South of Scotland Economic Partnership

– in the Scottish Parliament at on 15 March 2018.

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Photo of Linda Fabiani Linda Fabiani Scottish National Party

The next item of business is a statement by Keith Brown on the south of Scotland economic partnership. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions. Cabinet secretary, you have 10 minutes.

Photo of Keith Brown Keith Brown Scottish National Party

I welcome the opportunity to update members on the progress that we are making to deliver a new enterprise agency for the south of Scotland. Members will recall that one of the key recommendations from last year’s enterprise and skills review was a commitment to a new agency supporting inclusive economic growth in the south. The review recognised the unique circumstances of the south of Scotland and its strengths, opportunities and challenges. It also acknowledged the benefits that a new agency could deliver by developing a deeper understanding of the south of Scotland and tailoring a response informed by that understanding.

We know that the south of Scotland has great potential. It is woven into the fabric of our economy and it has played a key part in our economic history by, for example, nurturing our textile industries. The south of Scotland is a beautiful region of Scotland, attracting visitors from far and wide, and tourism is an extremely important part of the economy of the area. Its agriculture and forestry sectors are thriving. It is as rich as anywhere in renewable energy resources. Its businesses, many of which are small and family owned, show a real entrepreneurial spirit.

We want to ensure that the south of Scotland plays a key role in our economic future, too. We know that the south faces some economic challenges. It has, for example, more people working in lower-paid jobs than other parts of Scotland have. Fewer businesses start up in the area than is the case elsewhere and, when they start up, their success rate is lower. Its businesses spend significantly less on research and development and a higher number of its young people are leaving and not finding opportunities that attract them back to the area.

We have a tremendous opportunity to work with businesses and communities to transform the economy, generating a response that, in turn, responds to the needs of generations. That is to ensure that people in the south of Scotland can fully participate in the economy and access the opportunities that are there, and to develop the necessary skills and tackle the barriers that might be getting in the way. It is an opportunity to be bold and ambitious and to do things differently to benefit the area.

In our programme for government, we made a commitment to introduce legislation later this year to establish the new body. We also committed to putting in place interim arrangements in advance of the statutory body being set up. Today, we take an important step in that legislative process. I am delighted to launch the public consultation on the south of Scotland enterprise agency, which will open today and will run for 12 weeks until 7 June.

In the consultation, we have set out what we see as the three initial high-level aims for the agency. First, of course, we want it to drive the economy forward with growth in a way that creates opportunities for all. We also want to help businesses to become more productive and focused on fair work opportunities, tackling issues that prevent people from fully participating in the economy. Secondly, we want to sustain and grow our communities, building communities that can play a greater role in the economic, social and environmental success of their area. Thirdly, we want to capitalise on people and resources, developing skills and making the most of all of the assets of the area.

The consultation that I have launched today seeks views on the detailed specific activities that people want the agency to carry out. The responses that we receive will help to inform the legislation for the new body and help to shape its structure. It is a milestone moment in the economic future of the south.

We will complement the written consultation with a series of events across the south of Scotland to hear views directly from those with a stake in the agency’s future. Of course, in this year of young people, we shall make sure that we hear their voices, too. However, I do not need to tell members that legislation takes time. If the Parliament is supportive, we can have the new body up and running by 1 April 2020. We cannot—and we do not want to—make the south of Scotland wait any longer than that. It is vital that the area sees the benefit of a fresh approach as quickly as possible.

To that end, we have established the south of Scotland economic partnership to take things forward in the meantime. The partnership, which is chaired by Professor Russel Griggs OBE, brings together public sector organisations that support economic growth in the south of Scotland with members from the private, third and further and higher education sectors. Like us, the partnership is ambitious for the south of Scotland and is seizing the opportunity to do things differently. It will ensure a fresh approach to securing inclusive economic growth, with the private and third sectors being central to its work and helping to shape and design services.

The interim period provides the opportunity to align existing activities, ensuring that current services are as effective as they can be in addressing people’s needs. It also allows us the opportunity to trial new approaches to economic development and it will help to prepare the way for the new agency, assessing what has worked and ensuring that the agency is responsive to and informed by the needs of the people of the south of Scotland. When I met Russel Griggs last week, he set out the progress that the partnership has already made since its first meeting in February. He emphasised the commitment, energy and enthusiasm that members have already brought to the task and their determination to improve the economic outcomes for the south.

