Tom Hunter, Scotland’s first ever billionaire, on Tuesday weighed in with a strong reaction to the report published by the Advisory Group on Economic Recovery led by banker Benny Higgins on Monday.

Hunter said he is still waiting on a decision from the Scottish Government on an offer he made to co-invest in scale-up businesses.

Retail tycoon Hunter issued a statement through his Hunter Foundation, saying “… speed is of the essence and we in Scotland cannot afford to delay or prevaricate on obvious actions that we could take now.”

Hunter said: “We agree with Benny in that we do not believe the Scottish Government understands or engages enough with business and welcome the First Minister’s reaction ‘if that is the view and a perception, then we have to recognise it as real and address it’.”

Hunter continued: “In May we proposed co-investing with the Scottish Government in scaling up our Scale-Up Scotland programme, digitising it and quadrupling Scottish Edge to drive SME development – we even offered to pay the Government back if those investments didn’t work; we are still waiting on a decision …

” … when this crisis hit we engaged not only with business leaders and entrepreneurs in Scotland but also with global Scots leaders from around the globe – all to a man and woman willing, able and ready to help reimagine Scotland and help in building a robust economy where opportunity prevails for all our citizens.

“The Hunter Foundation remains willing and able to help and with all of Scotland working together we can again lead the world.”

The full statement read:

“At the Hunter Foundation our philosophy has always been that the best social policy ever created is a good job; entrepreneurs create them.

“Evidence from the Kauffman Foundation indicates over the next five years more or less all net new job creation will come from the SME sector, an extraordinary and important point when we focus on rebuilding Scotland and largely missing from this report.

“We absolutely agree with Benny Higgins that a job loss tsunami could consume Scotland and therefore that’s why we need to work together to prevent that. We welcome Benny Higgins report, but as ever the devil is most definitely in the detail.

“For our own part we have consulted widely with the entrepreneurial community on what needs to be done to kick start our economy and based on that consultation submitted the attached paper to Government and Lord Smith in early May. That paper has the benefit of perspectives from hundreds of businesses employing hundreds of thousands of people.

“These are practical points mainly in the gift of the Scottish Government.

“We agree with Benny in that we do not believe the Scottish Government understands or engages enough with business and welcome the First Minister’s reaction “if that is the view and a perception, then we have to recognise it as real and address it”.

“In our Foundation we have huge successes in education (Head Teacher Leadership Academy) and the Social Investment Partnership with the Scottish Government and we look forward to getting a better understanding between Government and business.

“With the purpose of hopefully contributing to the detail we have aligned parts of the paper we submitted to the Scottish Government with the various recommendations of this report. Our premise from what you will read is that we very much agree Scotland needs a sector by sector, region by region approach and true partnership with Government, the public, private and third sectors in order to maximise sustainable economic development.

“However speed is of the essence and we in Scotland cannot afford to delay or prevaricate on obvious actions that we could take now. In May we proposed co-investing with the Scottish Government in scaling up our Scale-Up Scotland programme, digitising it and quadrupling Scottish Edge to drive SME development – we even offered to pay the Government back if those investments didn’t work; we are still waiting on a decision.

“Lastly when this crisis hit we engaged not only with business leaders and entrepreneurs in Scotland but also with global Scots leaders from around the globe – all to a man and woman willing, able and ready to help reimagine Scotland and help in building a robust economy where opportunity prevails for all our citizens.

“The Hunter Foundation remains willing and able to help and with all of Scotland working together we can again lead the world.

“Using the Report’s legend our recommendations by Government responsibilities in bullet point format were as follows:

Scottish Government Responsibilities

5.1 Fiscal:

• Provide additional mortgage, rent and rate deferrals against some form of ‘pay it back’ process or equity stub (for tenants and landlords alike)

5.2 An Investment-Led Recovery:

• Implement a fast track planning permission process to drive construction employment and investment
• Dramatically increase investment in social housing construction in all Local Authorities funded via pension funds
• Address the timescales and delays on all public sector decision making – processes, bureaucracy and delays are costing jobs (and were before this): risk profiles require ammendment

5.4 Strategic Support for Business

One size does not fit all ergo match support to sectoral needs for example consideration should be given to:

• Pubs, restaurants, hotels – scheme to support 50% reduction in rates and rent-mortgages aligned to similar support for landlords in the chain – loan or equity swap for support (or as an alternate an extended furlough but those furloughed must support social sector-charities whilst off)
• Deploy APP to redeploy redundant staff into growth businesses rapidly

Support for Start-Up’s and Scale-Up Businesses

We have consulted with over 50 scale-up businesses and 300+ potential high growth businesses through our various programmes alongside the entrepreneurial community in general. We will have more feedback next week from intermediaries supporting thousands of businesses.

