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Yesterday, I published the phase 1 decisions of the enterprise and skills review; the First Minister announced the review in the chamber five months ago to the day. Our aim was to take fresh action towards our long-term ambition, encapsulated in Scotland’s economic strategy, to rank in the top quartile of Organisation of Economic Cooperation and Development countries for productivity, equality, wellbeing and sustainability. That ambition is the foundation for the work of our four enterprise and skills agencies—Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and the Scottish Further and Higher Education Funding Council—both individually and with each other and the Scottish Government. We recognise the vital contribution that the four agencies make to creating a more successful country, with opportunities for all of Scotland to flourish through delivering inclusive and sustainable economic growth. Our long-term ambition will require our best intelligence, analysis and creative ideas to achieve it.
The first phase of the review has been about reaching out, offering opportunities to be involved and collecting the evidence to ensure a simpler system that is based on meeting the needs of users and delivering the right outcomes for everyone. We have engaged extensively over the summer and gathered evidence in many forms, from economic advisers and academics, and from individuals, businesses, further and higher education institutions, agencies and representative organisations. We have sought the views of people with experience of using those public services and I thank in particular all members of the ministerial review group for their valuable insight and support. We also looked again at Audit Scotland reports and at Graeme Reid’s report on innovation centres hot off the press.
For my part, I was very encouraged by the high level of engagement with our national ambition and the quality and wide range of responses from individuals, businesses and organisations, with good ideas about how best to come together to achieve our ambition. I thank all those who have engaged so far. That balance of views is crucial to seeing the challenges in context and finding the right answers. Some asked for a refreshed strategic focus, a single vision, goals and shared ownership; others wanted to understand the criteria for support and have a simple-to-access, uncluttered service.
Many respondents conveyed a sense of being excited and energised by the process, enabling us to develop at real pace. However, that is not to say that we have rushed this consideration. Some of our questions related to long-standing structures, so we have sought a careful balance between engaging with pace and deliberating carefully. Last month, I announced that the review will proceed in two phases and we announced yesterday our top-level actions and those areas where work is on-going or further consultation is required.
We want to work with others across the chamber and across Scotland. Interestingly, one of the major points that were made by the various business organisations on the ministerial review group was that they wanted to see a political consensus behind what is subsequently agreed. We therefore want to work with others across the chamber to make a transformational change in Scotland’s economic performance. We want to reinvigorate our focus and place our ambition firmly within the context of Scotland’s economic strategy. We seek to create an enterprise and skills system with strong leadership, aligned closely behind our common purpose, which meets the needs of the end users of the services.
Our agencies and their staff already carry out excellent work on behalf of a diverse range of individuals and businesses across Scotland. As Audit Scotland noted, they have been successful in their respective roles, with clear strategies and good governance. The enterprise agencies, for example, collectively work with or assist around 11,200 businesses each year, and there are good examples of all of them working with partners to achieve a positive impact, such as creating jobs.
However, we have to acknowledge that, good as the agencies are, we need to step up our performance to achieve our ambition. The level of challenge that we face has increased exponentially because of the European Union referendum result, which has created a new context that requires fresh urgency. In the lead-up to the EU referendum, the Scottish economy continued to grow and demonstrate resilience in the face of continuing external headwinds.
I am intrigued by the cabinet secretary’s proposals for Highlands and Islands Enterprise and also by those for the south of Scotland. Will there be any changes to the functions of Highlands and Islands Enterprise? Will there be a separate agency for the south of Scotland or will it just be a local office?
I intend to come on to that. However,
I will say that the issue of functions will be part of what is considered in phase 2 and that an agency will be established in the south of Scotland.
Scotland’s economy has grown modestly since the start of 2016, growing 0.4 per cent in the three months leading up to the referendum. That was the highest rate of quarterly growth since the start of 2015. In relation to comments in the papers from Andrew Dunlop and David Mundell, I say that the Tory tactic of saying that we are not as good as the rest of the United Kingdom seems bizarre. Two Governments are involved in Scotland’s economy and to absent yourself from involvement in the economy does not seem to be a commendation for that approach. If, as Andrew Dunlop has said, the Scottish economy is not performing as well as that in the rest of the UK and the Scottish Government will have to improve things when it gets its new powers, why has the economy not been improved while the UK Government has been exercising those powers? The tactic seems bizarre.
I am also extremely surprised that the Conservative amendment seeks to remove any reference to Brexit from the motion. We hear about Brexiteers and anti-Brexiteers but we have not yet heard of Brexit deniers. Brexit is a huge issue.
Scotland’s labour market also continued to perform strongly with one of the lowest levels of unemployment that most of us have seen in perhaps a quarter of a century. As of August this year, employment levels were higher than they were a year ago and the unemployment rate in Scotland has fallen to 4.6 per cent, which is its lowest rate in eight years and lower than the UK’s rate of 4.9 per cent. It is encouraging that the underlying resilience of the Scottish economy remains strong, and there is much to be positive about.
However, the outlook for growth in Scotland and the UK over the next 18 months has weakened since the EU referendum. Economic forecasters have downgraded their growth projections for 2016 and more substantially for 2017 to reflect the heightened risk of a reduction in economic activity as the post-referendum political process unfolds. In the longer term, independent economic forecasts point to a range of possible impacts for the economy from a redefined relationship with the EU.
Although the path ahead is uncertain, the Scottish Government is clear that Scotland’s relationship with the EU and our place in the single market must be protected. That is vital for Scotland’s businesses and investors and for ensuring that Scotland’s business environment remains stable and attractive for investment.
On Monday this week, I was in Ayrshire to talk to a number of companies, one of which told me that it was facing a 15 per cent increase in the input prices in the glass and other materials that it sources from Ireland. I do not know about other members, but I am hearing similar things from a number of companies around the country that are facing huge increases in their input costs.
In that context, the phase 1 report sets out our vision, guiding principles, and actions under seven themes. We will strengthen the governance of our single enterprise and skills system, ensure appropriate regional approaches, and take action on internationalisation, innovation, skills, digital, enterprise support and the circular economy. Evidence on governance advocates that we will optimise what can be achieved by working seamlessly across the enterprise and skills system. Some respondents have suggested that there is a lack of clarity about roles and responsibilities that can lead to duplication. Users have asked us to simplify service delivery and to streamline funding schemes and grants. Respondents have also said that hard alignment around the national ambition might be overseen by a single board to ensure enhanced collaboration.
We will provide stronger governance of a single and coherent system by creating a statutory overarching board, and ensure robust evaluation and develop common targets that are aligned with the national performance framework and economic strategy to aid performance.
I agree with the minister that streamlining the system is important for business. It is the one overriding cry that we hear from business organisations. Beyond the creation of a single board, can the minister point to where else such streamlining will take place? It is far from clear to me that there are any other steps in the document that will promote the streamlining of organisations. Indeed, there will be more agencies rather than fewer.
That is not the case, not least because we are creating a single overarching board. If the member reads the document, he will see that the decluttering of what is a fairly cluttered landscape will be taken forward during phase 2.
The member will know from the hustings that we shared prior to the election about some of the exasperations that end users feel, and that is what we are trying to address.
National and local evidence noted that arrangements should respond to differing opportunities and challenges across Scotland, and that a one-size-fits-all approach is inflexible. Users have told us that services and funding streams might be simplified, and they have highlighted the particular needs facing dispersed populations in the Highlands and Islands and the south of Scotland. We will back our more national approach with enhanced regional skills delivery; they are two integrated sides of the same coin. We will protect levels of service provision in the Highlands and Islands, and create a new vehicle to meet the enterprise and skills needs of the south of Scotland.
The purpose of the strategic board is to oversee the strategy but also to provide that level of collaboration that we and the respondents to the consultation felt was not currently there. However, Highlands and Islands Enterprise will remain in place, as stated in the phase 1 outcomes.
We will review, with our local government partners, the best way to work together to deliver flexible local services with better outcomes for the user. There should be scope for the Scottish Government, local government, the agencies and other partners to work flexibly with emerging city deals, local services and regional economic partnerships.
On internationalisation, evidence identified Scotland’s wide range of international assets and strengths and suggested that we could benefit from broader action across a wider range of activities and better co-ordination.
I note that the cabinet secretary has not touched on productivity yet. The Scottish National Party’s target of Scotland reaching the top quartile of productivity levels by 2017 will clearly not be met. Will there be a new announcement, either today or in the near future, about what the SNP’s new target for productivity will be? Currently, Scotland is in the third quartile of productivity.
I wonder whether the member has had an opportunity to read the phase 1 report, which covers exactly that ground. We have seen an increase in productivity of 4 per cent in Scotland, while it has been absolutely static in the United Kingdom. Nevertheless, I recognise that there is an issue with productivity, competitiveness and increasing exports, which is what the review is seeking to address. I am discussing our proposal for how we will help to address those issues.
Internationalisation is part of that, so we will increase the pace on delivering on our international trade and investment strategy and co-ordinate international activity across the public, academic and industrial sectors more strongly—we have received substantial evidence that, sometimes, the efforts of those sectors have been duplicated and that one effort can undermine another. That is why we must look to Ireland’s team Ireland approach and take a team Scotland approach. We will also consider in phase 2 the role, position and governance of Scottish Development International.
