Seòmar agus comataidhean

Compared with other independent Government strategies, this strategy is unusual. We did some comparison work, and pretty much all other international, independent Governments have far more tools and levers at their disposal. Macro, fiscal, economic and monetary levers are all reserved. Trying to build an economic strategy is quite remarkable when, for example, we do not have any control over migration, the vast majority of tax powers, international trade and some regulation.

You are right to say that our unemployment rate is 3.8 per cent, which is lower than the UK’s unemployment rate. From that perspective, accessing additional labour is hugely challenging in a country that has always welcomed inward migration and that now has a demographic outlook that indicates that we absolutely need to build and extend our working-age population. It is a huge challenge.

One of the actions in the strategy is around talent attraction from the rest of the UK. To date, Scotland has done very well on that, but we need to do even better because, right now, our businesses and industries are crying out for labour. There is an acute labour shortage, but we have no capacity to manage visas or ensure that, once we have attracted individuals, there is an easy route for them to get here.

We have engaged with the UK Government’s refreshed shipbuilding strategy because of its opportunities for Scotland, in particular. We also recognise that that is one of the most powerful arms that the Scottish Government has for procurement at a time when public finances are not plentiful as the Chancellor of the Exchequer tightens the purse strings, post-Covid. Quite clearly, there will be opportunities for ferries—in Scotland and outwith it—when those links are developed.

However, to cut a long story short, I note that procurement is a key arm. It is an area that we reference alongside our spending power to create new opportunities for Scotland, and it goes right to the heart of developing a supply chain. Under project 6 in the strategy, which is on development of Scottish supply chains, we specifically talk about our strategic approach to public ownership, so that public companies are managed, developed and initiated for the public good. That relates to what you asked about.

Again, I will take the question in two parts. If we have a streamlined, focused delivery landscape, in a sense, that vehicle will drive itself. We need a very focused approach from our enterprise agencies and so on to what we are trying to achieve: new market opportunities, more entrepreneurial culture and citizens and a focus on productivity. If we look internationally, we see that those are three ingredients for success. That is not aligned with a particular circumstance or with being relevant only in the immediate post-Covid phase. Those things will be relevant going forward, and they have certainly been the foundation stones for Scottish economic success to date. Therefore, there is an element around delivery to consider.

On the other point, we need to be flexible and agile enough to respond. Therefore, when it comes to productivity across our regions, I want to see the Highlands, Ayrshire, Glasgow, Edinburgh and the north-east being as productive as possible, and that will remain a focus, irrespective of the circumstances. Success is never inevitable. In no country and on no planet is success ever inevitable if you do not go out and seek it. The strategy is built on the fact that Scotland has advantages and strengths that are the envy of many other countries. Let us build on them and ensure that we are as successful as possible.

I think that they will. Again, I refer you to the two documents that have been published: the analytics paper, which is quite a weighty document, and the document that sets out the emerging actions, which is an easier read.

There are two issues. One is that we had given a commitment to publish the strategy document as quickly as possible after the election and, obviously, there was some delay because of the emergence of the omicron variant over the winter period.

The other issue is that the agents of delivery are not all within Government. For example, with regard to health, the national health service reports directly to the Government, and all of it, in its entirety, is in the public sector. However, with regard to economic growth, 70 per cent of the agents of delivery are in the private sector. That means that we need businesses, entrepreneurs and academics to be on board with the strategy, and they need to play their part in the delivery and implementation. You will see in the document that, next to each of the actions, we have detailed who we think owns each one, and, in order to deliver an implementation plan, we need to work with them. That is why we believed that it was more important to publish high-level actions and then work with those people on the implementation plan.

There is a point to be made around businesses working with business. One of the actions to which we have committed is appointing productivity ambassadors. There has been talk in the past about productivity commissioners, but we chose productivity ambassadors, and their job will be to work intensively with key industries to drive productivity improvements.

As part of that, they will work internationally. They will build international networks and work with similar industries in other parts of the world to learn what are the key investments, perhaps in technology or workforce, to improve productivity. They will ensure that there is a particular focus on leadership in those key industries in order to improve productivity.

As you said, there are some industries that are significantly more productive than others by far. However, we must work with them because we cannot be content that they are more productive than other industries; they should be world leading on productivity, because many of them compete on an international stage and not a domestic one. We must also work with other industries—this point is well rehearsed so I will not list them—in which, to bring them higher, there needs to be more investment in reskilling, upskilling, digital, technology and innovation.

