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On 21 April, I informed Parliament that we had adopted a four-step plan to respond to the economic impacts of Covid-19 using a respond, reset, restart and recover approach. The Scottish Government brought forward a £2.3 billion response package of measures in the form of grant payments, loans and rates relief and a £230 million restart economic stimulus with capital for shovel-ready and growth projects.
Tailored to the specific needs of the Scottish economy, those measures have provided a lifeline for businesses, workers and the self-employed as they negotiate the immediate crisis, providing specific support for hard-hit sectors such as tourism and hospitality as well the creative industries.
I have previously recognised the United Kingdom Government’s role in supporting business, as suggested by the Conservative amendment. Our additional schemes are not available elsewhere and have been geared to addressing gaps in the UK Government’s support.
As part of resetting workplace safety needs, we have produced sector-specific workplace guidance with business and unions in advance of restart to help businesses to reopen as soon as it is safe for them to do so. I recognise the Liberal Democrat amendment and I am sure that Willie Rennie heard the Deputy First Minister’s comments in that regard.
Irrespective of the measures that have been put in place, Covid-19 has brought about irreversible changes to our society and we must be realistic about their longer-term implications for Scotland’s economy. Covid-19 has caused death, grief, tragedy and disruption, but the economic shock and crisis created by the virus has accelerated thinking, instilled a desire for change and necessitated a radical rethink of priorities. It is a chance to shift the dial on business innovation and practices and an opportunity to accelerate the drive to create a greener, fairer and more inclusive wellbeing society.
I informed Parliament on 21 April of our intention to establish an independent advisory group on economic recovery led by Benny Higgins. I tasked that group to provide expert advice on supporting the different regions and sectors of Scotland to recover in a way that would facilitate our transition towards a greener, net zero and wellbeing economy.
The advisory group’s report, “Towards a robust, resilient wellbeing economy for Scotland”, which was published on Monday, contains 25 recommendations for both the Scottish and UK Governments as well as other actors in the economy. I record my thanks to the expert members of the advisory group for their commitment over the past two months to producing a set of recommendations that provide such a strong foundation upon which to rebuild and reshape our economy.
By applying their energy and expertise to developing the recommendations in such a short time, members of the advisory group have given us the platform to act swiftly, purposefully and, I hope, in consensus as a country in shaping the course and direction of Scotland’s economic recovery as we continue to emerge from lockdown.
I do not know whether the cabinet secretary has read the Fraser of Allander institute’s response to the Higgins report. It makes the point that although it is a
“welcome contribution to the ... debate ... there is little ... that is new, or different to what has gone before.”
Will the cabinet secretary tell us what is new in the report?
One of the major differences is an acknowledgment of the debt issues that many companies will face—as a result of welcome UK Government loans, for example. The restructuring of business may require some type of intervention. I am not saying that that is blanket, but the Green amendment indicates that there are issues on that point that might need to be addressed.
I have raised the issue of equity stakes, for example, with the chancellor and I know that across Governments, not just in Scotland but in the rest of the UK, we are thinking about what that means. That is one example.
I appreciate that the direction is similar to what we have proposed previously in relation to a green recovery and to digital action. However, the report provides the foundation for and the acceleration of what we need to do, and I hope that the chamber will come with us on that.
Throughout May and June, the group engaged directly with key stakeholders and it received more than 375 submissions from individuals and organisations. The breadth of the responses confirms the value of the advisory group process.
I thank all the businesses, trade unions and third sector organisations, as well as the wide range of individuals, who, despite the challenging circumstances, brought forward analysis and shared their knowledge and insights. Our enterprise agencies also played a crucial role in enabling the advisory group to undertake robust and extensive engagement with the business community, and so I express my gratitude to them as well. In particular, I thank the chair of Scottish Enterprise, Lord Smith of Kelvin, for convening a number of round tables, giving businesses the opportunity to feed their views into the group.
The 25 recommendations are wide ranging and challenging, reflecting both the breadth of the engagement that has been undertaken and the diversity of factors that make up a robust, resilient wellbeing economy. A theme that emerges strongly is the need to avoid repeating the mistakes of the past, when the impact of recessions has been exacerbated by retrenchments in public spending. I wholly support the group’s clear view that, as we come out of the recession caused by the pandemic, we must not return to austerity.
Instead, the report identifies the need for targeted investment to support and stimulate the economy through an investment-led recovery. That requires either an increase in our budget or new mechanisms for raising capital. As the Cabinet Secretary for Finance noted in Parliament on 16 June, the fiscal framework was not designed to deal with the impact of a pandemic, and greater flexibility is needed to fully respond to the crisis.
In his foreword and at the daily press briefing yesterday, Benny Higgins outlined the implications of the pandemic, identifying that:
“The last few months have exposed and illuminated the scale of inequality across the world and here in Scotland” and that
“The central importance of the role of education in the reconstruction of the economy is unarguable”.
He also highlighted that:
“The prospect of an inevitable sharp rise in unemployment demands direct and urgent intervention.”
I agree on all three counts. The report provides a series of recommendations to address those themes. On inequalities, the report highlights that advancing equality and eradicating discrimination must be at the heart of Scotland’s recovery, embedded in the design, delivery and review of policy response at all levels of government. I support that view; not only is it the right thing to do, but equality is—as the report makes clear—fundamental to a robust and resilient economy. We cannot ignore the continued inequality that persists in our society, which has been exposed so clearly by the pandemic. Advancing equality must pervade all aspects of our recovery plans.
The advisory group’s report states that Scotland’s recovery must be education led, prioritising the alignment of our skills base to the changes in the economy. The report identifies the need for co-ordinated action across education and skills provision to achieve that. Covid-19 has given rise to new economic trends and accelerated existing ones. Our education and skills system is the foundation of an inclusive, fair and prosperous society, and it must be adapted to the new realities. As I informed Parliament on 2 June, the Scottish Government’s commitment to investing in and developing Scotland’s skills base is only strengthened by the pandemic, and the report’s recommendations will help us direct funding to where it will be most valuable.
The advisory group’s report identifies that rising unemployment will be a key challenge for Scotland’s economy. Increases in unemployment will disproportionately affect young people who are moving from education into the labour market, and previous recessions have shown that the repercussions of that will permanently impact on the career prospects of that group unless action is taken to address it.
We must therefore plan for the impact of increased unemployment, particularly on young people. That is why we have asked the Enterprise and Skills Strategic Board to look specifically at issues related to unemployment. I agree with the Labour and Green Party amendments in that regard.
I welcome the recommendation for a new collaborative partnership with business to deliver change and action on recovery. Covid-19 has taught us just how important the dynamic between business and Government truly is. We need to draw on all talents and expertise in a focused way with purpose, action and results. We all need to be part of building and creating the post-Covid world, and the report quite rightly places expectations on both Government and business.
As someone who, 22 years ago, was seconded into Government by the chief executive officer of the company that I worked for at the time—Standard Life—to provide marketing advice on launching the new Labour Government’s new deal to help young people into employment, I know the value of those connections. This Government is committed to building a relationship with the business community to take matters forward.
What unifies the recommendations is the need for a renewed partnership across the public, private and third sectors, and with this Parliament, which is united around a shared purpose and vision for our economy. Covid-19 has been cruel, but we cannot let it defeat us or rob our children of their future. We must establish the partnerships that are required to create a robust and resilient wellbeing economy for Scotland.
Together, we can use the strengths, ingenuity and common collective will of Scotland to recover well for all the people whom we are here to serve. I am committed to working with members across the chamber and with the UK Government in order to achieve that. I commend the report to Parliament.
That the Parliament notes the findings and recommendations of the independent Advisory Group on Economic Recovery in its report,
Towards a robust, resilient wellbeing economy for Scotland
, and thanks the membership of the group for their deliberations; further notes the considerable impact that COVID-19 has had on the different sectors and regions of the Scottish economy, and recognises the considerable and collective action that will be required from Government, private and third sectors, trade unions and the people of Scotland to support a green and sustainable economic recovery that enhances the wellbeing of all.