In essence the message is investment has fallen off a cliff; the Angel market has all but disappeared and the VC’s are largely acting in an entirely predatory manner; growth funding is more or less impossible.

Over and above providing, by sector, a process by which to open up safely the SME sector – where the majority of jobs and economic growth reside – there is need for the following interventions both immediately and going forward:

• An alternative to the UK Future Fund enabling EIS backed businesses to gain the matched funding
• Enabling the SNIB or in the interim, Scottish Co-investment Fund to drop the need for co-investment and also to appoint a Scottish based manager urgently to fast track support
• Take the Scale-Up Scotland model of support and digitise it and enable via that platform far more peer-to-peer and mentor support alongside critical growth advice from entrepreneurs to entrepreneurs scaling (estimated cost £175K; 8 week turn around – THF willing to invest in this) * Importance of peer to peer support note below full paper available
• Dramatically increase the availability of loans perhaps on a sliding scale:
• Up to £100k – interest free loan with x months grace before repayments commence – business commits to give back £?k once loan is fully repaid
• £100-£250k – same as above but with convertible note
• £250k + – equity exchange
• Identify via networks and existing Accelerators across Scotland high growth, high employment prospects and add additional support to accelerate growth
• Quadruple Scottish Edge and enable growth companies access to capital on the loan-grant ratio as exists 70-30 – may tie in to loans as above
• Restart export grant support (or loans – we cannot develop a dependency culture in Scotland)
• Digital development loans are taking 3months to process – key now; must be accelerated
• Accelerate deployment of R & D support to qualifying companies
• Rapidly increase public sector decision making: for example here is one entrepreneurs actuality: “We won and have been through Scot Gov ‘Civtech’ process over 4months, since and during covid it’s taken 6 weeks to get a pre commercial contract drafted (for a 20 person pilot that lasts for 12 weeks) before they make the call that we’re fit for purpose and get rolled out to help Gov digitally onboard new staff. The Gov teams really don’t understand commercial realities of timing and opportunity cost.”
• To that point risk analysis needs to be recalibrated on investment
• Consider creating Scottish Equity Partners2.0 – success has been incredible
• Productivity/development grants as an alternate to Furloughing
• Make Scotland the preferred location to scale your technology business:Technology sector is growing 6 times faster than the Scottish Economy: to do so:

• Focus financial support on technology based innovation
• Shift funding for innovation to Scaling companies with the support of academia rather than pass it straight to academia
• Provide subsidised “founder friendly” support/consultancy
• Provide campus style locations for scaling companies
• Provide incentives for investors to invest in Scottish based scale ups (we need to boost Series A funding in Scotland)

5.6 Foreign Direct Investment:

• Make Scotland the preferred location to scale your technology business:Technology sector is growing 6 times faster than the Scottish Economy: to do so:

5.8 Planning and Regulation:

• Implement a fast track planning permission process to drive construction employment and investment
• Address the timescales and delays on all public sector decision making – processes, bureaucracy and delays are costing jobs (and were before this): risk profiles require ammendment

5.10 Digital Infrastructure – see 5.4

5.13 Tourism and Hospitality – see 5.4

5.18 Learning Loss:

Introduce the national training academy.  Leavers would sign up to skills development programmes which would focus on the needs of real jobs in industry growth sectors or the gaps in public sector provision. The private sector and Govt would partner the academy to ensure that eight months out of the 12 month programme would be spent in paid employment gaining experience in post. The structure of the 12 months would be tailored to the needs of each job type and would be delivered in partnership with the college sector. Govt grants would support the young person whilst in classroom training and employers would pay the national living wage during the working period. The FE element of the programme gives each sector better trained employees for their talent pipelines and could also kickstart progression to further professional training In yr 2 of employment. It will also help young people decide whether full time FE may be an option for them.

UK Government Responsibilities

5.1 Fiscal

• Temporarily reduce or scrap VAT for the hardest hit sectors or extend VAT deferrals
• Extend the Furloughing programme, perhaps at reduced rates, in specific sectors conditional upon ‘furloughees’ volunteering for social, health or charitable purposes or repurpose furloughing to subsidise high growth businesses employment costs to drive productivity gains and product/service development.”