There are two things. First, the access that businesses have to support will change. It will be more streamlined, in that it needs to align with what our strategy says—for example, there will be changes to conditionality and to the things that we focus on. There will inevitably be changes to the support that businesses receive. In relation to that streamlining, as soon as anything is stopped, I guarantee that people, whether it is Colin Smyth or somebody else, will be posing questions to me about why we have stopped certain schemes and initiatives and so on. Inevitably, one of the by-products of streamlining is that you bring everything into one place and by default, things might have to change. If the Parliament believes in change, I hope that members remember that in the future, when considering the schemes that are available. Some of the schemes will have to change or will be no more, because we have adapted our approach.

The second thing is that there is support that is provided by, for example, the enterprise agencies that is not specifically grant support and is not about accessing funding. Again, the enterprise agencies will align all their activity to the actions and objectives that we set out in the strategy. It will be very clear to businesses what the enterprise agencies are doing, what they are seeking to achieve and the opportunities that come from getting on board with that.

I will take that question in two parts. The second part of the question is about measurement and the first part is about solutions.

I will take this opportunity to say that I am pleased that Ronald MacDonald agrees that we have diagnosed the problem, because that, in itself, is where we should start. It is easy to shy away from diagnosing the problems, which involve long-term structural challenges and some of the short-term post-Covid challenges.

There is a lot that is new in the strategy on solutions. I have already referred to some examples around developing a more robust supply chain—a Scotland-based supply chain—for our renewables. I am sure that you would be one of the first in the Parliament to criticise the Government for not having done enough to develop the supply chain for renewables. The fact that we have set out a comprehensive plan for how we are going to do that and a commitment to do it sounds like it is new, to my mind.

It is unfair to suggest that there are no new solutions. We have started with the data, diagnosed the problem and identified the actions to get where we want to be, bearing in mind the fact that not all the agency lies with Government. A lot of it lies with other institutions and the private sector.

Measurement is vital. If we are not measuring the right things, we will probably not be able to define success. Ultimately, there will be clear metrics for success in the implementation plan.

On what we are measuring, I go back to the analytics paper. I will give the example of entrepreneurship. Scotland is an entrepreneurial country if we define it in terms of entrepreneurial activity such as start-ups—new businesses—but we are not performing as we should on scale-ups. In other words, the success rate for new businesses is not as high as it should be. There is much to celebrate in the way of entrepreneurial activity. If we just stop there, we could say that it has been a success, but there is a problem with business survival rates. We do not perform in the way that Ireland performs, for example.

What we measure is key, and we will set out the measurements. That is unpacked in the analytics paper—particularly the example on entrepreneurship. Gary Gillespie, the chief economist, might want to come in on measurement, because we debated at length what we should measure.

What do you suggest is missing?

Interestingly, I posed a similar question to various advisory council members and to a lot of the people with whom we consulted. I asked what needs to be done to deliver a step change. By and large, the feedback was that we know what to do—I am sure that the committee and the Government are mostly aligned on what needs to be done for the Scottish economy—but we need to improve our ability to get it done and to be focused, determined and ruthless in our execution of the strategy during the next 10 years.

When we look at international examples of models that involve Government-led national strategies, we see that what often separates the successful ones from the unsuccessful ones is that, in the successful ones, there is consensus across political parties, Parliament and Government about what needs to be done. That means that, irrespective of the challenges that emerge, those Governments are able to deliver, because whoever forms the Administration knows what needs to be done.

One thing that makes the strategy stand out considerably is the ruthless focus on delivery. Of course, that will never grab a headline. There is a lot in this document that will grab headlines, particularly around entrepreneurship, but that focus on the execution of what we know we need to do and on streamlining our ability to do it is key.

There is one smaller area that is equally important, and that is the new opportunities that have emerged. When the previous strategy was published, in 2015, we knew that Scotland had great strengths when it came to our natural assets around energy, but in the past few weeks we have seen the announcement of the world’s largest floating offshore wind technology. That is remarkable, but it will be effective only if we can develop the supply chain and establish the businesses that accompany that. Those massive, momentous opportunities that are recognised the world over are new, and the strategy sets out in detail how we can make the most of those opportunities and, basically, build businesses and deliver jobs over the next 10 years.

I will prime Gary Gillespie, in case he wants to come in with additional analysis about additional costs.

Certainly, the anecdotal feedback from businesses, particularly smaller businesses, is that higher costs and increased bureaucracy have impacted on trade. They seem to be disproportionately affecting small and medium-sized enterprises that had previously been able to trade in and of themselves. Some larger businesses are able to access markets more easily, but there are increased costs.

If we go back to the questions about how we improve our productivity in our economy, I note that one of the most significant opportunities is through increased exports. That is why our export plan and the 25 per cent target are so important; there being additional costs of accessing one of the largest trading blocs in the world does not help with that.

Gary Gillespie might have some analysis on EU exit.