The partnership is now working on a clear and prioritised work plan setting out what it will be doing. It is clear that its work needs to be shaped by the needs and perspectives of people in the south of Scotland. To that end, it has established six specific theme groups to explore issues that, in its view, are key to the success of the south. That will enable the partnership to draw in views from across the south and to capture perspectives and expertise. The groups are on farming; forestry and land management; key sectors; education and skills; infrastructure; and communities and business support. They will identify key issues and explore how they could be addressed.

We are committed to the success of the partnership and, in our 2018-19 budget, we have allocated £10 million in additional resources to support the partnership’s work. That is over and above the resources that partners already invest across the area. Our additional resources will support new activity that would not otherwise have happened.

The partnership will make recommendations on potential projects. It will assess them against clear and consistent criteria, ensuring that they deliver real impact and economic benefit. Of course, those resources that I have mentioned build on our other investment in the south of Scotland—investment in innovation through my colleague Paul Wheelhouse; investment in skills through Jamie Hepburn; and investment in businesses and infrastructure.

Examples of that investment include £275.5 million for the new Dumfries and Galloway royal infirmary, which opened in December; £68 million from our schools for the future programme for eight schools across the area; £60 million through the Scottish Further and Higher Education Funding Council for further and higher education over the past three financial years; and £353 million for the increasingly successful Borders railway, which I remind the Parliament was the longest piece of new rail infrastructure in the United Kingdom for 100 years.

I very much look forward to working with members over the months ahead as the partnership takes forward its work and we shape the new agency. I believe that this is an exciting time for the south of Scotland and I encourage all members here—and, of course, members of the public—to be active participants in the consultation process that we are launching today.

The Deputy Presiding Officer:

The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions.

Photo of Dean Lockhart Dean Lockhart Conservative

I thank the cabinet secretary for the advance copy of his statement. We welcome the progress that has been made on the establishment of a new enterprise agency for the south of Scotland—which was, after all, originally a policy of the Scottish Conservatives.

We will support all steps to encourage sustainable growth across the south. That will require an approach that is tailored to the unique characteristics and needs of the economy and the workforce of the south, and that taps into the real potential that exists in the region.

There is much work to be done on that front, because the economy of the south has suffered in the past 10 years. Gross domestic product and productivity levels in the south are 20 per cent below average levels in Scotland. Against that background, I have the following questions for the cabinet secretary.

Recent figures show that productivity levels and GDP in the south of Scotland have been in decline. What steps will the cabinet secretary take to reverse those worrying trends?

In his statement, the cabinet secretary mentioned that the budget allocated £10 million to the south of Scotland economic partnership. As he knows, it will take more than £10 million to address the economic challenges in the south. Can he confirm what additional budget will be available for the enterprise agency once it is established?

Photo of Keith Brown Keith Brown Scottish National Party

On Dean Lockhart’s first point, I was not aware that the establishment of a new enterprise agency for the south of Scotland was a Conservative policy—perhaps it was a bit of a secret. I know that the various things that I have described that have been done—for instance, the Borders railway—have also been policies of other parties over the years. The difference is that we have delivered them. The other parties had decades to deliver those policies, but did not do so—the SNP is delivering them.

We have had a relatively consensual approach up to now; it is unfortunate that Dean Lockhart has chosen to deviate from that.

Previously, I have laid out our response in terms of productivity and GDP, and I have underlined it on many occasions. Members across the chamber, apart from in Dean Lockhart’s party, acknowledge that Brexit presents a real threat to the economy and is having an effect on it now. Of course, one of the responses to the situation that he describes is the establishment of the agency that we are talking about. I had hoped that we would have the support of the Conservatives for that.

On the initial investment of £10 million, how funding will develop in future years is, of course, a matter for future budgets. However, as far as I am aware, there was no proposal from the Conservatives to provide a higher funding allocation in any alternative version of the budget that was produced by them. Of course, in future years, they will be free to do some work on that and to put forward proposals, with information about where the money would come from. However, along with the discussion that we are having on a potential borderlands initiative and the establishment of the agency, that £10 million will be well received in the south of Scotland and will be used for good purposes.

Photo of Colin Smyth Colin Smyth Labour

I thank the cabinet secretary for advance sight of his statement. Having campaigned for many years, as a councillor and a chairperson of the south of Scotland alliance, for a rethink on the support that is provided to the area to tackle our huge economic challenges, I welcome the proposal to establish a south of Scotland enterprise agency and look forward to shaping the final proposals when legislation comes before Parliament.

Given that the recommendation to establish a new body was made in October 2016, I am sure that the cabinet secretary understands that there are frustrations about the start date of April 2020 for the new agency. That is more than two years away, but the economic challenges exist now. That timetable means that the work of the interim partnership will be vital.

