Official Report 598KB pdf
Good morning, and welcome to the sixth meeting in 2026 of the Economy, Tourism and Energy Committee. We have apologies from Daniel Johnson this morning.
I remind all members and witnesses that they do not need to operate their own mics during the public meeting.
Agenda item 1 is an evidence session on the Scottish Government’s priorities for economy and tourism. I refer members to papers 1 and 2. I welcome to the meeting Stephen Flynn, Cabinet Secretary for Economy, Tourism and Transport, and his officials from the Scottish Government, Colin Cook, director of economic development; Aidan Grisewood, director of jobs and wellbeing economy; and Frances Pacitti, director of business and better regulation.
I ask the cabinet secretary to make some brief opening remarks before we move to questions from members.
Thank you, convener, and good morning to the committee. I am very pleased to be here this morning to discuss the Government’s programme for the years ahead in respect of our economy.
The programme for government is clear that we want to have economic growth in Scotland. A number of levers are available to us to ensure that that happens. We have taken early action over the summer by convening the national council for economic growth, of which I am a member, and we have been clear about our intentions for a major projects office and a high-growth unit. We have also made strategic interventions and investments to help to ensure that our business community can move forward with confidence and that our public are able to benefit from the wealth that they can create.
A number of interlinked factors underpin the drive for economic growth, and I am sure that the committee is very familiar with them. We need to ensure that, over the coming years, we bring those together in a fashion that delivers for the public. I am very keen to do that, but I will not be able to do it alone. It will require significant partnership working, not just in the Parliament but with the wider business community in Scotland. Our initial interactions have been very positive in that regard, and I hope to build on those relations with the Parliament and the business community over the coming months and years.
Convener, I am very much in your hands and will answer any questions that you might have.
Thank you very much. I appreciate the opening remarks.
I will start with a general question before I bring in members. We had evidence sessions last week. The witnesses were broadly supportive of some of the themes in the programme for government, but Professor Stuart McIntyre from the Fraser of Allander Institute called it a
“cluttered landscape of economic strategies”.
Stephen Boyd of the Institute for Public Policy Research Scotland shared that sentiment, saying that there is
“no credible, coherent economic strategy … that stakeholders can unite behind.”—[Official Report, Economy, Tourism and Energy Committee, 22 September 2026; c 13, 14.]
In particular, he thought that there was a lack of clarity and consistency.
We can see in the programme for government a huge number of new agencies, new units, new programmes and new funds. For example, AI Scotland is set out as a flagship international programme. We have a Scottish Government bond programme, a high-growth unit, a major projects office, a Scottish innovation fund, regulatory sandboxes, knowledge transfer partnerships and empowered regional economic partnerships.
There is a lot going on there. Reading that, it is hard to escape the view that it is a cluttered environment. It is hard to see what the timelines and specifics are for getting those organisations or programmes up and running. That all seems to be set against the backdrop of public sector reform, whereby we seem to be consolidating various bodies, from the national health service to councils. Here, we seem to be doing the opposite and introducing many new bodies and programmes. What would you say in response to those comments?
You have done a remarkably good job of listing all the positive things that we will do during the period ahead to ensure economic growth. The business community, in my early interactions with it, has been supportive of the measures that we seek to take, particularly in relation to the national council for economic growth, the major projects office, the high-growth unit and our plans to simplify processes that can often pose a challenge for businesses as they seek to grow. I do not believe that there is a contradiction between seeking to empower our regions and ensuring that there is a strategic approach from central Government.
I guess it is a question of delivery as much as anything else. There are many new bodies, programmes and so on. How will you deliver them in a timely and measurable manner so that people can see progress? Everyone can see that the things that I listed are useful in themselves, but when we bring them all together it is hard to escape the criticism that there is a cluttered landscape. What would you say to that criticism?
I am glad that you agree that the list could be useful—your recognition of that is an incredibly important starting point. I would be more than happy to respond if there is a specific item that you wish to draw my attention to, but if you are simply saying that you feel that there is a cluttered landscape, that is an observation that you have sought to make.
