It is fair to say there was a muted response from business to the Chancellor, Philip Hammond’s, last spring time budget. We are always keen to hear what this means in terms of the labour market and how it will affect employment across the country.
The Scottish economy and labour market is fuelled by small business. 99% of all private sector enterprises in Scotland are SME’s and they employ over 50% of private sector employment, an estimated 1.2m jobs. So when some of the big announcements from the budget seem to specifically impact on small businesses and entrepreneurs it certainly makes us sit up and take notice.
National Insurance and Drawings
The increase in NI payments and the cut in dividend allowance is likely to be another potential barrier to those dreaming of setting out on their own and living the dream of running their own business. Small business inevitably start through necessity or desire, but in either case it is often one or two people in a room before the successful ones grow into sustainable enterprises.
Here at Eden Scott we are a good example of what can happen when employees feel confident enough to take a chance. The three founders started out in a single room in Edinburgh and have developed a business that turns over £15m, has four offices and employs over 60 staff, something that might not have happened if they had been put off by over burdensome tax.
We also work with a number of contractors in a range of markets including financial services and IT. Many of the larger organisations and the smaller enterprises across Scotland depend on the flexibility of contractors. While the day rates may seem higher to employees, this is offset by unpaid leave, sickness and pension contributions. These changes to NI and drawings will certainly make a number of them rethink their next move and start to change the balance of our business as more people go in search of permanent employment.
“Starting our own business was not easy but we’ve had fantastic support all along the way and that Entrepreneurial ecosystem is still very strong in Scotland. That’s why we created Talent Spark to make sure we can give back to the system that helped us. We just hope others follow our path.” Guy Martin, Founding Partner, Eden Scott
Our base in Aberdeen has definitely had to refocus as the oil and gas industry has evolved. The calls from the industry for tax incentives to improve productivity and encourage investment were not forthcoming on this occasion. We won’t get embroiled in the political ramification of support for the oil industry but a commitment for a discussion paper on the benefit of tax incentives was welcomed as a positive first step but decidedly short of what is required.
In terms of recruitment in the North East many feel the focus has to be on decommissioning. While it is an expensive business the knock on affects in terms of support services will mean a shot in the arm for the labour market in the area. So while a discussion paper is a positive first step, we would hope this leads, fairly quickly, into some positive action for the economy of the North East.
“There is so much potential in the north east economy and with the right support we know Aberdeen can re-establish itself as a front runner. The discussion paper is a step in the right direction, hopefully we will follow up with some action.” Laura Steel, Principal Consultant, Eden Scott
Keep The Entrepreneurial
While the economy continues to grow and many of the other aspects of the budget target ongoing growth and increased consumer spending which is vital to business we would certainly hope that the proposed changes don’t extinguish the entrepreneurial passion in this country and that there is some urgency to the proposed support for the oil and gas industry.