Have John Swinney and Kate Forbes reset the government's relationship with business?

First Minister John Swinney and Deputy First Minister Kate Forbes outside Bute House with the Scottish cabinet. | Jane Barlow/Press Association

John Swinney and Kate Forbes have “significantly improved” the relationship between business and government, according to a leading Scottish retail group.

One of the biggest moments of 2024 in Scottish politics was when Mr Swinney got the keys to Bute House and then appointed Ms Forbes as his deputy.

Both past finance ministers, the pair promised to be pro-business and create economic growth, with Ms Forbes admitting that years of low investment had held Scotland back.

First Minister John Swinney and Deputy First Minister Kate Forbes outside Bute House with the Scottish Cabinet. | Jane Barlow/Press Association

Businesses’ confidence in the government had plummeted under former first minister Humza Yousaf, with a poll carried out by Holyrood Magazine finding the majority of MSPs thought the relationship between government and business was poor.

“The retail industry’s relationship with the Scottish Government started 2024 under a dark cloud,” said Ewan MacDonald-Russell, the consortium’s deputy head.

“The promises of the new deal for business had long since been broken by a guddle of a budget which hit high street retailers with increased non-domestic rates bills and the threat of a further surtax on grocery retailers.”

However, he conceded there has been a change of direction by the new First Minister since he took office back in May.

Mr MacDonald-Russell said: “The new deputy first minister met our members within a week of taking office, and promised to listen.

Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium.

“Since then there has been progress on improving regulation, some pragmatism on implementation, and a programme for government which brought no new costly surprises.”

However, despite the “good start” on resetting the relationship, the consortium says there are still more things businesses want to see happen in 2025 and beyond.

Get daily political analysis and insight with The Steamie newsletter

When Finance Secretary Shona Robison set out the proposed Scottish budget for 2025/26 at the beginning of December, she introduced 40 per cent rates relief for the majority of hospitality businesses, and continued the 100 per cent rates relief for island hospitality businesses.

However, she did not bend to industry pressure to extend this to retail and leisure businesses.

Economists at the Fraser of Allander Institute said extending rates relief to retail businesses would have cost the government an extra £220 million - significantly more than the £22m it has set aside for hospitality rates relief.

Mr MacDonald-Russell said: “Whilst the Scottish budget raised business rates for larger stores by £9m and failed to provide the 40 per cent business rates discount for smaller shops, the decision to scrap plans for the grocery surtax showed a commendable commitment to listen to the concerns of the industry.”

He added: “However, the Scottish Government has yet to fulfil the manifesto promise to bring the higher property rate into parity with England this parliament, and there are a number of costly and complex policy measures affecting food and drink businesses which have yet to be decided upon.

“The measure of whether this is a pro-retail government will to a large degree be determined by those big decisions next year.”

Deputy First Minister Kate Forbes believes she and Mr Swinney have done a good job at resetting this relationship.

Deputy First Minister Kate Forbes. | Jeff J Mitchell/Getty Images

She said: “By working closely through the new deal for business group we have been ensuring that their views are heard and effectively inform a range of policies - most notably in the draft Scottish budget 2025/26.

“But deepening this relationship is an ongoing endeavour.

“We are listening to businesses to help create a mutually beneficial environment that supports a fair-green and growing economy.

“That’s why we’re continuing to offer the most generous small business rates relief in the UK, with around half of properties in the retail, hospitality and leisure sectors eligible for 100 per cent small business bonus scheme relief.”