I contend that, through public sector reform, we will be able to streamline our interventions and empower our regions in the way that we detailed in our manifesto, which was also reflected in the manifestos of several other political parties. I draw the committee’s attention to the Muscatelli report, which came out earlier this year and built on previous work that Anton Muscatelli had undertaken in years gone past that emphasised the importance of our regions.
We are taking that work forward through public sector reform, and we have introduced several other initiatives to ensure that we can be strategic about where our investments go and that we capitalise on the potential for economic growth in a way that benefits people in every community across Scotland.
The initial reference to the cluttered landscape was more about all the different things that have come in since 2007, and the economic strategy in 2007 was recommended as one of the best ones. From the point of view of businesses, one of the problems is talking about things too much but not actually getting them done. The convener listed several initiatives that are being put in place, but how will those things get done? Taking action is probably more important than just sitting and talking about things.
That is a fair question, Gary. I draw the committee’s attention to our enterprise agencies, Scottish Enterprise, Highlands and Islands Enterprise, and South of Scotland Enterprise. The money that has been put into those organisations is substantial, but so are the jobs figures that come out the other side and the strategic support that the agencies can provide, not just in the important regions in the north and the south but right across Scotland.
Over the summer, I had the opportunity to meet with many of the businesses that have been able to grow and expand on the back of investments made by the enterprise agencies. However, it is about much more than that. It is not just about start-ups or the wider economic landscape; it is about the scale-up landscape as well. Techscaler has been a particular success story for the Government—I am sure that the committee is familiar with that.
There is much more work to be done. As we embark on public sector reform, it is important that we recognise the strategic strength of our regions. It is also important that we empower our REPs and continue the good work of our enterprise agencies in a way that is focused on outcomes so that we ensure that there are jobs, we secure investment and, ultimately, we help to increase the tax take that allows us to do all the other positive things that we are able to do across the public sector through the budget process.
Thank you, cabinet secretary—and I apologise, as I should have welcomed you to the committee this morning.
Thank you for the presentation, cabinet secretary.
I was checking my notes, and I have terrible handwriting, but I think that one of the points that was made in the discussion about the cluttered landscape was that it would be good for us to focus on comparative advantage and on what we do best. I am interested in the high-growth unit and in how we will focus on Scotland’s strengths. I would like to understand a bit more about what that would look like.
The same question has been put to me in relation to the major projects office and how that will operate. What the high-growth unit and the major projects office will do—indeed, what the Government is very committed to doing—is ensure that, where we are able to make interventions and work with the private sector to deliver the greatest impact, we do so. That can be through providing a one-stop shop through the major projects office that allows investors who come in to know where the regulatory and planning barriers are, to know where the investment support can be, and to have the wraparound support that they require and deserve. That would ensure that their investment can be delivered and that we get the economic benefits on the back of it. The high-growth unit will very much supplement that work and the work of our enterprise agencies, ensuring that we are able to provide the streamlined strategic approach that the private sector has been calling for.
We have seen actions in other nations, such as Canada and New Zealand, and the success that those interventions can bring about. However, those interventions are not enough in and of themselves, which is why I would go back to the regional empowerment piece, because a very fluid conversation is going on about where Scotland’s strategic strengths lie. That is not to say that a single region should seek to follow one economic group, because the strength of our economy is its diversity. We know that, in the north-east of Scotland, the predominance of the energy industry is huge. In Edinburgh and Glasgow, our financial services sector is robust, and we have a burgeoning life sciences sector, not just in the University of Dundee but across all our universities. The question for the Government is how we can be strategic and work with the private sector, our universities and our regional economic partnerships to deliver the greatest value for the public and ensure that we have as high a tax take as possible through increased investment and output. We are seeking to complement the work that has been done to date—which has been successful, as was reflected in the election earlier this year—and ensure that we go further and faster. I am keen to ensure that that happens.
I will bring in Kristopher Leask in a minute, because he has questions on the major projects office and local economic development.
The underlying question, which this committee will have to take a deep interest in, is whether those programmes or agencies—whatever you call them—will help or get in the way. How much will they cost to set up, how many members of staff will they need, and how long will they take to get going? Those questions will be common to all those offices, projects or funds—whatever you call them. We certainly hope to be kept informed about that.