Evidence on innovation also showed perceptions of complexity and we were asked to simplify and streamline funding. Agencies should offer agile, fast and flexible interventions, and collaborate better. The can do forum and the Council of Economic Advisers identified similar issues. We will review, streamline and simplify innovation support programmes, funding and delivery mechanisms. We will bring into one forum the strategic decision making on innovation and will publish the innovation action plan by the end of November.
On skills, our recently published labour market strategy defines the labour market outcomes that are required to support inclusive economic growth. Those will guide our approach as we move forward.
Evidence suggested that skills investment plans and regional skills assessments should be built on to better meet the needs of businesses and workers and that labour market information should be used more extensively to inform the alignment of provision with labour market demand. Some people have advocated a regional approach, and some have questioned the balance of academic and vocational skills investment.
We were encouraged to consider the needs for reskilling across the workforce, including upper age ranges. We will align the functions of our skills agencies to better join up the way in which learning and skills are planned and provided for learners and employers. We will review our investment in learning and skills, including skills utilisation. We will review the learning journey into employment for young people and we will seek to support people with low skills who are already in the workforce and develop the skills of older workers to maximise productivity and inclusive growth.
Evidence also highlighted how much our global economic competitiveness depends on the right digital approach. We will therefore seek early improvements in services, with a step change in digital skills provision at general and specialist levels so that businesses can compete internationally. We will better communicate our infrastructure plans, and continue to examine how best to accelerate improved coverage to ensure that there is good connectivity across all of Scotland.
Evidence on enterprise support suggested that we have broadly the right strategic framework but that there could be areas for operational improvements. We will ensure a broader support offering to more companies on innovation, productivity, digital and exporting. We will also seek to implement better targeting to increase impact, and provide clearer entry and exit points. We will engage more closely with the private sector in shaping service delivery, and we will consider where the private sector might be involved in providing services.
I believe that those decisions will help us to achieve our strategic outcomes for Scotland, and I commend them to the chamber.
That the Parliament shares the ambition that Scotland should rank in the top quartile of OECD countries for productivity, equality, wellbeing and sustainability; recognises the vital contribution of the enterprise and skills agencies to creating a more successful country, with opportunities for all of Scotland to flourish through delivering inclusive and sustainable economic growth; further recognises the different social, economic and community development challenges facing the Highlands and Islands and the south of Scotland; believes that the challenge of achieving this ambition is made greater in the context of the Brexit referendum; further believes that achieving this OECD objective will require a transformational step change in national economic performance across a range of outcomes and that enterprise and skills support is central to achieving this ambition, and welcomes the publication of the outcomes of Phase 1 of the Enterprise and Skills Review.
We welcome the opportunity to discuss the future enterprise and skills framework in Scotland, and we also welcome the Scottish Government’s phase 1 report in that area. In particular, it is good to see that the report includes a number of Scottish Conservative proposals, including the establishment of a new enterprise body for the south of Scotland and the much-needed expansion of the Scottish Development International network.
After almost 10 years in power and with no new policy initiatives, it is not surprising that the SNP is now looking to the Scottish Conservatives for new ideas on the economy.
It was also encouraging to see that so many organisations responded to the call for evidence. As Mr Brown said, there were over 300 responses to the review. The one overarching point that was made clearly in the feedback is that enterprise and skills policies should not be viewed in isolation. As the Confederation of British Industry Scotland has highlighted and as Mr Brown mentioned today, Scotland’s long-term economic plan needs to involve a joined-up approach between the Scottish Government’s economic strategy on the one hand and the work of the enterprise and skills agencies on the other. That has also been made clear by Audit Scotland, which said:
“the enterprise bodies are performing well but the Scottish Government needs a clearer plan for delivering its economic strategy”.
That feedback reflects what the Scottish Conservatives have been saying for a number of years—that the SNP’s economic policy is not working for Scotland. It has become increasingly clear that its economic development strategy, which is based on the four Is of inclusive growth, innovation, internationalisation and investment, as reaffirmed by the cabinet secretary in the report, is not proving to be effective.
If we look at the policy of inclusive growth, for example, we see that there has been very little growth in the Scottish economy in the past year, or indeed in the past decade. The latest gross domestic product figures, which were released two weeks ago, show that the Scottish economy expanded by only 0.7 per cent in the past year compared with a figure of 2.1 per cent for the economy in the rest of the UK.
I refer back to a point that I made on the point that Dean Lockhart has just made. Does he recognise a responsibility on the part of the UK Government in the situation that he describes or does he, like Andrew Dunlop and David Mundell, always want to put it on the Scottish Government, forgetting the role that the Conservative UK Government is meant to have in the Scottish economy?
The SNP has had its hands on the levers of the economy for almost a decade. It had a review of the enterprise agencies when it first came to power, in 2007, and it has now had another end-to-end review. It has had enough time to establish its economic credentials, and the economic data on its side is not very promising.
The increasing economic divergence from the rest of the UK because of the additional powers requested by the SNP will have a direct impact on the Scottish budget and the amounts that are available to spend on education, the enterprise and skills agencies and other elements of economic development.
The other area that I want to highlight is innovation and productivity. The SNP has failed to meet its target for Scotland to reach the top quartile of productivity levels of OECD nations by 2017. I ask Mr Brown when a new performance target will be announced. According to Scottish Enterprise, if Scotland’s productivity matched that of countries in the top quartile, as set out in the SNP’s target, Scotland’s GDP would be boosted by £45 billion a year. That economic gain would be a multiple of any potential downside of Brexit. There would have been a boost of £45 billion a year if the SNP had met its target. Perhaps the minister will tell us in winding up when a new productivity target for Scotland will be announced.
I call on the SNP both to include in its phase 2 report a detailed assessment of how it will address the on-going failure of economic and business development policies and to set out specific steps to increase economic growth in Scotland and productivity in the Scottish economy. It has had the chance to do the phase 1 report. It is now time, in the phase 2 report, to have a more fundamental look at the Scottish economy and how the Scottish Government can boost economic performance.
We agree with a number of the detailed recommendations in the phase 1 report. We have some concern that the proposed new board of trade may lead to further centralisation of economic policy, and we will be monitoring how it will work in practice. We would also go further than some of the steps suggested by the SNP in order to meet the challenges that the Scottish economy faces.
On enterprise policy, for example, our priorities are as follows. First, we need to simplify the enterprise support that is available to new and expanding businesses in Scotland. In the business community, there is real confusion over what form of assistance is available. In the Economy, Jobs and Fair Work Committee yesterday, we heard that there were over 600 funding streams available to businesses in Scotland. That is simply a cluttered landscape that needs to be fixed.
We propose making available a one-stop digital portal with business development information broken down according to sector, region and the size of business, and with different business support for exporting companies and domestic markets. That approach is taken in other countries such as Singapore and it works very effectively, so I would recommend that approach to the Government.
Secondly, the enterprise agencies should provide more non-financial support. In many cases, what is holding back the development of small businesses is the lack of management capacity or experience. The Singapore model and the Denmark model show that the secondment of sector experts into an emerging business for a short period can result in exponential benefits.
Thirdly, we encourage the Government to designate some of the underperforming parts of Scotland as turnaround zones—this was part of our manifesto—with special tax breaks, faster planning, streamlined regulation and dedicated support for those who decide to set up in those areas. Again, that has worked in other countries and there is evidence to show that it would work in Scotland.
We also need to maximise the commercialisation of innovation from our world-class universities. The work of the technology transfer offices needs to be looked at. That issue is not covered by the phase 1 report. I recommend that it is covered by the phase 2 report, because the technology transfer offices are an essential part of the transition mechanism that translates innovation from universities into the commercial market and more can be done to maximise opportunities from the research that takes place in our world-class universities.
In skills development policy, there are a number of specific steps that we would suggest the Scottish Government should look at. I was interested to see that there was very little mention of the apprenticeship levy and what the plans are for that in phase 1. Perhaps that will be touched on in phase 2. We need to increase the levels of apprenticeship uptake in Scotland. Per head of population, Scotland has only half the number of apprentices that there are in the rest of the UK.
We also need to clarify how the apprenticeship levy will be implemented in Scotland. The Scottish Conservative approach will be to ensure that the application and destination of apprenticeship levy funds are fully transparent and that those funds are reinvested in Scotland for apprenticeships and skills training and are not absorbed or lost in general funding.
We also need to address the on-going skills gap in Scotland. The recent CBI Scotland report highlighted an increasing skills gap in the economy and the CBI has recommended that future skills required in the economy should be driven by joint consultations between business and the skills agencies, such as SDS.
To conclude, the Scottish Conservatives will always support measures that encourage enterprise and skills development and we agree with a number of the measures that are set out in the phase 1 report.
However, we call on the Scottish Government: to include in phase 2 of its report a detailed assessment of how it will address the on-going underperformance of the Scottish economy; and to set out specific, real steps to increase economic growth and productivity in the Scottish economy.