What started as a health crisis has become an economic crisis, too. Since March, Scotland’s economy has shrunk by a quarter. Tens of thousands of people risk losing their jobs, and businesses face collapse. Today, we learned that the iconic Braehead facility in Renfrewshire has gone into administration. That is a hammer blow for workers and families in Renfrewshire and the whole of the west of Scotland, and we must do all that we can to save it.
Of course, the UK Government has provided a safety net for Scotland. Almost 800,000 Scottish jobs—a third of the entire workforce—have been saved by the UK Government’s job retention scheme.
As the advisory group on economic recovery made clear, recovering from the crisis must include tackling inequality, combating climate change and ensuring the wellbeing of our citizens. The Scottish Conservatives welcome those aims and will work constructively to achieve them. As today’s motion recognises, significant effort is needed from every sector of society. That must include the private sector, which accounts for 79 per cent of jobs, and the third sector, which will be increasingly important in supporting communities in the months ahead.
Education will be key to our long-term recovery, due to its power to create opportunity, lift people out of poverty and provide the skills that our economy needs; there are also the jobs that are directly and indirectly dependent on the sector. However, the future of a generation of young people has been jeopardised by massive disruption to their education. Beyond the need to support pupils and students with face-to-face learning, even if it is partially delivered online, we need more help for those who have fallen furthest behind. I recognise the importance of the Liberal Democrats’ concerns about the effect of school closures on childcare and women’s employment. We will support the Liberal Democrat amendment today.
Those who are aged 16 to 24 will be hardest hit by job losses, no doubt as a consequence of the fact that many work in the worst-affected industries, such as hospitality. As such, the report’s recommendation of a job guarantee scheme, as highlighted in Labour’s amendment, is worth investigating, although we will need to review the details. We will also support Labour’s amendment today.
Training will be vital both to help those who are affected to find new employment and to build the skills base that we need to create a green economy and take advantage of emerging industries. For example, after the experience of recent months, digital services will only become more important, having had positive impacts on flexible working, the environment and business services. We must embed those benefits in the recovery while attracting new digital services and jobs. Supporting higher education to offer needed skills is essential to that effort, as is improving our infrastructure. We lag behind Wales in data centre capacity, and ultrafast broadband has been rolled out too slowly.
However, a green recovery can start immediately. In the oil and gas sector, we have workers with transferable skills who can help us to secure decommissioning work and roll out renewables and other net zero projects as part of a just transition. That would keep such jobs in Scotland and secure the long-term future of communities throughout Scotland.
I very much agree with what the member has said. Some of the points that he highlighted are from the report, but some are not. However, in relation to the transferability of skills, does he welcome the £62 million energy transition fund, whose purpose is to support the industries that he has referred to in north-east Scotland?
Yes, I do, but we need more action from the Scottish Government in that area—for example, in ensuring that we have deep-port capacity for decommissioning in Scotland. Currently, the decommissioning of a single-lift platform from one of the 471 platforms in the North Sea has to be done in Tyneside or Teesside. Opportunities to build yard capacity here in Scotland would be most helpful.
If anyone doubts the proposed approach, research from Scottish Power shows that a net zero strategy could support up to 10,000 jobs and help preserve our natural capital, which underpins much of our economy. Agriculture, food and drink, and culture and tourism are all reliant on our natural heritage. A green recovery will also improve general wellbeing.
Recent adaptations to support active travel have seen increased exercise levels, improved mental health, reduced congestion and improved access to services for those without cars. However, without adequate attention and a renewed focus on behaviour change, those adaptations will be only temporary. That is also the case for efforts to install energy-efficiency improvements and low-carbon heating in our homes, both of which could tackle fuel poverty, reduce emissions and create jobs. Ideally, local firms would get that work, as every £1 spent with a local small and medium-sized enterprise generates an additional 63p of value for the local economy.
We must offer immediate help to businesses by, for example, reviewing social distancing regulations safely, easing planning rules on outdoor trading and urging people to buy local. That point serves to highlight something that is missing from yesterday’s report. Although its overall objectives are to be welcomed, there is no detail on how to achieve them. I understand that ministers will be setting out a response in late July.
I do not wish to pre-empt that response, but it must provide the detail of when and how the economy can restart, and with what support. It must also explain how things will be done differently this time because—I say this with the utmost respect to ministers who were not in post at the time—many of the report’s recommendations could have been achieved in the 13 years in which the Scottish National Party has been in power. Members should not misunderstand that point—it is not a political one. We are all working towards the same goal of recovery, but lessons must be learned so that we can do things differently and show the boldness and imagination now that are required for us to emerge from this crisis.
I move amendment S5M-22119.2, to insert at end:
I welcome many of the recommendations in the advisory group’s report. The analysis that young people are more likely to be on insecure contracts, in low-paid work and in locked-down sectors is important in understanding the scale of the challenge that they face and therefore the scale of the challenge that we face as a society. That is why the call for a jobs guarantee scheme—a Scottish guarantee—to counter the huge rise in youth unemployment is one that we have been making for some time and will continue to make. It is therefore welcome to see it as a central conclusion of the report. I hope that the Government will not just vote for our amendment but will do what it says and give our young people a guarantee of a quality job or a quality training place.
I have said on a number of occasions that I am in favour of the devolution of employment law, not least in the context of Brexit, when we will see a transfer of powers from the European Union to the United Kingdom that, in my view, should come to this Parliament.
It is important that the report also identifies national leadership. Those of us who have lived through times of mass unemployment know what its unequal burden does to the fabric of society and to the fabric of families. It is important to note that the advisory group explicitly states that there can be no repeat of the mistakes of the 1980s and that, although the report talks variously of tight public finances, it is also clear in its view that
“another round of austerity is not the right answer.”
I hope that the Cabinet Secretary for Finance has got that message, too, and that she recognises the importance of “direct funding to families”, which the report also highlights as a way of getting the economy moving again. That is why the decision to delay the Scottish child payment, just when child poverty in Scotland is going up, needs to be reversed—fast.
We live in a time in which there is no shortage of useful, purposeful work to be done and in which a just and green recovery must be our goal. Older people are still shivering in the cold in our winters and suffering from hypothermia, while engineers and electricians are looking for work. Let us therefore have that green investment in domestic heating and energy efficiency to generate the jobs that we need.
We still have more than 150,000 households on housing waiting lists across Scotland, so, in the weeks ahead, while construction workers may have idle hands and apprentices could be trained, we need to see action in that area and a major council house building programme.
Let us give local councils the resources that they need. Our schools are calling out for extra teachers and extra resources to build the capacity that they need, not least to meet the consequences of the Deputy First Minister’s U-turn this afternoon.
Transport investment is rightly identified in the report as a priority, so let us look urgently at bringing the railways back into public ownership, and bus services back into municipal ownership, too.
That we need an investment-led recovery is often asserted, but not always acted upon. It is correct to bring forward the Scottish National Investment Bank’s bond-issuing rights, to pave the way for investment in housing and infrastructure projects, but the cabinet secretary should be pressing for the Scottish National Investment Bank itself to be up and running, not by the end of the autumn or by early winter, but by the middle of this summer. We need it now; this is a national emergency.
A revamped Co-operative Development Scotland agency would be an important start in the pursuit of the goal of the extension of community wealth building—the idea that we should be building more democracy, co-operative ownership and employee ownership into the economy.
I finish by touching on an area in relation to which I do not think that the report goes far enough. It does not properly recognise the need for economic planning or the importance of a national plan for the Scottish economy. It does not properly recognise the importance of bringing together employers, trade unions, Government and agencies to democratically plan, at industry level, where we want to be—not just next year, but in five years’ time and 10 years’ time. We need a plan that is comprehensive, that works for the whole of Scotland, that is effective and action oriented, that focuses on delivery and that is accountable to the Parliament.
