The Scottish Government should set aside £75 million to help firms adapt to the UK’s withdrawal from the European Union, according to the Federation of Small Businesses (FSB). 

Ahead of the draft Scottish Budget, due to be unveiled on 12th December, the FSB urged Finance Secretary Derek Mackay to set up a Brexit resilience fund to offset the impact of the withdrawal.  

In a statement, the federation also called for reforms to the business rates system and for action to be taken to boost town centres and high streets.  

Brexit Impact 

The FSB suggested Scotland must follow the example of the Welsh Government in its budget, which included a £50 million EU transition Fund.  

Andrew McRae, FSB’s Scotland policy chair, said: “Earlier this year, the Welsh Government announced a £50 million EU Transition Fund. We’ve been impressed by Scotland’s economic agencies’ response so far, but after 29th March the work is really going to need to ramp up. 

“At this budget, the Finance Secretary needs to put aside funds to help businesses – across all sectors and geographies – adapt.” 

McRae added that FSB research shows “only a minority of Scottish businesses have started to prepare for Brexit” and that Scotland cannot allow “good businesses” to be overwhelmed by a “rapidly changing trading environment”.  

Diversification Fund 

The FSB’s submission also underlines the need for the development of a town centre diversification fund, which could be used to upgrade high street properties and infrastructure throughout the country.  

“The high street is known as the home of independent retail,” he explained. “But if we’re to turn around some of our town centres, we need to make them attractive to the next generation of businesses.” 

McRae added: “We want the Scottish Government to build on the success of its town centre regeneration fund with a new high street diversification programme.” 

Changes to the Scottish rates system are also a key requirement heading into a post-Brexit environment, the Federation believes.  

This could include a new taper on the Scottish Government’s small business rates relief scheme so as to alleviate the financial impact upon businesses who find themselves outside the scheme’s scope.  

Cash boosts to help modernise the administration of the tax will also be crucial going forward, McRae insisted. 

“Following the Barclay review of business rates, the Scottish Government has developed a bold action plan to modernise this outmoded property tax. Minister must assign appropriate funding to make this change happen,” he said. 

McRae noted that the FSB would be “making the case to Ministers for a tweak to their landmark Small Business Bonus scheme” so that businesses outside the scope of full relief receive extra support. 

Priority for Scottish Businesses

Speaking on Brexit negotiations, McRae said the “top priority” for Scottish businesses is the government’s ability to secure an appropriate deal.  

Avoiding a “chaotic” no-deal Brexit is crucial to the success and well-being of Scottish businesses. However, he suggested that the deal in its entirety may never be accepted.  

“The fact we need a deal doesn’t mean that Scottish firms welcome every dot and comma in the current proposals,” he explained. “We recognise that UK Ministers are practising the art of the possible. But in the future as they approach key decisions we expect them to pay Scotland’s business community greater heed.”