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Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 4 May 2021
  6. Current session: 13 May 2021 to 21 October 2025
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Displaying 1235 contributions

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Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

As I said, the priority with regard to supply chains is to look at where there are opportunities for us to be competitive because we have the necessary capability and technology to maximise the opportunities for the manufacture of products within Scotland.

On the food supply chain specifically, Scotland has a thriving food and drink sector, which we are proud of. The Cabinet Secretary for Rural Affairs and Islands is focused on what we do to continue to develop that sector. There are many factors that relate to agriculture more broadly, including climate change and financial support, but the supply chain is a big issue, and, where there are opportunities for us to grow more produce in Scotland in order to support resilience, and where that makes sense for the agriculture sector, that is something that we are focused on.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

That is correct.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

That is absolutely done. I worked in manufacturing for 30 years, and I understand how this stuff works. We are 100 per cent focused on that, relentlessly.

You will know that it is illegal to specify what you have just asked us to specify because of the World Trade Organization’s agreement on Government procurement, or GPA, rules and our international free trade agreements—the European Union trade agreement and so on. We must have an open market.

We do everything that we can to ensure that as much of the product as possible is manufactured in Scotland. We make that visible. We produce guidelines on that, and we work—I refer to the importance of the investment in Alpha Solway—to ensure that businesses and supply chains have the capacity, capability, expertise and technology to compete in a global market and win contracts.

Alpha Solway has done a great job in winning contracts. It did that fair and square, and it beat competition from around the world. That is because of the support in training, investment and so on from the Scottish public sector.

As I said, all of that has to be done within the rules. That is the legal reality of the system in which we operate. However, as Graeme Cook said, our success in that regard has been quite significant. In Scotland, 47 per cent of the spend in public sector procurement goes to SMEs. That is significantly in advance of anything that is happening in the rest of the UK, where the percentage is in the 20s, and across the EU, where the average is somewhere in the high 20 per cent range.

We have made significant progress in that regard, and the results demonstrate that. However, the focus on that continues to be relentless. We look for every opportunity through the supplier development programme; our round-table discussions with SMEs to understand the challenges for them in accessing the public procurement process; working with partners across the public sector; and the work that we are doing on the Scotland innovates portal, which we have just launched. That invites Scottish businesses with innovative solutions to public sector challenges to put those online so that we can assess them and find a public sector procurement route for them. We look for opportunities through the work that CivTech does in putting out public sector challenges.

We are relentless on all that stuff. We have tremendous focus on it, and I regularly meet procurement officials to take work forward. As members understand, all of that is, of course, done within our legal restrictions.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

We do not have the power to tell a local authority, for example—

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

I will respond to the committee and let it know the outcome of that inquiry. As I have said, if a local authority decides to purchase something, we are not in a position to tell it where it should buy it from. If we did that, others would say that we should not be doing that. I have written very clearly and strongly to make those points to all public sector authorities, and I would be very happy to update the committee on any responses that we receive in that regard.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

A big focus of the transition is on the modal shift in transport and the net zero impacts of that. In our recent report on Scotland’s electric vehicle charging market, we identified what needs to be done, but we also very much recognise that that needs to be done in partnership with the private sector. Given the investment required, the public sector can do part of the work, but the bulk of it will need to be done by the private sector.

As a result, “A Network Fit For The Future: Draft Vision for Scotland’s Public Electric Vehicle Charging Network” not only sets out our ambition to work with the private sector to develop the charging network but makes clear what would be commercially viable for the private sector to pick up itself and the gaps that the public sector would then need to fill. We have also, as part of that work, announced the electric vehicle infrastructure fund, which has £60 million of target investment.

However, you are right to suggest that that work needs to move forward if we are to enable that modal shift to happen. We absolutely understand that, and we need to work with the private sector to ensure that the investment is in place to deliver on that.

Does Andy Park want to comment?

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

To finish off the previous point, work is taking place on building regulations. The 2024 new-build heat standard is being put in place. Work is happening on that all the time and standards have been updated to take account of the factors that we have talked about.

The decline in manufacturing has been an issue in western economies, particularly the UK, over decades, as we know. It was an issue when I studied manufacturing and engineering in 1980 and it continues to be one.

On what we are doing about that issue, it is important to recognise that the solutions are not things that you turn on like a switch—they take a long time. The technology, investment, expertise, accreditations and market credibility all take a long time to build up. From our perspective, it is about identifying where Scotland has the opportunity to have globally leading positions in specific manufacturing sectors and then to double down on support and build on that through a combination of inward investment and, importantly, growing indigenous supply chains and businesses in partnership.

An obvious example is the small satellite manufacturing cluster that has been built up over the past decade or two and is now a world-leading sector. We continue to get additional inward investment into that and to grow those businesses, but there is also a really strong focus from all parts of the public sector to support that ecosystem.

We have talked about the ScotWind investment, to which developers have committed £28 billion. The issue is not getting the developers to commit the money; it is finding somewhere to spend it, because you need £28 billion-worth of capacity in the Scottish supply chain to deliver on those projects.

11:30  

We are working with hundreds of engineering businesses in Scotland that are part of the clusters in the sector. We are working with Scottish Engineering and others in relation to engineering businesses that have not looked at the energy supply chain or other sectors as opportunities to diversify. That will be done through a combination of information, encouragement, skills support, investment support, networking, accreditation and so on. All that needs to click to get it to work, and we are hugely focused on doing that. NMIS is doing a solid job at the centre of that ecosystem, but a lot of other things are happening around that to make it deliverable.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

A number of parts of Government look at that. You are right that the supply chain development programme will look at opportunities to build Scotland’s economic capacity onshore, and establish in Scotland robust supply chains, where we recognise that we have the capability to compete globally and can build indigenous industries on the back of that.

Clearly, if something happens that brings a risk to food supplies, for example, that is resilience work, which happens in the Scottish Government resilience room—the Scottish Government group that is led by the Deputy First Minister. That group would look at those specific and very short-term resilience issues, and at other aspects of disaster recovery.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

As you know, many of the levers are controlled by the UK Government. We wish that that was not the case but, while it is, we work within that environment. In relation to welfare and social security support, it has been widely recognised by users of the service that Social Security Scotland has been doing a very effective job, but its focus, of course, is on only a small number of benefits. In terms of magnitude, the vast bulk of benefits still come through UK Government channels, and decisions on universal credit and so on have a significant impact on how people are supported.

Energy policy is, of course, reserved, which very much constrains what we can do. We are doing what we can through ScotWind and other initiatives not only to increase energy supply but to decarbonise. However, energy policy and many of the levers in that space are reserved.

Borrowing powers are also reserved. As has already been identified, the Scottish Government must work within very constrained limits. The situation is made even more unhelpful by not understanding what the limitations are, because, given the delay to the UK Government’s fiscal event, we do not actually know what our budget is. We need to know that to allow us to operate within that budget, given our constrained borrowing powers.

Colin Beattie is right to identify that much of what is needed is driven by levers that the UK Government continues to control.

Economy and Fair Work Committee

Scotland’s Supply Chain

Meeting date: 9 November 2022

Ivan McKee

You and I will get a truck, drive around one weekend and have a look.

You are right: there is work to do. You will appreciate that that work is part of the broader portfolio brief, but I undertake to follow up that issue and respond to the committee on the specifics of what is happening and the timeline for taking that work forward.