sector reform
UK Budget and subsequent spending reviews, consequentials, while welcomed, there is concern that this will result in higher pay for the public sector but not higher productivity. Public sector should clearly outline year expenditure across all departments and agencies.
Infrastructure
Call for increased investment in energy and digital infrastructure to drive growth. It was also suggested that opportunities for economic growth can be generated through the circular economy and the roll out of a UK wide Deposit Return Scheme.
Collegiate relationship with UK Government
Particularly around trade missions, connecting the narrative and pulling resources to attract investment to the UK and Scotland.
Business confidence
FSB about to publish their latest quarterly confidence index which shows that confidence among the Scottish small business base has dropped significantly in the last quarter. Business believe that the New Deal has made substantial progress, particularly in the Regulation Sub-group, but much of the action is behind the scenes and isn’t seen.
The Scottish Budget could demonstrate the change in the relationship between business and the Scottish Government by introducing rates relief. Dr Malik posed an ask for Leaders of each of the business organisations to pro-actively share details of the achievements of the New Deal for Business with their members and communities to make the NDBG’s work more visible.
PfG commitments
Welcomed the cross-directorate approach to producing this year’s Programme for Government and highlighted this as an example of the New Deal working in practice. It was suggested that it would be helpful for timescales and funding mechanisms for the PfG to be produced, particularly in relation to planning and grid connections, as well as information on the planning and consenting consultation.
Reflections from the Ministerial Team
In closing the discussion Ministers thanked members for their insightful contributions and:
- acknowledged concern over government spending and committed to publishing a Tax Strategy with the forthcoming Budget in December. This will be followed by the publication of Sustainability Delivery Plan with the Spending Review next year
- noted that spending by public bodies to be published this month. Ministers committed to trimming back-office costs and other support areas and would be keen to engage with anyone wishing to input. Minister for Public Finance committed to returning to the NDBG to provide an update
- stressed the importance of infrastructure investment noting the role of the Scottish National Investment Bank in levering in of private capital and will work to ensure access to the UK Investment Wealth Fund
- recognised the importance of the New Deal Group, its one-year anniversary and stressed the government’s continuing commitment to strengthening the relationship with business going forward
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