Big SNP donors to tell Salmond: We need more action

The three are believed to be Donald Macdonald, the hotel group owner, Sir Tom Farmer, the entrepreneur, and Brian Souter, the Stagecoach chief. The Scotsman understands a meeting with the First Minister has been pencilled in for next week, although details have yet to be confirmed.

The group has acknowledged the progress made by the Scottish Government so far and the limits faced by a minority administration.

While none of the trio is prepared to make any comment ahead of a meeting, The Scotsman understands they want to ensure Mr Salmond is fully aware of the severity of the deterioration and to leave him in no doubt as to the damage it is inflicting. There is a concern that some MSPs and many at local authority level still do not "get it".

They are also disappointed that the SNP government has failed to distinguish itself sufficiently from the previous Labour administration. There is little change, say the businessmen, in the dominance of the public sector over the private; the government is seen as a Labour administration in SNP clothing.

News of the meeting came as it emerged that Mr Salmond had not met Gordon Brown, the Prime Minister, to discuss the economy since last April.

The First Minister has also been accused of presiding over a "Salmond slump" by failing to invest in public-sector building projects. Iain Gray, the Scottish Labour leader, claimed such investment had fallen by 1 billion since the SNP had come to power.

The business chiefs wish to make three crucial points in their talks with Mr Salmond.

First, despite official rhetoric of changes to streamline and improve the planning system, they say there is little evidence of change in culture or practice at ground level. This, they fear, could impair recovery. Secondly, there is talk of unease over the continuing, relentless growth in the public sector and a feeling that reform is not being moved along as quickly as hoped.

And thirdly, the recession is inflicting such severe damage to the structure and fabric of Scotland's economy as to seriously impair recovery when it eventually comes.

A source close to the three businessmen said: "There is evidence of growing discontent in the ranks of senior and job-creating business folk that all is not as it should be and a more open debate and urgent action is needed."

These concerns are likely to be widely echoed across the business community. Business groups such as the CBI and the Scottish Council for Development and Industry have tended to tone down their criticism for fear of jeopardising their relationship with the administration. They will be hoping the "Salmond Three" will not mince their words.

Each week brings fresh news of cutbacks, closures, receiverships and job losses. The Scottish Chambers of Commerce survey for the fourth quarter of 2008 showed the most depressed results since the survey started in 1984. January is feared to have been even worse, with few signs that the torrent of black news is easing off.

Development projects are being scrapped as companies fall into administration and other schemes are being put on hold. Scottish Government plans to accelerate 230 million of spending on capital projects are dwarfed by private development cancellations and delays, running into billions of pounds.

Up to 26,000 jobs are already feared to have gone in construction, and the building of new homes has fallen dramatically. This year is set to see a drop in new home construction to less than half the annual average. "Every development plan in Scotland has been rendered out of date by the events of the last 12 months," says Homes for Scotland.

House completions are down 70 per cent across Scotland and 84 per cent in the Edinburgh council area.

Planning applications are still being used by councils to add on roundabouts, sports and community facilities, and "affordable homes" to original development proposals. But hopes that the building industry would fund these road improvements, public transport, drainage systems, affordable homes and schools are being dashed.

There is also concern across the business community over a lack of progress in simplifying and improving the planning system, despite official assurances that changes have been made.

An early hope among business figures who switched their financial support to the SNP was that much greater emphasis would be placed on economic development, and that the relentless expansion of the public sector would be curbed. Now the recession, combined with the fact the SNP is a minority government, have effectively killed off any public-sector reform. Indeed, not only have numbers employed in the public sector continued to increase, but the cost of red tape has carried on rising.

According to the Budget adopted by MSPs this week, spending on administrative staff is up by over 15 million. The central administration budget has risen 11 per cent to 273 million, and general government staff costs are up 9 per cent at 194 million. The data is a particular disappointment to the battered private sector, which feels it has been left to shoulder the burden alone.

Room for improvement? The four main bones of contention

1 - Alex Salmond has been accused of not doing enough to help Scotland cope with the economic downturn.

Like all administrations, the SNP government has found itself grappling with the effects of the global economic downturn. This has meant redundancies, company closures and business collapses.

Unlike most governments, however, the Scottish Government has limited means to bring about change. Ministers have brought forward capital spending from future budgets to next year, in an attempt to help the construction industry, and they have reduced business rates and frozen the council tax, to help small businesses and families. But the Scottish Government has been criticised for not doing enough.