In his statement, the cabinet secretary said that the partnership will make recommendations on how to spend the £10 million budget, but can he confirm who will make the final decision on how that budget will be spent, and will he give a guarantee that the decision will be made in the south of Scotland?

Ensuring that decisions are made in the south of Scotland by people who live in the area is a vital principle for the new body. Therefore, can he give a commitment that membership of the new agency will genuinely be determined by local stakeholders?

Finally—

The Deputy Presiding Officer:

Yes—finally, please.

Photo of Colin Smyth Colin Smyth Labour

Skills will be a crucial part of the new agency. Therefore, can the cabinet secretary say a bit more about whether existing powers and resources that sit within Skills Development Scotland will be devolved to the agency when it is established?

Photo of Keith Brown Keith Brown Scottish National Party

There was quite a lot in there. I will take the questions in turn. On the first question, we want to establish the body as quickly as possible. I do not see any way in which we could truncate the 18-month period for its establishment—such is the nature of parliamentary legislation—but I am open to suggestions on that. I agree with Colin Smyth that we cannot wait that long, which is why we have established a partnership and allocated substantial funds to it. It is also why we are drawing together the existing actors in the south of Scotland in order to make an impact as soon as possible.

On Colin Smyth’s question on skills, I have said—in particular in relation to the partnership of the three Ayrshire councils—that if there is a proposal from any part of Scotland about working more closely with Skills Development Scotland and reflecting more closely local demand and need for skills, I will be more than willing to listen. I have said that since the enterprise and skills review was undertaken.

There are early signs that the partnership is grappling with that and there is some good collaboration between the two councils that are involved. It is down to the partners—the people who have established the partnership—to come to the Government with their suggestions, which could be at the suggestion of people such as Colin Smyth and others from the south of Scotland. I would approach that with an open mind.

On how the money is spent, there will be a discussion between the Government and the partnership, which is as it should be and is how it works with the city region deals. We have a custodial duty to public funds, but the partnership is the organisation that considers the proposals in submissions that are made. However, there will be a discussion with the Government, too.

The Deputy Presiding Officer:

There are quite of lot of questions from members. If we have quick questions and answers, we should be able to get everyone in.

Photo of Emma Harper Emma Harper Scottish National Party

Does the new board for the south of Scotland economic partnership intend to give consideration to infrastructure investment such as roads and rail networks as part of the new agency’s support of inclusive economic growth?

Photo of Keith Brown Keith Brown Scottish National Party

Yes. The board will be able to take decisions on infrastructure investment, but those decisions will be informed by the representations that the board receives and the view of the partnership as to what the priorities should be. There is no question that we will exclude infrastructure investment from the board’s remit.

Photo of Rachael Hamilton Rachael Hamilton Conservative

Tourism is a key sector in the south of Scotland; in the Scottish Borders alone, it contributes £194 million annually. Does the cabinet secretary understand that, by not robustly identifying it in his statement as a key sector, he risks tourism being overlooked or not capitalising its worth through the south of Scotland economic partnership? The inclusion of tourism and growing the sector could improve low productivity, and it could increase below-average wages and business sizes. Will the cabinet secretary consider my request on behalf of the tourism sector to include it among the key sectors?

Photo of Keith Brown Keith Brown Scottish National Party

I mentioned tourism at the very start of my statement. I recognise that it is crucial, which is why I talked about

“attracting visitors from far and wide” and about how central tourism is to the south of Scotland. Perhaps Rachael Hamilton missed that. [

Interruption

.]

Pardon? I am sorry, but I cannot take questions from members who are in a sedentary position.

I mentioned tourism and I recognise its importance; however, it was the partnership that came up with the six key sectors that I mentioned. As I said in my statement, if members including Rachael Hamilton want to make representations to influence that list, they should do so to me, or directly to the partnership. We can have a conversation; we are not putting a block on that. We are very seized of how important tourism is; Rachael Hamilton and I agree on that.

Photo of Joan McAlpine Joan McAlpine Scottish National Party

I welcome the establishment of the partnership. As a member of the Economy, Energy and Tourism Committee in session 4, I often called for tailored support for the south of Scotland.

Can the cabinet secretary indicate whether the new partnership will consider the support that it can give to the creative industries, which is a key sector in the south? Given that many of those industries are currently supported by business gateway, what will business gateway’s role be when the agency is up and running?

Photo of Keith Brown Keith Brown Scottish National Party

In relation to the issue of creative industries and Rachael Hamilton’s point on tourism, I mentioned that the key sectors are an important part of one of the six strands of activity that are being taken forward. That is one of the reasons why Fiona Hyslop is here; she has responsibility for the creative industries and tourism, which reflects the importance that has been placed on them. The board draws on the experience of people in the creative industries—

I know that Joan McAlpine is aware of that.