That will take resolve, commitment and conviction, but that must be our duty, because, after what we have been through, after the sacrifices that have been and are still being made—the lives lost—we cannot allow the people to be demoralised. We must lift their spirits and give them hope to rediscover their self-confidence. We must give them a burning flame of hope: hope that we cannot go back to the old inequalities; hope that, instead, we can dare not only to think big, but to act radically; hope for a just and green recovery; and hope so that, together, we can build a better future and a better Scotland.
I move amendment S5M-22119.4, to insert at end:
“, and welcomes the focus on establishing a jobs guarantee scheme, which should be tailored to ensure it provides necessary additional assistance for young workers, women and BAME and disabled workers, who are all likely to be hit hard by this economic crisis.”
Like others, I welcome the report. We have been looking forward to it. I cannot say that I have read every page—it is a long report—but I look forward to getting to grips with it in more detail.
It is important to reflect at the beginning that we are talking about two distinct issues. It is not clear that the report does so successfully. First, we are dealing with a recovery over the coming months and year—maybe 18 months—from the state in which we are now, which is not a good place. There is a second, arguably more important and certainly longer-term restructuring that our economy needs, to ensure greater equality, resilience and security for our population, and it is not clear to me that much attention has been paid to that longer-term focus. The clear danger is that we attempt to do the first thing—and, I hope, are successful—but ignore the second.
Of course, we are having this debate against a backdrop in which real wages still remain below 2008 levels and inequalities that were there before the crisis have been exacerbated, as members have pointed out. Indeed, the pain that has been felt over the past three months has been disproportionately experienced by people on lower incomes, who remain in risky work, by women, by young people and by the black and minority ethnic community.
The impact has fallen disproportionately on those who earn an income by their labour, as opposed to those who are in receipt of unearned income and economic rent from the ownership of capital, whether that be shares, gilts or land and property, from which rent must continue to be derived on pain of eviction and court orders. Those who earn their incomes, therefore, have done worse than those who collect economic rent through asset ownership.
There is nothing in the economic recovery report about that. As the Trades Union Congress reflected in the briefing note, “How the shareholder-first business model contributes to poverty, inequality and climate change”, which it produced with the High Pay Centre a few months ago, over the period 2014 to 2018
“Across the FTSE 100 as a whole, returns to shareholders increased by 56% (despite net incomes falling by 3% over the period)”,
“the median wage for UK workers increased by just 8.8%”.
Indeed, if wages had matched shareholder returns, the average worker would be around £10,000 a year better off.
Green economics has always been concerned with reversing those trends and ensuring that economies are built around people, not profit. That is why we welcome the title of the report—“Towards a robust, resilient wellbeing economy for Scotland”. The recovery has to be built around wellbeing, but wellbeing must focus on ensuring an end to inequality and insecurity.
In that context, I was interested to read the Wellbeing Economy Alliance’s initial response to the report. It said:
“unfortunately parts ... fall short in recognising the type of transformation that could truly transform Scotland into a wellbeing economy.”
The alliance also criticised, as I have consistently done in the Parliament, the conflation of the interests of business with the interests of the economy. The two are not the same. It went on to say:
“crucially—to truly initiate a wellbeing economy, the restructure must be designed to enable people and planet to flourish while being agnostic to economic growth, not dependent on it.”
The fairly sober Fraser of Allander Institute said:
“There’s little in the report of substantial policy insight that is new, or different to what has gone before.”
The Scottish Trades Union Congress made similar points.
A month ago, Fiona Hyslop said:
“We will need a revolution in economic thinking”.—[
, 26 May 2020; c 32.]
I cannot help but note a disjunction between that argument and the outcome of the report, which falls far short of being revolutionary.
Although there is a lot in the report that we welcome, what is missing from it is anything about ownership and governance, anything about finance through new mutual and crowd-source models and anything about the need to build and strengthen local economies. There is nothing about fiscal policy; there is nothing about shifting from taxing earned income to taxing unearned income and shifting from taxing incomes to taxing wealth. There is nothing on basic income—indeed, the report dismisses that. There is nothing on a four-day week. There is nothing on land reform. I could go on.
This is not a something-for-everyone report. It is something for few more than the few who have disproportionately benefited from the pre-Covid economy.
Our amendment does not reflect the ambitions that we have for a green wellbeing economy, but it adds clear imperatives on precarious incomes, insecure housing in the private rented sector and the need to take public stakes in businesses, following clearly defined principles.
I move amendment S5M-22119.3, to insert at end:
“; recognises the disproportionate economic impact of the COVID-19 crisis on young people, and therefore welcomes the valuable role that a jobs guarantee scheme could play in protecting livelihoods, preventing unemployment and accelerating the transition to a net-zero economy; notes that young people are also more likely to suffer from precarious incomes and expensive and insecure housing, and considers that economic recovery must address the root causes of these problems; agrees that there is a need both for a significant increase in capital investment and for the Scottish Government to take public stakes in businesses, but considers that both these interventions must be actively led according to clearly defined principles, rather than according to commercial imperatives.”
I thank Benny Higgins and his colleagues for their work, and I am grateful for the time that Benny spent with me and others on a conference call yesterday before the report’s official publication; the call was enlightening.
This debate adds to the one that we had on the economy last week, in which I said:
“if the UK Government seeks to impose on itself a needless, masochistic rule to pay off the debt and operates too tight a fiscal arrangement, it will snuff out any economic recovery.”—[
, 16 June 2020; c 42.]
Before the virus struck, there was a lot of work to do in Scotland’s economy on issues such as low productivity; the need for that work is now more pressing. In order to get us out of the crisis, we need to build a high-skill, high-wage economy. Dr David Skilling also makes that case in the report. He calls for Scotland to
“Increase investment in research and innovation ... Give new impetus to the upgrading of skills” and
“Reprioritise support towards strategic growth sectors - digital, life sciences, green”.
That is why we need new, innovative investment in green projects, such as carbon capture and storage in the north-east of Scotland. That new science and innovative engineering would lift our aspirations and achieve great things for this country. Therefore, I was angry when the Conservative Government cancelled that project in 2015; in between then and now, we have lost many years in which we could have made progress. The crisis means that the Government needs to think again to ensure that such projects get the go-ahead.
Before I comment on other aspects of the report, I will discuss two important and clear warnings that it gives to the Scottish National Party. The first is the devastating impact on low-income families from closed schools and childcare. That is why so many people called on the Scottish Government to change its plans and step up to the challenge. The report says:
“COVID-19 job disruption is likely to have a disproportionate impact on women’s employment, as a result of low-paid women being particularly affected by job disruption; and women are potentially faced with an increase in childcare responsibilities as a result of school and nursery closures in the shorter term.”
I have repeatedly asked ministers to make sure that, if a person is required to work, they should have the childcare that they need in order to do so; I cannot believe that ministers hold out against that principle. Last Friday, a teacher reported that, when she returns to work, she is not going to be allowed childcare from the local hub. It is not good enough. People are required by their employers to return to work, because the Scottish Government has accelerated the economic phases, but it has kept childcare and schools at a slower pace. I am intrigued by the Deputy First Minister’s indications earlier today that, tomorrow, the First Minister might say something more on that. I hope that she does, because we need a joined-up approach to the economy, childcare and education, so that parents can return to work when they are asked to.
The report’s second great challenge to SNP ministers is the call for the regional focus to economic recovery. That flies in the face of every piece of economic centralisation that the SNP has forced through in the past decade. It downgraded regional economic development—if we are to have a sustainable, diverse, regionally based economic recovery in the years ahead, that must be reversed.
I move amendment S5M-22119.1, to insert at end:
“; notes that the Scottish Government has committed to a formal response by the end of July 2020; believes that a more urgent response is needed on provision of childcare for anyone required to return to work given the report’s statement that school and childcare closures represent ‘a disproportionate impact on women’s employment’, and further calls for a formal estimation within its plans of the amounts paid by the UK Government directly to people in Scotland under furlough, unemployment benefits and other COVID-related payments, in order to give a better assessment of the resources both required and available to support people.”
I thank Benny Higgins and the advisory group on economic recovery for producing a report that has a clear focus and contains significant substance. Moreover, to have done so in such a compressed period is impressive.
