Andrew Dunlop's speech to the Scottish Grocers' Federation

Scotland Office

March 17
14:22 2016



Its a pleasure to be here this morning to speak at the Success in Scotland Summit.

I should from the outset declare a personal interest.

My great, great grandfather used to work in a small grocers shop in Anderston in Glasgow.

There were obviously no flies on him, as they say.

He married the owners daughter and went on to expand the business with a chain of wine and spirits shops.

A very clear example perhaps of fortune favouring the bold!

In my great, great grandfathers time grocery businesses played a key role ensuring that the wheels of trade and commerce in Scotland continued to turn.

And today convenience stores remain very much a Scottish success story.

You are part of the lifeblood of local communities the length and breadth of Scotland and indeed throughout the United Kingdom.

You are a significant sector of over five and a half thousand convenience stores in Scotland.

Collectively you provide over 42,000 jobs and contribute some 4 billion in sales to our economy.

In short, yours is an industry that supports the welfare and prosperity of communities across Scotland - and I pay tribute to the contribution you make.

This morning I want to focus on some of the support the UK Government can provide to help businesses in Scotland flourish, complementing the important role played by the Scottish Grocers Federation.

Economic Performance

First I would like to set the scene by saying a little about Scotlands business environment.

Its no exaggeration to say that for the last 5 years Scotland has been involved in an almost unbroken period of political campaigning: one UK General Election, two Holyrood elections and three referendums.

Maybe like me you look forward to the 24th June when that period of campaigning comes to an end - the big constitutional questions settled.

Then we can all look forward to four years before the next big national elections.

Four years in which we can come together to work together - UK Government and Scottish Government, local and national government and public and private sector - to build a Scotland that is more prosperous and more secure than at any time in our history.

Businesses like yours will thrive and grow in an environment that is more certain and stable.

And we have the opportunity to build on some firm foundations.

The private sector in Scotland is thriving.

There are now over 60,000 more businesses operating in Scotland than in 2010 - 33 more businesses created each and every day.

And the support we give to these businesses is of critical importance if we are to find more jobs and raise the living standards of people in Scotland.

Scotlands labour market is performing well and employment is now at record levels with well over two and half million people in work.

Since 2010, private sector employment has increased by nearly 160,000 and the governments work programme has helped secure jobs for over 43,000 people in Scotland.

The creation of these jobs has largely been supported by the expansion in Scotlands economy, which has now grown continuously for 3 years and is forecast to grow by a further 1.9% in 2016.

This is welcome news but we cant afford to be complacent.

We continue to face a number of risks.

At the turn of the year, the Chancellor set this out very clearly when he highlighted that last year was the worst for global growth since the financial crash in 2008.

So we need to redouble our efforts to ensure our economic recovery works for everyone and for every part of the country.

Scotlands two governments need to continue to work together and do everything we can to help create the conditions for sustained economic growth.

Each government has different levers to pull to help make Scotland and the UK the best place in the world to start and to grow a business.

Scotlands New Devolved Settlement

And make no mistake Scotland stands on the threshold of a new world of possibility.

2016 is set to be a momentous year for Scotland, with substantive new powers coming over borrowing, taxation and welfare.

The Scottish Parliament has always had extensive powers to determine how public money in Scotland is spent.

Now it will have much greater responsibility for deciding how that money is raised.

In future, over half of the Scottish Governments budget will come from revenues raised locally right here in Scotland.

This will give the Scottish Government every incentive to grow the economy and to increase its revenues.

If the powers are used well and Im confident over the years ahead they will be then Scotland will gain.

And Im delighted that yesterday the Scottish Parliament (unanimously) gave its legislative consent to the Scotland Bill enabling it to complete its passage the UK parliament next week.

Working Together

This new devolved settlement for Scotland extends the shared space in which the UK and Scottish Governments will be operating together.

This makes it even more important for the two governments to establish a strong and collaborative working partnership.

So let me make it crystal clear today the UK Government is 100% committed to achieving this and I hope the new Scottish Government elected in May will be too.

We have already shown what the two governments can achieve by working co-operatively together.

Take the new Fiscal Framework for Scotland - the financial settlement that will underpin the powers in the new Scotland Act.

There were plenty of sceptics who thought we wouldnt be able to reach a deal.

We did and its a deal thats fair to Scotland and fair to the UK as a whole.

Not only does this deliver on the Vow made to the people of Scotland during the referendum, it creates one of the most powerful and accountable devolved Parliaments anywhere in the world whilst still retaining the economic and national security that comes from being part of the UK - the worlds fifth largest economy.

The successful conclusion of these negotiations clears the way for the debate to move on from what the powers should be to how these new tax and spending powers will be used.

And the Fiscal Framework agreement is not an isolated example of a new spirit of inter-governmental co-operation.

We recently announced a 250m Aberdeen City Region Deal, a deal for Inverness is imminent and yesterdays Budget made a commitment to open negotiations for a further Deal with Edinburgh and South East Scotland City Region partners.

The UK and Scottish Governments are also working together so that Scottish businesses get more help to sell overseas.

Our Exporting is GREAT roadshow has visited Glasgow, Aberdeen, Dundee and Edinburgh in recent weeks, unlocking the potential of many more Scottish businesses, helping them make their mark around the world, and boosting the economy right here at home.

Like you, Im ambitious for Scotland.

Thats why I want to set ourselves the ambitious goal of encouraging and supporting an additional 10,000 Scottish SMEs to export their goods and services by 2020.

Support for small businesses

But exporting wont be right for every business and probably isnt the priority for you.

Thats why we need to have the right package of UK Government support for small ambitious businesses and convenience stores rooted right here in Scotland.

The UK Government recognise that promoting success in Scottish businesses also involves setting the right conditions.

In practice this means having the right policies in place which allow businesses to meet their potential and grow.

Many of the policy levers are in the hands of the Scottish Government.

The Scottish government has responsibility for planning, for business rates;

It can set transport policy and invest in infrastructure.

Its education and skills policies determine how able the workforce of Scotland is to adapt to the economy of the future.

As a result of the Chancellors decision in the Budget to prioritise frontline services particularly schools and to support enterprise through the business rates system the Scottish Government will get over 650 million more over the next 4 years that the allocations set out in last autumns spending review.

And I would urge the Scottish Government to match the scale of our ambition in all of these areas.

So how is the UK Government rising to the challenge?

How are we backing Scottish business and making the economy more productive?

Corporation Tax

First, were cutting the rate of corporation tax to 19% in 2017 and as a result of yesterdays Budget to 17% in 2020/2021 - a tax cut for 73,000 Scottish businesses.

Not only will this be the lowest rate of corporation tax in the G20, but these cuts are estimated to save businesses, both large and small, 6.6bn by 2021.

As well as making the UK tax system more competitive and helping with Foreign Direct Investment, this measure will also enable Scottish business to reinvest more of their profit and create more jobs.

Annual Investment Allowance

Second, to further support investment by small businesses we have also raised the tax-free threshold for the Annual Investment Allowance.


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