Economy, Energy and Fair Work Committee

Meeting date: Tuesday, January 8, 2019

Official Report 798KB pdf

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Enterprise and Skills Strategic Board

I welcome Nora Senior, who is the chair of the Enterprise and Skills Strategic Board. She has with her Stephen Boyle, who is head of the Scottish Government’s analytical unit for the Enterprise and Skills Strategic Board.

I invite Nora to make an opening statement, after which we will move to questions from committee members.

You will have to excuse my voice, as I have a bit of a cold.

Thank you very much for inviting us back to update you on what has been undertaken since I was last here. I have now been in position for about 14 months and the board has been in existence since December 2017—just over 12 months. We have met eight times during that period. We have examined evidence on the areas that will help to move Scotland’s position in the Organisation for Economic Co-operation and Development charts and considered actions to improve productivity, wellbeing and sustainable economic growth.

There are a number of areas in which the board has achieved successfully, and I am happy to outline those in more detail in answer to questions. The aims of the board are to improve the overall performance of the enterprise and skills system to drive sustainable economic growth; to drive hard alignment between the activities of the agencies; to look at performance measures that give realistic insights into what the agencies spend money on and the return on that investment and allow comparisons; to look at how we encourage engagement with other agencies and bodies involved in the area of enterprise and skills business support; and to look at the culture and collaboration of the agencies.

We can demonstrate successful movement forward in each of those areas, particularly on alignment. We now have a more co-ordinated planning system between the Scottish Government and the agencies. We are looking at a process in which there are dedicated times for the agencies not only to develop and discuss their own plans but also to share ideas with one another, so that there is more opportunity for the agencies to identify where greater collaboration could take place and where duplication could be eradicated.

We have made initial progress on measuring impacts across a number of different areas. We produced our strategic plan and published it in October, covering the four main missions of business models and workplace innovation; future skill needs; business creation and growth; and exporting. We looked at a wider range of areas that we thought would have a positive impact on economic growth, and selected those four as the ones that demonstrated that they would deliver the most impact. Later this year, we will return to those that we did not select for the first tranche.

The committee has had some discussion today on fair work. The board has been successful in challenging the agencies on embedding fair work in their culture and values and in the plans that they are beginning to prepare. The agencies each hold a significant amount of data. The board has been successful in ensuring that there are ways in which the information can be shared more easily among the agencies and, importantly, with the Scottish Government’s analytical unit for the board.

Most of all, the board has created a forum for discussion, not just with the agencies but with the wider business and learner communities and with those agencies, bodies and other organisations that are already involved in the area.

I am interested in the overall picture and will leave the detail, on the analytical unit for example, to my colleagues. I will try not to stray into their areas.

Nora Senior mentioned a lot of things, such as hard alignment, sharing plans and avoiding duplication. What are the timescales? I accept that a year would be very quick. At what stage can we say that we are making progress towards the OECD targets or that there is more alignment?

The strategic plan has a 20-year range, if all the actions are included. Being in the upper quartile of OECD countries will not happen overnight. There are some specific actions on hard alignment that will happen very quickly. For instance, the culture and collaboration piece will be very focused on the user—not on the services that the agencies deliver but on what the user needs. To assist, a group that is led by SE and includes HIE, SDS and business gateway is looking at having a single digital online point of entry. Basically, that is an initiative that will ensure that customers are able to access everything that our enterprise system, in its widest context, is able to offer. The beta system will be ready in the spring. In the next month or so, the programme group will look at how local authorities can also be involved in contributing to that single online point of entry, which I think is really important.

11:15  

That work has a very short timescale. Our learning journey, with the change and the future skills agenda that we have outlined in the strategic plan, will take longer to deliver, because you cannot change an education system overnight. Our education system and how we learn need to change to accommodate the technological change that we are experiencing, as well as the change in work patterns that will take place throughout the next period. We will not have jobs for 30 years; we will have jobs for one, two or five years. There will be a continuous programme of lifelong learning, because people will need to upskill and reskill. Changing the education system and then the career system to support that will take slightly longer to do.

