Plus ça change (again) with the Business Pledge

Plus ça change (again) with the Business Pledge

by Bill Jamieson
article from Wednesday 27, May, 2015

NOT LONG after the overthrow of the Ceausescu regime in Romania, a worrying suspicion began to spread among the people. 

As they watched the new government take shape, it began to seem, well, not so new at all. Familiar faces re-appeared. The rhetoric sounded strangely familiar. 

Had there been, they wondered, really a revolution at all? How could it be, when so many of the old red suits re-appeared – in new blue suits? It is difficult to avoid the suspicion that a similar trompe d’oeuil is unfolding in Scotland. The unveiling of the Scottish government’s Business Pledge this week is a disturbing example. 

The personnel may have changed. And the logos and colours on the promotional brochures and the website. But the tenor, the approach and language – all eerily familiar. This is a document that bears the hallmarks of the old Scottish Labour days. 

There’s the big presentational launch – or rather, re-launch – the Business Pledge has already had one previous outing. 

There’s the lofty aspirational rhetoric that’s seemingly pro-business, with talk of innovation, investment and sustainable growth. In between there’s finger wagging at the implied shortcomings of business in not pursuing socially desirable goals with sufficient energy and vigour. And throughout the whole is a near-total disconnect with the real world of business. 

So here we are – another day, another Great Leap Forward for progressive, sustainable, diversity aware, gender balanced Scotland. The Scottish Business Pledge is hailed as a new voluntary code “for companies to commit to the best of modern business practices”.

Now there’s no doubt that the Scottish Government needs a New Economic Strategy. To achieve anything like the ambitions it has set out in its public spending and social policy pronouncements we are going to need a major step change in economic growth. 

And there’s much to applaud in the social ambitions of the Business Pledge. 

But there are searching questions, too. 

By how much will the Pledge help achieve the government’s growth objectives? 

By how much will they encourage business to invest and expand? 

How much do its ambitions relate to the real world concerns of business?

Indeed, how much consultation was undertaken to find out what ministers could do to help business confidence and growth?

The Pledge asks businesses “to commit to fair and progressive policies that boost productivity, recognise fairness and increase diversity”.

Made up of nine components, companies wanting to commit to the Scottish Business Pledge must pay the Living Wage to all direct employees over 18, be delivering on at least two other elements and be committed to achieving the rest over time. Now click on the Business Pledge website and you will soon find out how vacuous and how shallow all this is. 

Companies, says Mr Swinney, “can now make their Scottish Business Pledge to demonstrate their commitment to these values and to delivering them through future plans.”

All businesses have to do is open up the website survey and click on buttons answering ‘Yes’ or No’ to a series of questions. And if you answer correctly - bingo! You become a fully signed up member! 

“Are you paying the Living Wage to all employees aged over 18?”

“Are you avoiding the use of exploitative zero hours contracts?” 

“Are you investing in youth?”

“Are you working towards gender balance?”  

“Do you see international business opportunities”?

Do you have an innovation programme?

Who but a blindfolded clod would not answer ‘Yes’ to such questions? 

First, it is meaningless because it is wide open to abuse – if you’re a business supplying goods and services to the government or are dependent on the government for contracts or grants or planning approvals, you’re hardly going to answer ‘No’. You’ll say ‘Yes’ to all the boxes!

Second, it is blind to the problems may of Scotland’s smaller firms will have with the Living Wage. There are some 340,000 businesses in Scotland. Of this total, 92 per cent are small firms – often employing fewer than five people. Not only is the Business Pledge blind to this, but it seems also oblivious to the warning of Sir George Bain, founding chairman of the Low Pay Commission, that introducing the Living Wage would cause massive unemployment in sectors such as retail and social care.

How much consultation was held on this? Was VisitScotland asked for its view? Or the Federation of Small Businesses?

Sure, zero hours contracts need to be policed. But beware of unintended consequence. A third of voluntary sector organisations use zero-hours contracts. And the public sector is a major user of them. In fact, about a quarter of public sector employers resort to them, compared with 17 per cent of private sector firms.

As for the other aspirations in The Pledge, thousands of Scots businesses already thrive by innovation. Many already internationalise. The vast majority already invest in young people. Indeed, all the employment growth since the recession has been in the private sector. And Scots firms are no enemies of diversity. They have been keen to take on workers from Europe and further afield.

The Business Pledge bears all the hallmarks of a PR stunt drawn up by people who have had little experience of the business world and who know even less about the everyday problems of business. 

How does the Business Pledge materially help what business is already doing?

How about ideas to boost jobs and investment? These might help.

The Business Pledge was the centrepiece of the Scottish government’s economic strategy launched months ago. 

It hammers away with pages on gender balance and “cross generational inequality”: worthy concerns. But they do not themselves create growth, investment, jobs and wealth. That’s what an economic strategy should be helping to do. 

And businesses looking for guidance on tax and fiscal policy in Scotland will search The Pledge in vain. 

Business wants to hear how the Scottish government’s new tax powers might be used to make us more competitive. Yet there is nothing here that might guide them. As for regeneration, there’s nothing about a key factor that has contributed to the boarded up shops, closed businesses and blight in many of our towns and villages: business rates and levels. These are of major concern to business as another rise took effect last month. Instead, the “refreshed strategy” proposes “a ministerially-led innovation hub”. Spare us!

Planning application fees have risen by 25 per cent over the past two years, and water and sewerage charges are set to be levied on empty shops and commercial premises.

Of course more should be done to lift opportunity and aspiration for those on the lower rungs of the ladder. But documents such as The Pledge overlook the fact that we have one of the most advanced welfare services in the world. Indeed, welfare is the single most important activity of government. Across the UK we spend £165 billion a year on it – almost 14 per cent of GDP.

Such spending commitments have risen materially faster than the rate of growth in GDP. And until we raise this, the “refreshed economic strategy” sets us down a road that is truly, and ruinously “unsustainable”. 

How much better it would have been had the authors of The Business Pledge sat down and talked to business organisations across the waterfront – Chambers of Commerce, FSB groups, CBI Scotland, Institute of Directors, Business Gateway. Draw up a list of practical, real-world, specific, deliverable proposals that would spur investment and expansion. 

Helping SMEs get a larger share of public sector procurement might help. Or a push on late payment by government and public sector agencies.  Or a bigger push on high speed broadband. Every little helps. That would be a Business Pledge to give business hope and encouragement to grow and hire staff. 

But instead of recognising the need for a two-way street, the government couldn’t resist an opportunity for finger wagging. It has nothing to do with growth, investment or expansion. 

And it is all so wearisomely familiar: a rhetoric redolent of the Scottish Labour years. We’re back to the future with the folk in yellow suits – but with the old red paint still showing through. 


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