Business chiefs go on warpath against SNP

THE SNP government has been warned it is losing the trust and support of Scottish businesses because of an "accumulation of policies and sentiments" that are anti-private sector.

Several leading business figures have told The Scotsman there is a growing disquiet about the stance taken by the Scottish Government in areas as diverse as education, health and transport.

Despite attempts by the SNP to woo the business community, senior figures from the CBI, Institute of Directors and Scottish Chambers of Commerce have talked of a change in the relationship with Holyrood since the Nationalists won power in 2007. Significantly, they have warned certain policies are endangering investment in Scotland.

Before the election, efforts led by current enterprise minister Jim Mather and First Minister Alex Salmond saw businesses end their hostility to the SNP. The party even attracted major donors such as Brian Souter and Sir Tom Farmer.

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And while the SNP retains the confidence of high-profile figures such as Sir Tom Hunter and Sir George Mathewson, the party has been warned its current approach will see its efforts to woo the private sector unravel.

Business leaders are particularly angry at the SNP's policy on minimum pricing for alcohol, which they say is the latest in a long line of anti-business measures. CBI Scotland leader Iain McMillan cited episodes such as Diageo being "bullied" over its restructuring plans, the cancellation of the Glasgow airport rail link (GARL) without consultation, the blocking of private sector involvement in running hospitals and prisons and the slashing of the enterprise budget by 74 million next year.

Business chiefs say the alarm bells began to ring loudly when SNP deputy leader Nicola Sturgeon's told her party conference in Inverness: "We will never put private profit before public services."

They interpreted the words of Ms Sturgeon, who is expected to take over the leadership when Alex Salmond retires, as a leap to the left for a party.

This is not the first time the SNP has met with a concerted attack by business chiefs. Last November, Scotland's five leading business organisations delivered an ultimatum to finance secretary John Swinney to drop plans for a local income tax. Eventually, they got their way – the policy was shelved earlier this year until after the 2011 Holyrood elections.

This time, the attack was spearheaded by Mr McMillan, who told The Scotsman that "an accumulation of SNP policies and rhetoric" was causing "grave concern" to the business community.

"Minimum pricing is only the latest in a long line of matters coming from the Scottish Government causing businesses serious concern," he said.

"The appalling way Diageo was treated over its plans to restructure its business, with the First Minister going on the protest rally even though the company was investing 100m in Fife was quite outrageous. We are also angry about the cancellation of GARL with no prior consultation, and then we have the fiasco over the Scottish Futures Trust."

He also hit out at Ms Sturgeon's recent decision to return Stracathro Hospital in Angus to the NHS – even though the private company that managed it was more efficient – and justice secretary Kenny MacAskill's promise to block private sector involvement in prisons.

Mr McMillan added: "Ms Sturgeon's speech that private profit should not come before public services completely misses the point that the two should work in tandem."

He said efforts by the SNP to woo the private sector in the run-up to the 2007 election, which had created "enormous goodwill among businesses", was all being undone. He added: "If a company is looking to invest in Scotland, it will take note of what the government does. What is happening now seems to directly contradict the SNP's stated primary aim of growing the Scottish economy.

"At the moment there are more harmful things for business than positive ones from the Scottish Government. The SNP is talking the talk, but not walking the walk."

There was support for Mr McMillan from other senior business figures.

David Watt, head of the Institute of Directors in Scotland, said:

"We were quite disturbed over the treatment of Diageo and over the taking away of money from the enterprise budget. The Scottish Government does not seem to have grasped the ramifications of this.

"It also seems completely wrong to cancel infrastructure projects such as GARL when we should be building as much as we can to support the economy and prepare it for the recovery."

Scottish Chambers of Commerce chief executive Liz Cameron said: "If you see the health budget increasing by 94m and the enterprise budget reduced by 74m, it does not suggest the government's first priority to grow the Scottish economy.

"This is not about greedy businesses wanting more money. It is about supporting the economy and social wellbeing of Scotland, which can only be done if people have jobs and an income."

There was even criticism from the Federation of Small Businesses (FSB), whose members have benefited from a cut in small business rates. It believes small businesses in England are receiving much better support.

But a Scottish Government spokesman said evidence of how well business was being supported was in the economic and employment activity in Scotland, which is higher than that of the UK average. "Since coming to office, this government has put in place a whole raft of positive business policies with the key purpose of supporting sustainable economic growth," he said. "We have listened and acted from day one in office – slashing rates for tens of thousands of small businesses, and acting to improve the planning system to ensure that it is an aid not a barrier to economic growth.

"And in facing the recession we have again focused our efforts on our comprehensive economic recovery plan, which is supporting some 15,000 jobs across Scotland, and we will publish an updated plan on Thursday.

"Crucially, we took early and decisive action to accelerate capital spending and support construction sector jobs – which comes on top of what is already a record infrastructure investment programme, supported by the SFT (Scottish Futures Trust].

"Through grants such as RSA (Regional Selective Assistance] and our enterprise agencies, we are supporting thousands of Scottish companies to survive tough times and flourish when the good times return.

"The latest figures showed that from July to September 2009, RSA funding offers worth 19m have been accepted by 32 businesses, linked with overall planned capital expenditure of more than 70m, and the planned creation and safeguarding of some 2,500 jobs."