I move amendment S5M-02099.1, to leave out from “believes that the challenge” to end and insert:
“notes that, with the new fiscal powers devolved to the Parliament through the Scotland Act 2016, the performance of the Scottish economy will have a significant impact on achieving these goals and on the levels of public spending available to the Scottish Government; notes that Scotland’s economy continues to underperform compared with the rest of the UK on a range of measures; calls on the Scottish Government to effectively respond to the recommendations of the Audit Scotland report,
Supporting Scotland’s economic growth
, by developing a clearer plan for delivering its economic strategy and measuring its impact; further calls on the Scottish Government to confirm that skills development remains a priority at all levels of educational provision in order to maximise the contribution to productivity and sustainable growth and ensure that enterprise continues to be central to achieving economic growth targets, and welcomes the publication of the outcomes of Phase 1 of the Enterprise and Skills Review and anticipates the speedy publication of the next phase of the review.’’
I am delighted to be putting forward the Labour case and the Labour amendment to the Government motion. I begin, and I shall end, with the recent Audit Scotland report into Scottish Enterprise and Highlands and Islands Enterprise, because the report reminds us—and I think that this Parliament needs to be reminded—that between 2008 and 2015, in the very years that our economy needed additional support not less, the national enterprise agencies of Scotland had their budgets drastically cut.
For Scottish Enterprise there was a cut of 16 per cent in real terms, and HIE’s core operational budget was cut by 22 per cent—nearly a quarter—over the same period, according to Audit Scotland.
If we want—as I believe we do, and as the Scottish Government’s motion spells out—to match other advanced industrial economies in our industrial investment and our skills training and education; if we want growth and development rather than simply care and maintenance; and if we demand, as I believe we must, transformative change in our economy and a rebalancing of it with a vibrant manufacturing base, the Scottish Government must be bold and ambitious.
The well-respected Fraser of Allander institute describes the current state of the Scottish economy not as strong but as “fragile”, and it forecasts that Scottish unemployment will rise to 7 per cent next year. Even as we hold this debate, production and manufacturing are not growing but contracting. Business investment, as measured by gross fixed capital formation, fell by 4 per cent in the first quarter of 2016 according to the Scottish Government’s own figures—and that is before Brexit has begun.
With an already shrinking productive base and a downturn in industrial investment; with real unemployment already at 12 per cent; and with Brexit looming, this is no time for business as usual or for timidity and tinkering with governance. This is not the occasion for postponing the real change that we need; it is quite the opposite. It is precisely the moment for getting on with that real change.
We need a debate, but it must be a fundamental debate on our whole approach to economic development, training and education. We need a discussion, but we need an honest discussion about whether the current institutional framework is capable of delivering the industrial strategy that we need.
We heard the First Minister announce at her party’s conference a plan to double the number of staff pursuing inward investment; to send out trade envoys from the new Scottish board of trade; and to open a new Scottish office in Berlin, which we suspect is necessary but by no means sufficient for the Brexit challenge that we face.
I say to the cabinet secretary that it is high time that we start to build up our indigenous business base, especially in the high-value, high-skill manufacturing industry, and that we start to develop the untapped potential for co-operative ownership growth in Scotland. The home of Robert Owen and the Fenwick weavers should set itself the noble ambition of becoming a co-operative capital once more: the Mondragon of the north. It is high time that we start to consider the innovative role that workers’ pension funds—including public sector pension funds—could play in starting to advance popular economic ownership and control. It is high time too that we seriously consider the case for greater public ownership of public transport, renewable energy, local government services and nationally organised services such as the work programme.
I go further and say to the cabinet secretary that it is high time, as part of a coherent strategy for industry, that he starts to look at new economic planning agreements and public equity stakes to stimulate the wider economy. I am firmly of the view that change will not come about if we simply leave it to the market; it requires Government leadership and a considered, coherent and credible industrial policy and strategy, which must lie at the heart of the Scottish Government rather than being an afterthought. It demands a long-term vision of what we want our economy to look like in 20 years’ time, because the change that we need will not happen overnight. We need to make a start now to make progress in the right direction.
That is why I shudder a little—perhaps only a bit, but I do—when the cabinet secretary says in his foreword to the “Enterprise and Skills Review: Report on Phase 1” that we need to be “cost-effective”. He has used that phrase before: when he was Minister for Transport and Veterans in 2014, he described Abellio as
“the least expensive but most cost-effective” bid to take over ScotRail. I do not think that many of Scotland’s passengers who face delay upon delay, day in and day out would agree that that kind of cost-effective approach is the right one for Scotland’s enterprise, education and skills agencies.
It would be useful if Richard Leonard would acknowledge the fact that the reason why we had to franchise rail services is because the Labour Party insisted on that in the two railway acts for which it was responsible. On the member’s point about cost-effectiveness, he has talked about 2007, so will he recognise that the manifesto on which his party stood in 2007, with Jack McConnell, included more money for education, with everything else having to cut its cloth? In 2007, there were cuts for enterprise support coming from the Labour Party.
I was not around in 2007 and I do not know what Jack McConnell’s draft budget plans were, but I can tell the cabinet secretary that, in the teeth of the economic crisis that we have been facing for the past five years, the right thing to do is surely to put more money into economic development, not to take it out.
We should be building up not taking down Scottish Enterprise’s industrial knowledge base and its strategic role, while recognising the importance of sub-national structures, such as the city deal, and the challenges that now face not just the south of Scotland but the north-east. We argue that, in place of reactive task forces, we should establish proactive sectoral advisory groups that bring together trade unions and employers to help inform industrial policy and the real investment strategy that we need to go with it.
Just as we support the Government in its call for the
“robust evaluation of activity and impact” of our enterprise and skills support agencies, I hope that, in turn, the Government will support our call for Audit Scotland’s recommendations to be adopted, so that the Scottish Government sets out its own economic action plan, with clear targets and timescales, and sets out progress against its stated economic priorities. That would be real progress, and I hope that we can make such progress this afternoon.
I move amendment S5M-02099.3, to insert at end:
“, and notes that, between 2008-09 and 2014-15, the combined spending of Scotland’s enterprise agencies fell by 12% in real terms; further notes that a continuation of the reduction of Scottish Enterprise and Highlands and Islands Enterprise budgets will prevent the realisation of these ambitions to improve the development of Scotland’s economy, and commits to an action plan that will set out clear targets and timescales for the delivery of the strategy that Audit Scotland has called for.”
We move to the open debate. Because I have allowed all the front benchers extra time for interventions, I regret that there is now a tight six minutes for back benchers. We cannot have it both ways.
I am delighted to be called to debate the motion on the skills review. I do not know whether Mr Leonard was around in 2007, but he was here in 2016 when the Government stepped in to save steel manufacturing plants in areas that he and I represent, securing manufacturing and skills for the future. That was stepping in and actively working towards securing an economic future for our area and for Scotland. That is exactly the type of work that the Government has been doing and will continue to do on behalf of the people of Scotland. I for one, along with my constituents, welcome that very much.
I will talk about the information technology industry, in which I used to work. I want to mention some of the challenges that it faces and some of the work that the Government has done in the area. As outlined in the SNP manifesto, the SNP Government has agreed to
“develop and implement a Scottish STEM strategy to ensure that from the earliest age, children are alive to the opportunities that science, technology, engineering and maths can offer them.”
It has also said:
“As part of this, we will introduce a new skills qualification that recognises the achievement of a wide range of vocational and other qualifications taken by young people in senior school.”
The Scottish Government has also agreed to
“examine the feasibility of establishing further skills academies to address key skills shortages, based on the widely-welcomed CodeClan model”, which is an initiative that involves giving training in coding to young people who would not traditionally go into IT or the academic world. It looks at people’s aptitude and offers them training.
In the programme for government, the Scottish Government said that it will launch a consultation on the new STEM strategy and will set out the actions that it will take to
“raise the levels of STEM enthusiasm”, particularly in young people. It will also look at maths and numeracy skills in our schools.
That is all very important, because the potential economic benefits to Scotland of a strong IT sector and innovation economy are widely known and recognised.
The rapid pace of technological change means that there is a strong understanding that we need to continually raise this as a business priority. The British Computer Society recently published research to show that the number of people who are required in IT and digital roles will have increased five times faster by 2020 than the number required for other industries. The Scottish Government has shown its commitment to the area by its support for Codebase and other organisations, which will continue.
The BCS has recently reacted to Brexit and has said that
“vital support” is required
“for our science and engineering education and research ecosystem if we are to continue to succeed in a global economy following the vote to leave the EU.”
That is hugely important, because we cannot ignore Brexit, pretend that it will not happen or downplay the devastating impact that it could have on our economy if we do not get the right deal for Scotland.
The BCS has published research and has made six asks of both the Scottish Government and the UK Government, to ensure that the IT industry is supported. One is for
“outstanding computing education from primary school through to university level, so that our economy and society has the home grown talent it needs to compete internationally.”
That brings me to further work that the Scottish Government has done with the launch of the barefoot computing programme, which is run in conjunction with BT and in partnership with the BCS, of which I am a member. It makes IT resources and lesson plans available to primary schools.
Thank you, Presiding Officer.
There is a shortage of computer science teachers: 17 local authorities in Scotland do not have dedicated computer science teachers. Is that not a skills development concern that the Government should focus on?
I will say this before Ms Adamson responds. Interventions must be short, because we are running out of time. I do not mind them, but they must be short. Ms Adamson, please.
I am sure that it is. There are IT skills shortages in all areas, not just education, which is why we must work with our young people and encourage more people to come forward to have a career in IT at any level.