One of the theme groups that I mentioned will focus on the key sectors—of which, there is no question, the creative industries is one.

Decisions about the scope of activities of the new agency are still to be finalised. As part of the next stage we will consider suggestions on the future role of business gateway. That initiative will have to come from local authorities, which are responsible for business gateway.

Photo of Jackie Baillie Jackie Baillie Labour

I welcome the south of Scotland enterprise agency and the £10 million of funding.

I want to explore a principle with the cabinet secretary. Does he envisage the funding increasing in due course at least to match the funding that is received by Highlands and Islands Enterprise, given that the population in the Borders and Dumfries and Galloway is higher than that in the Highlands and Islands?

Photo of Keith Brown Keith Brown Scottish National Party

There are several reasons why it is difficult to give a definitive answer at this stage. First, unlike in the Highlands and Islands, Scottish Enterprise is still actively involved in spending money in the south of Scotland. It will take some time for that to work through the system.

Secondly, I cannot lay a claim on future budgets in the absence of the finance minister. I am sure that Jackie Baillie understands that process.

It is our ambition that the body—both the partnership and the agency that will succeed it—will have the resources to take it through that transformative stage. That is our ambition, but we will have to see how things develop in the future.

Photo of Andy Wightman Andy Wightman Green

I thank the cabinet secretary for the advance notice of his statement. The establishment of the agency was also a manifesto commitment of the Scottish Green Party, so it is welcome progress.

I have two questions. First, given that social enterprise, employee ownership and co-operatives are increasingly recognised as the business models of the future, in order to create sustainability, resilience and fairness, does the minister agree that such models should form a core part of the work of the new agency? Secondly, the minister said that he is committed to listening to young people in the development of the legislation. How does he intend to do that?

Photo of Keith Brown Keith Brown Scottish National Party

On the latter point, engagement with young people will be done through the consultation process, both through the meetings and through the way in which the consultation invites responses from groups that we want to target. Specific work is going on in the Scottish Government to ensure that we have representations from young people.

It is good to see that the public are beginning to learn that they should vote for the Scottish National Party if they want things in other parties’ manifestos to be delivered, because the SNP will do it for them. This seems to be a commitment in everyone’s manifesto, so we should all be agreed on the matter.

There is no reason why the partnership should not consider the various models that Andy Wightman mentioned. Rather than waiting to see whether those bubble up—I am not suggesting that Andy Wightman would do this—people should be sure to put that response into the consultation process, so that it is uppermost in the mind of the partnership in its future work.

Photo of Willie Rennie Willie Rennie Liberal Democrat

My question is a follow-up to Colin Smyth’s question, because I do not think that he got the answer that we were looking for. No one in the Parliament would be against discussion between ministers, the enterprise and skills body and the south of Scotland partnership. The real question is on who makes the final decision. Will it be taken in the central belt or in the south of Scotland?

Photo of Keith Brown Keith Brown Scottish National Party

I may not have given the answer that Willie Rennie wanted, but I am used to being in that position. The answer is the answer. It will come forward from the partnership. Submissions and representations have already been made to the partnership.

Mr Rennie will understand that the Scottish Government has a responsibility to the Scottish taxpayer for the proper expenditure of resources. We have not yet had the primary legislation to establish an agency that would have that accountability. As things stand, it is a partnership and so, of course, there is a role for the Scottish Government. In due course, when it becomes an agency, it will be a different proposition and all the decisions will be taken by the people in the agency.

Photo of John Mason John Mason Scottish National Party

I want to follow up on Andy Wightman’s question. Will the cabinet secretary expand on how he might draw in groups that do not normally take part in consultations? To many people, it might seem to be a very dry subject at this stage and they might not realise that it will be very important to them in practice.

Photo of Keith Brown Keith Brown Scottish National Party

Andy Wightman and John Mason have raised good points. As I said in response to Andy Wightman, a lot is going on in the Government to ensure t he location, accessibility and appeal of the various consultation events in order to get as many people as possible attending those events. As has been mentioned, a particular effort is being made to get young people to come along.

I am happy to write to Andy Wightman and John Mason on the great deal of work that is being done by the Scottish Government. The venues are pretty much arranged, and I am happy to write to the members on how we intend to attract people to the events, particularly those who would not normally get involved.