A range of timescales are embedded in the strategic plan. The performance measurement framework that the analytic unit is looking at will identify targets against timescales more specifically. We have seen the initial draft of the framework. The next discussions about that will probably be in March. After that, the framework will be embedded and adopted, so we should have a more transparent overview of a timescale for various key performance indicators.

On the issue of the different organisations working together, being more joined up and having less duplication—if that is what we mean by hard alignment—you have said that you have your plan and that the agencies are beginning to prepare their plans based on that. Obviously, that will take a few years. In two years’ time, will the committee see a noticeable change in the atmosphere and the relationships between the organisations? Will they all be going in the same direction by then, or is two years too soon to expect to see that?

I would expect the business community to come back to your learner community and say that it sees a noticeable difference in how it can engage with the whole enterprise and skills system. I would be most disappointed if that was still in question in two years’ time.

We have started to talk about the analytical unit, and you have said that the first draft of the performance framework will be available in March. What resource is available to the unit? What are the staffing levels? What size of budget has it got?

Last May, the board agreed a proposal for an initial head count of eight people and a corresponding non-staff budget of up to £800,000 a year. The Scottish Government also agreed that budget request. At present, we have five people in post, and we expect to bring others on board.

Are those five staff transfers from other Scottish Government agencies, or are they new people brought in from business, for example?

Three of the team are employed by the Scottish Government, so they either were already members of the Scottish Government civil service complement, or have been recruited to the Scottish Government specifically to work with us. Those three are mainstream civil servants. Another is on secondment from Skills Development Scotland and another is seconded from the Royal Bank of Scotland.

Are the three remaining people to be recruited to fill specific gaps in expertise in the unit in order for it to be able to analyse all the data that is coming in about the Scottish economy?

Yes. Two will be economists and one will be either a statistician or a social researcher—those are descriptions of roles in the Government and there can be grey areas between them. As I said, plans are in place to bring those staff on board

That is helpful.

The committee has carried out an inquiry into the economic data for Scotland. Are you satisfied that enough data is available to enable you to measure Scotland’s performance and the outcomes of Scottish Enterprise, Highlands and Islands Enterprise and the new south of Scotland agency?

State-of-the-art approaches to measuring the impact of such agencies do not terribly much rely on conventional economic statistics.

Let me illustrate that with a live example of something that we are doing. In round numbers, about two thirds of the budgets of the four agencies is spent on investing in people, whether we are talking about college and university provision through the Scottish Further and Higher Education Funding Council, or the apprenticeship programmes through Skills Development Scotland. We think that, building on work that SDS started, we can estimate the impact of that investment on productivity, equality and wellbeing, not by using conventional economic statistics but by using other data sets that enable us to track people as they move through the education and training system, so that we know what investments have been made in those people and what qualifications they have obtained. When those data sets are linked with others, we can follow a person into the world of work and ascertain what impact the education and training has had on the likelihood that they will be in work and on their earnings. None of that is in the conventional territory of economic statistics that the committee considered.

You mentioned people’s progress through education and into careers. How will you measure the impact on wellbeing, fair work, business models and innovation?

That is trickier—there is no question about that. In a sense, the easiest bit to measure—although it is by no means absolutely straightforward—is the impact on productivity.

Let me give you an example of how we are tackling the question of wellbeing in the context of education and training investments. We are likely to use the approach to the measurement of wellbeing that the Office for National Statistics uses for the United Kingdom as a whole to compare people who have been through the education and training system with people who are identical in other respects. By comparing the wellbeing of the two groups, we can measure the impact that proceeding through the education and training system has had on wellbeing.

When it comes to the impact of agencies’ activities in relation to fair work, we would adopt a similar approach, whereby we would compare what had happened to businesses that had participated in programmes or received agency support that had fair work as a condition of participating with what had happened to similar firms that had not participated in such programmes. Again, by comparing the two groups, we could measure the impact that fair work interventions had had on businesses.

Let me go back to my earlier question. Are you satisfied that the ONS data—which predominantly covers the UK, so only a small amount of it relates to Scotland—is adequate for the purposes of such comparisons?