Nobody can doubt that the Covid-19 pandemic has been the biggest crisis outside wars to hit the world in a century; I hope that we never see its likes again. Inevitably, in a crisis, not all decisions are right, but I support the Scottish Government for prioritising public health during the crisis. Decisions have rightly focused on keeping people safe; in Scotland, the majority of people support that approach, but it has come at a cost. In responding to the threat of Covid-19 and in order to protect the most vulnerable, we effectively closed huge chunks of the economy.
Rightly, in the initial weeks of the crisis, swift action was the order of the day: get money out the door and protect as many businesses as achievable. In those early moments, not every decision will have been correct. However, in the main, where there have been issues, they have been rectified.
I turn to the report to address the particular challenges in the tourism and hospitality sector. First, I draw the economy secretary’s attention to an area that badly needs action if we are to avoid some good businesses going to the wall: those businesses that use the owner’s home as their office or headquarters—businesses ranging from pest control companies to online tourism operators. Because many such companies do not pay rates or rent, they have missed out on much-needed grant support. Will the cabinet secretary identify aid for such businesses as a priority? I know that that is a tough ask and that, given the limits of the Scottish Government budget, it might require help from the UK Treasury to enable us to move on that front.
As the report makes clear, getting people back to work is now the top priority. I represent a constituency with a highly important tourism and hospitality sector. I have raised the challenges that those businesses—and numerous related businesses—face several times in Parliament in the past few weeks and months. That is why I warmly welcome the report’s contribution, recognising as it does the serious financial impact on the interrelated tourism, event and hospitality sectors and the need to develop specific solutions for those sectors.
The initial grants that were provided to affected businesses were a welcome lifeline and support. However, the majority of those businesses remain closed, three months after lockdown began. More support is needed if we are to see such businesses trading sustainably when it is safe to do so. Many pubs, restaurants, cafes, hotels and tourism-related businesses are seasonal and make the majority of their money during the summer months. Losing that trade means that they will find themselves in serious trouble, effectively experiencing three consecutive winters. That will be true no matter what further easing of lockdown restrictions are introduced. As the report recognises, we need targeted support now. The advisory group asks the Scottish Government to consider a reduction in business rates for tourism establishments and asks the UK Government to reduce VAT for the sector. I would be grateful for the Scottish Government’s views on those suggestions as soon as it is in a position to offer them.
I only wish that I had time to explore further ground, particularly in relation to the university sector, renewables and the fiscal situation. However, given the limited time, I will conclude my remarks by thanking the advisory group again for its timely, focused and substantial report.
I start by adding my thanks to Benny Higgins and his colleagues for their valuable report and constructive recommendations. However, I cannot help but reflect that this is a missed opportunity. Notwithstanding all the positive outcomes highlighted in chapter 5 of the report—which we fully support—there is no route map or detail on the practical policy steps that we need to take to achieve those outcomes. That is not the fault of the advisory group, but is due to the failure of the Scottish Government to set out a proper remit when the advisory group was established three months ago.
The opportunity at that point was to ask the advisory group not only what a post-Covid economy should look like but, more important, what specific policy steps we needed to take to get us to that destination. That was the point made yesterday by the Fraser of Allander institute when it said:
“Without a focus on practical next steps, the risk is that this report is consigned to the shelf”.
We now find ourselves in a position where the Scottish Government will respond to the report only by the end of July, some six months after Covid started to impact workers and their livelihoods.
I am amazed that the cabinet secretary has asked that question because, during the period to which I referred, the UK Government has implemented an unprecedented series of policy interventions that have saved 800,000 jobs in Scotland and delivered more than £10 billion to Scotland. Those are the policies that are saving the economy.
I turn to some of the central recommendations in the report. We agree that wellbeing should be a central part of economic policy and that businesses across Scotland will need some form of public sector recapitalisation, but there are real concerns about the SNP’s ability to deliver in those areas. Under the SNP, Scotland has fallen from 16th to 21st place in the most recent international rankings on wellbeing. When it comes to taking stakes in private sector firms, just last year, more than £150 million in investments were written off at the expense of the taxpayer. The Scottish Government will have to work hard to convince stakeholders that it can deliver in those areas and save countless jobs and livelihoods.
One of the report’s most striking conclusions is that, after 14 years in power, the SNP has no formal structure in place to engage with economic stakeholders. That observation from the advisory group merely confirms something that we have been saying for years: this is a Government that is out of touch on the economy. That is why, in the weeks ahead, the Scottish Conservatives will announce a series of concrete action plans to get Scotland back to work.
The report suggests reform of the fiscal framework, but that would be a needless distraction in a time of crisis. The fundamental issue when it comes to saving jobs is not about constitutional technicalities but about how much investment is required to rebuild the economy. According to the Fraser of Allander institute, up to £7 billion of capital will be required to rebuild Scotland’s economy over the next 12 months. Simply put, the reality is that it would not be possible for the Scottish Government to fund that unprecedented level of investment on a standalone basis. That is why we are calling for the Scottish Government to work with the UK Government on a policy response to rebuild Scotland’s economy and get the very best outcome for Scotland by using the unrivalled pooled resources of the United Kingdom.
Yesterday, the chair of the advisory group on economic recovery, Benny Higgins, said that a key element of our fiscal framework is “arcane” and that the restrictions that are placed on the Scottish Government’s ability to reallocate capital funds to where they might be needed are a significant problem for our recovery.
The report also points out the Scottish Government’s inability to borrow, which is a tool that is enjoyed by other Governments around the world and is invaluable in times of crisis. If this moment is not a crisis, I do not know what is.
An urgent review of the fiscal framework along the lines suggested in the report is the most urgent takeaway for me. In my view, anyone who stands against more flexible fiscal powers for the Scottish Government has absolutely no grounds to complain about limits on spending on any recovery programmes. On a cross-party basis, we all need to get behind those calls for the sake of our citizens.
In my area of the north-east, we face a triple crisis: Covid-19, Brexit and a record-low oil price, all of which are combining to prompt what might be the worst unemployment level that the area will ever have seen if we do not take swift action now.
Of course, a fourth and potentially more savage crisis is the climate change emergency. Recently, I saw a cartoon that I think was by Mary Annaïse Heglar that showed a boxing ring, with planet earth being pummelled by a muscular figure representing the coronavirus in what was labelled the “preliminary round”. Standing at the ropes was a much larger, more menacing figure representing climate change, who was waiting to have their go in the next round.
With that in mind, I read the report through the lens of a green recovery. The phrase that hit me as the most important was:
“Responding to climate change needs to be a thread through every policy action.”
If we are serious about a green recovery, an increased focus on skills that are fit to serve that recovery should be a priority, and I was glad to see that that featured in the recommendations.
Investment in skills and innovation in the areas of low-carbon energy is particularly essential. The workforce and ideas are there, but we need the investment, focus and funding. The Scottish Government must have the full powers through the fiscal arrangements to realise that potential. I agree with Willie Rennie’s comments about CCS and the project that was cancelled by the UK Government, which was one of the most short-sighted decisions in the history of the past 10 years.
I also agree with the recommendation on the rebalancing of skills provision to include more work-based apprenticeships, and that we should use the fact that the crisis has given greater impetus to online learning.
I would like to see us go further by funding green energy innovation projects that take on apprentices too. Taking on at least one apprentice should be a condition of Scottish National Investment Bank or enterprise agency funding.
I was also very pleased to see fair work mentioned so often in the report. During the pandemic we have seen a shift in how we work and what we value, and a recognition that those we rely on for our most basic needs and the wellbeing of our nation and citizens are often the most undervalued when it comes to fair work practices and salaries. Women make up the majority of those in that previously undervalued but essential work. One recommendation is that the Scottish Government deploys expanding tax powers and business support interventions and makes greater use of conditionality.
There is too much to cover in this short speech, but an urgent revamp of fiscal powers, emphasis on fair work, skills and green recovery are my top takeaways from an excellent report, which I want to see turned into action as soon as possible.
I join others in thanking Benny Higgins for his report.
