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Ruth’s speech to Federation of Small Businesses

18 Mar 2016

Ruth Davidson MSP

Good afternoon and thank-you very much for welcoming me here today.

It’s a pleasure to be back here at the SECC.

A couple of years ago, I did a debate for the Better Together campaign in the Hydro next door.

It was the big event of the campaign – 8,500 thousand young people crammed in.

I have to say, this audience today is pretty impressive but it is a little less terrifying.

That day, I was one half of a double-act backing Scotland’s membership of the UK alongside George Galloway.

I see today that I’m following John McDonnell on the bill.

Let me just say, if Fidel Castro ever comes to Glasgow and needs a warm up act….

…I’m your woman.

First of all, let me repeat the words of earlier speakers and say to everyone who has travelled here from elsewhere in the UK – welcome to Glasgow.

I’m still the local Member of the Scottish Parliament for this city – for the next six days at least.

This is a wonderful city which has enterprise and hard graft and bloody minded doggedness wired into its bones.

I also note that this very part of the city, Finnieston, was ranked by the Times this week as the hippest place to live in Britain.

I can attest Firebird does the best pizza, the Butchershop the best steak and Mother India the best curry.

And I do hope as many of you as possible are able to go out and enjoy Glasgow while you are here.

Adverts over.

So – today I’d like to speak a little about both the UK and the Scottish political scene.

We have two very different political time-zones in Britain right now.

I know for many of you in the audience it is all about the economy and the impending EU referendum.

For us here in Scotland, we are less than seven weeks away from the Scottish Parliament elections – with the campaign beginning in earnest next week.

I’ll take them both in turn.

First, the UK. And I’ll start with Wednesday’s budget.

Of course there will be plenty to pore over in the coming days as the ritual pulling apart of the Red Book continues.

But for me the Budget’s plan for business showed exactly what this government is all about.

Not managing decline or hunkering down in the face of a storm.

But rewarding the risk takers and the entrepeneurs.

The further cut in Corporation tax will benefit a million companies across Britain and means that the headline rate will fall from 28% when the Conservatives came to power to just 17% by 2020.

That will be of huge benefit to small firms.

Not just by reducing their own tax bills.

But, as important, it will allow larger firms to invest more, and seeing that investment flow through the supply chain.

Added to this, the cut in capital gains tax will help smaller firms grow more rapidly.

And, of course, for us in Scotland, the Chancellor’s £1bn tax cut and £20 million pounds of investment for the North Sea was a vital measure to support the industry.

The real danger from the continued low oil price is that we lose the network of small and medium sized firms which supply the oil industry in the north-east – firms which add huge value to the wider Scottish and UK economy.

I hope the Chancellor’s announcement to scrap Petroleum Revenue tax and halve the supplementary charge shows we can see out these tough times.

If we do, I believe there is still a massive future the North Sea and the north-east.

Put these tax measures together, and for me this Budget sent out a very clear message – that Britain has the confidence to grow its way back to health.

That is vital. The FSB’s own survey today shows that business confidence in Scotland is now at its lowest since 2013.

Given the rocky last few months in global markets and the fall in the oil price, perhaps that’s not surprising.

What we need in the face of this is vibrant action that rejects any notion of decline.

That says – we have the ability to knock the doomsayers out of the park.

And we must continue to do that.

I don’t want to parade a long list of statistics before you today – but let me just pick out one which I think is worth mentioning in this context

In 2010, I remember the prophecies of doom. We were told that the plan to reduce the deficit would lead to 4 million unemployed.

In fact, we now see the highest rates of employment on record. Millions more in work.

Yes, public sector jobs have fallen – here in Scotland  by just under 100,000

But private sector jobs have risen – by nearly 300,000 north of the border.

Three private sector jobs created for every one public sector job lost.

That hasn’t happened by accident.

It has come about because of the energy and spirit of small and large businesses across this country – all backed by a UK government which is on their side.

So let’s look to the positives. As the FSB says in its manifesto for the Scottish elections, we can’t buck the global economy, but we can position ourselves to become more resilient

I couldn’t agree more.

And before I focus more closely on Scotland, let me just address the other big UK issue at the moment, and that’s Europe.

There will, of course, be plenty of water under the bridge before we vote in June.

But my judgement is simply that the pros of membership out-weigh the cons.

I do not in any way seek to underplay the downsides of the European Union.

But I cannot ignore the sound logic of those who argue that we gain more inside; fighting for a better EU than outside watching on helplessly.

And I find it hard to ignore the verdict of many firms here in Scotland.

According to the FSB’s own survey, 60% of their membersback EU membership.

And according to our whisky producers, it’s not just about getting access to the single market

– but also being able to call on the EU’s negotiating muscle on trade policy around the world.

So, let’s have the debate. Let’s ask the voices of business to assert themselves as theirs is an argument we need to hear loud and clear.

But for those reasons I for one, will be voting to stay.

…..

That vote, however, isn’t till June.

And I hope you’ll appreciate that I’m rather more preoccupied right now by the other vote that is taking place here a month before.

The Scottish Parliament is dissolved on Wednesday and the election campaign will begin in earnest.

And I am on record as saying that the bar I have set – and that we are on course to achieve – is to return our best ever result in a Holyrood election. More votes and more seats than ever before.

We have a very clear message.

Something in Scotland needs to change – and if the voters of this country choose not to change the government, they should consider changing the opposition.

