‘Small businesses sit at the heart of local economies and with the right support they will flourish… a wealthier Scotland with lower local tax and our small businesses freed from the burden of business rates and able to grow.’
Where did this bold paean to free enterprise and limited government spring from? The leader column of this newspaper? One of Scottish Conservative chief Ruth Davidson’s drier speeches? Did Milton Friedman have a but’n’ben in Strathpeffer that no one knew about?
Hold onto your foam fingers, folks, because those stirring words came from none other than the SNP. Yes, the same party that now sports an ill-fitting cloth cap and talks like a cross between Tony Benn and Mother Teresa was once the best friend of small business. Their 2007 Scottish Parliament manifesto, which propelled them into government, pitched the party unashamedly to Scotland’s job-creators.
‘Families in Scotland can be wealthier,’ their blueprint read. ‘An SNP government will remove the burden of business rates from 120,000 small businesses, freeing them to grow and create more and better paid jobs.’ This was called the ‘small business bonus’ and for those companies it didn’t free up from rates altogether there would be a cut in their yearly bill. All in all, 150,000 firms would either pay no rates at all or get a substantial tax cut under the SNP.
Backing business. Rewarding hard work. Easing the tax strain on families. There was nary a handbag nor a string of pearls in sight but this was pure Maggie.
Of course, that was how the SNP used to speak. Today they haven’t just forgotten how to talk to small business — they’ve stopped listening too.
Nothing symbolises that more than the row over business rates. Rates revaluation on non-domestic properties will come into force on April 1 but this is one practical joke no one will be laughing about. Small firms across Scotland will be stung for more tax on the buildings they use and key figures are already speaking out about the impact on their bottom lines.
Some hoteliers face gut-punching hikes of 200%, according to Duncan Johnston, general manager of Hotel Indigo. Not only will this put off tourists, Johnston fears investors will baulk and build new accommodations elsewhere.
Ryan James, who chairs Glasgow Restaurant Association, paints an even bleaker picture, warning: “There are many different pressures facing the city’s restaurant businesses, which are so tightly squeezed I genuinely believe rate increases could be the final straw.”
Mr James points out that the leisure sector will be especially hit because licensed premises get rated on their turnover. “Our independent culinary offering will undoubtedly suffer,” he cautions.
These aren’t big corporations, already dodging tax and whingeing about what they still have to pay. These are modest-sized companies that drive our economy forward. Tourism supplies more than 200,000 jobs in Scotland and visitors pour in £5 billion to our economy every year. What impact will pricier dinners and steeper hotel bills have on that income?
Glasgow City Council has recently set itself a target of boosting visitor numbers by one million. In the city where the Nats hope to wrest control from Labour in May, the sound of wallets closing and flights diverting to London and Manchester will not go down well.
Glasgow Chamber of Commerce chief executive Stuart Patrick explains: ‘This is a broken tax which increasingly appears to lose touch with the ability to pay. The most concerned are clearly those who find their rates going up, irrespective of the business conditions in which they find themselves.’
Finance secretary Derek Mackay insists the Scottish Government is doing all it can to help. He should read back over Mr Patrick’s words for they express the anguish felt by Scotland’s business owners.
It’s true that rates revaluation is carried out by an independent body and businesses have the option of appealing. But for some firms, an appeal won’t come in time — they will already have hung up the ‘closed’ sign. As finance secretary Mr Mackay does have options and he could start by launching the inquiry suggested by the Scottish Tourism Alliance. He should also consider their call for a rates freeze until the conclusion of the Barclay review of Scottish business rates.
There were high hopes when Mackay was awarded the finance portfolio. But the Renfrewshire North and West MSP, touted as a future leader of the SNP, has struggled to impress so far. From admitting he hadn’t heard of the Laffer Curve to his halting performance at the budget statement, Mr Mackay has some way to go to restore confidence.
Rates present an opportunity for him to show what he’s made of — and whose side he’s on. Scottish businesses are crying out for help; Mr Mackay could step in and be their champion. It would not make him popular with rank-and-file Nationalists but his name would be cheered by merchants the length and breadth of Scotland.
He should intervene for another reason. Old-fashioned though this might sound, it’s the right thing to do.
The entrepreneurs speaking up are not asking for a handout. They’re not complaining about having to pay their fair share of tax. These are men and women who care about their communities and try to give something back. All they ask is that their companies not be crippled by punitive bandings.
This isn’t so they can roll around in profits and light cigars with £50 notes. It’s so they don’t have to pass on rate hikes to their customers. It’s so they can keep on staff who will otherwise have to be let go. It’s so, in some cases, they can keep the lights on.
The Scottish Government isn’t overflowing with people who have run their own business. Too few ministers have ever had to worry about overheads or red tape or meeting salary costs. To them small firms are a cash machine to be raided whenever they want a few quid for a new project. But that is not the real story of Scottish enterprise. The real story — and there are tens of thousands of such stories — is of companies built from scratch, grown on hard work and passion and self-belief. Small businesses are what’s created when graft and perseverance come together with sacrificed holidays and children’s bedtime stories read down the phone from the back office.
Slug them with higher levies? We should be celebrating these people for their work ethic and their contribution to our economy. Success and gumption are not dirty words — they are what we should be teaching the next generation to aspire to.
Alex Salmond does not come in for much praise in these pages but while he may be many things, he is not a stupid man. He understood that the path to power ran through the ambitions and aspirations of Middle Scotland. The SNP had dallied with social democracy and with conservatism but they were primarily a nationalist party. The ascendancy of the left in the 1970s and 1980s reflected activists’ belief that by mimicking the Labour Party they could replace them and remove the final barrier to independence.
Mr Salmond knew this would only take them so far and he worked long and hard to reach out to the business community. That meant lots of bland dinners and speeches to suspicious audiences but it also meant substantive policies to unshackle innovation and promote growth.
If the Nationalists won’t listen to small business, they should heed the principles they once espoused in their own manifesto. If not, they should be honest about what they do believe.
That’s the problem with posing as socialists at the STUC and capitalists at the CBI. Eventually you get found out.
Originally published in the Scottish Daily Mail. Contact Stephen at email@example.com.