There is much that can be welcomed, but the report must be only the first step in tackling the recession to come. We are facing a truly unique set of circumstances: a recession of enormous magnitude that is truly unprecedented.
Our gross domestic product has plunged by almost 25 per cent, unemployment is predicted to rise to 10 per cent and a number of companies—large and small—will cease trading. The Organisation for Economic Co-operation and Development predict that the recession in the UK will be one of the worst in the world and it might be even worse in Scotland because we have been in lockdown longer, more businesses have ceased operating and we rely on sectors such as tourism and hospitality and oil and gas more than other parts of the UK do.
The scale of the solution must self-evidently be equally significant and bold. This report is a helpful contribution, but it is the opening chapter of a much longer book.
I welcome the Scottish jobs guarantee scheme, for which Labour has been calling for many months now. So, too, do I welcome the emphasis on fair work and sectoral bargaining, the investment in digital, the ability to take a stake in private companies and the focus on capital.
However, none of that is really new. The problem with having been around for a long time is that you remember what went before. Twenty years ago we had FEDS—the framework for economic development in Scotland—which was announced by Donald Dewar and Henry McLeish. That was followed by the refreshed economic strategy, a smart successful Scotland, which was developed by Wendy Alexander. After that came John Swinney’s economic strategy. What do they all have in common with today’s report? The interventions and the rhetoric are largely the same.
FEDS talked about social capital, physical capital and human capital. This report is similar to the Scottish Government’s existing economic policy, which worries me because it is perhaps too timid given the circumstances. Much more can be done on a green recovery, which I had hoped to see more of in the report.
There is also very little on implementation. In fact, that has always challenged the Government, which is great at strategies but poor at making them real on the ground. The truth is that with cuts to budgets, economic development capacity in councils and in Scottish enterprise is hollowed out. So where is the action plan, with targets and timelines, backed by resources? We really need to get a move on.
I am interested to know how the Scottish Government will pay for the big interventions that are required. Will budgets be reprioritised? What are we not going to spend money on anymore? What about our tax policy? Will the tax burden be shared more fairly?
It is interesting that, at a time when poverty is increasing, the SNP’s response is to delay the child poverty report and the Scottish child payment. I am disappointed because I think that those things are essential, particularly now when poverty is increasing. I find it very odd that those are the priorities because they resemble actions that the Tory party would take.
.] There is a lot of noise coming from the back benches.
Bringing forward the substantive negotiations about a future fiscal framework is also dangerous when we do not yet know the scale of the economic impact that we face. It would be far better to maximise the money being spent in Scotland. That means the combined spending power of the United Kingdom and Scottish Governments.
It is absolutely right to have a temporary relaxation of restrictions to cope with the current crisis. We support looking for those flexibilities now, but the wider review should be approached with care.
It is not the normal rhetoric of this chamber to talk about co-operation and consensus, but that is exactly what must happen with the UK and Scottish Governments, not just so that we have a recovery plan from both Governments but so that we get those plans implemented and deliver on a far more ambitious prospectus.
I too welcome the report. I agree with Andy Wightman: it does not include the kitchen sink and everything else, but it sets a very clear direction for what is required in future.
Dean Lockhart and Jackie Baillie both raised the question of how we will pay for the recovery. The Fraser of Allander institute is right that we probably need to spend something like £7 billion in Scotland over the next 12 months, in addition to the existing budget, if we are to be able to recover from the post-Covid economic crisis.
The report starts, on page 3, to address the question of where we can get the money. It says
“there needs to be a plan to unlock financial borrowing at the exceptionally low prevailing long-term interest rates.”
I agree with that, but what should that plan be? There is only one possible plan: it is for the Scottish Government and the other devolved Governments in the UK to be able to borrow the money that will be needed for economic recovery directly from the Bank of England, and on exactly the same terms and conditions as the UK Government.
The governor of the bank said yesterday that his job in recent months has been to rescue the UK Government from going bankrupt. The Bank of England is not supposed to be just “of England” and for England; it is supposed also to be for the rest of the United Kingdom. Now is an opportunity for the UK Government to give the Scottish Government the same borrowing powers. That would mean, like the UK Government, paying no interest; having no timescale for re-payment, like the UK Government; and having the power to write off loans from the Bank of England, as the UK Government already did with money that it borrowed for the recession. That is where the money should come from. A sum of £7 billion is less than 1 per cent of the £745 billion that the UK Government has had from the Bank of England in the past three months.
Throw the fiscal framework out the window. It is no longer fit for purpose. Give us some real short-term powers that we can use to save the Scottish economy.
The question is then how to spend the money, if and when we get it. I agree with the report when it says that the economic recovery has to be “an education-led recovery”. The statement that we heard from the Deputy First Minister shows that the Scottish Government also agrees with that. I have a specific recommendation for the Scottish Government: endorse the idea of a job guarantee for 16 to 25-year-olds.
We must also do something for people who are over 25. I count myself as one of them. There is a need for a training and employment grant scheme that provides incentives and subsidies to employers to take on people who are unemployed or are under threat of redundancy, with an enhanced subsidy for disabled people to encourage employers to recruit them, too.
There is talk among Tory back benchers about trying to persuade the Chancellor of the Exchequer to end the triple lock on pensions, which is especially important for the poorest pensioners. That action would save £8 billion a year. It would be an utter disgrace to punish the poorest pensioners. Each year, £40 billion in pension tax relief already goes to better-off people, so if the UK Government needs to find £8 billion, it should take it out of their pockets—not out of the pockets of the poorest pensioners.
Before I get to the substance of my speech, I gently point out to Alex Neil that the fiscal framework that he wants to throw in the bin protects the Scottish budget against the decline in tax revenues. He will need to explain how he would make up the £12 billion annual deficit in Scotland’s finances that is currently filled by the union dividend, which is thanks to the fiscal framework that John Swinney negotiated on behalf of the SNP Government.
One thing that we do not lack in Scotland is reports on the future of the economy. The Fraser of Allander institute has often made the argument that we have a large apparatus of overlapping councils and economic advisory bodies, all producing reports. Whole forests have died to support the report-writing industry; at least one part of the economy is doing well.
Here we have yet another report. This one is on the economic recovery from coronavirus. The danger in having all these reports, as is highlighted in the Fraser of Allander institute’s response to the advisory group on economic recovery’s report, is that producing more and more reports will not change anything. We need action.
The advisory group’s report suggests that it is for the Scottish Government to take greater financial interest in private sector companies. I must say that anyone who looks at the Scottish Government’s track record in that area would not be encouraged. We have seen high-profile investments in Prestwick Airport Ltd, Burntisland Fabrications Ltd and Ferguson Marine Ltd, but none of those gives us much confidence in the Scottish Government’s ability to invest public money wisely.
If the Government is choosing which businesses to support, it must also choose which businesses will fail. That will be the real challenge, and it is not a position that I would like any minister to be in. [
.] I cannot take an intervention—I have only four minutes and am half way through my time already.
The recommendation in the report that there be a jobs guarantee for young people is a good one, but the problem is that Governments cannot deliver that. Only businesses can provide jobs, and only if they succeed will they be able to supply employment for young people or, indeed, for anyone else in the jobs market. The key to the future of our economy is in understanding how businesses in the private sector will be able to thrive in a challenging environment. In that respect, it is disappointing that so few members of the economic advisory group who produced the report are directly involved in private sector business.
What can and should be done at this point? We need to learn the lessons from the past few months, which give us some pointers for the future. First, it is very likely that more people will work from home. Therefore, connectivity and good-quality broadband are essential in all of Scotland, but especially in rural areas. Ensuring that they exist must be given even greater priority than has been the case up to now.
Secondly, one of the consequences of more people changing their working patterns will be that there will be less demand for office space. Being a commercial property landlord might not be so attractive, which will have serious implications for the likes of pension and life funds, which traditionally invest in that sector.
Transport patterns will also have to be looked at, with potentially fewer people wanting to travel to work and, at least in the short term, people being more reluctant to travel on public transport.