Brendan Dick, director of BT Scotland, said:
“Through our education engagement work, we know that primary school children really enjoy computer science—and that the thinking skills they gain can help in other subjects”.
That is important, from my point of view. When we are educating and building on these areas, we want to develop lifetime skills for people. The analysis and the work that is done when people are taught computer programming especially gives them life skills that will benefit our economy in the future.
I do not have time to go into the other great work that is being done in my area, so I will leave it there.
I am glad that the cabinet secretary mentioned digital skills in his speech, because as many as 1 million Scots face social inequality because of digital exclusion, according to the Carnegie UK Trust. The growing digital divide between those with internet access and those without is felt most acutely in Scotland’s remote and rural areas. That has far-reaching social and economic consequences.
Mobile internet and cloud technology have changed just about everything we do. They have not just made our lives easier but changed the conditions in which businesses thrive and workers succeed. In the age of the digital nomad, connectivity, training and start-up support are needed in rural and urban areas alike. Cloud computing has, for some, made the need for expensive inner-city office space obsolete. Now anyone can run a global business from their laptop.
That presents the whole of Scotland with countless new economic opportunities in emerging markets, from consumer analytics to mobile advertising—but only if our digital infrastructure and our education system and skills training keep up with global trends.
Since my election, I have had the great pleasure of meeting some great young entrepreneurs in Scotland, such as SuperJam founder Fraser Doherty. He told me that one of his biggest challenges is recruiting people with the software skills that his business needs. He recruits from across the world, because there are simply not enough programmers in Scotland.
The digital revolution began a long time ago, but the Scottish Government has been slow to catch on and has been content with launching glossy recruitment campaigns and telling its agencies to innovate. Yesterday’s enterprise and skills review document is a prime example: it is full of jargon and words like “streamline” and “step-change” but it fails to provide any glimpse of a strategy that will enable Scotland to benefit from the economic opportunities of the fourth industrial revolution.
As I read the report, it seemed to me that the Scottish Government is stalling for time rather than spelling out the practical steps that it needs to take. It says:
“We want Scotland to be a place where innovation is an intrinsic part of our culture, our society and our economy”.
However, a constituent who came to one of my surgeries recently told me that he is perpetually frustrated by the Government’s lack of support for inventors in Scotland.
The document talks about skills provision, but how can we raise up the workforce of tomorrow when 17 per cent of Scottish schools have no computing specialist whatever and 30 per cent of Scots still lack basic digital skills? My colleague Dean Lockhart referred to the lack of computing science teachers in Scotland, which is an important matter.
I take on board the point. STEM subjects are important, but the lack of computing teachers in Scotland has an immediate effect on the skills that are available to employers.
How can we attract new businesses to rural communities, if they are the last communities to benefit from the roll-out of high-speed broadband?
In a recent report, Audit Scotland highlighted the lack of measurable targets and clear strategies for the Scottish Government’s economic development agencies and noted that it is not always possible to measure how the agencies contribute to delivery of the Government’s overall strategy.
Meanwhile, the tech and start-up scenes in other small countries, such as Portugal, Israel and Estonia are gathering momentum.
Our amendment calls on the Scottish Government to develop “a clearer plan”. I hope that phase 2 of the review will do just that. Observing the Scottish Government’s lethargy in bringing Scottish enterprise and skills into the 21st century is a bit like watching the sand in an hourglass slip away; every grain is a missed opportunity.
The year 2020 is just around the corner. I do not want to have to make this speech again over the course of this parliamentary session, but having read the report I fear that I might have to do just that.
In these uncertain times, it is more crucial than ever that the Scottish Government remains wholly committed to investing in and developing a strong, sustainable economy, and to increasing business-driven innovation and our international competitiveness, while reducing inequality. For those reasons, I am pleased to see the official results of the Government’s end-to-end review of the enterprise and skills bodies which, based on the consultations that have taken place, promise an increasingly bright future for Scotland and its people.
I think that all members will agree that we are fortunate that the review was planned before the European Union referendum took place. That has enabled us to focus our efforts not only on pre-existing challenges in the enterprise and skills agencies but on the new context and emerging challenges that have resulted from the referendum.
That said, there are clear areas where we have already made great strides forward—areas in which I know we will continue to progress as a result of that assessment. For example, the creation of a new Scotland-wide statutory board to co-ordinate the activities of HIE and SE, including SDI, SDS and the SFC, promises to make the actions of each of these organisations more effective and efficient.
In addition to the report released yesterday, I have read through a large portion of the responses to the Government’s formal call for evidence and the learning journey workshops and interviews that were commissioned, and there were many constructive suggestions arising from first-hand experiences with SDS and the various other agencies. Those insights will allow us to continue to build on what we already know works well inside those agencies and will help us to achieve the step change needed in Scotland’s economic performance.
From what I have seen before and during the evaluation, we have done a very good job in identifying areas where we need to improve our performance. In targeting those areas, using the results of that end-to-end review, we will be able to hone those approaches to skills development that have been successful and we will be able to develop new strategies to combat developing challenges in the sector, especially those arising from Brexit.
A clear correlation is established between the amount a country invests in research and development and the subsequent success of that country’s economy. Historically, Scotland has lagged behind in the amount that private businesses invest in R and D. However, we have increased our expenditure on R and D by 44 per cent between 2007 and 2014—from £629 million to £905 million. That is compared with a 10 per cent increase in the UK. Scotland already has one of the highest rates of spend on higher education R and D in the OECD.
What is more, we have increased our international exports by over 17 per cent since 2010, with over £27 billion in exports every year. Total food and drink manufacturing exports increased by £3.4 billion—an increase of 63 per cent—between 2002 and 2014. Those accomplishments are in addition to increases in investment in higher education, international recognition of our universities as being among the best in the world, and rankings that place Scotland among the most attractive locations for inward investment in the UK.
My point here is this. We know what we need to do on a national level, as set out by the four Is in Scotland’s economic strategy: investment, innovation, inclusive growth and internationalisation. That is happening right now, through the process of the review, setting out what we can continue to improve locally, on a user level, better co-ordinating enterprise and skills organisations, and we are committed to using those findings right away. In essence, we are leveraging all of our devolved powers to improve each aspect of Scotland’s economy from the inside out. That even includes those parts of our economy that are already outperforming international benchmarks.
The Scottish Government introduced the most competitive business rates scheme in the UK, invested billions of pounds in Scotland’s infrastructure, established the curriculum for excellence in our schools and expanded the level of funded childcare to help those with young children participate more fully in the labour market. It has committed to creating tens of thousands of new modern apprenticeships every year, established a new innovation forum, and built the Scottish Business Development Bank from the ground up. The actions outlined in yesterday’s report promise more of the same success.
The focus here is on not only economic growth, as I discussed earlier, but reducing inequality. Inequality hampers the skills development of disadvantaged individuals, reducing their social mobility and undermining any further educational opportunities that they might have. Even though we have a highly skilled workforce and a long-standing reputation for innovation, international experience demonstrates that taking our country to the next level—to the highest quartile—also requires performing better on measures of equality and wellbeing. In a sense, the two are symbiotic.
I am pleased to see that the report on phase 1 spent a considerable amount of effort specifically addressing inequalities in educational outcomes. That improves employment opportunities and living standards for individuals, but also the overall skills of Scotland’s workforce. The Government’s report points out that we are one of the first countries in the OECD to put inclusive growth at the heart of our economic strategy while also focusing on increased competitiveness. That can only make for a stronger Scotland.
However, I am deeply concerned—and I see in the report that the Government agrees—that our
“long-term economic performance depends on greater success in international markets and in continuing to attract stronger investment” from abroad. Obviously, that depends on our maintaining access to those markets—access that is being threatened. The recent events stemming from the EU referendum put the future expansion of our burgeoning international trade at considerable risk.
I look forward to seeing the actions that are reported in phase 1 being implemented and commend those who were involved in producing yesterday’s report for their excellent work.
I refer members to my entry in the register of members’ interests and to the fact that I am a councillor in Dumfries and Galloway, where I chair the economy committee. I am also the chair of the south of Scotland alliance.
As the cabinet secretary said in his opening speech, our enterprise and skills agencies make an important contribution to our economy and they impact on all our constituencies. Last week, I met a company in my constituency that is account managed by Scottish Enterprise, I spoke with young people on a training programme that is provided by Skills Development Scotland and I visited Dumfries and Galloway College, which is funded by the Scottish Further and Higher Education Funding Council. However, the more organisations I speak to and the more companies I visit, the more the need for change becomes apparent. That is why the review of our agencies is so important. I very much welcome it.
Put simply, the current structures are not delivering the support that is needed for the economic success that we all want. That is nowhere more apparent than in the south of Scotland. The Government’s motion talks about the economic challenges that will be caused by Brexit—I am not a Brexit denier, so I do not disagree—but I can tell members that the south of Scotland does not need to wait for Brexit in order to face major economic challenges: the challenges are there right now.
