The clock is ticking on Humza Yousaf's New Deal for Business

No shortage of political migraines, like the suspension of Fergus Ewing from the SNP and the party’s overwhelming defeat in the Rutherglen & Hamilton West by-election.

So in some ways, it’s a surprise that the First Minister and his cabinet have managed to make any progress at all on their pledge to rebuild trust, boost the green economy, support innovation, entrepreneurship and start-ups while maintaining investment in skills.

Yet there has been quite a flurry of progress. Or, more accurately, lots of activity.

In May, the FM set up the New Deal for Business Group co-chaired by Wellbeing Economy Secretary Neil Gray and Head of Investments at Strathclyde University Dr Poonam Malik. 

Members include the Scottish Chambers of Commerce, Scottish Retail Consortium, Scottish Tourism Alliance, Scottish Food and Drink, Federation of Small Business and the Institute of Directors, as well as Cosla and economists at the Fraser of Allander Institute.

Alert to the leisurely pace of many such Government projects, Mr Yousaf gave his Group a tight deadline. He wanted its initial report on his desk by the end of June.

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In six weeks, it delivered 78 recommendations which Mr Yousaf accepted in full. It was, he said, a “strong foundation for a continuing partnership between business and government”. 

Strong foundation is code for being a long way from concrete results, of course, especially with so many recommendations to prioritise and apply. But the report was definitely a start. 

There are five basic strands - better (and less) regulation; earlier business involvement in policy making; business rate changes; the wellbeing economy; and sharing key data metrics.

The ideas generated by these fell into short-, medium- and long-term categories.

Given the rapid pace of the initial exercise, many of the key recommendations were inevitably to carry out further pieces of work.

These include a “deep dive” into the Government’s policy development cycle, a “systematic mapping” of how business engages across Government; and developing a new Business and Regulatory Impact Assessment and Toolkit aimed at small business and consumers.

Disappointingly for many on the Group, business rate reforms will merely be kept “under review”, Government speak for inertia, until the recent Barclay reforms bed in.

Comically, a key goal of the wellbeing economy strand will be to “create a simple description” of what the term actually means, as no one seems quite sure.

The report also underscored how bad relations had become under Nicola Sturgeon, when business barely got a look-in at Cabinet.  

The Group reported a perceived “lack of openness and transparency” in policy-making that led to a “lack of credibility and trust”. 

Instead of ministers using “data and insight” to shape policy, businesses felt “political ideology” was driving initiatives. 

Consultations were seen as fake, with the Government having already made up its mind, and a failure to act on feedback bred “justifiable cynicism”. 

There was clearly a thirst for change.

The Group’s report called for “no surprises” on policy-making and a “cultural shift” on the Government's side, with the voice of business brought in loud and early.

An early test of the new approach came with September’s Programme for Government.

On the plus side, this vowed to follow through on the recommendations, including axing regulations seen as redundant and a package to “unleash innovation and entrepreneurial talent”, as well as the creation of a new Small Business Unit to speak up for the sector.

However bonfires of red tape are often promised by governments and rarely lit. The package for unleashing talent turned out to be £15m, or just 0.025% of the Holyrood budget.

The New Deal for Business was also slyly expanded to embrace Scotland’s two new Green freeports, which were a Treasury initiative Scottish ministers initially resisted. The Green side of the Scottish Government still hates them and would happily see them shut down.

Last month, the New Deal for Business Group published a detailed plan for implementing its earlier recommendations showing which will take six, 12 and 18 months to get right.

Mr Gray said it would “turn the dial” on the relationship between business and government, with the two moving “in sync” to achieve common goals and grow the economy.

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However one of those close to the process said the mood among business is that the “jury is still out” on the reset. People want tangible results. “The clock is ticking,” the person said.

There is also a worry that ministers, none of whom have any personal experience in running a business, don’t truly understand what is expected from them.

While business wants the reset to be about long term relationship-building, there is a fear that those in government will see it as a one-off, box-ticking exercise and move on.

Mr Gray told the Herald he understood that concern, but he was clear that the New Deal was far more ambitious and fundamental than that.

“This is a shift in the mindset of the machinery of government, “ he said. “That is something that comes from the First Minister and the Permanent Secretary down.  

“I’m very conscious of the fact that it’s about delivery.”

Despite his convincing evangelism, caution remains advised. 

In the speech in which he announced his New Deal for Business, Mr Yousaf also announced a New Deal for Local Government with a “no surprises promise” on budget matters. 

That went out the window when he announced a pre-election council tax freeze at the recent SNP conference, something councils don’t want and weren’t consulted about.

Fresh from a by-election defeat and heading into a stormy 2024, the First Minister put short-term political calculation ahead of a long-term deal with erstwhile partners.

If he can welch on one New Deal, he can welch on another.