Good morning, cabinet secretary. I am glad that you raised the issue of the major projects office. I am very supportive of it in principle, because we need to be better able to deliver capital in Scotland. At every level, be it community, local government or national Government, we have slowed down on that far too much.
I hope that you can expand on something that concerns me. Where is the additionality that the major projects office will bring? Will it have new powers? Will it be able to act more quickly in relation to the capital development process at every level? Where will that come from? Otherwise, I do not see how it will accelerate capital delivery, other than by providing advice or support. Can you expand on the thinking behind it?
09:15
The additionality comes from the fact that, in effect, the office will operate as a one-stop shop for investors coming to Scotland. We will seek to identify key major projects of significant value to Scotland’s economy and basically wrap our arms round them and help them to be delivered. That is an important concept and one that the private sector would welcome. The strength of the vision is borne out in the fact that it has been spoken of quite highly by those in the business community who I have engaged with. To respond to your concerns about additionality, I see that coming from the ability to ensure that projects that have profound economic benefit to Scotland can be delivered at scale.
I welcome and support that principle and the work that you have outlined. Is it fair to say that the office is about attracting and supporting capital rather than delivering capital infrastructure or expenditure?
Both things can probably be true at the same time, although that will depend on the projects that are taken forward. We are keen to get to work on this. I hope that, in the coming weeks, and certainly by the end of the year, we will be able to provide the committee and Parliament with significantly more detail on the projects that will be taken forward to ensure that we unlock strategic investment in Scotland’s economy.
We are all probably paying attention to the news this week in respect of the potential expansion of Heathrow airport, and we will all be familiar with high speed 2 and the fact that it has taken a significantly long period to be delivered. One of those involves a key infrastructure delivery arm of Government, and the other is a private sector project. However, they are both underlined by the length of time that it takes for something to happen. If we can ensure that things that are of strategic value to Scotland’s economy happen more quickly, that can only be welcomed. Ultimately, we will be judged on delivery in that regard. I am keen to take forward the office, and I am glad that there is broad support for it across the political parties in Parliament.
Kris, do you want to talk about local economic development?
Yes, we can move on to that topic, if that is okay.
Cabinet secretary, you touched briefly on the empowerment of regions, the role of local government and enterprise agencies, and how we do better regional economic planning, which is important. For the past two years, I sat on HIREP, which is the Highlands and Islands regional economic partnership, although I am not on it any more. I have seen at first hand how effective or, to be frank, ineffective those partnerships can be.
As a councillor in local government, I have always found that economic development for councils is, in a way, a tax on their budget of conscience or availability. They do not get anything directly back from economic development—they do not get the increased taxation. There are no incentives, other than the laudable and real ones of improving wellbeing and local economies and stimulating more jobs locally. Those are all good things and things that councils want to do, but there is no incentive for them to do that work when they are under financial pressure, because they do not make the return that the Scottish Government does in increased taxation.
Have you thought about that quandary that local government faces? How can we circumvent that to create more incentives for local government to do place-based economic development?
There is a public sector reform piece that underpins some of that conversation, but I think that economic growth is not just the Government’s and the Parliament’s responsibility; it is everyone’s responsibility.
If you are a local authority, notwithstanding the challenges that you face with your budget—which we face, too—you have to be strategic about your interventions. The more start-ups you have, which you might achieve through working with the likes of Business Gateway, the more people there will be with money in their pocket in your local area, which can only be a good thing for a local authority. If increased investment in your local area ensures that more people are paying tax, that can only be a positive thing for a local authority.
I know from having been, in the dim and distant past, a board member of Business Gateway through the Convention of Scottish Local Authorities that there is real appetite in COSLA, and in local authorities more generally, to do their bit to facilitate economic development, because they recognise its importance not just to their area but to the wider Scottish economy. As we go through public sector reform—and I know that Mr McKee and the Deputy First Minister are fully engaged with COSLA on that—we must ensure that we have that foundation of regional empowerment of our economies resulting in delivery and outcomes that benefit local areas. I think that it makes sense to do that on a regional basis, and many of the conversations that I have had up to now have been very supportive of that, too.
