The Courier & Advertiser (Fife Edition)
‘Make life easier’ plea as Scottish Budget due
Brexit toll on SME confidence
Finance Secretary Derek Mackay has been urged to use his Budget this week to “make life easier” for small businesses whose confidence has “crashed” in the face of Brexit uncertainty.
New research by the Federation of Small Businesses (FSB) shows confidence among small concerns fell to its lowest level since records were first collated in 2011 in the past quarter.
The Scottish score of -32.6 represented a significant worsening of the position compared with the prior three-month period.
Business sentiment north of the border was also significantly more pessimistic than seen elsewhere across the UK, although the wider picture also showed a drop in confidence with the rating moving to -9.9 from -1.7 in the prior period.
Andrew McRae, the FSB’s Scotland policy chairman, said uncertainty over Brexit was fuelling concerns.
“These gloomy figures show that the uncertainty and confusion associated with Brexit is having a huge impact on business optimism,” Mr McRae said.
“It looks likely that confidence will only return when there’s a clear path beyond the March 29 deadline that safeguards smaller businesses’ interests.”
A previous low of -28.9 points was recorded in Scotland in the last quarter of 2016, while the UK low of -2.9 points also came in the aftermath of the Brexit referendum.
Across the UK, more than two-thirds of small firms said they did not expect to increase capital investment in the coming quarter, while 15% said they were planning cuts.
More than a third of companies also highlighted concerns about access to skills as a barrier to growth, despite a majority still hoping to expand their base in the coming year.
“Tumbling investment intentions should worry decision-makers as should skills shortages,” Mr McRae said.
“That is not a foundation on which to build a sustainable economy.
“But our figures show that half of our businesses still want to grow despite the obvious challenges.
“We want to see those in charge make life easier for these operators.”
Last month, FSB wrote to the Scottish Government outlining potential avenues for the finance secretary to go down in the year ahead.
Mr McRae added: “In our discussions with ministers we’ve stressed the importance of rates reforms, underlined the need for skills development and urged the Scottish Government to do what it can to prepare its agencies and business community for post-Brexit trading conditions. We’d urge Derek Mackay to gear his budget toward giving smaller operators a much needed lift.”
Council officers have spoken about the impact of cuts for Tayside and Fife ahead of the Scottish Budget.
Senior officials in Dundee said the financial situation is “worse than it’s ever been” with funds pared to the bone.
In Fife, town hall staff are crowdfunding grants previously covered by the council, said testimony given to Holyrood and university researchers.
Finance Secretary Derek Mackay will unveil his draft 2019-20 Budget tomorrow after three years of real terms cut to local government.
The report said Fife Council is looking at “local fundraising to make up shortfalls and provide new services”.
An officer in the kingdom said: “Things like crowdfunding…rather than providing one-off grants for community groups….we could maybe put in 50%, and encourage groups to raise an element themselves.”
A Dundee official said: “There’s probably not much that we can shave from our service areas now.”
Another officer said: “In the early days the changes we were making were almost voluntary within services…things we’d like to be doing anyway.
“It’s become more about the money.” The anonymous interventions are unusual in that they are by non-political officers, who operate behind the scenes.
The briefing was compiled by independent Scottish Parliament Information Service with Glasgow and Heriot Watt universities.
Researchers spoke to council officers as part of case studies on three councils, including Dundee and Fife.
Dundee City Council, which is run by the SNP, has been forced to make savings of £50 million over three years.
The figure at Fife Council, a joint SNPLabour administration is £62m.
The briefing also found that Angus is among the group of Scottish councils under the most budgetary pressure, with savings in 2018-19 amounting to 3.7% of spending.
A Scottish Government spokesman said: “Despite continued UK Government real terms cuts to Scotland’s resource budget, we have treated local government very fairly – and in the current financial year they received a real terms boost in both revenue and capital funding.”