Why looming crisis for Scotland's small businesses is a big problem for us all

Keir Starmer and Chancellor Rachel Reeves need to listen to the concerns of small businesses, as do the SNP (Picture: Justin Tallis) | AFP via Getty Images

In Scotland, the term ‘small business’ is something of a misnomer. For, while they may not be corporate giants, these companies make up 98 per cent of all the total in this country, employ more than 900,000 people, and have a collective turnover of £93 billion a year. In other words, small businesses are a very big deal.

So news that more of these firms expect to shrink, sell up or close entirely in the next year than those expecting to expand, according to a Federation of Small Businesses survey, should worry us all. It is, after all, the first time this has happened since the economic cataclysm caused by the Covid pandemic.

If that was not bad enough, 48 per cent of Scotland’s small businesses reported a fall in profits over the last three months, compared to 27 per cent which saw an increase, and the number of firms which reduced their staff (18 per cent) was twice as many as those that increased the size of their workforce.

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Keir Starmer and Chancellor Rachel Reeves need to listen to the concerns of small businesses, as do the SNP (Picture: Justin Tallis) | AFP via Getty Images

Urgent, decisive action

Guy Hinks, chair of FSB Scotland, said while the Westminster and Holyrood governments had been “making all the right noises about supporting the small business community... these stark findings show the urgent need for decisive action”.

He urged UK Government to listen to business concerns about Labour’s Employment Rights Bill and “its dampening effect on firms taking on staff” and the SNP government at Holyrood to ensure “the needs of small businesses are fully taken into account whenever any policy is brought forward, from creating a level playing field for small firms bidding for valuable public contracts to local Visitor Levy schemes”.

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We very much hope our elected representatives are listening, as the people best placed to provide good advice to government are the small businesses themselves. Clearly, Labour has well-meaning goals that it wants to achieve in its Employment Rights Bill. But putting an overly heavy burden on hard-pressed small businesses will only backfire in the long-run, making the situation worse for all concerned and the economy as a whole.

Small businesses cannot be treated as cash cows, they must be nurtured carefully. Their interests are our interests.