Comrade Salmond should cut taxes and let enterprise thrive

Published on Monday 21 December 2009 21:47

BACK in July I entertained a main board director of the world's largest semiconductor chip maker to a game of golf at Loch Lomond.

As we relaxed over dinner and a large Glenfiddich I asked him why they had chosen Ireland over Scotland for their main European plant.

"It's simple," my friend, a proud American-Scot, replied, "We asked the Scots what their corporation tax level was. It's 28 per cent. We asked the Irish. They said, 'What would you like it to be?'"

It thus comes as no surprise the Irish have just passed legislation to tempt many of the offshore hedge funds away from sunnier tax neutral climes. Consistently, the Irish have taken the view that to gain inward investment they will always find a way to match their will.

Now let's not fool ourselves. The Irish economy is pretty knackered but both government and commerce will cut every corner and push every piece of legislation to the limits to ensure that the Celtic Tiger starts roaring again.

Contrast that with the swamp of inertia that currently characterises the Scottish business scene. Gerry Hassan argued here last week that despite a plethora of business organisations whose remit is presumably to stimulate business there is little or no evidence that the tectonic plates are shifting.

I upset a few sensitive souls when I commented in a recent article that Scotland has become bogged down in the world of procurement, that Bermuda Triangle of free enterprise.

Bang on cue, a Scottish construction industry survey shows the majority of smaller construction firms are actively avoiding participation in public tenders because the associated costs are prohibitively high. Fewer that one in six small building firms (turnover below 500,000, fewer than ten staff) have participated in public tenders in the past year because of the prohibitive cost and the inordinate amount of time required to complete the paperwork.

From the point of view of my own business I found the Scottish procurement process was becoming so stifling and soul-destroying that we moved a considerable percentage of our resources to London (including me) and have been rewarded with spectacular returns. The decision time to grant our company contracts can be measured in hours and sometimes minutes, not months like back home.

One call came totally out of the blue from a foreign client to the London office. Without any preamble, (his reputation preceded him) I was informed I was hired for a year at least. When I asked if he wanted to hear my fees, the answer was no. I e-mailed a contract halfway round the world and one hour later it pinged back signed by the chairman and two of his board. Now be honest, when was the last time you heard of that happening in Scotland?

Our biggest fee earner in the UK in the last four years was agreed with a handshake over a plate of bacon and eggs in an airport caf. The deal was done in 15 minutes.

The funny thing is, the bigger and more successful the client, the less the hassle over contracts and actually managing the workload. It is governments and civil servants, especially in Scotland, who seem to go out of their way to make life difficult.

They deceive themselves if they think this provides better and more cost effective delivery. All it does is induce rigor mortis to the twitching corpse of corporate Scotland.

Ironically, I note that the chair of The Public Procurement Advisory Group is one Jim Mather, minister for enterprise. Members include Iain MacMillan (CBI Scotland), Janette Harkess (SCDI), Liz Cameron (Scottish Chambers of Commerce) and David Hutcheson (IoD). What do they talk about? How to make life difficult?

Gerry Hassan is spot-on when he says that main priority of these organisations is justifying their existence and they talk a language of business that is not informed by the real hands-on experience of running a business.

Depressing isn't it? What is more depressing is the way our country is jokingly referred to by my English colleagues as the Socialist Soviet Republic of Scotland. Is that fair? Well, Comrade Salmond currently presides over 199 devolved public sector organisations. It's hard to tell what good, if any, many of them deliver to the economy other that the creation of six-figure salary jobs for the bosses and positions for semi-literate graduates from pretend universities.

To be fair, this SNP administration took a sharp axe to Scottish Enterprise, but rather spoiled the party by appointing Lena Wilson to head the slimmed-down organisation despite her having worked there for 20 years. Of course it could be part of a Baldrick-like cunning plan to finally run SE into the ground. They've got off to a good start.

Other agencies and institutions rumoured to be facing colonic irrigation and repeated Botox injections include Visit Scotland, Transport Scotland and the diabolically mismanaged National Trust for Scotland.

It's easy to criticise, less easy to provide solutions. Let me try. Let's be adventurous, revolutionary even, and use that 3p discretionary power to cut income tax. Why watch London businessmen flee the Darling 50p upper limit when we could encourage them to move north of the Border? Let's be brave like Ireland and other EU countries and refuse to be swamped by a procurement process that is killing the construction industry and other businesses, stone dead.

Cut the paperwork, cut the time lag and most importantly cut the meaningless jobs and stop procurement developing into an industry in its own right.

And lastly, when we sell Scotland abroad (are you listening Lena and Mr Mather?) try and remember it's a job for grown-ups, not kids.

Will they listen? It's doubtful, but as I'll be working in the Cayman Islands and Miami mid January with other Scottish business colleagues I'm going to find it increasingly hard to give a hoot.

&#149 Jack Irvine is executive chairman of PR firm Media House.