Photo of Finlay Carson Finlay Carson Conservative

In his statement, the cabinet secretary mentioned twice that he is taking a fresh approach and doing things differently. I suggest that that is a recognition that, over the past 11 years, the SNP Government has failed the south of Scotland. I welcome the opportunity that the new south of Scotland enterprise agency will bring. However, I also have some concerns.

Six key areas have been set up and, like my colleague Rachael Hamilton, I am disappointed that tourism has not been included, but I am also disappointed that energy has not been included. Given the number of renewable energy projects in the south of Scotland, can the cabinet secretary explain how the potential for energy generation and storage will be met through the enterprise agency?

Photo of Keith Brown Keith Brown Scottish National Party

I mentioned the key sectors, and energy is, of course, one of those. My colleague Paul Wheelhouse has already had a number of discussions with interests in the south of Scotland on the potential opportunities there. Finlay Carson accuses us of failure. Well, we have established this body; I do not know how long the Conservatives will take to accept that we have done that. Of course we want to see the body take a fresh approach and we want to see whether it can replicate some of the successes of Highlands and Islands Enterprise. If the member is genuinely supportive, he hides it quite well.

Photo of Willie Coffey Willie Coffey Scottish National Party

The cabinet secretary will be aware of the close and common interests between the south and the south-west of Scotland. He will also be aware that the Secretary of State for Scotland, Mr Mundell, has given his full support to the Borderlands growth deal for the area where his own constituency lies. Can the cabinet secretary tell me what progress has been made in discussion with the UK Government to support the wider economy in the south and south-west of Scotland, particularly with regard to transport infrastructure improvements?

Photo of Keith Brown Keith Brown Scottish National Party

We have consistently pushed the UK Government to commit to 100 per cent coverage of growth deals across Scotland. That includes the Ayrshire growth deal

, which preceded by some way the emergence of the Borderlands deal. As a Government, we have said that we are committed to growth deals for the whole of Scotland—that seems to us to be the only equitable way to proceed—and I have increasing confidence that the UK Government will also support that.

I am not sure what the basis of that support will be—I do not know whether it will be the same as the city deals, which is 50:50 reserved and devolved. I was due to have a discussion with Mr Mundell recently, but unfortunately that had to be postponed. I expect to be discussing the matter with the secretary of state shortly and I am optimistic that we will see a commitment from both Governments to 100 per cent of growth deals, which will cover some of the questions that Willie Coffey raised.

Photo of Claudia Beamish Claudia Beamish Labour

As I understand it, there is no union involvement in the interim body. The cabinet secretary recognised that South Scotland has more people working in lower-paid jobs than other parts of Scotland. The statement also focused on the fair work opportunities that the south of Scotland enterprise agency will bring. Will the cabinet secretary commit today to union participation in the south of Scotland partnership and agency by adding the unions to the list of themed groups and membership? Will he also clarify whether there will be a social remit to the new agency?

Photo of Keith Brown Keith Brown Scottish National Party

Claudia Beamish raises a fair point. We recently had a discussion at the joint meeting of the Scottish Trades Union Congress and trade union partners on that issue. There will be substantial engagement with the trade unions both through the fair work convention and by a number of other means, not least for the reasons that Claudia Beamish mentioned. It is very important that we take that approach. There is a need to have that discussion in relation to low pay and some other issues. We believe that the different measures that are already in place, not least through the fair work convention and the regular consultation with trade unions, should allow us to take forward those issues. I am happy to write to Claudia Beamish on the specific point that she raised.

Photo of Christine Grahame Christine Grahame Scottish National Party

On tourism, while welcoming support for the Borders railway and for the great tapestry of Scotland to be located in Galashiels, I note that the cabinet secretary referred in his speech to additional resources to support new activity. Can I suggest that it should include existing activity, such as Smail’s printing works in Innerleithen, which is having its funding cut by the National Trust for Scotland? It is a wee gem and the last working printing works in Scotland.

Photo of Keith Brown Keith Brown Scottish National Party

Christine Grahame can indeed suggest that, and she could also suggest it to the partnership, which has an expanding list of proposals and priorities that have been presented to it. To respond to some of the concerns raised by members of other parties, it is right that those proposals go to that partnership. Those are the people who will consider and prioritise them. It is important also to look at what currently exists and not always to assume that we have to do something new. I suggest to the member that if she wants to get in touch with the partnership, suggestions such as the one that she has just made will be well received.

Photo of Rachael Hamilton Rachael Hamilton Conservative

I draw members’ attention to my entry in the register of interests, which I failed to do before I asked my question. I am a business owner in the Scottish Borders.

The Deputy Presiding Officer:

That concludes questions on the ministerial statement, being the update on the south of Scotland economic partnership.