Fair play, but whose ball is it?

For whatever reason, attitudes changed as the 1997 General Election approached, and a change of Government began to look increasingly certain.

Business leaders sought reassurances that might usefully have been sought earlier on the commercial implications of reform and, having received them, generally held their peace, though with a few high-profile exceptions. Since September's decisive referendum result, the issue has largely been regarded as what Grant Baird of Scottish Financial Enterprise calls ''a done deal''.

What is now open to question, though, is whether companies, having been persuaded that devolution poses no immediate threat to their businesses, may make the opposite mistake of assuming that it has no bearing on them at all, and that there is therefore nothing they need do to prepare for the coming of the Parliament.

As a former civil servant, Peter Mackay wrote recently: ''In my years as head of the Scottish Office Industry Department, I was continually chastened to find that business had little knowledge of (and often little interest in) how Scotland is governed, of the division of responsibilities between the Scottish Office and Whitehall, and even of how to influence policy formulation and the legislative process ... I fear that a lack of knowledge may be even more true of the devolution proposals.''

This is perhaps understandable. The biggest powers which government has over the business environment will, as Scottish companies were assured they would, remain reserved to Westminster. Holyrood will have no power to vary corporation tax; it will have little influence over the main instruments of macroeconomic policy, like monetary policy or the public spending total; it will not be responsible for employment policy or the benefits regime; and it will not determine

business or financial regulation, competition policy or company law.

But that is not the same as saying that it will do nothing which business needs to heed. The Scottish Parliament's

powers are very significant indeed - amounting in essence to all the powers currently

vested in the Scottish Office

- and many will have a

direct bearing on the circumstances in which Scottish businesses trade. Among the most important are:

n economic development policy, including industrial assistance, trade promotion, area regeneration and inward investment;

n education and training,

which includes vocational

qualifications;

n land use and building

control;

n passenger and road transport, ports and airports;

n the Private Finance Initiative;

n civil and criminal law;

n tourism development and promotion;

n licensing (though not of

gaming);

n environmental protection;

n some aspects of food safety;

n the health service;

n the careers service;

n administration of EU structural funds;

n and, though the matter is under review, business rates. Many of these functions are delegated to local authorities or quangos (like environmental or economic development policy) and will be subject to a wider framework of UK or EU policy. It will be open to the Scottish Parliament, should it so choose, to reform the structures and responsibilities of Scotland's local authorities and quangos.

Yet these powers will have in aggregate a significant bearing on every business in Scotland, and in particular on small businesses, to whom local market conditions can matter more than macroeconomic climate.

Above all, the Parliament will be responsible for distributing a Scottish spending block currently worth some #14bn, on which many businesses are dependent for some or all of their income. It will also be responsible for the negotiations with Westminster which determine the future size of that block.

Which brings us to the most notorious of all the Parliament's powers, its right to vary the basic rate of income tax by up to 3p in the pound. This seems to have preyed on the minds of the business community. Yet, it's not obvious that this right, if exercised, would have anything like as much impact on business prospects as many of the other powers at the Parliament's disposal.

What it has in common with them is that it is a power, not a policy. Westminster has the power to raise income tax by 100p in the pound. The constraint on excess will be exactly the same as for Westminster, namely, the need to secure public assent through periodic elections. It is hard to imagine that the Scottish Parliament, or the parties forming its administrations, would ever want to preside over economic failure.

If the ''threats'' which the Parliament poses to business prosperity have been conventionally exaggerated, the potential advantages have been under-estimated. The Scotland Bill does not prescribe the powers the Parliament will have, but those - known as Reserved Powers - which it will not have. Beyond their parameters, the scope for innovative measures tailored to specifically Scottish needs is considerable.

The Scottish Council Foundation, in its paper, Scotland's Parliament - a business guide to devolution, says: ''It is at the level of the Scottish economy and the micro-economies within Scotland that benefits might be realised; Scottish economic policy to meet Scottish needs.

''Devolution should open up the Scottish business environment to new ideas and suggestions which could never be implemented at UK level. There will be opportunities for creative business minds to enter the policy debate. A key factor in the success of the Parliament in having a beneficial overall effect on the Scottish economy will be the extent to which the business community rises to that challenge.''

Which raises the question of how the business community should go about influencing the policies of the Parliament. The Bill leaves it largely to the Parliament itself to determine its procedures, but a broad-based Consultative Steering Group has begun discussing the principles that should apply.

Some aspects of how the Parliament will work are becoming clear. First, there is an evident will that policy-making processes will be more transparent and inclusive than those at Westminster. Second, the likelihood that a proportional voting system will ensure that the administration comprises more than one political party may broaden opportunities to influence ministerial thinking.

Third, there is expected to be an extensive pre-legislative process, in which public views will be sought on issues where legislation is proposed. This may operate through empowered committees of the Parliament, able to call in or co-opt expert opinion, receive submissions, hold public hearings and, possibly, generate legislation themselves. Individual MSPs are also likely to have a right to sponsor legislation.

These are the key opportunities for exerting influence, and professional lobbying organisations are gearing up to take advantage of them. But the close-knit nature of Scottish society should enable individual businesses of all sizes to get to know decision-makers, and to make their voice heard directly, rather than having to channel views through the established business lobbies. The same, of course, applies to non-business activists - environmentalists, cultural lobbies, unions and the like.

Some big companies are already encouraging staff to stand for the Parliament, though MSPs will, of course, represent their constituents rather than their erstwhile employers. The Parliament's recourse to expert opinion, too, will mean that business inputs fare better for being well-informed and plausibly substantiated. But there are potential benefits for businesses in acquainting themselves with the policy-making processes as these emerge,

and developing strategies for advancing their views.

It is hard to see what business has to fear from the Parliament. At macroeconomic level, reserved powers will keep the competitive playing field level. At microeconomic level, there is a potential for Scottish businesses to tilt it in their favour - provided the opportunities

are seized.