I do not expect us to rely very much on ONS data; we will rely on the different data sets that I have been talking about, many of which have been developed only in recent years.

Thank you.

From what you are saying, it seems that this analytical unit is, to a large extent, reinventing the measurements that it will use. To what extent can we make use of the experience of other countries or regions in that respect? Are we reaching out and looking at that information as we put these models together?

Yes, we are. We can learn a very great deal from what others have done. Off the top of my head, I would say that we can learn a lot in the education and training sphere from the work of the centre for vocational education research at the London School of Economics and the Institute for Fiscal Studies. Often they have done that work on behalf of other Governments or agencies, but just as often they have done it independently, and we can learn from that. Moreover, we can draw on good experience from Denmark with regard to assessing the impact of export support. We are very open to learning about what has been done elsewhere.

Something that we might well benefit from is the University of Strathclyde economics department’s recent recruitment of a number of people with deep specialisation in the kind of impact assessment and evaluation techniques that are likely to be important to us, and we have had initial discussions about how we might be able to work with those people and about whether they can support our work.

Given the wide variety of organisations in Europe and, indeed, the UK that are trying to measure and make some sense of this data, how are you determining and evaluating which models are better than others?

Perhaps I can go back to the work that we are doing—and which I have already described to Mr MacDonald—to assess the impact of the education and training investments made through SDS and the SFC. We have had an extensive review of examples of people in other places and countries undertaking similar work, and when we carry out that kind of work, we apply two filters. The first is the five-point Maryland scientific scale, which is used to assess the quality of a piece of evidence; on that scale, one is not very good, while five is state of the art, and we look for examples that are closest to the state-of-the-art end. Secondly, we use our team’s experience and skills and apply our own judgment with regard to what is most relevant to us and our circumstances. I reiterate the point that we are very open to learning about what people elsewhere are doing well.

What specifically have you learned from elsewhere, and what measures are you applying here with regard to the return on investment in enterprise and skills?

The principal lesson that we have learned is that many of the previous techniques for measuring the outcomes from these kinds of investments are, in many respects, flawed and inappropriate.

But does that mean that previous data and statistics will not be comparable with what is being done now? You say that the other measurements that were done in the past were flawed, but does the fact that you are reinventing the whole basis on which things are measured mean that, for example, we will not be able to make a comparison of the average over a certain period?

Let me explain briefly but in more detail what we are trying to do. With regard to education and training, the question that we are trying to answer is: what return are we getting on each pound spent on an apprenticeship or on a college or university place?

Previous approaches to answering that question were flawed in no small part because we did not have the data that would allow us to answer it. The type of approach that I outlined to Mr MacDonald deploys data that simply did not exist until very recently. If we had been before the committee two or three years ago, we would not have been able to talk to you about how we would use such data.

We hope to move beyond the approaches of the past to give different and better answers to the return on investment question. You are right to say that those answers will not be comparable with what might have been seen before, but I think that they will be more reliable answers.

11:30  

As with all statistics, until we build our statistics over a period, we cannot do trend analysis and we will not really get the whole picture; we will just get a snapshot.

That is correct; we have to wait for the trend analysis. If I take, again, the example of the education and training analysis that we are doing, I think that I am correct to say that we are now able to follow people who have been through the education and training system up to about their late 20s, and others have begun to build that time series. However, it is correct to say that we will not get much longer trend data for some time.

Good morning. I was going to focus on some of the areas that Colin Beattie has just covered, but I want to expand the discussion a little bit and look at responsibility, accountability and the process.

On measuring the return on investment in enterprise and skills policy, Scottish Enterprise’s suggestion that every pound spent results in £6 to £9 of gross value added came up again this morning. People may agree or disagree with that. Do you agree with it?

Obviously, the enterprise budgets are being cut. If people had a concern about budgets being cut while accepting the potential for GVA growth, how would they put that across? What would the processes be to make that known to the Government, in particular, and to the enterprise agencies?

