Seòmar agus comataidhean

I gave a lot of evidence yesterday to the Finance and Public Administration Committee on our national performance framework changes. That was interesting, because there was a general criticism about there not being enough focus on economic growth in that. I think of the national performance framework as a way of painting a picture of the Scotland that we want to be, and I do not think that there is much disagreement with any of the objectives—there is a general consensus. You have to build a consensus with something like that, when you are talking about people’s health and wellbeing, economic prosperity and so on. The objectives are aligned with the United Nations sustainable development goals, which is a very laudable aim. Keith McDonald is welcome to come in on that.

Again, those objectives set out the picture of the country that we want to be. The First Minister has taken that and distilled it down into four objectives—I am a big fan of distilling things down to fewer objectives. One of those objectives is economic growth. You spoke about what economic growth can lead to, but it does not have to lead to those things. That will depend on what you see as the aim.

The reason why I argued yesterday that economic growth should not be an end in and of itself in the national performance framework is that it is not an end in and of itself. It is a means to an end. If you view it as an end in and of itself, you will absolutely bake in inequality, destroy the environment and so on. You should see it as prosperity with a purpose. In other words, we cannot reinvest revenue into our public services unless we have a growing economy that raises the standard of living for everybody and thus raises the revenue that can be reinvested. We cannot meet our net zero goals unless private investment is made, because the cost of meeting our net zero goals far exceeds the public sector resources of any Government under the sun. We have to be an attractive place to do business so that we get that investment.

My view on economic growth is that it is not an end in and of itself but a means to an end. However, we cannot achieve that end without economic growth—which is perhaps where there would be a minor disagreement between us. I am open to answering any further questions on that.

My difficulty with that is that, although, obviously, we are delighted when we see an increase in it, economic growth has been incredibly stagnant across the UK for a long time. Child poverty figures have increased and we have had huge pressures on our public services.

I see no conflict between the four aims that the programme for government sets out. I see no way of tackling child poverty, meeting our climate change objectives—which is also an aim in the programme for government—or protecting and supporting our public services without an increase in economic growth. The four aims in the programme for government are mutually dependent. If we were to take out economic growth as one of those four legs, the stool would topple over. It just could not stand.

I am not suggesting that we would necessarily mirror every decision that the Irish Government has taken, but who can look at the most recent Irish Government budget’s support for people in fuel poverty, families with kids, and infrastructure, without being envious of what it has been able to achieve with considerably higher economic growth?

There is an argument as to how Scotland can achieve its aims and ambitions. I just do not think that there is a route to that without economic growth.

That has been considered in the past, with quite extensive work to look at the opportunities that you identify for efficiencies and so on. There are significant legal issues with any amalgamation of the three organisations that you mentioned. The Cabinet Secretary for Transport is probably better suited to answering the technical elements of why they have different forms of governance and ownership.

Certainly, the aim for Ferguson Marine has been to get the boats built then return the company to a private sector buyer who believes in continuing to build boats on the Clyde.

There have been extensive reviews of what might be possible through amalgamation. However, some options have been dismissed because they are not possible under the current governance arrangements of each of the three parts.

If the committee is interested, I am sure that the transport secretary could write with an update on the progress on that question, because it is a very fair one and the Government has been very interested in it in the past. No official wishes to add to what I have said, but the Government will be happy to respond.

The aim in the green industrial strategy is to make things as simple and straightforward as possible in order to deliver on our objectives. Below the strategy’s five opportunity areas are a number of targeted actions that the Government will do to create a successful enabling environment for investment and growth. Those targeted actions include things such as skills, research investment, supply chains, planning and consenting, and housing.

Clearly, a lot of that relies on access to land and facilities. Every week, I have conversations with potential investors who are looking for scale and size. In and around the Cromarty green freeport area, there is talk of a need for 25,000 new homes. By extension, that will require land.

I do not know whether my officials have anything to add on the specifics on compulsory purchase, but I imagine that it is part of the toolbox to enable us to meet the growing requirements for land access and to deliver thousands of homes.

Since coming into post, I have had two meetings with the new deal for business group, and I have been very enthusiastic about the progress that has been made. There was equal enthusiasm at the most recent meeting, because we worked closely with the group in shaping the programme for government. The organisations that are represented on the new deal for business group were very encouraged by the extent to which their asks were reflected in the programme for government, and some of them said that publicly. We have made substantial progress.

The next area of focus will be the budget. The Cabinet Secretary for Finance and Local Government has met some stakeholders, including stakeholders in hospitality businesses, to talk about what they want to see being reflected in the budget. I want there to be tangible evidence that the new deal for business is shaping Government policy, because that promise was made to the group when it was convened.

An obvious example of where that is having an impact is through the regulatory review group, which is headed up by Russel Griggs. He and his team review policy commitments that have been made by the Scottish Government across all parts of Government, including the health service and the environmental brief, and the impact that those will have on our economy. That evidence is then fed into the new deal for business group.