If the SNP is re-elected, I want to deliver the strong pro-UK opposition that Scotland needs right now.

Because I believe that it will help deliver the better government and the stronger country that most Scots want.

I don’t believe Scots want to go back to yet another interminable debate about the merits of independence just eighteen months after the last one ended.

So my promise is to continue to make the case, every day, to respect the choice that people made in September 2014 – to stay part of the United Kingdom.

And I will pressure the Scottish Government to focus on what is really required: real change to improve education, a vision for a sustainable NHS, and strong support for jobs.

And I will make the case for business too.

First of all, that means boosting skills so businesses have the high quality staff they need.

For me, that means restoring the money cut from colleges resulting in 152,000 lost places.

I have also set out our plan to create a network of new Skills Academies, where students can get expert training – something I know the FSB is campaigning on.

On a wider point, we need to end the snobbish distinction between acedemic and vocational education. The Germans don’t do it – and nor should we.

Can I also set out where I agree with the First Minister who I know spoke to you this morning.

It is good to see that more is being done to support firms win public sector contracts, and that this will now be enshrined in law.

I am pleased to see the progress being made on superfast broadband on the commitment from the Scottish Government to ensure access for 100% of properties in Scotland.

The big strategic aim should be to ensure that more of our small businesses are given the confidence and the support to become the big high-impact firms of the future.

To say, we’re not content with seeing a rise in the number of small businesses – but that we see small businesses as the seed bed for a new generation of locally run, international firms, exporting to the world.

We need to up our game on skills to help do that.

But we also need the right tax regime to help all firms prosper.

As you may have seen, this has been at the centre of debate this week – as the impact of new tax powers at Holyrood begins to hit home.

Labour and the LibDems are already proposing an income tax rise for people living in Scotland. It appears the SNP is also likely to oppose income tax cuts to middle earners as set out by the Chancellor this week.

My position is simple. These new powers mean that we have to earn our way in the world.

And we need to start by sending out the right message to families, to businesses and investors.

And you don’t do that by saying – higher taxes here.

Scotland shouldn’t be the highest taxed part of the UK – in fact, we should look to reduce the tax burden where possible.

To help our small firms grow and employ more we need a competitive edge in Scotland. What we don’t need is a reputation as a country which punishes aspiration.

No more stories from entrepreneurs saying how much they love Scotland, but they’re worried about the cost of setting up here.

So we need to act.

The Chancellor this week has proposed further cuts to the business rates paid by many small firms.

The Scottish Government will now receive funding from this business rate cut to spend here in Scotland as it sees fit.

And I believe it should use that money to go further than our counterparts south of the border.

The fact is that, over the last ten years, business rates have been this Scottish Government’s cash cow.

In 2005, income from businesses was under £2 billion. It is now closer to £3 billion.

To put that in percentage terms, while Council tax has barely risen at all over the last decade, there has been a 42% increase in revenue from local businesses.

Now, of course, a number of smaller firms have had their rates discounted by the small business bonus over the last few years.

But many small and medium sized firms in high value properties – such as a family hotel in Edinburgh – don’t qualify.

Indeed, the Federation of Small Businesses says that as many as one in four of its members pay rates without any discount.

What does this mean in practice?

It means that if your business property has a rateable value of £20,000, you are now paying an extra £1,500 a year to the Scottish Government compared to when the SNP won the last election.

We need to recognise that this has become a huge dead weight on the ability of these businesses to prosper.

It is too often the difference between hiring a new member of staff, taking on an apprentice, investing in the business – or not.

So we believe reform is necessary.

I know many business organisations are looking for a full review of Business rates. We support that review and we look forward to playing a full part in it.

and I welcome the announcement by the First Minister that Ken Barclay will lead it.

But we want action now.

You want any rate system review to be done properly – thoroughly – with real reform – and we agree. But you also want security and relief while we wait for that review to be undertaken.

So, while the business rates system remains in place, we will argue the poundage rate should be frozen. Frozen for as long as it takes that review to happen – all parliament if needs be.

Scottish Ministers have had their pound of flesh from firms across Scotland over the last decade.

It’s time to give the small firms, the job creators and the innovators a break.

A business rate freeze would offer certainty and clarity to all firms across Scotland – incentivising them to go for growth.

And there’s another reason why we should back it.

Huge new tax powers are coming to Scotland. We absolutely must rise to the challenge of growing jobs and investing in our economy – if we don’t then we will damage tax revenues, and see the funds for schools and hospitals fall.

That cannot happen.

We back a Scotland that rewards enterprise instead of punishing it.

We back a Scotland that wants to get on.

We back a Scotland creating jobs and opportunities for the next generation.

Can I close today by thanking you for the work you do here in Scotland and right across the United Kingdom.

I know how tough running a business can be: I spent my childhood watching my Dad work in manufacturing –  textiles and then whisky – sweating to turn a profit, and to keep people in a job.

I know the old clichés about small businesses – that you’re the lifeblood of the economy.

But clichés exist for a reason – they earn that title because they reinforce something that’s true.

And my pledge is to be a voice for small business in the Scottish Parliament over the next five years.

In its manifesto for the coming election, the FSB rightly starts by noting that Scotland stands at a crossroads.

The FSB has, for decades, been a guide to those of us in politics urging us to take the right path.

I look forward to working with you for many years to come. And I hope we can all build the stronger Scotland and the stronger United Kingdom we all want to see.
Thank you