I will kick off, then Stephen Boyle can follow up with any other comments.

On your first point, about Scottish Enterprise and the return on investment, one of the challenges that the board has put to the agencies relates to their measuring themselves and their targets against companies and people who are already involved with the system—companies or people who, to an extent, therefore, are already on a trajectory. The big challenge for the agencies is to reach people who are not yet engaged in the system, because that is where the greatest growth could be. If people who have not been in that kind of marking system before are brought in, that will change the return on investment.

On whether I agree with what the agencies are putting forward in the context of what they mark, I still think that there is more than an excellent return. However, that has not resulted in an overall shift in productivity or economic growth, because there are still too many customers out there who are not engaged with the system at all and would benefit from greater help. That is one of the tasks that the board will set the agencies in order to widen their customer base.

On the second point, I refer to what Stephen Boyle said. The strategic board is not an operational board, so the targets and measures that we will look at will be at the macro level. We will look at the shift in productivity, inclusivity, equality measures, growth in economy and how many companies are moving up the growth scale. If those top-line metrics and measures show that nothing is moving, the board will challenge the agencies to come back and explain and to demonstrate why particular budget lines are showing growth and particular budget lines are showing no growth. The board would then challenge the agencies to explain and evidence why they have continued to place money and investment in the areas where there is not an acceptable return on the investment.

As well as doing that, the strategic board will challenge the agencies’ own boards to revisit the issue so that they can come back and provide support for their decision to invest in those areas. That process provides an opportunity for review of where investment is being made and whether it could potentially be better placed.

Under each of the strategic plan missions, the board will look at the types of targets from an overall macro perspective, and the agencies will have to take those and deploy them through each of their individual plans.

You talked about greater help but greater help might require at least the same budget. Is there a role for the board in challenging the Government if the board disagrees with the cuts that are being made and how those might limit the provision of greater help?

We would have to discuss that with the various ministers who are responsible for the agencies and make recommendations. It is not in our gift to make budgetary decisions, but we can certainly make informed recommendations around where we think investment ought to be made.

Thank you.

Last year, the committee issued its report “Scotland’s Economic Performance”, in which it expressed concerns that the enterprise agencies were marking their own homework when it came to setting and achieving performance targets. Do you share those concerns and how will the performance targets be set going forward? Will we see more transparency?

I might have answered that question. The planning process is being put forward, the strategic plan has been created and the agencies are developing their own individual plans around the missions, as well as the other areas that they cover. The approach is that the agencies will hold themselves to account because they will have to share their plans before they are published, which has not previously happened. The process is still to be decided at the board’s meeting in January, but I anticipate that not only will the agencies share their own plans—which will obviously be looked at and reviewed by their agency board—with each other, but they will also be reviewed by the strategic board, in particular by the business members of the board, before they are signed off.

There should be greater transparency and understanding around the targets that are set. I think that the performance framework that is being developed by the analytical unit will also allow greater transparency around comparisons—in relation to not just GVA but the other elements that Stephen Boyle referred to—which will provide transparency for ministers in order to make decisions around where budgets ought to be placed.

Is there any plan to publish or make public the enterprise agencies’ performance targets?

Each of the agencies publishes the performance targets in their own business plans.

My understanding is that the top-line targets are published, but Scottish Enterprise has, from memory, 72 different targets and I do not think that that second level of targets is made public.

I cannot answer that but I am willing to go back and have a look. The performance targets that the strategic board will set will be around the macro level. The operational targets would have to be set by the agencies themselves. You raise a good point, so Iet me consider it and feed it into the discussion in January around targets and how they are reported.

Thank you. I have a related question. The Scottish Government has recently moved away from a policy of setting specific economic targets. For example, it no longer says that productivity should increase to the first quartile. In the absence of specific economic targets, does it create difficulties for the strategic board in setting its own targets when it does not know what the overall macro-economic targets are for each of the economic components?

I will let Stephen Boyle answer that. My own observation is that our aim is inclusive economic growth, so it is not just about economic growth and GVA and GDP themselves; there are other areas such as wellbeing, health and workplace innovation, which are all indicators that an economy is moving in a positive direction. Those are the types of criteria that are included in the performance framework that the analytical unit is looking at.