The nature of retail will change even more rapidly. Before coronavirus, we had already seen a significant shift to online retail purchases. That trend will accelerate, as people have become even more comfortable with shopping from home, which makes the decline of the high street an even greater challenge.
In that context, the need for a wholesale review of business rates, for which we have been calling for years, has become acute. We need to consider properly a digital sales tax in order to level the playing field for high-street sellers and online sellers. We need to reimagine the high street of the future, of which retail will play a much less significant part. We must explore whether we can repurpose former retail shops for leisure uses, or convert them to residential accommodation, and we must explore whether we can align the planning system accordingly.
There is, in the course of this short debate, simply no time to consider all those significant issues properly. Although the new report will be of assistance in framing discussions, a lot more action and a lot less conversation will have to take place if we are to make a difference.
It is quite clear that the backdrop to the economic advisory group’s report is very much the considerable economic challenges that the coronavirus poses. However, it is important also to note from the report the group’s evident determination to propose suggestions that would rechart Scotland’s economic approach, taking into account the new Covid-19 starting point, but with the focus being very much on employment.
In the foreword to the report, Benny Higgins, the advisory group’s chair, comments:
“The public health crisis which has tragically taken so many lives prematurely cannot be allowed to lead to an economic one that is socially destructive.”
As the member for the Cowdenbeath constituency, which comprises disparate areas including former mining communities and areas with acute deprivation, to my mind such recognition of the need to avoid further scarring of already fragile communities is crucial.
Of course, in the short time that we have available for the debate it will not be possible to discuss all the report’s findings. We have already heard about investment, ownership stakes in companies and the priority that should be given to green investment and digital infrastructure. However, importance should also be attached to the roles of culture and of the third sector.
I will focus on three aspects, the first of which is recognition of the pivotal role of the private sector, in which more than 70 per cent of Scots work, and which must therefore be at the heart of our recovery plan. An example of that recognition is the group’s recommendation that a business-led Scottish jobs guarantee scheme be established, to work in partnership with local authorities and other agencies, and to be supported by targeted funding from the Scottish Government. According to the report’s recommendation,
“The scheme should offer secure employment, for a period of at least 2 years, to 16-25 year olds, paid at the Living Wage, with access to training, apprenticeships and the possibility of progression.”
I very much welcome that recommendation, for at its heart is recognition that, absent urgent and comprehensive action, a whole generation might be left behind in terms of their job prospects.
The report also recognises that business must play its role, and that recovery should not be a matter solely for public agencies. I welcome that, because what we are facing is a massive issue for the whole of our economy and our society. We all have role to play in them, so all hands should be on deck.
At the same time, there is recognition that the relationship between business and government should be “refreshed” and that a new collaborative partnership on the strategy for Scotland’s economic recovery should be developed. That is a positive suggestion. The report expresses ideas about how that could be achieved, including secondments. I look forward to seeing how those might be developed, when the Government responds to the report.
Acceleration of the planned review of the fiscal framework, which the report highlights, is also crucial. Indeed, the shortcomings are there for all rational people to see: limitations on opportunities for meaningful policy autonomy, a limit on capital borrowing to less than 0.3 per cent of gross domestic product, and restrictions on transfer between capital and revenue. In a global pandemic, those just do not make sense.
I remind members that Benny Higgins indicated yesterday that the fiscal response in Europe is beginning to shift from emergency assistance to fiscal stimulus, in order to kick-start economies there. He cited Germany, which has just announced a package amounting to about 4 per cent of GDP. In Scotland, that would equate to about £6 billion. If the UK Government does not intend to do that, we in the Scottish Parliament should be equipped with the powers to do it, so that we can get our economy back on track and tackle the widening inequalities that we see in our country.
I, too, am grateful to the economic advisory group for its work on identifying both issues and solutions. Its guiding principles form
“an action list, and not a shopping list”,
as it boldly says. Although terms such as “reimagine our economy” may be a little overblown, I agree that, given the damage that the pandemic continues to inflict on people, businesses and our economy, it signifies a watershed moment.
We need to look with fresh eyes and use this situation, awful as it is, as a catalyst for finding different ways towards recovery from those that followed previous economic crises. The report says:
“The damage done to the generation currently aged 16-25 and their job prospects will be a scar across their working lives if there is no urgent, ambitious and focused intervention to address it.”
I agree. However, I believe that action should be extended to those aged under 35. Many people in their late 20s and early 30s have seen hopes of a home of their own, prospects of starting a family and career prospects dashed due to the economic uncertainty, and we cannot abandon them.
“Given the slump in economic output and the jump in unemployment, there is a pressing need to jumpstart the Scottish economy and its vital small business community. Today’s report from Benny Higgins sets out a range of options to do just that.
The focus on sustaining and generating jobs is the right call if we want to prevent a lost generation—but that can only happen in partnership with small businesses. This is especially true in remote communities where small businesses generate over half of private sector employment.”
Glasgow Chamber of Commerce said:
“We applaud the focus on investment-led recovery and the need for creation of jobs at an unprecedented rate and endorse the call for innovation in skilling and reskilling and the need to reduce the impact of the crisis on the futures of our young people.
We agree on the prioritisation and delivery of green investments—particularly in the circular economy—and also on the mobilisation of investment in digital infrastructure as a key force for resilience and growth and a direct job creator”.
The report identifies wealthy Edinburgh and Aberdeen as Scotland’s most economically resilient regions, and it puts North Ayrshire, where my own constituency is, last. The potential resilience of areas is based on pre-crisis characteristics, but that does not account for the relative severity of the difficulties that regions will face due to sectoral impact, for example. North Ayrshire will clearly need additional support, not least so that it can play a full part in Scotland’s full economic recovery.
As the report recognises, there is no one-size-fits-all approach and every region needs different solutions, with local partnerships working together. Ensuring the success of growth and city region deals is more important than ever, and they should be accelerated.
It has been 15 months since the Ayrshire growth deal was agreed, on 8 March 2019, after much dithering by the UK Government, and much work has been done behind the scenes, not least by North Ayrshire Council’s officers. However, given the position of Ayrshire’s economy before Covid-19 and the full impact of—let us be real—a hard Brexit due to break over us, time is of the essence. It is paramount that the Ayrshire growth deal is implemented.
Signing off on actual projects has been “imminent” for weeks now, and I am keen to know what steps Scottish ministers are taking to expedite the Ayrshire growth deal. Although that is hugely important for Ayrshire, we need more help from the Scottish Government to make Ayrshire’s economy more resilient. In carrying out advisory group recommendations, Ayrshire must be at the forefront—with, for instance, potential solutions being piloted in Ayrshire. As the cabinet secretary was born in North Ayrshire, in the sunny town of Irvine, I am sure that she agrees.
The fact that the old normal is nowhere on the horizon may be no bad thing for wealthier local economies, which can afford to worry about investment in levels of self-actualisation that most can only dream of. However, for Ayrshire, this should absolutely be seen as an opportunity to kick-start our less resilient economy with basics such as job creation and retention and attracting inward investment. I am glad to see that this report is a major step forward in achieving that.
I think that the whips must be back in control of Alex Neil. Last week, they were not successful: he would have smashed the consensus on the fiscal framework that had developed across the chamber with his ridiculous comments that the Bank of England was only there for England, apparently ignoring the fact that the job retention scheme, the self-employment schemes and the massive increase in universal credit contributions of £900 million came directly to Scotland. It was a ridiculous point to make about the Bank of England, and I hope that he is away reflecting on those comments somewhere else this afternoon. [
.] I see that he is back in the chamber now, perhaps to apologise for such comments.
We need to recognise the contribution of the United Kingdom, because it is through the strength of the United Kingdom that we have got through this immediate crisis. We need to work in partnership, which the Scottish Government has managed to do so far. It has put aside its differences to try to achieve something greater, which is why we have been prepared to co-operate and work in partnership with the Government.
We would support a jobs guarantee scheme, because the report is right when it talks about the need to prevent the “scarring” of young people and the economy. We know that it is our people and, in particular, our young people who will be the future strength of our economy. If we invest in the skills and talents of those people, we will grow the economy and make it sustainable. That is why it is right to have a jobs guarantee scheme.
