ICAEW Scotland has laid out a manifesto for the Scottish parliament to get growth going again as members highlight the difficulties in doing business in the current economy.

With business confidence in the region falling to a record low that surpasses the UK average, according to ICAEW’s Business Confidence Monitor, the manifesto emphasises the need to act swiftly to improve the region’s economic performance.

While the measures are aimed at stimulating growth in Scotland, they have relevancy beyond the region, reflecting struggles that businesses are dealing with across the UK.

Address the causes of the productivity gap

The productivity gap in Scotland and across the UK is holding back growth and wages, with a knock-on effect on public finances.

A lack of long-term capital investment incentives, time-sucking compliance and a lack of cross-sector communication is making productivity difficult to achieve.

ICAEW has suggested setting strong productivity objectives that focus support on high-potential growth sectors in the region, including across their supply chains. It should align with the UK Industrial Strategy and cover issues such as management capability, technology adoption, skills and investment. There should be regional ownership and clear ministerial accountability for these objectives.

Regulation also needs to be proportionate for small businesses and should also be factored in more when decisions are made around new regulation. This includes a post-implementation review of the impact on SMEs.

Non-domestic rates (NDR) should also better support competitiveness and growth. There is an ongoing debate about NDR, giving the Scottish Parliament an opportunity to improve how it supports investment and growth, including enhancing the visibility, accessibility and operation of existing reliefs.

Put more into skills – and encourage technology adoption

Digital and artificial intelligence (AI) technologies are becoming a key point of difference when it comes to being competitive. However, there is a danger that SMEs could be left behind as larger corporations plough ahead with bespoke tools and training programmes. 

ICAEW is calling on the Scottish parliament to expand support for technology adoption. This targets high-growth potential businesses in the UK’s priority sectors, as outlined in the Industrial Strategy. In particular it recommends a focus on upskilling professional services firms, that can then pass on their expertise to SMEs in their local communities.

Unlock more investment opportunities

Delivering Scotland’s aims in energy, infrastructure, housing and innovation requires capital, both private and institutional. Investors want to see stable policy and clear regulation if they are to inject that capital into these major projects. 

ICAEW members say that tax and regulation are currently too complex, creating administrative hurdles. Policy also seems unpredictable, causing investors to hesitate before providing long-term capital. Public bodies need to be more coordinated when sourcing private capital, with particular focus on strategically important sectors.

Project pipeline information needs to be clear and more consistent for investors, with information on priority sectors, project stage, financing requirements, milestones and public support. Public finance and economic development bodies should work on shared sector delivery plans for priority growth sectors. 

Focus on clean energy

More needs to be done to stimulate growth in the clean energy sector and the path towards net zero. Planning for renewable and green infrastructure projects has been overly complicated, and there’s been inconsistent backing for the institutions that encourage private investment in clean energy. 

ICAEW Scotland is pushing for a fast-track planning route for “nationally significant clean energy and industrial decarbonisation projects”. A route with clear rules for eligibility, application standards and a case process lead would speed up project approvals for projects with genuine economic and energy benefits, with a knock-on positive effect on the local economy.

Be more targeted with regional development

Currently, according to ICAEW members, skills pipelines in the region often don’t align with needs within various business sectors. Innovation hubs don’t link businesses, academia and investors effectively. Everything is currently too ‘one size fits all’, which doesn’t really benefit all sectors.

ICAEW urges the Scottish parliament to support regional devolution and use Regional Economic Partnerships (REPs) more effectively, setting out a clear national framework for their role, governance and reporting structure, without diluting regional flexibility. 

Regional skills planning should take a bigger role in development, with each region working closely with employers, education providers and professional bodies on delivery plans for skills apprenticeships. These should include transparent targets and annual reports on the number of apprenticeship starts, completions, pathways and progression into employment, including into the profession.