The board retains the desire to see Scotland achieve top quartile performance in each of the areas of importance to it—productivity, equality, wellbeing and sustainability—and I expect that to continue to guide the approach that the board takes.

Nora Senior, you mentioned inclusive economic growth, which has been referred to as lacking definition. Is there now an agreed definition of what it is and how it can be measured?

I would have to say no, because if I asked five different businesses, Government officials or politicians, each would probably use different words and a different definition. That is part of the challenge. When it comes to inclusive economic growth and fair work, businesses in particular get confused about what we are talking about because they sound like a Government mandate, when actually we are talking about good working practice.

If you asked people in business whether they would be willing to consider having a workplace where they included their workers, gave them a voice and looked at equal opportunities, most of them would say, “Of course.” The majority would think that they were already doing that, but because we give it a name such as fair work, people think that we mean something else. The language that all of us use needs to be much more consistent, and we need collectively to look at definitions. We will certainly look at the words that the strategic board will use, which will be embedded in the agencies.

What emerged for the board was that each of the agencies had a different understanding of inclusivity and fair work. We will therefore look at having a consistent approach and form of words that the agencies will all buy into, and that will be embedded in the work on culture and collaboration.

The Scottish Fiscal Commission has forecast GDP growth of around 1 per cent for the next four years. How far off is that from trend growth and Scotland’s potential?

How far 1 per cent is off—

How much does that figure diverge from trend growth and Scotland’s potential?

Over a long period of time—between 50 and 60 years—Scotland has probably grown at an average annual rate of just south of 2 per cent. In the 10 years after the financial crisis, we grew in total by about 1 per cent. The Scottish Fiscal Commission’s projection of 1 per cent a year over the next few years is materially better than what happened in the immediate aftermath of the financial crisis, but is materially poorer than the longer-term trend.

So 1 per cent is the new normal.

We can observe that, across most advanced economies, there appears to have been a step down in the growth rate—it pre-dates the financial crisis and probably happened towards the end of the 1990s and the early part of the 2000s. Despite what we all read, and what some of us sometimes say, about the pace of change, it is not manifesting itself in productivity growth across much of the western world. Scotland is part of that story, with the added factor of slow population growth.

There are other external factors, such as Brexit. I do not want to bring in the Brexit debate but it could have a significant impact, as will technological change and the ability of both businesses and our educational system to adapt to digital disruption and climate change. It would be difficult to say which of the elements that are out there might have a more severe impact on that 1 per cent.

11:45  

The enterprise and skills review did not include consideration of business gateway, but the board quite rightly identifies business creation as one of its missions. How can you influence what goes on in business gateway?

Again, looking at it from the user perspective, we see business creation as critical because if we do not create enough businesses, we do not have enough businesses moving into the middle and onwards and we rely too heavily on a small number of large companies. We need the pipeline to be bigger, so we rightly recognise the important role that business gateway plays—so much so that we invited both business gateway and the Scottish local authorities economic development group to our November board meeting in order to have an open discussion about how the agencies and the enterprise and skills system could work much more cohesively.

Businesses start off through the business gateway, but we need better cohesion and better customer experience so that businesses move through the system at the right time and can move from local to regional and national in a seamless, rather than a disjointed, transition. Someone looking at the situation as an outsider would see that that disjointed journey comes from not only the agencies but their portfolios. Where there is division around budgets and delivery, there is the challenge of disjointedness.

Again, the business gateway point is embedded in the culture and collaboration work. This is about looking at not just how the agencies work but how the local authorities, business gateway and regional economic partnerships work. That is why we made the recommendations in the strategic plan on closer working relationships and making the journey more streamlined not just for the user but internally, although the user is the most important factor.

If I was being kind, I would say that the committee regards performance as patchy, given the evidence that we have been given. Is there a role for the analytical unit to look at some of the data that underlies performance and to give us an in on lifting standards across Scotland?

