Scottish Business Growth Group minutes: May 2020

Attendees and apologies

Attendees:

• Colin Borland, Head of Devolved Nations, FSB
• Andrew McRae, Scottish Policy Convenor, FSB
• Philip Grant, Chair, SFE
• Graeme Jones, Chief Executive, SFE
• Graham Hutcheon, Chair, CBI
• Tracy Black, Director, CBI
• Ian Wall, Chair, SCDI
• Sara Thiam, Chief Executive, SCDI
• Liz Cameron, Chief Executive, SCC
• Aidan O’Carroll, Chair IOD
• Malcolm Cannon, National Director, IOD
• Helen Martin, Assistant General Secretary, STUC

Scottish Government:

• Fiona Hyslop MSP, Cabinet Secretary for the Economy, Fair Work and Culture
• Mike Russell MSP, Cabinet Secretary for Constitution, Europe and External Affairs
• Joe Brown, Head of Strategic Business Engagement, DED
• Laura-Anne Brown, Head of Business Engagement and Events, DED
• Reuben Aitken, Deputy Director Trade Policy
• Gavin Gray, Deputy Director Employability, DFWES

UK Government:

• Nadhim Zahawi MP, Minister for Business and Industry
• Douglas Ross MP, Parliamentary Under-Secretary of State for Scotland
• Jonathan Darby, Head, Strategic Engagement (Scotland)
• Steve Thompson, Team Leader, Business and Trade, OSSS
• Hannah Standring, Policy Advisor, Business and Trade, OSSS
• Stuart Chapman, Business Intelligence and Readiness, BEIS
• Luke Nightingale, Business Support, BIS
• Edward Coarse, Business Engagement, BEIS
• Jeremy Martin, DA Team, BEIS
• Anna Sladden, Trade and Investment Negotiations, BEIS
• Jack Hawthorn, Industrial Strategy, BEIS

Items and actions

Welcome and introductions

Ms Hyslop welcomed members to the Scottish Business Growth Group (SBGG) meeting, in particular, Parliamentary Under-Secretary of State for Scotland, Douglas Ross and Cabinet Secretary for Government Business and Constitutional Relations, Mike Russell.  She noted Nadhim Zahawi, Minister for Business and Industry would join the meeting at 9.30.

Members approved the draft minutes of the last meeting for publication.

UK transition arrangements

Mr Russell presented the case for an extension of the Brexit transition period noting: the potentially damaging impact on businesses operating in a ‘new normal’ and with a possibly reduced workforce; the delay to negotiations as a consequence of Covid19; and the need to allow time for civic and parliamentary scrutiny.

Mr Ross noted that the UKG position was clear: the Transition Period is not being extended, and although Covid-19 dominates currently, talks and behind the scenes work were continuing. 

CBI said the focus was rightly on COVID/recession, that the UKG has a clear mandate and should aim to deliver a pragmatic outcome from ongoing negotiations. SCC said members were focused on COVID/recession not BREXIT.

STUC endorsed Mr Russell’s case for an extension and was supported by SCDI. Both recognised the economic importance of securing the best possible outcome, but favoured more time to allow that to be developed and scrutinised by parliament, stakeholders and civic society.

Mr Ross noted the helpful views from stakeholders around the need for democratic oversight and scrutiny. Mr Russell emphasised that a clear process and wider debate around managing links beyond transition would be necessary to avoid a blockage at the end of the year.

[Mr Russell left the meeting.]  

Re-set and restart: economic growth - COVID-19

Ms Hyslop summarised the current SG position: to date only personal exercise time outdoors had been relaxed and all other lockdown restrictions remained in place. She noted ongoing engagement with businesses and trade unions to prepare for re-opening the economy but the timing of this will depend on public health evidence. She said a safe re-start will be based on 3 factors: success in suppressing the virus; workplace regulation and compliance; and guidance for safe workplaces that gives workers and customers confidence. Ms Hyslop said that SG sector specific guidance was being developed and would complement UKG guidance.

[Mr Zahawi joined the meeting.]

Mr Zahawi set out the UKG position which had recently changed in terms of returning to work in England. He welcomed the close working with SG and other Devolved Administrations and recognised that UKG safer work guidance should be considered alongside more local guidance and public health circumstances. He confirmed that all fiscal and non-fiscal support measures would be kept under review as Government moves to re-open the economy.

FSB noted the need to consider the capacity of small businesses to respond to the Covid-19 crisis and cited research published by them that day where members expressed fundamental concerns about their capacity to restart. FSB also said that members want clear and practical guidance which protects staff and customers and look to Government to demonstrate support and confidence in businesses that re-open. This point was endorsed by CBI

SFE observed that the current package of business support will need to change in the longer term and that businesses face complex budgetary issues requiring advice and guidance. Scottish Enterprise, banks and advisors could all have a role in this.