As I have said, there appears to be broad agreement not only in this Parliament but in the wider business community on the importance of empowering our regional economies, and we are very keen to get on and do that as part of the wider public sector reform piece. Therefore, I want to encourage our colleagues in local authorities to be ambitious where they can, and I am more than happy to work with them to try to deliver on any ideas that they might want to bring to me or to the Government as a whole.
I agree with you, cabinet secretary. There is broad agreement on that, and you have outlined well the ambition of, and opportunity for, local government to change things for the better in their communities and, indeed, for themselves. The crux of this, however, is that, when the Scottish Government invests in stimulating the economy, it makes that investment back indirectly or in some other way, while local government does not. Do you agree that we need to consider how we can create that financial incentive, perhaps within the public service reform agenda, for local government to do more place-based economic development?
If there are any specific suggestions in that regard, I am more than happy to engage with them, and I am sure that colleagues across Government are, too. I would gently challenge you, though, by suggesting that more people being economically active and coming to a city, region or rural area to live and work is a good thing for local authorities; it increases the council tax base for a start, but it also enables a whole host of other important factors that help to underpin a local economy. Local authorities have an important role to play in that regard, both now and in the future. That said, I am more than happy to work with you on any specific suggestions that you might have.
Continuing with the theme of organisations, I call Rachael Hamilton, who has a question on the Scottish National Investment Bank.
Good morning, cabinet secretary. Am I right in saying that, in answer to an earlier question, you said that economic development agencies should be judged on their record? Do you believe that?
I think that I referred to the Government. We will always be judged on our record, but I also think it important to constantly review the investment that our enterprise agencies put in, the jobs that they create and the economic opportunity that comes from that. I would also note how successful their interventions have been, as you will have seen directly with SOSE.
I have a specific question on the Scottish National Investment Bank, which we will be bringing in to give evidence and which, having been in operation for five years now, has just posted a £138 million loss. I note that John Elvidge has said, quite rightly, that the public are concerned about the losses, but he has also pointed out that there has been no
“external analysis of the broader economic impact of its activities”.
Are you concerned about the bank’s losses, and about the value for money for taxpayers?
In fairness, I read the work that Sir John undertook, and I think that he gave a very balanced view in respect of SNIB. Certainly, in reading it, I was encouraged that SNIB is pointing in the right direction. Of course, we do not want losses to be realised, but we recognise that, ultimately, SNIB deals in patient capital. That capital will, I hope, come to fruition over a considerable period of time, as it should.
It is important that, as parliamentarians, we give SNIB the space that it rightly requires to make that patient investment to deliver those returns over the long term but also to be strategic in its approach to making interventions. Whether in relation to the energy sector, housing or a host of other interventions that it has made, many people are incredibly grateful for and recognise the support that they have received. Over the years to come, I am confident that it will come to be a success story that the Parliament will recognise.
Notwithstanding the numbers that you highlighted, I state the fact that SNIB has deployed about £1.2 billion, which has leveraged in about £1.9 billion. Those figures are not inconsequential. They make an important contribution to Scotland’s economy.
I will take you back to the report. It said that there was a “lack of clarity” about the purpose of the service, and a lack of understanding. A billion pounds early on and another billion by 2030 is quite a lot of money to be forking out on early-start businesses that are failing. How many of the companies that were invested in returned a profit?
We are not just talking about early-start businesses. I have engaged extensively with a host of businesses that have a significant economic legacy in Scotland and have sought to invest strategically to ensure that they are able to deliver growth for themselves, their employees and the economies in which they sit. That is a positive thing.
If you are saying that we should not be supporting start-ups, which you referred to in your question, I contend that that is the wrong approach. We should support businesses across our economy, and I am very pleased that SNIB has an important role to play in that.
I gently suggest that Sir John’s report offered a balanced view on both the challenges and the opportunities. My focus and, I am sure, SNIB’s focus, will be on making sure that those opportunities are realised, because that is of benefit to all of us, across Scotland.
