Scottish election's impacts on business have yet to be revealed
Don’t be taken in by the ‘nothing to see here’ reaction to the results of the Holyrood vote, writes Andrew Henderson
Business leaders who hoped for time to digest the impacts of last week’s election result were left disappointed. Instead they found themselves drinking from a firehose of other political news, all of which has flowed from Westminster rather than Holyrood.
The circus always moves on quickly after an election, but the speed of its departure this month has been remarkable. This is largely attributable to the spectacle of another Prime Ministerial defenestration attempt, but may also reflect something of an anticlimax around the Holyrood result. The pollsters got it right, shocks were contained to constituency level, and both the governing party and First Minister remain unchanged. A sense of “nothing to see here”, perhaps?
Scratch beneath the surface though, and the impacts on business could prove to be anything but minor. This election changes a great deal, just not quite enough to feel different. At least not yet.
The last Holyrood term was essentially a three-act play – i) Sturgeon/SNP decline; ii) Yousaf/rock bottom; iii) Swinney/resurrection. Across the latter two acts came a marked shift in policy approach – especially around business engagement.
There are indicators already that the seventh Holyrood term could also be a multi-act affair, and one characterised by tumult and drama rather than plain sailing.
As the term progresses, speculation will mount as to the First Minister’s own future. Last week’s election heralded a significant influx of talent, especially from Westminster, equipping the FM not only with a strong bench from which to refresh his depleted cabinet, but also a powerful set of potential successors.
Depending on his perceived success, or lack thereof, in progressing the independence case, those lieutenants could quickly become his rivals. The FM could easily find himself in a position where, to misquote Batman, he has to decide whether he wishes to depart a hero, or stay in post long enough to become the villain.
Different leadership hopefuls have signalled very different approaches to policy, so from a business perspective it is perfectly plausible that what we plan for now could be of a markedly different flavour to what we end the term with.
Much water will pass under the bridge before then though, not least a General Election with a potentially seismic impact on Edinburgh-London relations.
At a more operational level, running a minority administration with diminished numbers will increase the bargaining power attached to the opposition votes (or abstentions) required first to re-elect the FM, then keep the SNP in government. The policy price to be exacted is as yet unknown, but with multiple cliff-edges on the horizon, in the form of annual budget votes, smooth government for five years is far from assured.
With the government’s ability to legislate weakened, we should also expect members’ bills to assume increased prominence this term, with unlikely cross-party coalitions forming to pass policy. Devolution’s short history has already shown us that not all of this will be business-friendly. Businesses will hope therefore that the enhanced role for committee conveners in this new session will ensure that legislation is adequately scrutinised and downside risks are minimised.
Andrew Henderson, Director of Public Policy and Strategic Communications, Pinsent Masons
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