In a number of the conversations that we had in the lead-up to the announcement of the programme for government, evidence from that process was actively taken into consideration. Members of the Parliament will never know what did not make it into the programme, but they will see the final version. I know that, throughout the twists and turns of all the conversations, a lot of feedback was given by the new deal for business group and the regulatory review group, which, if I remember correctly, was reconvened as a result of the new deal for business.

In some circumstances, we can switch. However, revenue is basically spent on people: it is spent on the wages bill for our nurses, doctors and front-line workers. The Government has clearly set out its prioritisation of our people because they serve the public. Therefore, to switch is really challenging.

Now that we are coming through the cost of living crisis, high costs and the erosion of our spending power, although we are not quite out of that situation it is the time to inject capital into major infrastructure projects, to get the economy growing and to create the hive of activity that we know is attractive to other international organisations and enterprises that might want to be part of what we are doing in Scotland.

I do not disagree with that. The UK clearly cannot get to net zero without what is happening in Scotland. Of course, I would cheekily argue that it cannot get to net zero without the north and the north-east, including the Highlands and Islands. That means that a lot of the focus is on Scotland.

Some of the figures for the economic activity, the export potential of our energy and the investments that are being made are astonishing. The opportunity is huge, but it requires an equally huge response from the Government. We cannot do that within the fiscal framework, in part because of the sums of funding that are involved. We have a capital budget of about £5 billion a year and you know our limits on borrowing. Take ScotWind as one example. Those who have won the leases have, between them all, pledged £25 billion of investment in the supply chain. We have an annual capital budget of £5 billion that is designed to go on hospitals, roads and everything else.

The opportunity is huge. Any other country will respond to that huge opportunity with an equally huge offer. If we want, for example, to take stakes in businesses in the supply chain and ensure that the supply chain is able to respond, the level of demand on a capital level far outstrips the small budget that we have with our enterprise agencies and the Scottish National Investment Bank. The remarkable thing is that GB energy will not do anything over and above what is already happening with the Scottish National Investment Bank and other players: it will not provide any significant additional capacity. I am delighted that it is to be based in Scotland. It has a role to play. That is great and it is creating a hive of activity around it. However, to meet the scale of need, we all need to get real and get with what people are pledging to invest.

We have a £55 billion overall budget. Just one ScotWind leasing round—it is not even innovation and targeted oil and gas, and it is not onshore, but just offshore—represents £25 billion, which is half the Scottish Government’s budget. That illustrates the scale of what we are talking about.

We set out in our hydrogen action plan the decisions that we would take on hydrogen. As you said, there have been a number of pilots and pockets of activity in hydrogen. I know about the level of activity of interested investors, developers and energy companies that want to explore and develop it, so there is a lot of optimism about the potential.

The key in all the energy industries is to turn potential into reality. We need to work at pace to turn potential interest from investors and developers into activity on the ground. For example, the need to develop the infrastructure for export and build will require close alignment with the UK Government. The big sticking point with generation of renewable energy, particularly offshore wind, is access to the grid.

At the moment, our engagement is positive. We have had a lot of face-to-face engagement. I know that the Secretary of State for Energy Security and Net Zero, Ed Miliband, and Gillian Martin have had a number of face-to-face discussions about what each side needs to be doing, but the industry cannot wait for us to keep talking. It needs to see some shared partnership working in getting things done.

Some things have been done around two recent investments. The investment in Ardersier, which we talk about extensively, is about infrastructure and upgrading the facilities there, thereby creating opportunities for other developers to come in. That investment was joint UK Government and Scottish Government funding. The other example is the UK Infrastructure Bank’s investment in Hunterston and XLCC, which complements some funding that the Scottish Government has committed. Those are two examples. We can point to those and see active investment in infrastructure.

The message that I have been sharing is that if the UK Government wants to achieve its aims around energy, it should let us take the lead in Scotland. We, jointly with industry, can give a clear steer on the changes that we need to see in short order. The UK Government, in its early weeks and months, has had a big focus on getting GB energy set up, but when it comes to those questions, we know what needs to be done. It is a clear list, and it is about making the changes and speaking with one voice to give reassurance to those who are minded to invest and are looking at whether they should stay here or go to our European neighbours. A lot of the investors who come to Scotland go on to Scandinavian or European countries. They have options, so we need to ensure that they are here.

I realise that I have been talking at length about investment. Richard Rollison is leading a lot of the work on attracting investment.

I agree with your point about the supply chain. There is a sequence to that. We need to get some of the major developments, particularly offshore, through consenting and planning and into a phase where they are about to build and have pledged funding. In advance of that point, they will look to the Scottish domestic supply chain, and it will be the services and products that are at the most advanced stage that will be able to support the wind or hydrogen opportunities. If they do not exist, investors will look overseas.