We would be open to that. I have had an initial discussion with business gateway about its approach to evaluating its impact. We are not able actively to help it at the moment, but I am certainly open to doing that in the future.

That is very helpful. Thank you.

Ms Senior, in your opening statement you said that the board is now much better placed to challenge agencies on the implementation of fair work, and throughout this evidence session both you and Stephen Boyle have spoken a lot about the availability of data and the importance of scrutinising it. The guest speaker at your board meeting in August, Patricia Findlay, said that

“the system, e.g. business support, is not set up to support fair work. The value of adopting fair work is recognised and accepted but not mainstreamed”.

Does the board agree with that assessment? If so, why has fair work not been mainstreamed, given that it has been a Government priority since 2015?

That is a fair comment. Patricia Findlay is right that fair work is not mainstreamed in the agencies or our businesses. That is partly because, as I have said, businesses do not understand what such mainstreaming means.

One of the board’s four missions covers business models and workplace innovation, which includes fair work. The board is completely behind fair work and believes that it must be central to everything that is being done.

We were fortunate enough to draw on Pat Findlay’s advice on developing our proposals in that area, on which we have set the agencies a number of actions. The first is to deliver a campaign to promote understanding of the possible impacts on productivity of the adoption of fair work, workplace innovation and different business models. The second action builds on the Scottish manufacturing advisory service’s diagnostic model and is to identify businesses that can benefit from innovation and the adoption of better working practices through the fair work model. Developing new cross-agency teams will drive the adoption of fair work and other management practices.

In answer, I think, to a question from Angela Constance, the cabinet secretary talked about fair work and whether the businesses that fail do so because they are not more transparent. Management practices can be poor in some businesses in Scotland. Communication and the creation of new cross-agency teams that will deliver a consistent message about fair work will be important.

Again, we recommended to the Government that any support that comes from the agencies should have fair work practices as a condition.

Where does social partnership sit in all that? The Scottish Trades Union Congress and Jim Mather led a bit of work and reported on their findings in the “Working Together Review”. Given the links between good social partnership and productivity, how well placed is Scotland in beginning to motor ahead with social partnerships, or are we still some distance from the races?

Scotland benefits from its size and scale. It has more of an opportunity to engage and have dialogue with a much wider bank of stakeholders than many of our competitor countries have. The strategic board has acted as a catalyst for dialogue not just between the agencies but with a wider bank of organisations. That engagement has the potential to continue and grow.

In response to Jamie Halcro Johnston’s earlier question about the budget, you rightly said that you do not make any budgetary decisions. Did you make any recommendations about the budget to the finance secretary this year?

In truth, we did not, really, in terms of pounds, shillings and pence. However, we made strong recommendations on the missions and where we think emphasis ought to be—business models, innovation and fair work, for example. We did not make recommendations on the budget.

We have tasked the agencies to look at how they will use their budget collectively, and the funding council is looking at how it can give some of its budget to SDS for career progression, upskilling and reskilling. The task is for the agencies to take on that responsibility and to bring that to the board for discussion and review.

You mentioned the Scottish funding council and South of Scotland enterprise—

No—I mentioned SDS.

I apologise.

Will there be more flexibility around transfer of money between the agencies that you co-ordinate, or has that discussion not happened?

We have not considered that yet. The board will meet at the end of January to discuss its priorities for the next two years. Within that discussion, there will be a discussion for the agencies about how we task them to demonstrate where greater collaboration and shared resources are happening. Therefore, I suspect that movement of budgets, which is outside our domain, will have to be decided between the agencies, their Government sponsors and ministers.

Are you examining that in terms of efficiencies, which we discussed with the cabinet secretary this morning?

Yes.

What is the role of the board with regard to the Scottish national investment bank?

We talk to the Government and we make recommendations. The national investment bank’s work will be of interest to us. There will be areas of investment—infrastructure and exports, for example—on which we will want to feed in, but we do not have a formal relationship. If we were to have such a relationship, that would require a decision by the Scottish Government.