In Dumfries and Galloway, economic productivity—our gross value added per hour—is just 82 per cent of the Scottish average. There are fewer people with high-level qualifications in the region’s workforce than the Scottish average, and only about 20 per cent of the workforce are educated to degree level, compared with a Scottish average of 30 per cent. The proportion of people of working age there who have no qualifications is twice the level of the Highlands and Islands, youth unemployment in the region is almost always higher than the national average, and there is real evidence of growing underemployment. Not surprisingly, given the level of part-time employment, Dumfries and Galloway has a low-wage economy with, shamefully, the lowest-paid workforce in Scotland. The most recent Office for National Statistics figures show that the gross average weekly wage of someone living in Dumfries and Galloway is £463, compared with a Scottish average of £527 and a UK average of £530.
The Government has had a commitment to regional equity—which it now calls regional cohesion—in its past two economic strategies, but the stark figures that I have highlighted show that after nine years the people of South Scotland do not feel a great deal of regional equity. As Audit Scotland pointed out in its recent report “Supporting Scotland’s economic growth: The role of the Scottish Government and its economic development agencies”, there is a real disconnect between the Government’s economic strategy and aims and the remit and direction that are given by the Government to agencies such as Scottish Enterprise and Skills Development Scotland.
What needs to change? We need a clear commitment in the review that regional equity will be part of the remit of our Government agencies, and we need a performance framework that measures not only delivery of regional equity but the contribution that the Government agencies make to that. As far as the south of Scotland is concerned, that could be achieved through a stronger regional approach by existing organisations, through devolution to local councils of more economic development powers and resources, or through the establishment of a specific organisation in the area to tackle the challenges. As the cabinet secretary confirmed in his opening speech, phase 1 of the review proposes the last option.
The proposal for a south of Scotland body that the cabinet secretary outlined sends a signal that the Scottish Government is now at least aware of the significant economic challenges that the area faces and that the campaigning and lobbying that many of us in the region have done for many years are beginning to pay off. The question is this: what will the proposal mean in practice? The remit, resources and capacity of Highlands and Islands Enterprise demonstrate an effective approach to strategic economic development in a rural area that those of us who live in the south of Scotland have looked on with envy for some time—not least because of the social development element of HIE’s role. However, it is not entirely clear from the list of actions in phase 1 of the review whether that is what is proposed for the south of Scotland. The actions talk about
“a new vehicle to meet the enterprise and skills needs” of the south of Scotland, but I note that the vehicle will be accountable to the new Scotland-wide statutory board rather than to a board that will be based in the south of Scotland. That contrasts with HIE, which is very much directed in the Highlands and Islands.
It is also not clear what the boundaries will be or what powers the new vehicle will have. Will it have powers devolved to it from Scottish Enterprise and Skills Development Scotland or will it simply seek to remove powers from local authorities, thereby raising further concerns about more centralisation?
Furthermore, it is not clear what the budget of the new vehicle will be. As Richard Leonard highlighted, the combined spending of Scottish Enterprise and HIE has been decreasing in real terms over recent years. In 2015-16, the Scottish Enterprise budget was £280 million to deliver economic development across 4.8 million people—an average of £58 per person. The final outturn budget for Highlands and Islands Enterprise was £96 million to deliver across a population of about 450,000—an average of £213 per person. Will the new vehicle for the south of Scotland have a budget akin to that of Highlands and Islands Enterprise or will it be similar to that of Scottish Enterprise? How will the new vehicle fit with the emerging borderlands initiative, which brings together Scottish Borders Council, Dumfries and Galloway Council and councils from across the north of England and was launched by the Scottish Government in 2013? Will it take into account the significant work that has been done to develop an alternative NUTS 2—nomenclature of territorial units for statistics 2—proposal for European funding, which will not happen because of Brexit, but for which the arguments are still strong.
I appreciate that the cabinet secretary is likely to tell me that that will all come out in the wash, which is phase 2. I hope that when the minister sums up he will outline in more detail the process that will be followed to develop the emerging actions from phase 1 and, crucially, what the timescale will be for completion of the work.
The clock is ticking when it comes to the economic challenges that are faced by my constituents, so I hope that we will not have to wait too long for an economic strategy that at long last delivers regional equity for the people of South Scotland.
I think that we can all—bar a few Conservatives who wish to deny it—agree that the exit from the European Union will have a significant impact on our economy. Consequently, it is essential that we have robust enterprise structures to support and meet that challenge.
We need to make sure that we face off the immediate Brexit challenges. The first challenge has been the change in the pound’s value, which is having a direct impact on our economy. There have been positive aspects, but there have also been serious negative impacts. We also need to think about the longer-term investment decisions that are about to be made by companies across the country, so we need robust structures to support and advise them as they attempt to address the challenges.
The motion mentions equality and wellbeing and I recall Colin Beattie talking about inequality, but—again—the actions do not match the rhetoric. I have raised on a number of occasions my concerns about receipt of Government grants by companies such as Amazon that pay below the living wage. Although yesterday’s report contains an oblique reference, there is no direct proposal that would lead to refusal of grants to companies that pay below the living wage. I hope that that issue will come in the later report, because the last time I raised the issue in the chamber with the First Minister she said that she would take “firm action”. The “firm action” appears to have been to send Roseanna Cunningham off to see Amazon to have a cup of tea. That cup of tea resulted in the company recruiting lots more workers who are also paid below the living wage. We should not send Roseanna Cunningham to Amazon any more if that is the action that we are going to get. Threats of cups of tea with Roseanna Cunningham are clearly not enough for Amazon to take further action.
I would like to see the Government institute a rule that says that it will not pay regional selective assistance or Government enterprise grants to companies that do not pay the living wage, as advocated by the Government. That would match action with rhetoric.
The minister gave part of the game away when he talked about reviewing the functions of the various agencies in the next report. He said that Highlands and Islands Enterprise will remain, that there would be a new agency—he called it an agency and not just a vehicle—for the south of Scotland. He then proceeded to say that the Government is not sure what that agency would do and that the functions would be reviewed in the next report. Forgive me for being sceptical, but we know this Government’s track record: we know that it wants to regionalise education governance and to change the health boards, and we have seen what it has done with the police. I suspect that it wants to do exactly the same with the enterprise agencies. Colin Smyth has already alerted us to the fact that the new south of Scotland vehicle—or agency—will be directly accountable to the national agency. This Government’s tendency is to hoover up powers into the centre; it is not to recognise local need and variation, but to control things from the centre. That is the tendency, and I suspect that if the alarm bells had not been rung earlier, we would now be seeing the end of Highlands and Islands Enterprise. Thank goodness that somebody had the gumption to raise concerns about the Government’s proposals on that, because it would have been a backward step to have abolished HIE.
In its report on the next stage of the review, I want the Government to put forward serious proposals to properly devolve powers to the enterprise agencies. I do not want HIE to have the same powers; I want it to have more powers. I also want the south of Scotland to have meaningful enterprise powers. Nine years after the SNP Government abolished support for the south of Scotland, it is ironic that it is trying to make a virtue out of recreating something that it abolished only a few years ago.
Would Willie Rennie like to comment on the track record of the Liberal Democrats when they were in control in Scotland? They did not create the agencies or the additional powers that he is talking about; instead, they massively ring fenced the expenditure of local government. What he is saying now is not what he said back in the day.
The SNP Government’s removal of ring fencing from local government does not absolve it of all responsibility for centralising ever since, which seems to be the Government’s argument. Our party has a strong record in this area: we have advocated for the creation of regional development banks in local areas to ensure that we can drive local economies at a local level by working properly in partnership with councils. The Scottish Government cannot wipe away its record of the past few years; it cannot make a virtue out of creating something that it abolished only a few years ago.
If the SNP wants to praise the record of the Liberal Democrats, perhaps it could praise the work of Danny Alexander, who led the way on creating city deals for places like Glasgow, Aberdeen and Inverness. [
.] The ministers scoff, but the reality is that Danny Alexander was the pioneer in creating those city deals. He drove forward the idea in the face of the wishes of a rather reluctant SNP Government; at the time, it was dragged to the table, rather than being an active participant. I want those city deals to be meaningful city deals, because that is how we can drive real change in the cities across Scotland.
The success of Scotland’s economy and, hence, our ability to fund high-quality public services now and in the future will depend on the ability of our businesses to survive and thrive, both at home and in export markets around the world.
Government undoubtedly has a key role to play in supporting that success because the market on its own can do only so much. Getting the form and focus of that Government support right is critical to economic success, to inclusive growth, to fostering innovation and entrepreneurialism, and to enabling us to build the kind of society that we all want.
I therefore welcome the Government’s review of the enterprise agencies, in which it is considering how best to align the various organisations that currently occupy that space to ensure that the most effective, efficient and flexible support for business growth is provided.
It is important that we do not set our sights too low. In the past, I have spoken in the chamber about ambition—the ambition of our young people and our communities, and our national ambition for this country. Scotland has, in our natural resources and our human talent, many inherent strengths that many countries can only dream of. In many sectors, we are extremely well placed to deliver now and in the economies of the future. The task of Government, through its agencies, is to support Scotland’s businesses to deliver on that potential and to realise that ambition. By setting a national target of achieving top-quartile Organisation for Economic Co-operation and Development status in productivity, equality, wellbeing and sustainability, the Scottish Government shares those ambitions.
I welcome the fact that the review process has been broad and wide ranging—evidence has been taken from more than 300 businesses, organisations and individuals—and I welcome the fact that the review is proceeding in phases, which is allowing the structure to take shape on a solid foundation following dialogue with business. In the business world, change is a constant, so continuous improvement of the structures and processes that we use to deliver and perform is crucial to on-going success in an ever-changing world.
