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Business figures warn of ‘dying’ public services in Scotland without economic growth

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“My proposition to the Scottish Government has been let’s do the same for the next 30-40 years for Scotland. Let’s make it easy for businesses to come to Scotland – they will bring jobs; they will pay their taxes. That is what makes the world go round.”

An animated Sir Tom, admitting that he is “worried about the way the country is going just now”, pointed to the recent decision by Danish pharmaceutical company Novo Nordisk, maker of weight-loss drugs Ozempic and Wegovy, to purchase a factory in the Republic of Ireland as it seeks to increase production.

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The firm is investing $92.5 million to buy a plant in Athlone, County Westmeath, in order to grow its business. Ireland is already major centre for pharmaceutical manufacturing with companies like Pfizer and AstraZeneca operating there.

Sir Tom highlighted last week’s headline news from Audit Scotland which highlighted a “gap in political leadership” within a key Scottish Government strategy that aims to transform the country’s economy.

Former finance secretary Kate Forbes launched the National Strategy for Economic Transformation (NSET) in March 2022, setting out a 10-year blueprint to create a wellbeing economy which delivers for people across Scotland.

However, the spending watchdog was highly critical of the strategy, pointing out that almost two years on, the Economic Leadership Group, which was meant to be a “key part” of the NSET, has still not met.

Audit Scotland said there is a “gap in collective political leadership as the government has yet to establish its planned Economic Leadership Group”. The group was to be chaired by the First Minister with members including senior Cabinet ministers and the president of local government body Cosla.

Stephen Boyle, Auditor General for Scotland, said last week: “Making the shift to a wellbeing economy while also increasing tax revenue is a substantial challenge. Collective political leadership remains vital, and the government needs to better understand the cost and affordability of its plans so it can prioritise spending decisions.

“This is especially important at a time of continued pressure on public finances.”
Audit Scotland added that without this body being in place, it is “not clear how evidence about what is successfully transforming Scotland’s economy will flow to the relevant decision-makers”.

Sir Tom, looking to the longer-term economic growth plan for Scotland, said: “Let’s go out and be laser-focused about bringing businesses to Scotland. OK, we can’t offer the corporation tax incentive because that’s devolved to Westminster but let’s make it easy.”

He noted last week’s letter from 16 trade groups – including the Scotch Whisky Association, Scottish Retail Consortium, Scottish Wholesale Association, Scottish Financial Enterprise, Scottish Chambers of Commerce, Scottish Tourism Alliance and more – to Deputy First Minister and Finance Secretary Shona Robison in which they state that plans for a business rate surtax on retailers does not align with the government’s pledge to work with business.

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Sir Tom also alluded to recent comments by Stephen Leckie, chief executive of the Crieff Hydro Group of Hotels, who is also the current president of Scottish Chambers of Commerce, who said he would like to invest around £30 million in his portfolio but says he cannot currently take the risk.

A Scottish-based spa owner, he noted, had also decide to invest in England instead of at home because of the high business rates here. “That means jobs don’t come here, people don’t pay tax her – it’s economic self-harm,” said Sir Tom.

He then called on the Scottish Government to follow the UK Government’s lead in providing 75% relief on business rates bills for eligible hospitality, leisure and retail businesses for the year 2024/25.

However, a sceptical Lord Haughey added: “Sadly, I need to say there is no chance of that happening. Be afraid because if we don’t do something about our economic growth out public services are going to die a slow death – it will be death by 1,000 cuts.”

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The Scottish Government, suggested Sir Tom, “don’t seem to understand the link between a vibrant private sector that pays its taxes to fund a vibrant public sector”, adding: “If you don’t have that then you can’t afford to give people free prescriptions etc.”

Lord Haughey called on businesses to “stand up and let your voice be heard”. He said “this is the only way we are going to get change”, to which Sir Tom replied: “I’m worried about the way the country is going just now.”

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