We hosted our first business leaders’ summit at our Edinburgh office recently - attended by Scottish Labour shadow economy secretary Daniel Johnson. The roundtable discussion was chaired by Andy Maciver, founder and director of Message Matters, and involved senior Partners from Lindsays and key clients contributing to debate on how government needs to do more to connect with and champion Scotland's private sector, and how that has led to a culture which is not encouraging business growth and opportunity.
Andrew Diamond, Partner and Head of Residential Property, said there is a feeling that there is “a hostility in Scotland to growth and success, and a feeling that people doing well and growing businesses are seen as a bad thing”.
“We’re very quickly tarred with that – that you’re a fat cat,” he said. “That’s an issue that Scottish people didn’t have historically and I don’t know where it came from but it’s very easy for the Scottish Government to play to that.”
Andrew McRae, a retail entrepreneur, agreed, noting that it is “very demoralising trying to run a business at the moment at any level”.
“The Scottish Government in recent years, it seems, has no trust in businesses to do the right thing,” he said. “That’s very hard when you’re at the front line and trying to support yourself and your family and the community. The sense that it’s only the public sector that can do good, and make profit, is quite ludicrous.”
The government’s stance towards businesses operating in the private rented sector came under particular scrutiny, with John Blackwood, chief executive of the Scottish Association of Landlords, pointing to the “anti-landlord rhetoric” that came out of the now-abandoned power-sharing agreement between the SNP and the Scottish Greens and has found its way into the Housing Bill that was introduced to parliament in March.
Two years ago Green MSP Ross Greer claimed on social media that landlords were “not contributing anything useful to society” and, prior to its coalition with the SNP falling apart in April, the party was active in ensuring rent controls were included in the Housing Bill.
John noted that the rent cap that was in place from March 2023 to March this year had had a chilling effect on the housing market, dissuading investors from coming to Scotland and having a negative knock-on impact on supply.
Daniel Johnson said Scottish Labour’s position is that the Housing Bill “in its current form is insupportable”. While noting that his party is in favour of rent regulation of some kind, he said that the current government is “trying to fix a supply problem with demand measures”.
“Something that’s much more consistent and allows developers to get a return while protecting tenants can be arrived at,” he said. He added that the onus is on the government to recognise that rental properties will always be required within the housing mix and that it must create an environment in which private rental sector businesses are able to trade.
“The really important point is that, even if you’ve sorted everything out in the housing sector, in an ideal world renting will still exist,” he said. “People will always want to rent a property rather than own it. There will always be a proportion of the population for whom renting is the right solution so there will need to be landlords. Renting and having availability of good-quality accommodation is a good thing.”
Derek Nash, Partner and Head of Commercial Property, said another policy that is stifling growth in Scotland is the fourth and most recent iteration of the Scottish Government’s National Planning Framework (NPF4), a long-term plan that was introduced last year and sets out national planning policies through to 2045.
Views were expressed that NPF4 is obstructing commercial activity with operators focussing on opportunities south of the border instead, while Andre Sarafilovic, managing director of Pars Group and executive chairman of Stephens Bakery, said it is “the biggest issue” he has in his business because it has “stopped us in our tracks”.
“Every food manufacturer is trying to do a drive-to site but NPF4 says it will cause too much traffic and so planners are having to reject application after application,” he said. “Each case should be taken on its own merits but I don’t think it is. As a growing business we want to go where the customers are but we’re being blocked.”
Daniel said the problem with the current Scottish administration is that it has been focused on social issues and the absence of personal wealth rather than looking at areas where growth can be generated and how that can have a positive impact on society as a whole.
“Parliament has been focused on social policies rather than economic policies and we really need to turn that on its head,” he said. “We need to understand the economic levers that the Scottish Government has to shape the economy in Scotland – there’s been too little focus on that.
“We also need to stress that growth relies on profits – if you don’t have profits you can’t invest and you can’t grow. Perhaps it’s a sign of the state of Scottish political discourse that that needs stating but I think it does.”
Ultimately, Daniel said it is up to the government to recognise the vital role businesses play in growing the economy and improving people’s livelihoods.
“If you look at what has happened to inequality over the last few decades, wage mobility has decreased and so it’s harder to find wage increases than it was 30 years ago,” he said. “For a lot of people, when they hear about growth in businesses, they feel they are excluded, but the wrong response is to browbeat businesses and say it’s all their fault.
“The government needs to step up and work with business to say we need to fix inequality and that’s why we need a healthy economy and growing businesses. Politicians need to work with businesses to explain why growth is important.”
Photo [L-R]: Derek Nash (Commercial Property Partner), Michael Yellowlees (Rural - Land & Business Partner), Daniel Johnson (Scottish Labour shadow economy secretary), Ben Doherty (Employment Partner), Andrew Diamond (Residential Property Partner).
Published 25 September 2024
