A year ago Scotland's devolved parliament was elected. Over the preceding years, the business community said time and again it didn't want it as change meant instability and the possibility of higher taxes.
One year on, it can see that Holyrood hasn't raised taxes but is still unsure if change has been a good thing. "It's a question of wait and see really" says Ms June Deasy of the Federation of Small Businesses.
"In a global market, business people are used to dealing with all sorts of administrations - Holyrood has just become another one for Scottish business people to deal with," says Mr Alan Hogarth of the Confederation of Business and Industry - Scotland. There have been teething problems aplenty with the new parliament, yet it has settled down and become an integral part of Scottish life. The most obvious impact on business has been in Edinburgh. The parliament added to the capital's economic boom, lending a political importance to a city which was enjoying huge growth in the financial services sector.
House prices are rising at 30 per cent per annum, restaurants are opening faster than menus and Edinburgh Airport is expanding. The swagger in Edinburgh's step is beginning to be found in Scotland's international presence. Last month pipe bands and kilts were to be found in Washington DC as part of the Tartan Day celebrations. The annual event plans to rival St Patrick's Day in the US. "It's a good thing. For too long we have been reluctant to tap into the Scottish diaspora and shout about our identity. If we can mobilise the 50 million American Scots then we are going to be able to do a lot of business," says Mr Hogarth. Closer to home there is more caution. Business was relieved when Labour, the majority party in the coalition government with the Liberal Democrats, pledged not to use the limited tax-raising powers granted to Holyrood. The basic rate of tax can be varied by three pence up or down in the devolution settlement.
However that has not stopped the grumbling caused by tax hikes from Westminster. "There is no doubt that the general tax burden has risen under Labour," says Mr Andrew Dilnot, of the Institute of Fiscal Studies. Holyrood can only affect the macro-economy through infrastructure support.
While the Chancellor, Mr Gordon Brown, in the Treasury in London holds all the strings, Holyrood can assist through improving enterprise agencies and the transport system. Holyrood has greater powers in relation to social matters than economic issues. "There is too much focus on social issues when we must get the economy right in the first place," says the CBI. Attention has turned to the enterprise network, with all parties agreed it is cumbersome. The Scottish government is reviewing the structure of the Scottish Enterprise network and its manufacturing and tourism strategies. The parliament's Enterprise & Lifelong Learning Committee has inquired into local business support services.
"It's been a year of reviews" says Ms Deasy of the Federation of Scottish Business. "Small business owners, while welcoming the reviews, are waiting for the process to end and for action to begin. Then they will be able properly to assess how the Scottish Parliament has impacted upon business."
Action is promised in the autumn when the Enterprise Minister, Mr Henry McLeish, will unveil his economic strategy. Mr McLeish promises that "the reviews, consultation and dialogue on these particular issues ends (in the autumn) and action begins".
The CBI is hopeful but as Mr Hogarth says: "Wouldn't it have been better to have the overall strategy first and the reviews of each agency later?" Not that the enterprise agencies are failing. The latest figures show that Scotland still gets the largest slice of inward investment for high-tech industries in the UK. Business start-ups are still far lower than in England, but foreign money ensures that Scotland is in the race in the electronic and biotech markets. The other concern is that Scotland, which exports twice as much per capita as England, is falling behind on transport improvements. Holyrood has a fixed budget to spend from Westminster called the Scottish Block. It amounts to £16 billion sterling (€25 billion), of which more than half goes on salaries for nurses, teachers and local government workers. To pay for other social measures, the transport budget has been slashed. It stands at only £70 million for the whole country.
"This is a real concern. Fifty-two per cent of our manufactured products are exported south but our road network is falling behind" says Mr Hogarth. The main link between Glasgow and Edinburgh still has stretches of dual carriageway instead of motorway, while the M74 link in Glasgow is incomplete. While business waits to see if Mr Brown's electoral war chest will pay for new roads and improved rail links, it is clear that Westminster still has more impact than Holyrood. Small businesses are coping with the impact of UK employment legislation, such as the Working Time Directive, Working Families Tax Credit and Parental Leave.
Bigger businesses are coping with the strong pound and its impact on exports, an issue solely in London's charge. This is why businesses have urged the Scottish Parliament to adopt a strong lobbying role with regard to Westminster and Europe. It is too early to tell exactly how Holyrood will change the business climate in Scotland. After the excitement of a new parliament, political and business interests were keen to take things slowly and let the new mechanisms settle in.
In light of the ever-developing global market Scotland may, in a few years time, decide that its new political dynamism deserves a new economic strategy. The Republic may be a tempting example to copy, but unless Holyrood wins powers over the macro-economy it will only be a pipe-dream for Scotland.