I am disappointed with the timidity of parts of the report. In fact, in its dismissal of a universal basic income, it lacks ambition and aspiration. That issue should have been included, and I would have expected the cabinet secretary to have commented on the matter, because I know that she is a strong supporter of a universal basic income. Perhaps she will reflect on that in her closing comments. A universal basic income would help to fill the gaps in the various financial schemes that have emerged and ensure that no one is left behind in the current period. It might also be useful in the future, as we move towards automation, to ensure that everyone has a stake in society and an income that they can survive on.
I am interested in the aspect of Government intervention, because it is important that, during this recovery period, we support businesses that are perhaps on the edge but that are vital or pivotal for the future of our economy, whether that relates to sustainability and the environment, innovation or the high-wage and high-skill jobs that we seek. We need an understanding of what the rules are for that intervention. We need to know that it is not just about propping up failing businesses that will not have a future without Government support. It is important that the Government sets out the rules and the understanding. We need to seek the right advice from the right parts of business and the investment sector to ensure that the Government uses its restricted money wisely. If we get those decisions right, we will be able to protect the right businesses instead of just failing businesses.
Ultimately, we need to invest in people’s skills and talents so that everyone has a stake in the future of our country. We need partnership working between Scotland and the rest of the United Kingdom, and we need to put aside our differences to deal with one of the most significant challenges that this country has ever faced. I will close by agreeing with Kenny Gibson. The last thing that we need now is a no-deal Brexit or a damaging Brexit. We need to combine with our friends, neighbours and allies; in that way, we will defeat the virus.
In the short time that I had available when I spoke earlier, I was not able to reflect on the striking comment in the foreword to the report where the group says:
“It is illustrative to consider that 90% of the top 50% of earners in the country can work from home, whilst 90% of the bottom 50% cannot do so.”
That encapsulates a significant issue that has arisen during the pandemic, but I want to reflect on the fact that the report does not address what we are going to do about the issue. The report does not address how we need to change working patterns or the impact that that will have on workplaces and offices. There is a lot more work to do to flesh out what are some useful observations so that we have a plan of action for the longer term.
In my opening remarks, I reflected on the focus on the local. The report talks about proposing
“an approach to recovery and economic development that is grounded in local and regional approaches and partnerships”.
It is hard to see how we can do that, because we do not have the ecosystem for it. Local government has been hollowed out and, as Willie Rennie pointed out, there has been a vast amount of centralisation. Much of the thrust of the report is focused on businesses and Government working together, which misses out those important local actors.
Recommendation 17 talks about a “place-based” approach, but the landscape here is increasingly not only hollowed out but messy. We have city region deals, local economic development partnerships, enterprise agencies, and so on. A significant transformation, if that is what we are looking for, would include a significant transfer of fiscal, economic and political power to Scotland’s 32 local authorities and even more to our local network of municipal authorities.
Members’ contributions were interesting and useful. Richard Leonard spoke about democratising the economy, which goes to the heart of how our economy has been increasingly owned and run. We know that mutuals and co-ops provide much greater social and economic returns. Willie Rennie spoke about the need for regional economic development, but there is little in the report about how to achieve that. Dean Lockhart criticised the remit as the reason why the report was perhaps not as ambitious—in many regards, I accept that that was at the root of it.
I very much agree with the Fraser of Allander institute’s critique, particularly on the lack of focus on practical next steps. The cabinet secretary intervened on Mr Lockhart to ask about the UK Government’s response, which seems to be largely about getting people back shopping with money that people no longer have and, by definition, for non-essential items. That highlights the structural weakness in the UK and the Scottish economies: more than 60 per cent of GDP is based on household consumption, which is not really the basis for a sustainable economy.
I will turn to some individual recommendations that we did not have time to talk about. Recommendation 9, on conditionality and business support, was very useful, but it is important to point out that non-domestic rates relief is an appropriate short-term relief but not a long-term response, because it results in greater returns to landlords if rents are not reduced to the same extent. I am uncomfortable with the language around natural capital, but we can leave that.
The report said some very useful things on tourism, which is probably an area on which we can come forward with a plan in relatively short order, as Bruce Crawford highlighted. At a UK level, we have a £17 billion deficit in tourism—that is the amount of money that leaves the country over and above the money that is spent on domestic tourism—and things like a four-day week would help considerably with that. The report covers workplace innovations, which are very important, but it has nothing on ownership and governance.
I always welcome Alex Neil’s contributions to debates. He is right about the Bank of England, and I highlighted in last week’s debate the hundreds of billions of pounds of quantitative easing that is exacerbating inequality. We should have more control over spending our share of that.
Time is so desperately short that I will conclude with another observation from the wellbeing alliance. It says:
“A wellbeing economy is one that is purposed and designed explicitly for human and ecological wellbeing – economic activity in service of these higher order goals.”
The report and debate are welcome. The report is high level, with very little practical guidance on what the Government should do now; although it lists many of the challenges, it does not have the detailed steps that will be required to kick-start our economy that many people sought from it.
Richard Leonard spoke about the job guarantee scheme, and we certainly welcome the report’s recommendation for such a scheme. We have been pushing the Government for that for some time, and I hope that it will now move quickly and create the scheme. It needs to focus on young people, women, black and ethnic minority workers and disabled people, whom we know are the hardest hit by recession. The Resolution Foundation has pointed out that the least well-off are bearing the brunt of the pandemic, and that was echoed by the Poverty Alliance today.
The delay in the Scottish child payment also contributes to child poverty and the payment should be speeded up at this time rather than delayed to help families who are in that situation.
Willie Rennie spoke about the requirement to have childcare in place before women can return to work. When people are being asked to come back to work but there is no childcare in place, that appears a bit cart before the horse. People in Kirkwall on Orkney, in particular, are affected, given that the childcare provider Peedie Breeks will close at the end of this month; no nursery care, childcare or afterschool care will be available for people who want to return to work. We need to do something about that to make sure that childcare is available, especially for women who are returning to work and who can suffer from poverty disproportionately.
We cannot build our economy on a case-by-case industrial strategy. We need to build a manufacturing base and a green recovery, as Jackie Baillie said. We have resources—we have offshore wind—but none of the jobs comes here. We now have the opportunity and, indeed, the powers to do things differently, so let us use them to create a just transition. We should also look at things such as green energy and retrofitting, which would create jobs and tackle climate change.
Gillian Martin said that tackling climate change must be the thread that runs through every policy action. The Scottish Labour Party called for that at this year’s budget, and it continues to call for it.
I agree with what other members said about the need for digital connectivity, but we need more than just connectivity. People need to have the ability to access it. The children of many less well-off families have been told to learn online and do their lessons online, but they do not have a laptop to access those lessons or—if they are lucky enough to go to a school that provides equipment—the connectivity that is required for them to do so.
Richard Leonard talked about community wealth building and using procurement to invest in our communities. That is extremely important. We need to look at co-ops and mutuals and other organisations that keep wealth in our local economies and create jobs there. We must consider community empowerment and land reform. As representatives of rural areas, it is important that we empower people in such areas to make decisions for themselves and to build their economy.
The coronavirus has torn down the old order. Indeed, it has devastated many lives, and it has been most devastating to those who have least. We are at a crossroads between rebuilding the old order and creating a new order—a new economy that is fair, that is based is equality and that does not allow people to accumulate vast wealth to the detriment of others. The Scottish Government now needs to decide which it will be, and we urge it to build a new order.
As colleagues have intimated, we welcome the report’s publication, and we express thanks to Benny Higgins and others for putting it together so quickly. We also welcome several of the recommendations, which include some interesting and innovative ideas—especially the idea of the “four pillars of capital”, and the focus on natural and human capital in particular.
Like others, we welcome the overarching focus on job retention, which must be at the forefront of our economic recovery from the virus, and we note the proposal to bring together the private and public sectors to develop a jobs guarantee scheme. We look forward to receiving further detail on that. We also note the call to increase private sector investment in projects, alongside public sector input, and the suggestion that the Scottish National Investment Bank work closely with the third sector, universities and community projects.
