ACTION IS needed to help boost Scotland’s medium-sized businesses, with a new report claiming “mid market” firms are under-valued and too often over-looked by policy makers.
Medium-sized firms account for less than 1% of all companies but create more than a fifth (22%) of all private-sector jobs, according to accountancy and advisory firm BDO LLP.
There are 2,094 businesses in Scotland with a turnover of between £10 million and £300 million a year, which contribute £66 billion in revenue to the economy and provide jobs for 439,000 people, its Making the Most of the Middle report said.
Martin Gill, partner and head of BDO in Scotland, said more could be done to help such firms expand their operations, allowing them to create more jobs and revenue cash.
BDO argued that medium-sized firms are too large to benefit from policies which are tailored at small businesses but are too small to attract the same amount of attention as the largest firms.
‘Under-valued and over-looked’
Mr Gill 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 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.”
The report calls for the UK tax system to be reformed, to provide more certainty for mid-sized businesses and to encourage such firms to plan for the long-term.
It also suggests more could be done to reduce the overseas tax barriers for UK firms when they are opening up a new branch or subsidiary operation overseas, and to reduce the regulations that can hinder international expansions.
Struggling to attract workers
It states that some industries are struggling to attract workers with the correct skills and calls for the education system to reflect and support the long-term aims of the UK economy.
To help manufacturing, it argues the next UK government should put in place a long-term strategy, to be delivered by a dedicated manufacturing minister, as well as recommending formal targets be set for manufacturing growth and a temporary cut in employer’s National Insurance for the sector.
BDO also calls on local government to help break up large contracts into smaller ones, to give medium-sized firms a better chance of winning them.
Councils should work with local firms before contracts are put out to tender to ensure that these are drawn up with middle-sized firms in mind.
Mr 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.”