CBI suggested that while the timing of re-start may vary by region on the basis of different public health evidence, they questioned the need for divergence from UK guidance and for separate regional or sectoral guidance.  IoD and SCC asked that SG guidance be consistent with that from UKG - noting that UKG guidance is already being used in sectors where there is none from SG. Ms Hyslop noted that SG guidance published to date aligned with that from UKG.

STUC said that a safe re-start, avoiding a second spike in cases should be a priority and underpinned by strategies for transport and childcare as well as clear test, trace and isolate measures and adequate PPE provision. They also noted that individuals need confidence that the ask of them as citizens (where physical distancing measures etc apply) is consistent with their workplace arrangements.

Mr Zahawi noted that UKG guidance will continue to be reviewed as circumstances change but the primary objective is to avoid a further Covid spike and further business shut-downs. He recognised the importance of Trade Credit Assurance and said a UKG announcement on this was imminent.

Business support – COVID-19

Ms Hyslop welcomed the extension to the Job Retention Scheme (JRS), noting that SG measures more widely, seek to complement UKG initiatives, for example: a new £145m fund to support self-employed and SMEs; extension of the Small Business Grant and the Retail, Hospitality and Leisure Schemes; and a doubling of the Pivotal Enterprise Resilience Fund (PERF).

Mr Ross noted that £3.5bn had been passed from UKG to SG to tackle Covid-19, that the furlough announcement had been widely welcomed and that a new self-employed income support scheme would be launched that morning.  He and Mr Zahawi underlined their commitment to working with SG to ensure this funding reached businesses in Scotland as quickly as possible.   
 
Mr Zahawi explained he was working closely with Ms Hyslop to identify opportunities as UK comes through the crisis, in particular: to develop diagnostic and vaccine production capacity; supply chains; increased investment in Research and Development; and how to help the most innovative business cope with Covid-19.

SCDI underlined the need for a clear public health strategy to ensure confidence in visitors, workers and customers. They noted anticipated high levels of unemployment and proposed a flexible approach to combine furlough with part-time work would be helpful for business but also in managing transport pressures. They also looked to the UKG to bring forward capital works.

CBI emphasised that while grants and loans had been welcomed, business wants to be back on its feet and highlighted the potential to build momentum on the digital/technical transformation accelerated by the current crisis.  However they noted concerns about apprentices who have been furloughed or have no work to return to and whether Government might intervene to ensure the talent pipeline not lost.

IoD noted that many businesses had taken up tax deferral arrangements which, unlike grants and furlough payments will need to be paid back. They asked that UKG and SG worked together with HMRC to consider a strategy on ‘time to pay’ which takes account of the working capital challenges faced by business.

SCDI highlighted the concerns of members in the North East, also impacted by the fall in oil prices. The  increase in R and D grant funding was welcomed, as was the scope to apply in Scotland to boost policies and programmes for data-driven innovation and mission zero. SCDI asked both Governments to recognise the potential impacts on students and apprentices, and wider implications for support for re-training and upskilling. Businesses will also look to government for advice and support in a restart context, addressing challenges on childcare and transport, and PPE availability/markets (where companies will be keen to ensure their procurement actions do not undermine NHS provision). 

SCC noted the shift in business models as a result of the crisis and the need to look at the range of economic levers available to help business, for example business rates. They endorsed the CBI’s concern about apprentices but highlighted the need for a wider skills development focus for existing employees and those made redundant.

SFE welcomed the increase in Research and Development support and called for the focus to shift from the immediate situation to a forward-looking focus on investment and return.

Mr Zahawi welcomed business’ desire to move forward and in terms of Brexit, was confident a positive deal will be achieved by the end of the year. He confirmed that UKG is working to deliver announcements around infrastructure and digital but also looking at UK procurement and how to attract more businesses, including SMEs. On interventions, BEIS and Treasury keep these under constant review to ensure funding is targeted, flexible and supports a robust recovery and they also look overseas to learn lessons about what has and hasn’t worked well.  

Ms Hyslop assured members that SG was continuing to listen and act upon feedback from business, and that greater collaboration than ever before will be needed going forward.

Mr Ross noted that on Oil and Gas, he was meeting Kwasi Kwarteng, Minister for Business, Energy and Clean Growth to consider joint BEIS/SO approaches.

AOB

The next meeting will take place on 3 September.

SG/OSSS
May 2020