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by Margaret Taylor
27 February 2024
Economic gains: What the SNP can learn from Labour's business love-in

First Minister Humza Yousaf (right) has shifted his trusted economy secretary Neil Gray to health, leading to concerns in the business sector | Alamy

Economic gains: What the SNP can learn from Labour's business love-in

It may be 14 years since the UK Labour Party was kicked out of government, but it still has some big guns it can wheel out to wow a business crowd. Like Gordon Brown-era energy secretary Ed Miliband, who did a star turn when the lobbying firm run by former Scottish Labour leader Jim Murphy hosted a business forum at the party’s recent Scottish conference. Former defence secretary George Robertson and one-time Scottish secretary Douglas Alexander also took part, popping up on a speed-dating inspired roundtableathon at the Arden Strategies event, where the guest list included Centrica, Nationwide and Scottish Financial Enterprise. Hundreds of Scottish business representatives paid £800 a head to attend the day-long bash and, when they spilled out of the Castle Suite in Glasgow’s Clydeside Crowne Plaza, they were all abuzz with positivity.

Contrast that with the SNP, whose currency with business has fallen to a new low after First Minister Humza Yousaf was forced to reshuffle his cabinet earlier this month. Having stood by health secretary Michael Matheson, refusing to sack him when he became embroiled in scandal over the misuse of a parliamentary iPad, Yousaf was thrown a curveball when Matheson finally conceded and resigned. Though economy secretary Neil Gray was beginning to earn himself a positive reputation in the business community, the first minister chose to parachute him into health, with the bulk of his business-focused mandate being passed to net zero secretary Mairi McAllan. It is not a move that has been welcomed by those dependent on the portfolio Gray has left behind.

Shadow energy secretary Ed Miliband did a star turn at a business event held at Scottish Labour's recent conference | Alamy

“The feedback I was getting was that Neil Gray was just beginning to settle into and understand the wider economy brief,” says Scottish Chambers of Commerce chief executive Liz Cameron when we meet in the Crowne Plaza during a business forum break. Gray was good at “reaching out and engaging” with businesses, she says, and impressed when he consulted on and took forward plans for a New Deal for Business just months after taking on the brief last March. As part of the new deal Gray pledged that the government would listen to concerns on everything from regulatory overload to non-domestic business rates, with the longer-term aim being to “improve policy preparation and delivery”. A government that had shown itself to be uninterested in business was, in short, going to start listening.

“That’s something that we all got quite excited about,” Cameron says, but adds that the reshuffle has knocked the sector’s confidence that any of the promises made as part of the new deal will be followed through on.

“The Scottish Government did listen and in their endeavours they formed what they labelled a New Deal for Business, which clearly set out a framework through which government and business could engage and look at co-designing policies and ideas and come up with solutions as a collective in order to help grow our economy,” she says. “We’re now moving into a new era when they were just beginning to understand the vastness of the topic we were talking about […] That’s leaving businesses frustrated and it’s getting to a point where they’re thinking is it appropriate and is it beneficial to get round a table and give their views, give their thoughts and ideas [to government].”

Neil Gray, who has been moved from the economy brief to health, is seen as First Minister Humza Yousaf's right-hand man | Alamy

The Scottish Government has a patchy record when it comes to getting round the table with business. Though it is adept at setting up forums and committees, it is not always so good at taking soundings from the people it appoints to them. Earlier this month the Auditor General for Scotland, Stephen Boyle, issued a scathing report in which he highlighted that an economic leadership group that should have been established to bring forward the government’s National Strategy for Economic Transformation – a plan drawn up by then finance secretary Kate Forbes in 2022 – had yet to be set up. Similarly, Holyrood revealed that the five leadership groups underpinning the Scottish Energy Advisory Board, which is supposed to be playing a key role in finalising the Draft Energy Strategy and Just Transition Plan, have been left with no ministerial input, four of them since the change in government in March last year. The board itself, which is co-chaired by the first minister and University of Strathclyde principal Professor Sir Jim McDonald, has met only once in that time.

Sean McGrath, chief executive of the Entrepreneurial Scotland Foundation, says the businesses he speaks to are still smarting from the loss of Forbes – who, notably, was not offered a position in the recent reshuffle – from government last year. Her role was directly replaced by Shona Robison when Yousaf succeeded Nicola Sturgeon as first minister, but with Robison also serving as Yousaf’s deputy Gray was seen as the natural heir to Forbes in terms of acting as a conduit between the sector and government. By shifting him away from the economy brief, the first minister has damaged the trust that Gray had been starting to build up.

“This is a big issue and I think it’s a very strange manoeuvre from this government,” McGrath says. “Kate Forbes was well liked – I’ve never seen someone so young garner so much respect so quickly. She really had a good rapport and had the backing of business. Losing her was a blow. It was big shoes for Neil Gray to fill but, in fairness to him, he was actually doing a pretty decent job. He didn’t have a massive background in that space but anyone I spoke to who had interacted with him felt he was credible and was beginning to build some trust and some relationships. I think he’s viewed as kind of the right hand man of Humza Yousaf and that if he was in business then Humza would value business. Shifting him to health sends a slight signal that health is more important than business […] More and more people were talking about the fact that the government seemed to be engaged in a conversation. I’m not saying all that has gone away, but there will be a collective sigh that we have to go back to the start again.”