This week's Budget was hailed by John Swinney, the finance secretary, as a package of measures to help Scotland deal with the economic downturn. But the reality is that the impact of the Budget is limited, simply because Mr Swinney only has about 2 or 3 per cent of the total Scottish block grant of 33 billion available to him for new projects in any year. The rest is already allocated for public-sector costs, including salaries.

2 - The SNP administration is facing criticism that changes to planning legislation are not coming through as quickly as expected.

Senior figures in the construction industry have railed against Scotland's slow and ponderous planning system for years, complaining that it inhibits growth and delays construction projects.

Such problems were recently highlighted in the Donald Trump application for Menie, right.

The Scottish Government has an ultimate target of determining the outcome of planning appeals within 20 weeks. In the meantime, there has certainly been some progress in this area. In April last year, only 4 per cent of planning appeals were determined within 12 weeks, but, by November, that had risen to 37 per cent. There is still some way to go, but ministers are confident they will hit 50 per cent by April.

However, the speed of processing appeals is not the only area of concern. Business leaders have long been concerned about the process itself which, they believe, allows so much latitude to objectors that developments can get snarled up in red tape for years. Ministers have had to balance these concerns with fears from environmentalists.

3 - Another criticism is that the SNP is simply carrying on the Labour administration's policy of growing the public sector and is failing to introduce dynamism into the economy.

Scotland is heavily dependent on the public sector, spending a little over 50 per cent of its GDP on public services, more than many western countries. Aware of the bloated size of the public sector in Scotland, the Scottish Government has demanded efficiency savings of 1 billion from both local government and the health department. Ministers have also declared their intention to curb the size of the quango state and to reduce the size of government.

However, the results on the ground have been limited. Measures to reduce the number of quangos have been delayed for three months, and, while some bodies have been scrapped, many of the staff and their services have simply been transferred to the control of central government, achieving little.

As for the planned efficiency savings, councils and health boards have been allowed to find the savings where they can, which means that there is no guarantee of any reduction in bureaucracy or of the introduction of more efficient private-sector methods.

4 - The three donors are worried that so much damage is being done to the fabric of the productive manufacturing sector that it will be impaired permanently.

Across the UK, manufacturing orders are already falling at their fastest rate since 1992, and the pace is expected to increase over the next few months.

Scotland did lag behind the rest of the UK at the start of the credit crunch, with employment and manufacturing holding up better north of the Border, but the economic downturn has accelerated in the last three months and jobs are now disappearing from Scotland quicker than they are in England.

It is now feared that 26,000 jobs have gone from construction alone in Scotland. Business sentiment, order books, and investment intentions are all weak or weakening and manufacturing job losses appear to be coming on a daily basis. Just this week 100 jobs were lost at a flexible ducting plant in Milngavie.

The damage is certainly widespread and it is going to get worse. Whether or not the manufacturing sector is going to be permanently impaired depends on the scale of the recession and Scotland's ability to rebuild.

PROFILES

DONALD MACDONALD is one of Scotland's leading hotel entrepreneurs.

In 2007, he gave the SNP 30,000. However, soon after the Nationalists came to power, ministers intervened in what was seen as an attempt to speed up the planning process for an extension to Mr Macdonald's resort in Aviemore. Ministers have always insisted they acted within the rules and that if the project had collapsed, it would have cost 300 jobs. But planning remains a big concern for Mr Macdonald. He recently said lack of speed and efficiency in the planning process was harming jobs and business investment.

IT IS unlikely the SNP could have won the 2007 election without the help of BRIAN SOUTER, the Stagecoach tycoon. He gave the party a massive 625,000 – by far the biggest donation in its history.

In 2000, he controversially financed his own referendum against Holyrood's plans to scrap Section 28 – the law prohibiting the promotion of homosexuality in schools. In 2006, the SNP conference called for the bus industry to be re-regulated. But, when the SNP's election manifesto was published – a month after Mr Souter had given his donation – there was no mention of this policy.

SIR TOM FARMER has a fortune estimated at 130 million from his successful car repair business. The 68-year-old gave 100,000 to the SNP in the run-up to the 2007 election, but has never been an enthusiastic advocate of independence.

Sir Tom said he was donating the money to make sure there was a "more level playing field". He made it clear he did not believe the party should rush into independence.

"I don't want a separate Scotland," he said, "but what I do want is the Holyrood parliament raising its own taxes and being responsible for spending them."