Comment: Small firms need big voice on independence

Picture: Neil Hanna
Picture: Neil Hanna
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Big companies have made headlines, but SMEs are vital to Scotland’s future growth – so let’s hear from them, writes Michael Westmacott

The referendum debate is picking up speed, with heavy guns deployed on both sides. Airlines and some manufacturers say Yes; the oil industry and financial services take an opposite view.

The debate so far has largely been confined to the biggest issues, voiced by business leaders representing the biggest companies in Scotland. But Scotland’s economy is heavily dependent on the small business sector, and they are as much affected by tax or fiscal uncertainties as anyone else.

The country may need oil and financial services for its tax revenues, but employment and business growth is largely being fuelled at the other end of the economic spectrum.

There are now some 340,000 small businesses in Scotland, the highest number since records began. More than 30,000 Scottish businesses registered with Companies House in 2013. In 2012, it was 25,500; in 2011, 24,000; in 2010, 20,700. It’s a trend we should all welcome.

This is borne out in a new study, the UK Startup Ecosystems Report, which ranks Britain’s entrepreneurial ecosystems. Scotland comes fourth of the UK regions. The south-east was top, followed by London and the east.

The report, essentially, is a guide to the best places in the UK to start a business, and is based on a number of criteria – including business birth rates, unemployment rates and the number of businesses per 10,000 adults.

The Federation of Small Businesses (FSB) quotes Scottish Government statistics to show that small and medium-sized enterprises now account for 99 per cent of all Scottish businesses and more than half of all private sector employment.

The FSB also recently said that Scotland’s SMEs need support from banks, the government and utility firms if the sector’s recovery is to gain momentum this year.

The FSB also said that both sides of the independence debate needed to make a more compelling case to SMEs.

It’s a point noted by the Yes campaign, which is promising simplification of the tax system and a slashing of red tape for small enterprises – as well as the benefits of having control of VAT and thus being able to target tax breaks for specific sectors.

However, many of those proposals don’t need independence. For example, the Regulatory Reform (Scotland) Bill which was voted into law earlier this year, is intended to improve the way that regulation affects Scottish businesses while encouraging sustainable growth.

However, the referendum debate has become bogged down in what BA or BP says; whether Scotland can (or should) retain the pound; and whether we will be granted early membership of the European Union.

These are, of course, huge and important issues. But we have to remember that Scotland is a patchwork of many thousands of companies, working across the business spectrum – many of them dependent on UK or export trade; others on international collaboration.

Rather than have the independence debate shaped by Royal Bank of Scotland or Standard Life, it is the SME sector that politicians and the media should be listening to.

The trouble, of course, is that it’s not easy for a small business to make its voice heard. That is where the likes of the FSB, Chambers of Commerce and other representative bodies are so important.

The small business sector is the Scottish business sector. What happens to it will have a much greater impact on Scottish economic health than many big Scottish employers put together.

• Michael Westmacott is a partner in PR company ­Laidlaw Westmacott.