New Deal for Business minutes: January 2025

Attendees and apologies

• Deputy First Minister and Cabinet Secretary for Economy and Gaelic

• Dr Poonam Malik, New Deal for Business Group (NDBG) Co-Chair

• Liz Cameron, Scottish Chambers of Commerce (SCC)

• Mags Simpson, Confederation of British Industry (CBI)

• David Lonsdale, Scottish Retail Consortium (SRC)

• Iain Baxter, Scotland Food and Drink

• Louisa Macdonnell, BITC

• James Fowlie, COSLA

• Barry White, NSET Delivery Board Co-Chair

• Marc Crothall, Scottish Tourism Alliance (STA)

• Sandy Begbie, Scottish Financial Enterprise (SFE)

• Gail Macgregor, COSLA

• Stacey Dingwall, Federation of Small Businesses (FSB)

• Catherine McWilliam, Institute of Directors (IoD)

• Andy Williams, ScotlandIS

• Clare Reid, Prosper

Apologies 

• Mairi Spowage, Fraser of Allander (FoA) Institute 
• Natalie Agnew, Muckle Media
• Nora Senior, Co-Chair, ILG Chairs Roundtable

Items and actions

Welcome and opening remarks

The Deputy First Minister (DFM) welcomed and thanked members for their continued engagement. She opened the meeting by reflecting on the First Minister’s ‘Paths to Prosperity’ speech to JP Morgan on 22 January, where he outlined his ambitions on wealth creation, prosperity, economic growth, and skills retention of international students through well paid jobs. DFM stressed the role of the business community in delivering these priorities.
 
Dr Malik welcomed the Group and provided an update on the Programme. She gave an overview of the main points from the Key Actions and Outcomes Dashboards, provided in the supporting papers, before inviting questions from the group.
 
Points raised include:

• in relation to the Sub-Committee of the Cabinet on the Economy and Investment, it was suggested that updates from committee discussions be shared with business stakeholders and a mechanism established for business to share their views
• it was suggested that the analysis by the Metrics subgroup be used to inform discussions with UKG on their UK Industrial Strategy
• in discussing the reasons for the action on mapping business engagement being marked as ‘off track’, the complexity of identifying all engagements with business across the Scottish Government, in the absence of a Comprehensive Records management system, was stressed as well as a future focus on maximising quality of engagement with Government rather than the volume of meeting taking place
• members reflected on business stakeholders’ perception of engagement commenting that business do not differentiate between National and Local government and as such their perception may be skewed by poor experiences with local authorities

Budget 

DFM provided an overview of the key elements of the budget and the rationale for these decisions, inviting questions from the group. In discussion it was noted that:

• the £150 million investment in offshore wind was welcomed to de-risk private investment, support the development of supply chains, and stimulate growth. Members urged the Scottish and UK government to work together to ensure Scotland benefits from the establishment of GB Energy and does not lose out to the Southwest of England
• members felt that the budget has been mostly positive. However, decisions made by the UKG on employers’ NI increases have proved costly and are having an impact. UKG have announced a rate reduction to some sectors, particularly hospitality and leisure, which won’t apply to Scotland. DFM advised that her current understanding of the UKGs approach will not result in SG receiving consequentials and the methodology being proposed in England would not work in Scotland due to the make up of our business base. Further discussions will focus on this issue to understand the implications for Scotland

• budget announcements relating to housing, energy market reforms, skills and capital investment were highlighted as providing opportunities for growth and tackling economic inactivity. Other priority sectors for investment should include AI, life sciences and medical tech sectors. However, concern was raised over transmission charging which could favour operators in the Southeast of England and that this has been raised in a letter to the Director General for Economy in the Scottish Government

• in relation to the £62 million support for regeneration of local and small economies by the enterprise agencies, it was highlighted that most small business members don’t see how this assists them as they don’t qualify for rates relief or fit the client profile of the Enterprise Agencies