Mairi McAllan was given responsibility for the economy in the latest cabinet reshuffle | Alamy

It is against this backdrop that Scottish Labour, which hopes to form the next Holyrood government and work hand-in-hand with what is widely expected to be a Labour-led administration at Westminster, has begun setting out its business stall. Daniel Johnson, Michael Marra and Sarah Boyack, who would respectively take charge of the business, finance and net zero portfolios should Labour win in 2026, took part in numerous panel sessions at their party’s conference and all were singing from the same hymn sheet. Listening to, and working with, business was their tune.

Speaking on a Holyrood panel on the Scottish Government’s botched deposit return scheme Boyack highlighted the importance of “not just having a conversation” with business “but listening and reflecting” too. Johnson, who prior to becoming an MSP was managing director of retailers Paper Tiger and Studio One, spoke of how he understood business leaders’ frustrations because he shared them, having been impacted by the government’s failure to properly consult with retailers when it introduced a plastic-bag charge in 2014. “That was a really good thing but it was introduced in the October,” he said. “Christmas is the busiest time for retail and I had to order my bags in the summer but I didn’t know what I would need. I ended up with a massive overstock but if it had been introduced in the February, when things were quieter, it would actually have resulted in less plastic being created.” 

Even when Marra appeared alongside OEUK external relations director Jenny Stanning, who made the point that the organisation’s members had been blindsided by, and are utterly opposed to, UK Labour’s energy windfall tax plan, he was keen to stress that such differences can only be dealt with if they are debated amicably. The industry is, Stanning said, “looking for constructive dialogue” on what the proposals are and what OEUK believes they will mean in practice – an exodus of investors and tens of thousands of job losses. Yes, the windfall tax is unpopular, Marra noted, but in setting out what its plans are Labour is providing some much-needed certainty for the industry.  

Labour MSP Sarah Boyack takes part in a deposit-return scheme debate at Scottish Labour's conference | Andrew Perry

Certainty is certainly something the entire business community, not just those operating in the oil and gas sector, is crying out for. It is not yet clear what, if anything, McAllan will want to do now she has control of the economy brief. She has so far made just one address to the sector, during which she, predictably, if uninspiringly, said she will prioritise growth. "My bottom line is your bottom line," she told a meeting of businessfolk gathered at the headquarters of corproate law firm Brodies last week. "I want the economy to grow, I want individual businesses to invest, I want productivity to increase, and I want to help you succeed."

Regardless of how that can be interpreted, McGrath says it is almost certain McAllan, who since taking on the expanded role has announced that she will be taking maternity leave from this summer, will want to put her own mark on things. That is leading to fears that, with wide-scale reforms including the National Strategy for Economic Transformation and the Draft Energy Strategy and Just Transition Plan still not pinned down, the unstable business environment is set to continue.

“It’s inevitable when new people come in that they want to do their own thing,” he says. “NSET was Kate Forbes’s take, the New Deal for Business was Neil Gray’s. It’s a natural, human thing to want to do your thing when you come in but the problem is you end up with 15 new ideas and nothing actually gets done. The risk there is that your collaborative partners – businesses – become jaded. It’s the same way in business where we try not to change CEOs or leadership teams that often. If you change too often, a vision never get set and the work never gets done.

“What we want more than anything is a reliable partner. I’m not suggesting that we have an unreliable one, but if it’s chopping and changing and there’s continually a new face it’s very, very difficult. We’re not even after the best plan possible, just a pretty decent one that is then executed.”

At a UK level, Labour is establishing itself as the party of business. On the weekend Scottish Labour was gathering in Glasgow, UK leader Keir Starmer appeared on the cover of FT Weekend Magazine depicted in a broadly flattering cartoon. In a scene reminiscent of the movie Singin’ in the Rain, a beaming Starmer swings from a lamppost as coins and banknotes pour down around him. The accompanying article, which appeared under the headline ‘Labour’s new friends: Keir Starmer and big business, a love story’, detailed how, against expectation, the party is starting to attract big-ticket donations from business leaders including Ecotricity founder Dale Vince and Lord David Sainsbury of the supermarket dynasty. 

UK Labour leader Keir Starmer addresses the audience at a 'business love-in' event held in London at the start of February | Alamy

When he was interviewed at conference by Holyrood editor Mandy Rhodes, Scottish Labour leader Anas Sarwar spoke about his party no longer having to force its way through doors, instead finding those doors flung open to welcome it. There are clear parallels with the situation described in the FT article, even down to the depiction of a business event held in London at the start of February at which executives from companies including Goldman Sachs, Google and AstraZeneca held a “love-in” with Labour.

“In the early stages of what party insiders call the ‘smoked salmon and scrambled egg offensive’ on business, Starmer and [shadow chancellor Rachel] Reeves had to visit companies at their offices,” the article reads. “But as the election nears, with Labour well ahead in the polls, business is beating a path to the party’s door instead. This particular event, which cost at least £1,000 per head, was sold out in four hours, evidence of corporate Britain’s desire to schmooze with the men and women who could form the next cabinet. ‘It’s so funny seeing all these people who used to blow smoke up the arses of the Tories sitting here,’ said one business attendee.”

Two years out from a Holyrood election it is unclear what, exactly, Scottish Labour’s offer to the business community is beyond strong co-operation between Edinburgh and London and the promise of a listening ear. It may not seem like much but, given what they are currently being presented with – and given the enthusiasm the Glasgow business forum was greeted with – it might just be enough to win them over. As one chief executive says: “It will be difficult for Labour to do a worse job than the SNP, I think that’s really the stance of business.”

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