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New protection will be needed to help the Western Isles’ vitally important self-employed community get back on its feet and fully contribute to the Isles’ recovery from the covid crisis.

Research, conducted by Diffley Partnership for the Federation of Small Businesses (FSB) in what is the first major, in-depth study of covid’s impact on businesses in Scotland since the pandemic began, has found that three-fifths of their sample of almost 700 business owners said that the covid crisis has made self-employment less attractive, and only a fifth that the last Scottish Government valued their contributions.

David Richardson, the Federation of Small Businesses’ (FSB) Highlands & Islands Development Manager, said: “Small businesses have a vital role to play in the Western Isles economy, which makes the findings in our report all the more concerning. 

“Smaller businesses already face many challenges on many fronts, not least adapting to the new trading conditions of our post-Brexit world and complying with climate change legislation. Add the pandemic and it becomes all the more essential that we do everything in our power to keep our local economies alive and vibrant, especially given underlying concerns about aging and declining populations long-term.

“Sadly, however, over three-fifths of Scottish businesses believe that covid has made working for themselves less attractive. At a time when everything possible should be being done to nurture entrepreneurialism and business growth, it is also very concerning that only one in five businesses believes that the Scottish Government values the achievements of the self-employed. Addressing these issues and bolstering morale through the introduction of some important new measures should be the number one priority for the new Scottish Government.

“Having listened to our members and analysed all they have told us, we have distilled the results down to produce this new report, ‘The State of Small Business’, which sits alongside our Scottish Election manifesto, ‘From Recovery To Prosperity’. In short, we highlight a number of distinct, positive actions that the new Scottish Government can introduce to reinvigorate financially and emotionally stretched small business owners, boost the all-important recovery, locally and nationally, and re-establish self-employment as a first-choice career option for all.”  

Recommendations are wide-raging and, taken together, they will make a significant difference to the prospects of smaller Western Isles businesses. For example, the provision of broadband and outstanding digital infrastructure everywhere, and access to the skills and training required to make best use of it, were listed as top issues by businesses in the research, and introducing measures that unleash their full potential is one of FSB Scotland’s key asks.

Similarly, FSB Scotland is calling for a new Small Business Recovery Act that would introduce binding targets on the amount of public contracts that must go to small businesses, and for new measures to be introduced to reduce the cost of doing business to give firms time to recover from the pandemic. This would include retaining the vitally important Small Business Bonus. The FSB is also calling for more assistance to be given to town and village centres, and for job creation schemes to be made much more widely available.

One brand new idea is the call for a new collective insurance approach for self-employed individuals, something that would help make self-employment much more popular.

Sally Lessi, owner of The Anchorage Restaurant in Leverburgh, said  “The past year has really highlighted just how vulnerable small-business owners like me are to illness. If I become sick and have to take time off work I will receive little or no financial support from the state, and if I have no-one to cover for me my only source of income – my business – will suffer too.

“The government and its agencies keep saying how important the self-employed are to local economies, so why doesn’t it give us sick pay in the same way as it does for employees? The lack of it is one more reason why people think twice before going into business for themselves, and the sooner the new Scottish Government finds a solution the better.”  

David Richardson commented, “Our study found that almost nine in ten small business owners say that their health and wellbeing are top priorities for them, demonstrating the pandemic’s dramatic impact on mental health, and fewer than one in ten believe that they have the same rights and benefits as employees when it comes to things like sick pay. 

“It is vitally important that we re-establish self-employment as a first-choice career option by removing unnecessary or unfair barriers, and this explains why we want the new Scottish Government to create a new collective insurance scheme. Based on the successful Dutch model, this ‘bread-fund’ would cover the sick pay for all who contribute, removing the worry and pressure experienced by many small-business entrepreneurs.

“However, it doesn’t stop there. We argue that the government should also provide maternity, paternity and adoption payments to the self-employed via Social Security Scotland”.