I especially welcome the recommendation that we need to
“scale up and accelerate planned investment in Scotland’s digital infrastructure.”
That will be particularly beneficial to rural communities, such as the Highlands and Islands. The report is correct to urge the Scottish and UK Governments to work together more constructively on that issue and others, as Jackie Baillie said, not least because Scotland needs access to the capital investment and economic firepower of the UK.
I acknowledge the candour with which the report accepts the extent to which relations between the Scottish Government and the business community need to improve—those relations need to be much better. There is a palpable sense of disconnect between ministers and business right now, and that relationship has degenerated to such an extent that it requires to be resuscitated, let alone reset.
Of course, I recognise that the advisory group’s report is an independent report and that the Scottish Government might well choose to do things differently. Where we can, Conservative members will work with the Government to get our economy back on track. However, as Andy Wightman and others have said, it is abundantly clear that Scotland’s workers and businesses need swift measures and practical help now. It would be simply inadequate to wait until the end of July for that to happen, because jobs and livelihoods are at stake now. The situation is urgent now. It is undoubtedly an emergency.
We all welcomed the swiftness with which the UK and Scottish Governments responded to support workers and businesses at the beginning of the crisis, but that same urgency needs to be replicated now, and similarly radical and decisive action needs to be taken; otherwise, the pandemic will wreak economic havoc.
I acknowledge that the report calls for urgency in a number of areas, particularly where jobs are concerned, but as the FSB noted,
“Time cannot be lost in generating paperwork and organising meetings. From day one, the focus must be on delivery and how the proposals practically impact local businesses and the wider community they serve.”
In that regard, I will venture to make some more critical comments about how the ideas in the report are to be delivered, because there is no clear road map with timescales, there is no definitive strategy and there are no concrete plans. Dean Lockhart made that point. The report is “a civil servant’s dream”, as someone put it to me. Many of the recommendations are general and of no practical use to sectors of the economy that are struggling as we speak.
Many speakers, including Murdo Fraser, have quoted the Fraser of Allander institute, which said:
“There’s little in the report of substantial policy insight that is new, or different to what has gone before.”
If the report and the Government’s response to it are simply about keeping on doing the stuff that we have always been doing, we are lost.
I was struck by a couple of comments that members made in the debate and I would like to mention them briefly. Willie Rennie spoke about the effects on women, and especially low-paid women, acknowledging the importance of their childcare needs being met so that they can work. He was right to do so.
Bruce Crawford spoke about the hospitality industry in his constituency, and the importance of that industry is something that I feel, too, as I represent the Highlands and Islands. Many people in the hospitality industry will experience three winters.
Jackie Baillie was right to warn the Government against bringing forward a review of the fiscal framework when the economic shock is unknown, and I add that we should not do that during the current crisis.
We welcome the general thrust of the report and several of its recommendations and we are prepared to work with the Government where we can. However, well intentioned as the report is, it is not enough. Scotland’s workers and businesses cannot wait another month or more to be told what action the Scottish Government will take. We are at a pivotal moment.
My plea to the cabinet secretary is this: let this not be a moment when the Scottish Government buries itself in new strategies, task forces and working groups. We need courage to make difficult decisions, courage to act swiftly and boldly, and courage to rescue—at once and right away—the jobs and livelihoods of people across Scotland.
I thank members for engaging constructively, for the most part, on the content and recommendations of the advisory group’s report and for recognising that the group worked to a very compressed timescale.
As Donald Cameron pointed out, it was an independent advisory group. The report was commissioned by the Government, but it is not our report: it is a report for all of Scotland. The task is now about how we deliver on the points that we agree with, and part of the purpose of this debate is to identify the areas where there is consensus. It is helpful that there is consensus on the green recovery, the job guarantee and the digital route for both jobs and recovery.
Some of those things may have been considered before. A job guarantee has certainly been debated before, although there is now more urgency given the scale of the response that is required. However, I do not think that the fact that we have wanted to work on some of the areas before is a problem. The issue is acceleration and scale, and the report brings to our attention the sheer scale of what is required.
The response that we believe is required will depend on the angle from which we look through the lens. Given the scale of the response that is required, a number of members asked what the cost will be. If we are going to achieve in reality what is recommended in the report, the cost will be considerable.
I ask the member to let me develop the point.
The Fraser of Allander institute has said that £7 billion is required for Scotland to achieve the recovery that is necessary. As Annabelle Ewing and others pointed out, unlike the UK Government, Germany has already announced its fiscal and economic stimulus response, and 4 per cent of GDP would be equivalent to £6 billion of investment for Scotland. That is the sheer scale of what is going to be required.
The report is important because it helps us to understand what we need to do and the urgency with which we must do it, but I agree with Maurice Golden that it does not tell us how we must do it. That is what all of us must determine—not just those of us in this Parliament, but people in business, who are facing challenges, and the UK Government.
Other countries have developed their recovery plans. New Zealand uses the OECD’s four-capital approach, which some members commented on. Depending on how we look at the situation, if we do things differently, there are challenges as to what that will mean.
We heard from Willie Rennie, Andy Wightman and Kenny Gibson about the report’s focus on a regional approach. We agree that a place-based approach is important, but that would pivot and change how we deal with things in certain areas.
On education, we heard from the Deputy First Minister that there will be £100 million to help pupils who have been left behind.
From Jackie Baillie, Maurice Golden and others, we heard about the importance of a green recovery. The prospectus that Scottish Power has published is very strong. There are practical things that can be done, and I hope that they will be done collectively with Government.
Richard Leonard had lots of different ideas in his speech. The foundation of the report is not to exclude other ideas, but to provide a platform and focus for economic recovery. He was absolutely clear that we cannot have another round of austerity, and I agree with him. That would not be acceptable, and a consensus on that would make a big difference in our approach.
In a very interesting speech, Andy Wightman talked about funding models. Creativity will be very important in that area, particularly to support ways that we can do things differently.
I agree with Willie Rennie’s well-made point on the economy and childcare. The crisis has shone a light on the importance of care for both children and older people, which is important for a value-based recovery.
Gillian Martin identified for the north-east the four pressure points of Covid, Brexit, oil prices and climate change. Looking at the analysis on that will be important in our response.
Our rapid action on business rates has helped tourism and hospitality, and the other packages of support that we have provided have also been important. I remember speaking to people in the rest of Scotland about their concerns over the swift movement to support businesses in the north-east when there were issues in Aberdeen previously.
I hope that we can take an approach that will not exclude good ideas and which will have the ambition to bring people together to take us forward on the how. That is our point—that is why we want to ensure that we take action. Donald Cameron should not confuse the measures that are required immediately for restart with what is required for recovery. I look forward to hearing about the United Kingdom’s recovery stimulus. [
.] I said that I would take only one intervention.
On other ideas, I am looking with interest at an additional sales tax and wonder whether Murdo Fraser thinks that we should have the powers for that kind of activity in this Parliament. VAT reduction is really important, as Bruce Crawford pointed out. Tourism in Scotland is currently charged the second highest VAT rate in the whole EU. That is an important area in relation to immediate stimulus and support. The report also identifies the role of tourism and hospitality across Scotland and I am glad that it does that.
It is an ambitious report. It might reinforce the direction that we have taken in some of the areas that we have looked at previously, but our challenge is to work together to accelerate our actions. For our young people, we must take action with our colleges and universities and the business-led response in terms of a job guarantee. We know that that can work. It happened in Edinburgh 10 years ago and was successful. I hope that we can roll that out now on a wider canvas.
As I explained, this is not a Government report but an independent one, and I value it on that basis. We need to respond to it and I intend to do that, as requested, by the end of July, to ensure that we have an action-based recovery plan for Scotland. Let us be ambitious and work together. We owe it to the people of Scotland to do that. I hope that, together, we can deliver something that will allow us to come through this dreadful situation and put Scotland on the track to recovery.