Skills

• our skill set must be ready to evolve with changing technologies
• industry has good engagement with SDS to develop apprenticeships. Changing the funding model and bringing in a new body to deliver on it could risk the pace of progress
• Regional Economic Partnerships are working to identify skills and apprenticeship gaps in their local area and will then work on how they can deliver
• industry has taken a lead with Hospitality Scotland and Hospitality Northeast Scotland working together to bring in private sector investment to drive apprenticeships forward, but keen to grow the programme further with additional public money and private investors

Economic inactivity 

• DFM advised that there’s a big focus on using the employability fund of around £90 million to reduce economic inactivity and would be keen to hear ideas of any projects or initiatives that are able to assist people into work
• Public Health Scotland has produced interesting statistics on economic inactivity showing that 35% of those going into economic activity are then falling out of the labour market. This would suggest that there’s a role for employers to consider their role in wellbeing and upskilling which could help to address child poverty. We need to think about how we move to a just transition without exacerbating inequalities and leaving people behind
• we should learn from our past activities, considering initiatives that have worked well and those which haven’t and close any programmes or initiatives that are not lifting people out of poverty or helping them gain fruitful employment. Private sector would welcome the opportunity to build on this
• DFM keen to do something on a sectoral basis between employers where we explore the best model for investing in people to get them into work and keep them in work. This is an open invitation to bring ideas/suggestions forward on this

• action: to develop a Skills Forum to undertake a deep dive into skills, employability, and economic inactivity, using some of the vast data that we already have available to us, and explore what is working and what is not working in this space

Tax Strategy 

A presentation, providing an overview of the engagement and process for developing the Tax Strategy, was followed by a summary of the Tax Strategy before opening for questions.

Local Taxes

• concerns were raised about the ability of organisations to engage effectively with the 32 different Local Authorities around concerns they may have
• SG is committed to working in collaboration with local government and recognise the importance of developing an evidence base. The development of any further taxes would be done together and through that framework organisations would be able to engage with Scottish Government rather than through 32 Local Authorities
• Local Authorities are sensitive to local taxation; the tourist levy demonstrates this as not all areas will implement it and others will give it consideration only after a full local consultation has been conducted

Cost of doing business in Scotland

• aware of work to broaden the evidence base, lots of data already exists and we should use that, update it, and look globally
• in July we will receive the first outturn data for the 23-24 tax changes that will provide the initial data to allow an evaluation to take place
• competitiveness and wider impacts we are looking at across a number of sources, including surveys conducted by organisations such as the Scottish Chambers of Commerce and Fraser of Allander and will be supplemented by new data that will soon be commissioned. The report should be available around the summer

NDR subgroup 

• request for a timeline on when the work of the group will report their initial findings. Also interested in the evidence base for the impact of tax changes and keen to understand what new evidence will be gathered

Scottish spending review

• keen for the group to engage and feed into this if there is an opportunity to do so

AOB

• the Best Practice Policy Cycle was circulated to members ahead of the meeting for consideration. The Group agreed to sign off the document
• the Wellbeing Economy sub-group led on developing a sector summary as part of the Population Health Framework. A near final version will soon be circulated through our newsletter and Scottish Government officials will be in touch in early February to request your final sign-off, allowing it to be included in the Framework

Actions arising

• SG to set up a deep dive to reflect on initiatives to improve employability and reduce inactivity that worked well to date, and those which have not. For those which did not, decisive action required to stop and move on. [Update: officials have already been in touch with SCC and BITC to progress this]
• NDR Subgroup to provide the group with a timeline on when the work of the group will report their initial findings. Also interested in the evidence base for the impact of tax changes and keen to understand what new evidence will be gathered
• members to assist in finalising the sector summary for the Population Health Framework by responding promptly to correspondence
• the next meeting will be the last of the NDBG, and officials are working on a final report.  Further details on this work and how the work set in train through New Deal will be built upon