Medium-sized firms ‘stuck in policy black hole’

Mid-sized firms in Scotland are “under-valued and over-looked” despite their fundamental importance to the economy, according to a new report by BDO.

BDO says mid-market is stuck in a policy black hole, as small firms and large corporations dominate government attention

The accountancy firm today revealed that despite accounting for less than 1 per cent of all firms, mid-market companies create almost a quarter of private sector jobs in the country.

The 2,094 Scottish companies analysed, all of which have a turnover between £10 million and £300m, contribute £66 billion in revenue and £20bn “gross value added” (GVA) to the economy every year.

But BDO says this mid-market is “stuck in a policy black hole”, as small firms and large corporations dominate government attention.

The mid-market firms are said to be too large to benefit from policies tailored to small business, but too small to win the 
attention that the largest 
corporations and FTSE firms command from the media and policy makers.

Martin Gill, head of BDO in Scotland, said: “Without a shadow of a doubt Scotland’s mid-market is under-valued and too often over-looked. Mid-sized firms contribute a remarkable amount to GDP [gross domestic product] and jobs, and what’s exciting is that with the right support these businesses have the potential to deliver even more for our regional economy.

“The government has done a good job at promoting the general needs of business but more can be done to help mid-sized firms specifically.

“As we begin the run-in to a general election, this is a good opportunity to reflect on the needs of this section of our economy, as all political parties consider what they can do to drive economic growth.”

BDO’s “mid-market manifesto” seeks to address the untapped potential in the segment and unlock a further £1.3bn in revenue.

Policy recommendations include temporarily reducing employers’ national insurance payments for manufacturing companies to encourage 
exporters.

The report claims this measure alone would boost GDP by more than £3.5bn – including £1bn from the mid-market – and create nearly 90,000 jobs.

It also recommends awarding government contracts on the basis of the employment and training benefits to the supply chain, rather than cost alone.

It says that would increase economic output by £1bn and create more than 11,000 jobs, with more than a quarter coming from the mid-market.

Gill said: “Our policy recommendations are rooted in reality and quantify just how beneficial to businesses, job creation, and the wider economy they could be. Straightforward changes even to policy around procurement could make a material 
difference.

“There is now a unique opportunity to tilt the balance in the direction of growth for the unsung heroes of our economy to ensure we drive value for Scotland.”