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Ian McConnell: What on earth is the SNP’s big problem with business?

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And it is also plain that a narrative has developed that the SNP, and the Scottish Greens of course when they were the junior partners in government, have not been the friends of business.

This narrative often seems to have developed a life of its own, and it is, of course, promoted to the max by opposition politicians. These politicians perhaps regard this as part of their job.

These are, however, febrile political times so it seems crucial to look at the SNP’s actual record on business and the economy.

Firstly, however, it is worth highlighting the scale of the perception problem faced by the SNP.

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A recent poll by The Herald and the Institute of Directors in Scotland revealed business leaders north of the Border believe the UK Government is doing a better job on business and the economy than the Scottish Government.

Asked if the Scottish Government is doing a better or worse job on business and the economy than the UK Government, or if the performance of the two is similar, 68% of the IoD Scotland members who responded said “worse”.

Meanwhile, 13% believe the Scottish Government is doing a better job and 19% think the performance of the Westminster and Holyrood administrations on business and the economy is similar.

These findings are stark.

And they are particularly striking given the very poor policymaking by the Conservatives at Westminster since 2010 on business and the economy.

This has included a failed austerity programme which, as well as being despicable from a societal perspective, has choked off economic growth, and also a hard Brexit which has caused huge damage to output and living standards already and will continue to do so.

So the fact that Scottish business leaders think the SNP is doing a worse job than this highlights the enormous scale of the challenge facing the party in shifting perceptions.

It is interesting that, in spite of this view by Scottish business leaders, they are overall overwhelmingly of the belief that Brexit is damaging the economy north of the Border.

Asked in The Herald and IoD Scotland poll for their views on whether Brexit had hindered or helped the Scottish economy, or neither, 101 of 133 respondents, 76%, said it had been a hindrance. Only 4% believed it had helped, and 20% opted for “neither”.

It seemed clear from the poll that differential income tax for higher earners was one of the bugbears of business when it came to policymaking by the Scottish Government.

Asked if the Scottish Government is right to use its income tax powers to raise additional tax from higher earners, 78% or 103 of the 132 respondents said it is “not right”. Meanwhile, 22% or 29 respondents said it is right.

With the differential having been widened further in the Scottish Budget in December, this has been an issue about which business leaders have been making much noise in recent months.

However, much of the general discontent from the business community seems to be based on a view that the Scottish Government does not prioritise its needs sufficiently, and is not listening.

Mr Yousaf tried to respond to this with his New Deal for Business pledge. However, it seemed that he almost made a rod for his own back on this.

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His olive branch appeared to be well received at first but the discontent from many in the Scottish business community resumed quickly, if it had ever actually paused, when things that were asked for were not delivered.

The highest-profile example of this is probably the unhappiness of hospitality, leisure and retail businesses that the Scottish Government has continued to decline to introduce the temporary relief on business rates of up to 75% given to their peers south of the Border by the Conservatives.

The narrative that the SNP and Scottish Greens have been bad for business has at times painted a picture that the economy north of the Border has been performing much worse than that of the UK as a whole in recent times.

However, this is not borne out by the data.

Scotland, unlike the rest of the UK, avoided technical recession last year. It is important that we do not make too much of this – it is a matter of fairly fine margins. And, given the main economic levers remain firmly at Westminster, it is not as if the Scottish Government can do much to shift the dial north of the Border, one way or the other.

However, it is important to emphasise that Scotland’s economic performance does not look bad at all relative to that of the UK as a whole, especially given the particular demographic challenges north of the Border.

Looking at what is within the Scottish Government’s control, it has presided over a long period of impressive foreign direct investment.

This suggests that overseas businesses, through their objective due diligence, have perhaps formed a more positive view of what is happening in Scotland than some domestic companies.

Much of the economic development work in Scotland, delivered by agencies under the Scottish Government’s control, is impressive.

And the Scottish Government has also ensured a very large number of businesses do not pay any business rates, with its small business bonus scheme.

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Deputy First Minister Shona Robison noted in her December Budget speech that this had ensured that “100,000 properties are taken out of rates altogether”.

And what is surely worth noting is that if we want to look at business-friendly government, the SNP has rightly championed the importance of being part of the European single market. This is obviously a very big issue, from the perspective of the economy as a whole.

In contrast, the ruling Conservatives have had their hard Brexit. And, as the inevitable damage unfolds following the loss of frictionless trade with Britain’s largest trading partner and the ending of free movement of people between the UK and European Economic Area, they are refusing to back down.

As businesses face extra costs and hassle in exporting and some give up altogether on this front because of the bureaucracy delivered by the Tories, and as employers in myriad sectors deal with a skills and labour shortages crisis exacerbated hugely by Brexit, the Tories simply will not shift.

That seems about as business-unfriendly as it gets.

So you could see why the SNP might feel hard done by in terms of how business perceives its efforts. And what is driving the enormous momentum of the narrative that the SNP has been bad for business is somewhat puzzling.

Whether the SNP feels aggrieved or not, that does not change the simple reality that Mr Yousaf’s successor, a position for which John Swinney is now in pole position, faces a huge challenge in shifting the perception that the party is not good for business and the economy.

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