I also welcome the flexibility of the approach of recognising the different strengths and support needs of different parts of the country, and the recognition of the need to align national and local government support and private sector talents. The creation of an agency that will be focused on the south of Scotland is an important step in that direction, but it is also right that an overarching strategic view is maintained at national level so that we can leverage scale and co-ordinate progress at home and internationally.
Scotland has many sectors—renewables, offshore energy, whisky, life sciences, tourism, the creative industries, financial services and premium food—that can deliver on a world stage and which have the potential to deliver significant export growth for Scotland. Exporting is crucial for Scotland. Exploring and exploiting global markets is essential but often challenging work, and the role of Government agencies is probably even more important there than it is elsewhere. For small and medium-sized businesses, making the leap to international markets can be daunting, and soft support, practical advice and opening doors can make all the difference.
Phase 2 of the review must have a clear perspective on how best to deliver that. We need to draw on international success stories and leverage all the skills and talents that we have as a nation. We must break down barriers and build collaboration and we must utilise all the levers at our disposal, including existing export businesses, cultural links, political visits, the global Scot network, the great international work of our universities and colleges and the soft power of brand Scotland to maximise international trade opportunities.
The creation of the recently announced board of trade will be a key component of that work. However, we must also recognise that we need to work with businesses at all levels and, instead of focusing on just a few large companies, make existing global connections available to support all export growth initiatives.
A coherent structure of interlocking metrics feeding into the national performance framework will be critical to the success of business support and economic development. Few nations are as advanced as Scotland in the use of performance framework methodology but, when compared with the best in class in the business world, that work is still in its early stages of development. It presents a great opportunity to drive further on-going improvements in performance. Phase 2 of the review will ensure the development of data and evaluation functions to support robust evaluation of activity and impact.
Finally, the present array of available business support is confusing and disparate. It is good that the review highlights that as an area that is ripe for improvement, and that it outlines steps to enable progress. Businesses are too busy doing what they do best—building and growing—to take the time to shop around the wide variety of services that are on offer.
As I have said, this is an evolving situation and we need continually to change, develop and review what is in front of us. As Dean Lockhart will see, more significant steps will be taken in that regard in phase 2.
Simplification of the framework and support system to embed the no-wrong-door principle will be key to ensuring future effectiveness and enabling inclusive growth.
This is a country with great potential. We can be a world beater in so many sectors, but we need to get the review right, co-ordinate and leverage our many opportunities as a nation, build on the solid foundations laid by phase 1 and move forward to refocus the enterprise agencies on delivering ambitious targets for Scotland’s businesses, economy and people.
“justifiably proud of our enterprise and skills agencies—Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and the Scottish Funding Council ... in helping Scottish businesses to thrive and grow.”
That achievement is even more impressive given that, according to Audit Scotland, the enterprise agencies’ poorly defined objectives have limited their effectiveness. A report by Audit Scotland
“recognises that economic growth is complex, and concludes that the Scottish Government needs to be clearer on how its economic strategy will be implemented.”
The Scottish economy has been suffering from a Sturgeon slowdown and has lagged behind that of the UK for the past six and a half years. Despite a shallower recession in Scotland, the recovery has been weaker than the UK’s and economic growth has lagged behind that of the UK since 2009.
We simply have to look at the way in which the economy is being affected yet again by more talk about Scottish independence and the total uncertainty that that gives business and other sectors in the economy.
Growth in Scotland has been driven mainly by construction—a historically volatile sector—although services have also been picking up recently. That contrasts with the rest of the UK economy, which has experienced broader growth across different sectors. Economic growth is not evenly spread across Scotland so, for example, the economy of north-east Scotland has grown at more than double the rate of that of east Scotland.
Growth in jobs in Scotland has stalled under the SNP for more than a decade. Scotland now lags behind every other UK region on job creation. Data on economic growth and skills shortages pre-Brexit is shockingly bad for Scotland, and the SNP cannot hide behind the Brexit decision, which more than 1 million Scots voted for.
A failure to invest in skills leaves Scotland lagging behind on apprenticeships and business development. Scotland has consistently lagged behind England on apprenticeship starts under the SNP Government. In every year in which the SNP has been in government, there have been proportionally fewer apprenticeships in Scotland than in England.
I have an example of the significant skills gap in Scotland from a business development site that I visited recently in Edinburgh. The site is to be built on, but it had been lying empty for 18 months. I thought that that was perhaps because of the council being slow or other factors, but the developer told me that the only reason why the development had not started earlier was that there was a lack of apprentices coming out of Scottish colleges. The developer simply could not find local people to do local jobs, yet the Government has cut college places again, which means that there will be fewer people in Scotland with such skills.
Business confidence in Scotland is lower than that in the rest of the UK, and we need to deal with such issues quickly. Scotland’s economy is suffering from a chronic skills shortage that the SNP has neglected to deal with. The SNP Government needs to stop the blame game—it needs to stop blaming Westminster, which the cabinet secretary did yet again in his intervention—and to participate in a smooth and orderly exit from the EU that is in the interests of not just the few but the whole of Scotland.
We need to create an environment where business is confident to invest and grow. We need to ensure that we have a workforce that is equipped with the right skill set to make the most of the new opportunities that we will be presented with in the years ahead. I am happy to support the amendment in my colleague Dean Lockhart’s name.
This is like déjà vu. I note that every speech from Conservative members yesterday mentioned independence; there seems to be a theme that runs through everything that they say. Either they are coming over to our side or they are terrified. I agree that independence is coming, but let us concentrate on the day job for the time being, lads.
As convener of the Education and Skills Committee, I will take a moment to speak about the committee’s efforts to address skills issues so far in this parliamentary session. The committee has done initial work on the skills sector and, rightly, we started by hearing from people who have practical experience of training in various disciplines.
Members visited Stirling Community Enterprise in the summer and the visit highlighted the massive difference that training can make to someone who has previously been unemployed and struggled to find work. Trainees told us that they felt that they were treated with respect and, importantly, that their confidence had increased through taking part in programmes at the enterprise.
It was clear that attendance at SCE provided those young men with much more than qualifications—it gave them a life structure. Without that structure, alcohol abuse, crime and imprisonment were mentioned as likely ways in which their life chances would be reduced. On the committee’s behalf, I take the opportunity to record our thanks to the trainees and the enterprise staff for such a useful and insightful visit.
The committee has also heard from businesses such as Standard Life on their apprenticeship schemes, as well as the Scottish Trades Union Congress, the Scottish Council for Development and Industry and Skills Development Scotland. That session highlighted businesses’ frustration at the lack of information at UK level on how the apprenticeship levy will function in practice and at the uncertainty over how all the detail will be ironed out before the levy’s introduction in six months’ time. The panel’s clear view was that the levy should not bring about any great change in existing approaches in Scotland, including success stories such as developing Scotland’s young workforce, and that new money should be concentrated on the existing programmes, which are working effectively.
Does the member agree that other comments were made about the importance of ensuring that the apprenticeship and skills system becomes as focused on reskilling as it is on skilling? I note that that is in the report that we are discussing, but does he agree that the phase 2 report needs to contain a lot more detail on that point?
I do, and I might come on later to the importance of reskilling.
Although many existing programmes are working well, Scotland must continue to make new efforts to help young people to thrive in science, technology, engineering and mathematics, which my colleague Clare Adamson referred to. STEM education and training will be vital for our future economy and Scotland must equip our young children with the education that is required to face future environmental and economic challenges. Research suggests that 65 per cent of children who are in preschool today will work in jobs or careers that do not yet exist. Times are changing and our education system must change to help us to face the problem of sustainable resources and continued economic prosperity.
The Scottish Government is clear that we will develop and implement a Scottish STEM strategy to ensure that, from the earliest age, children engage with the opportunities that science, technology, engineering and maths can offer them. Providing quality education is vital to implementing the changes to help Scotland to flourish. We will roll out a programme of school STEM clusters and develop a Scottish STEM ambassador network to ensure that, by 2020, every Scottish school is working with a STEM partner from the private, public or third sector. That will enable students to look at first hand at the work that is needed to utilise advanced technology for Scotland’s benefit.
Modern apprenticeships support young people into their careers while meeting industry’s skill needs, and the Scottish Government’s 2016-17 budget supports the continued expansion of modern apprenticeships from 25,000 to 30,000. It is clear that more needs to be done to improve wider representation in modern apprenticeships, but progress has been made. In 2015-16, the number of females participating in the programme increased by 41 per cent on the previous year. There was also an increase in the number of modern apprenticeship starts who had some form of disability—the proportion of starts among those reporting a disability was up by 3.5 percentage points on the figure for 2014. In addition, there was a slight increase in participation from black and minority ethnic groups. Those statistics show that, although some figures are pretty poor and a lot of work still needs to be done, the efforts that are being made are producing gradual change. We must continue to provide the programmes that will help young people to pursue their future careers, and it is recognised that much more should be done.
The UK Government’s apprenticeship levy is a concern for the Scottish Government, which has committed to working with employers to develop a distinctly Scottish approach, as I indicated. The UK apprenticeship levy cannot be allowed to cut across the good work that Scotland is already doing.