On future challenges in enterprise and skills, you hinted at population, Brexit, climate change and so on. I am not asking you to look into a crystal ball or anything, but you mentioned that you are working to some timescales of the order of 20 years, and you mentioned changes in people’s expectations of what a job is, how long it might last, what might be required in terms of sustaining employment and so on. What will be the key challenges to the enterprise and skills environment over the next 10 years?

I think that the issue of skills is a major challenge. There are many opportunities with regard to which Scotland needs to be fleet of foot. Issues around manufacturing development, exports, upskilling and reskilling, and digital disruption all impact on how Scotland performs. The ability to have a flexible education system that can look at issues around demand-led jobs, and can also create new higher-value innovations, will be one of our key challenges.

Can you say a little more about digital disruption?

Automation is an important issue, in that regard. Many of our manufacturing industries could benefit from more innovative adoption of digital technologies. However, many of those companies are not yet engaged with the enterprise and skills system. That goes back to the challenge that I mentioned at the outset, which was that the challenge does not simply involve working with companies that are already in the system; it also involves working with those that have not yet engaged with the system.

Have the board or any of the agencies that you work with made preparations for a no-deal Brexit?

Yes. In November, we had a comprehensive presentation on a collective response to a number of different Brexit scenarios. There is a comprehensive website that the agencies have collectively launched to deal with Brexit and queries around Brexit.

Part of the challenge concerns the fact that business is ambivalent about responding and is closing its eyes, in a sense. Depending on what happens at the end of March, there might be a rush to the agencies to get assistance. That is why the board tasked the agencies with coming up with a collaborative Brexit response.

I understand that we are behind some continental European countries on automation. Have you identified how Scottish companies could be encouraged to automate more? Automation does not necessarily mean loss of jobs, of course, because the introduction of automation can often increase production, which results in more jobs. Do you have a view on that?

The board has not seen evidence on that. An area that the board will consider, and which we did not consider the first time, is innovation in research and development. The analytical unit is preparing some background information on that, which takes into account companies that are already benefiting from the adoption of digital technology and those that are not, and involves a comparison with the situation in some other OECD countries. That piece of work will not be ready until sometime between March and the middle of the year.

12:00  

You talked about digital, but I am also thinking of automation—the use of machines to do work. The use of digital technology is part of that, of course; these days, you cannot really separate the two.

I meant both. Going back to the Scottish manufacturing advisory service’s model, it is already looking at companies that are benefiting from automation. Rather than reinventing the wheel, the aim is to work in partnership in order to gain insight and knowledge from those findings and so that the agencies can touch the companies that could benefit from automation.

I have a general observation to make, provided that we have reached the end of questions.

I would be grateful if you could make the observation brief.

A number of the initiatives and measures that Nora Senior has set out are welcome and sensible, but what you have said begs a question about what was happening previously. Was there a lack of strategic direction and a lack of alignment of the agencies? Do you have an observation to make on what was done previously?

Do you want me to give a personal opinion or a strategic view?

Do you feel that you are in a position to answer the question?

Yes. To an extent, I answered it the last time I appeared before the committee. I asked the analytical unit and Government departments to give us evidence on what had happened in terms of a sector-based approach. My reason for asking was that I wanted the board to understand what the future analytics for the sectors that we had looked at would be. We did not have that predictive information, so I asked for information going back five years and 10 years so that we could see what the trend was. The trend showed clearly that, in six of the seven sectors that were looked at, there was no substantial economic growth. Therefore, personally, I think that the approach was flawed, because high growth can come from anywhere. It does not need to come from a particular sector; it can come from a different place or region, or a different type of industry.

However, there are always debates about such matters. Some people always say, “You need to go for the next big thing and put all your money in that,” but the reality is that we do not know what the next big thing will be, so one way is as good as another until we monitor and provide evidence on the effect. My challenge would be about why we took a sector-based approach for so long without deciding to review it, or to change course and do more or less in particular areas.

Thank you very much.

I suspend the meeting briefly to allow our witnesses to leave.

12:02 Meeting suspended.  

12:03 On resuming—