Ewan Crawford: SNP shows the way when it gets down to business

DURING his leadership of the SNP, John Swinney often belied his public caricature of a bank manager (bankers were less racy in those days) by demonstrating real passion. I remember in particular a fiery speech against the war in Iraq, real concern over the obscenity of locking up vulnerable children in Dungavel and a deep commitment to helping victims of crime. But aside from these perhaps obvious emotive, human issues, I was a little surprised by one of Swinney’s other passions – the business rate regime in Scotland.

For most politicians, the poundage rate at which businesses paid their rates did not exactly get the fires burning. But the system at the time put Scottish enterprise at a competitive disadvantage and it was something John believed had to change. In a televised leaders’ debate for the 2003 Scottish Parliament election I became concerned at the forcefulness at which he was putting his arguments. How many other people I thought feel as strongly about this issue and how will this be coming across?

That’s why I was bemused at reports after last week’s Scottish Government Spending Review that the finance secretary was somehow intent on a huge increase in rates. Of all the politicians in all the parliaments, John Swinney was surely the least likely to pursue such a course of action.

This, I thought, cannot be correct. And of course it wasn’t. Somehow in the apparent desperation to have a go at the SNP the distinction between a rise in anticipated income from business rates (because of inflation and a predicted increase in economic activity) was confused with a policy decision to ramp up rates for individual businesses.

In fact, as the SNP pointed out, the government is actually investing £2.6 billion in business rate relief. True, large supermarkets who sell tobacco and alcohol are to contribute an extra £30 million to £40m a year, but this should be seen in the context of Tesco alone making global profits of over £3.5bn.

This debate comes at an interesting time in terms of the relationship between government and business. In his conference speech the Labour leader, Ed Miliband, tried to draw a distinction between bad businesses (which reading the text seem to include Scottish Power and Scottish and Southern Energy as well as the evil banks) and good businesses. For his trouble, he was also rewarded with a going-over from businessman Digby Jones.

For political parties, business endorsements matter because they contribute to, and are a recognition of, the most important factor for electoral success – economic competence. In this respect the level of business support for the SNP has grown markedly in recent years.

The roots of the SNP’s new appeal to business can also be found in a concerted attempt, started ten years ago, to take the economic case directly to Scottish business. Jim Mather, later to be a government minister, but not at the time an MSP, walked into the SNP leader’s office and delivered a computer presentation on the economics of independence.

The message was clear and, for those around the table, compelling: in a tough economic world, Scotland needed the powers to compete. Other countries, regions and cities – such as London – had certain inbuilt advantages which acted like a magnet, attracting talent and investment. In response, Scotland needed tools to counter that gravitational pull, for example economic and tax powers to help our firms secure a competitive advantage.

With a reasonable claim to the title of most enthusiastic man on the planet Mather then took his laptop around Scotland spreading the message. The hard graft paid off with the result that an impressive array of business leaders now support the idea of either independence or greater financial powers (or what the SNP calls job-creating powers). The success of this strategy goes to the heart of how I believe the SNP will campaign in the run-up to the independence referendum. The key is to build coalitions of support, making the case for additional powers by explaining why these powers are needed to meet aspirations.

Although there is clearly some way to go on full independence it seems that the case for tax and borrowing powers is accepted by a majority of people in Scotland. In this area of policy at least, the coalition has been built. Clearly, given its importance, the SNP’s opponents will now seek to fracture that coalition.

This, I suspect, is the context in which the artificial row over business rates should be seen.

For the nationalists, the aim is different – to widen and deepen the coalition. In this regard some of the comments on economic powers from CBI Scotland in particular must be very frustrating. Some business leaders are want to complain that the public sector in Scotland is too large as a proportion of the economy. Yet when the SNP proposes policies to expand the private sector, such as a competitive corporation tax regime, these are rejected.

Interestingly, the government’s response to these comments is measured. Ministers understand that public rows with an organisation like the CBI, whatever its agenda, would not serve their interests. Instead, there is a self-confidence that alone among the major political parties in Scotland the SNP understands that no-one owes us a living and that by being dependent on others we are in a peculiarly vulnerable position.

In short, it seems perverse for Scotland to be denied the full range of economic powers enjoyed by our competitors. Since the SNP’s election victory a curious phenomenon has taken place: the government and Alex Salmond have been assailed on a range of issues, but the SNP’s poll ratings have hit record highs. In terms of business support I suspect, and hope, that the long-term power of the SNP’s arguments on competitiveness will also prove more persuasive than a distorted report on business rates.