We need to be flexible in how we train our youngsters, and there are a number of examples of that. The one that I have selected is in my constituency—it is Newlands junior college. The college assists young people who are disengaged from education to make a success of their lives and contribute to society. It operates on the premise that mainstream schools do not always offer the best learning environment for many young people and do not always inspire or motivate pupils or meet their personal needs. The college was specifically designed with such young people in mind. It provides a specialist service for a specific group of students, with intensive and individual support that focuses on the vocational curriculum and which provides a different experience that can re-engage students and set them on their road.
Jim McColl, the well-known Glasgow entrepreneur, devised the concept of the college and has made a considerable financial contribution to it through Clyde Blowers. The college embodies a constructive partnership of the private and public sectors for many young people who face long-term exclusion from school. Personal development with the college involves a certificated two-year course that is provided through SkillForce Scotland to develop personal and life skills, where mentoring and personal support are key.
I think that everyone in the chamber would want Scotland to rank in the top quartile in this area—I do not think that there is any argument about that. Scotland is served by a vibrant enterprise and skills sector that will greatly assist the Scottish economy to navigate through the uncertainty of Brexit.
However, further to my question earlier to the Minister for UK Negotiations on Scotland’s Place in Europe, I have to touch on my concern about the potential long-term skills shortage if college and university staff are barred from working in Scotland because of the insane behaviour of the Westminster Government over Brexit. If that impacts on the education system, it can only have a long-term detrimental effect on what we are trying to achieve.
The Scottish Government’s review is a sensible evaluation that is evidence based but inclusive and will ensure that productivity is woven with the aspirations of our citizens to prepare them for the economic and technological challenges that lie ahead in Scotland, which is why I support the motion.
I refer members to my entry in the register of members’ interests. I am a shareholder and non-salaried director of a small retail business in Edinburgh. Indeed, my experience of that is what convinces me of the importance and urgency of the review of enterprise and skills agencies. Running shops for eight years before I came into this place taught me three important lessons that are relevant to today’s debate.
The first lesson is about change. Like many sectors, the retail sector has been undergoing fundamental change. Online shopping is not an optional extra; every retail business has to do it and our shops certainly had to adapt by building technology into how we did business. Whether it is technology, Brexit or economic shocks like the collapse in the oil price, our enterprise and skills system needs to prepare for and enable change. We need to make sure that technological change and automation create more jobs than they make obsolete.
The second lesson is about innovation. We cannot limit the scope of innovation to new businesses or high-tech start-ups. I agree with the Government’s assessment that all businesses have to be digital. Indeed, my business had to move online and we had to get better at using and manipulating data. We moved all our systems, including our accounting systems, to the cloud so that we had complete integration between our web store, our till points and our back office. Skilling up existing businesses is just as important as new tech and start-ups.
That leads me to my third lesson, which is about skills. Innovation demands that companies and employees reskill to react to the shifts that might occur in their sector. As we moved our business and systems online, our staff had to become adept at managing stock online as efficiently as they managed it on the shelves. As technology changes, our skills system needs to be as much about reskilling people who are already in the workforce as it is about skilling up school leavers as they enter the workplace for the first time.
To that end, I welcome the details of the review about focusing on productivity. I also welcome the comments that the skills system has to be as much about reskilling the existing workforce as it is about new skills, and I certainly welcome the comments about technology.
However, as I reflect on the phase 1 document that looks at innovation and skills, I think that we needed it to say more. We needed a clear strategy that could be implemented, but we are left with a review that has the potential to complicate rather than simplify. There is a lack of clear metrics for success and few clues about funding. No timetable for delivery has been set and the document raises more questions than it answers.
The review admits that it is only half finished and there will be a phase 2, but it sets out to start implementation before we have the phase 2 document. Ultimately, the review does not point to strategic vision and a way to achieve it; it is a muddled half fix with a promise of more reviews.
During the debate, there has been much discussion about the board of trade, which is to be the overall single answer to simplification. Let us look at the implications of that. The board will oversee a budget of £2.16 billion, and it is a combination of the first, second, third and fifth largest agencies of the Scottish Government by funding. That easily puts it into the top 10 largest quangos in the UK and raises clear questions about democratic accountability and certainly about resources. We have to ask where the money will come from to resource and staff a body of such size, scope and magnitude.
I note that Tavish Scott is no longer in the chamber but he was quite right to ask who the board will report to. Will it be setting the budgets for the agencies for which it is responsible? Will it have power of appointment over all the agencies that fall beneath it?
As the review highlights, simplification is important but so far the only answer to it is this super-quango. I regret that the Liberal Democrat amendment was not taken, because the language of the super-quango is useful in this debate. As Colin Smyth pointed out, we will have to wait until the wash in stage 2 when we will get the details. The details are important, because matters such as the purpose and scope of bodies such as the south of Scotland agency and SDI will come out with the detail of this super-quango.
Jamie Greene, Jeremy Balfour and Willie Rennie were all correct to point to the fact that we have little in the way of metrics and little in the way of timetable. We really have no answers at the moment, whether we want to know about the steps that we need to take in order to implement measures, which Jamie Greene talked about, or about the goals in terms of things such as the enforcement of equity and the pursuit of the implementation of the living wage by companies that are helped by our agencies, such as Amazon.
There are three things that we need from any strategy. First, we need metrics—simply having a review is insufficient. Secondly, we need to understand the resources and funding that lie behind the review. Thirdly, we need a timetable. We do not have those things and, without them, we have no strategy. That is in a context in which, under this SNP Scottish Government, there has been a 12 per cent cut in the budgets of enterprise agencies.
I know what the Scottish Government will say in response to what I have said. It will say, “Don’t be so hasty. Just wait. All the answers will come in the phase 2 document.” However, that is not good enough because we do not even know the precise nature of that phase 2 document. Will it be a final report or will it merely be a consultation for further work? Will it be simply a series of hints and a save-the-date card?
The Government is right about one thing: we need a step-change—that is the only way to achieve the top quartile ambitions that it set out. In order to do that, we need a clear strategy that sets out clear goals. However, today, in place of objectives and clarity of purpose, we have more questions; instead of principles for the co-ordinating agencies, we have the creation of one large super-board with several new agencies beneath it; and, instead of a timetable, we simply have a request that we wait until we see what is reported in the new year.
We need change, we need innovation and we need skills. However, right now, I do not think that we have the plan in front of us that tells us how we are going to get them.
Yesterday, I was the closing speaker for the Scottish Conservatives in a debate that was brought about principally in order to discuss the “Fairer Scotland Action Plan”. It is a good document with 100 pages, carefully sectioned headings and detailed methodology, which sets out five ambitions to be met by 2030, 50 points to be actioned by the end of this parliamentary session and measurements of success.
Having examined, commended and noted the clear recommendations in the Audit Scotland report into the enterprise agencies, I was looking forward to the publication of the enterprise and skills review document. However, yesterday, I got this—17 pages, with more padding than the NFL game that I was at last weekend. It is just not good enough.
It is not good enough that, despite the fact that Audit Scotland has pointed out that the full range of public support for business is not known and thus that there is a risk of duplication and inefficiency, and the fact that the enterprise agencies themselves gave up on trying to establish what all the funding streams and public support sources were, there is no action point that states that anyone has been tasked to address that. Daniel Johnson asked where the streamlining is and said that he hopes that it is in the second report—we will return to that theme.
Despite the economic strategy stating that progress will be measured through the national performance framework, the contribution of the enterprise agencies to the NPF is not measured, as Audit Scotland pointed out. However, again, there is no acknowledgment of that in the document, nor is any solution proposed.
Jamie Greene said that the report is heavy on words but light on substance. Audit Scotland said that agencies must have measurable targets, but phase 1 does not have any. Willie Rennie said that there is no direct recommendation and that he hopes that it will be in the second report—there is a theme emerging. It is just not good enough.
The document trumpets that the Scottish economy grew by 0.7 per cent in the past year. That figure is 2.1 per cent for the rest of the UK. Keith Brown trumpets the unemployment rate of 4.6 per cent but ignores the fact that the number of female unemployment claimants has risen in Scotland while it has fallen throughout the UK; that the number of women aged 18 to 24 in work has increased by 2.8 per cent in the UK while it has fallen by 4.2 per cent in Scotland; that job growth has stalled for a decade; and that Scotland’s employment rate remains lower than the UK’s. It is not good enough.
Perhaps Liam Kerr will answer the question that his colleagues have failed to answer. He describes a litany of woe, but does he attribute any responsibility for it to the UK Government, which, as the Tories have said, holds the major levers to the Scottish economy?
It is, of course, the easy answer to always blame Westminster. The same question was put at the opening of the debate and the same answer will be given. The Scottish Government has the levers of power and it should do something about it. [
Mr Hepburn need not worry—I am coming to him.
The report proudly talks of beating the target for modern apprenticeships but, as Jeremy Balfour said, it fails to mention that, in every year in which the SNP has been in government, Scotland has had fewer apprenticeship starts per 100,000 of working-age population than England. This is a Scotland where 5 per cent of the workforce is deemed to have a skills shortage and 32 per cent of firms expect to have difficulty in recruiting apprentices.
Talking of apprentices, I hope that we will hear more on that subject later from Mr Hepburn. James Dornan will also benefit from that, as he badly needs to get up to speed. As the Parliament knows, the apprenticeship levy will come in next year. The Scottish Government’s consultation closed on 26 August with business already saying, “You’ve left this too late.”
On 11 October, I asked Jamie Hepburn in a written question when the Scottish Government will tell business in Scotland what it will do with the apprenticeship levy. Yesterday, I got my answer, which states:
“A report of the findings will be published shortly and will inform our response in Scotland, which we will look to provide as quickly as we can.”—[
, 25 October 2016; S5W-3689.]
I say to Mr Hepburn that business cannot work with that. This is happening. Scotland needs action and it needs it now.
I look forward to Mr Hepburn telling business in his closing speech what this Government is going to do.
It is not good enough, but it is not all bad. We are pleased that the Government will set up a south of Scotland agency, pleased by the Scottish Development International expansion and pleased by the flexible childcare proposals. Those are all things that we called for in our manifesto, and we can help the Scottish Government further. It should ensure that the funds that are raised from business through the apprenticeship levy are transparent and will be reinvested in Scotland for apprenticeships and training and not lost in the general budget. It should reinstate a significant number of the college places that it has cut and pull back from making Scotland the highest taxed part of the UK. As Dean Lockhart said when he called for specifics in the second report, the Government should have the enterprise agencies provide more non-financial support and designate some of the underperforming parts of Scotland as turnaround zones.
It is clear that a robust, effective and modern enterprise and skills programme is needed in Scotland and we welcome the steps that the Government is taking towards that goal. However, the theme that comes out of today’s debate has to be: “It is not good enough”. Speaker after speaker has clamoured to ask what will happen in phase 2, where the targets are and when things will be brought in. Even Ivan McKee admits that all the significant stuff will be in phase 2.
Building a strong economy, growing the jobs market, providing more apprenticeship places and linking the worlds of work and academia with strong and measurable aims and desired outcomes must be at the heart of any review of enterprise and skills in Scotland, or else it will simply be more bluff and bluster from a Government that is so out of ideas and so short of policy initiatives that it is stealing ours.
I do not know whether the member who gave the previous speech is aware that, when it decided on the apprenticeship levy, the UK Government did not tell the Scottish Government or the business community, gave no warning to anybody and, once it was introduced, could answer no questions on it for many months. Perhaps the member should look to his own situation. It is also worth saying that all our apprentices in Scotland are employed, which is unlike the situation south of the border. It is worth bearing those points in mind.
As ever, the very helpful civil service has suggested some points for my closing remarks. One is to thank everybody for their positive contributions. Perhaps I will dispense with that for the time being. [
I will try to go through some of the points that speakers raised in the debate. Daniel Johnson started off in a relatively constructive manner and I agree with a great deal of what he initially had to say—not least his point that reskilling is just as important as upskilling or developing skills in the first place. He made a number of reasonable points. He suggested that he knew what I was going to say before I said it, but I note that some of the questions that he asked will be answered in phase 2. The idea of a phase 2 was not just proposed by me but came through the ministerial review group. It enjoys general support, and there are good reasons for that.
James Dornan highlighted the importance of education and skills and the absolute necessity for freedom of movement, not least among EU nationals, and he is absolutely right about that.
Jeremy Balfour’s speech may have been one of the most truly depressing speeches that I have heard in the nine years for which I have been in the Parliament—a litany of depressing talking Scotland down. His statement that the economic situation that Scotland finds itself in has nothing to do with Brexit is an appalling abdication of responsibility from the Conservatives—I think that it is the greatest act of economic self-harm that we have seen from any Westminster Government. The speech was an appalling contribution.
In contrast to the likes of Jeremy Balfour, Ivan McKee spoke about ambition and the strengths that we currently have in Scotland. Of course it is necessary to recognise what we have to do better but we should also recognise our strengths so that we can build on them.
Unfortunately for Willie Rennie, I was a council leader when we had a Liberal Democrat Administration here and I remember being told time after time by the Liberal Democrats what we had to spend our money on in local government. It was not a paradise of decentralised—
Colin Smyth made a number of good points although, having made those good points—many of them relating to what is obviously a dearly held view about having a separate agency in the south of Scotland—he then mentioned some of the challenges.
I appreciate, understand and accept that the Scottish Government has to take some responsibility for that and we are trying to address some of those challenges, but he must accept—as the Tories will not—that the UK Government holds the majority of the major levers in the economy.
Whether we are talking about the Conservative Government now or the Labour Government previously, the UK Government has been in power for a lot longer than this Parliament and this Government. In addition to that, local authorities—and the member is a councillor—have to take some responsibility as well. There would be more credibility in what the member said if he acknowledged the different actors that are involved in local economies.
There was a good speech by Colin Beattie, who once again talked about some of the strengths in the system, which it is important to do.
I agree with many of Jamie Greene’s points on the need for digital inclusion. I do not think that the digital divide is growing; I think that there is a digital divide and we are doing what we can to try to address it, not least in relation to infrastructure, where there is an ambitious plan to try to deal with it. I agree with him on how important digital inclusion is. In my view, we have done a great deal of work on roads, railways and so on but the digital highway is important to people as well—it is sometimes even more crucial.
Clare Adamson challenged Richard Leonard’s point that he was not in Parliament in 2007. Richard Leonard spent a lot of his time talking about this Government’s track record going back to 2007. He cannot on the one hand say, “I am unaware of the fact that the Labour Party wanted to have deeper cuts than Margaret Thatcher,” and on the other criticise the SNP—
Nobody could answer the question about what was in the mind of Jack McConnell and I did not ask that question. I made the point that, in advance of the 2007 election, the Labour Party said that every area apart from education would have to cut its cloth—would have to face cuts. The member should at least acknowledge his own party’s track record at the same time as he wants to criticise that of others.
Richard Leonard also mentioned unemployment. I cannot remember a time under the Labour Government when we had unemployment levels as low as they currently are in Scotland. Perhaps there has been a time—maybe he can advise me of that—but I cannot remember it being the case in recent years. Of course 4.6 per cent unemployment is not the answer—it is not the final position. In terms of structural unemployment, I accept that there are people for whom we have to do more. Whether it is people with disabilities or people who are furthest from the job market, we have to do more. However, he should at least recognise the success: 4.6 per cent unemployment is worth shouting about—not trumpeting about, perhaps, but certainly shouting about.
Dean Lockhart made a point about productivity. He cannot have any credibility in asking any of those questions if it is his position—as it seems to be the position of the Conservative Party generally—that there is no role in the Scottish economy for the UK Government.
In the previous session of Parliament, some more aware Conservative members such as Gavin Brown at least said that the UK Government was the major influence in the Scottish economy as it retained most of the levers. We have in the chamber—in addition to Brexit deniers—members who say that there is no role or responsibility for the Conservative Government in relation to Scotland’s economy. That is not a credible position, and they will perhaps now accept that the UK Government has some responsibility in that regard.
Once again, the Conservatives refuse to acknowledge that the UK Government has a role in the Scottish economy. They cannot have any credibility on economic issues if they will not even acknowledge that the Government that they support has a major role to play in the Scottish economy. They are deniers of the fact that the UK Government has a role, and they are Brexit deniers who seek to remove from the Government’s motion any reference to Brexit.
We heard that in spades from Jeremy Balfour, who said that there is currently no impact from the decision on Brexit on the Scottish economy. There is no way that he can have any credibility if he does not acknowledge the impact. I can tell him about companies that are letting people go just now; companies in which individuals are looking to a future elsewhere than Scotland; and companies that are changing their investment plans because of the vote in the EU referendum. I can tell him about EU citizens who are very uncertain about their situation in Scotland because the UK Government refuses to confirm their status. According to the Conservatives, however, there is no impact from the vote in the EU referendum. If they cannot acknowledge that fact, that leaves them with virtually no credibility in tackling these issues.
Dean Lockhart and other members mentioned Scotland’s GDP. Our GDP per head is 2.1 per cent above its pre-recession peak, although that is not good enough and we would like it to be higher, but the figure for the UK is only 1.2 per cent. It would have been good if Mr Lockhart had acknowledged that and shown a bit of even-handedness and balance, with a bit of knowledge and self-awareness about the Conservative Government’s failures.
Our proposals seek to build on the agencies’ success. The success that we have had so far is not good enough, which is why we are reviewing the agencies to ensure that the system is focused on a shared purpose with user-led services. A number of questions were raised about phase 2 of the review, and I am happy to answer them. Phase 2 will begin on 1 November and will run until spring next year. It will build on and develop the input and relationships established in the first phase to ensure that we find the best way of implementing our key decisions from phase 1. I hope to support that task through the ministerial review group that I set up during phase 1. I thank the members of the group for their help and I look forward to continuing to work with them.
I am in my last minute just now.
In phase 2, I aim to propose a single aligned delivery plan for the full implementation of each decision. I anticipate that some actions will be prioritised for quick delivery while more complex changes will take longer to fully implement—that seems fairly straightforward to me. The final phase 2 recommendations are likely to set out a programme of work to be undertaken during the current session of Parliament. Achieving our ambitions will require a strong, enduring, focused and concentrated alignment of services behind our goal, and I look forward to working with partners throughout Scotland—and possibly even some other parties, I hope—to achieve that.