This is my last question on SNIB. You mentioned value for money in economic development agencies. Sir John Elvidge recommends a review of SNIB’s performance. Do you agree with that?
Irrespective of whether the work involves SNIB, Scottish Enterprise, HIE or SOSE or the work that is undertaken through Business Gateway—any of the strategic interventions that we make that involve public money—it is important that we are fully aware of delivery, impact and outcomes. The Government continually assesses that.
When it comes to SNIB, we need to recognise the fact that it involves patient capital, which takes time to deliver the benefits that we all—I think—want to see, and it is important that SNIB is given the space to do that. I am sure that you, Ms Hamilton, as someone who is keen on economic development, would support that.
09:30
That has been a good first half hour of the meeting. We have talked at a high level about some of the agencies and have taken an overview of the programme for government.
I would like to use our next half hour to dive into some more specific areas, and I have one that I want to dive into first. It was in the news recently that Alexander Dennis did not receive the furlough money that it was promised during its recent restructuring. It feels to me as if we are letting Alexander Dennis down if it is getting no furlough money. There is also limited bus procurement, with the bulk of Scottish orders going to China and even that limited procurement now being uncertain due to a legal challenge. That contrasts quite starkly with bus orders from some English regions such as Liverpool and Manchester. What is the cabinet secretary’s view of that and has he been to Alexander Dennis to discuss how the Scottish Government can help the company from now on?
There is a lot to unpack there and I will seek to take all your points in turn, if I may.
The furlough money was not paid out because the conditions in relation both to bus manufacturing and to job retention were not met. I hope that you are not suggesting, as you appear to be, that public money should be given to a private enterprise when furlough conditions are not met.
Regarding support for Alexander Dennis, it is well known that the Scottish Government has provided millions—tens of millions—of pounds’ worth of research and development support to the business over many years. We remain engaged in discussion and the First Minister met the company on 31 August. I was unable to make that meeting, due to personal circumstances that I will not delve into if that is okay with you, but I am fully apprised of that meeting and of the discussion that was had. For my part, I have met the trade unions and have absolute confidence that my officials will continue engaging constructively with Alexander Dennis to provide the support that we can provide to ensure that the company can deliver an optimistic future for its workforce and for the community that it sits within.
Convener, I simply reiterate to you, a Reform politician, that I do not think it is wise for parliamentarians to suggest to the Government that it should pay out to a private company in cases where furlough conditions are not met.
Thank you for that statement, cabinet secretary. The point that I was trying to make was that it feels to me as if Alexander Dennis has been let down a bit. I understand that furlough comes with detailed conditions attached, but it feels as if we have let the company down when bus orders have been held up, with most of them going to China—
Convener, are you suggesting that the Government should make the furlough payment, given that the conditions have not been met? Is that your position?
Please do not interrupt, cabinet secretary. No, I was not suggesting that.
Good. I am glad you have clarified that.
I was suggesting that the Scottish Government, nevertheless, has let the company down because we have not come through with significant bus orders. I think that Alexander Dennis has acted in good faith to restructure operations in the face of significant competition from Chinese bus manufacturers, especially when it comes to electric drive chains, an area in which China essentially dominates the supply chain.
Our approach is simply not good enough when a company is acting in good faith to maintain operations and manufacturing in this country. Will you now visit Alexander Dennis to see what the Scottish Government can do to support the company?
First, convener, the Scottish Government does not order buses. Do you understand that point? The Scottish Government does not order buses: we do not own buses and we do not order buses.
The scheme that you are referring to is the decarbonisation of the bus fleet in Scotland. It has run for many years and been incredibly successful in enabling us to make the transition to an electric fleet. You will see the benefit of that in Aberdeen, the community in which we both live, in the same way that I have.
There are specific matters relating to the Scottish zero emission bus challenge fund—ScotZEB—that I cannot get into, due to ongoing legal proceedings, but I simply reiterate to you that the First Minister of Scotland met representatives of Alexander Dennis on 31 August. There is no higher office in this land to engage with the company. I am very comfortable with the level of engagement, both at ministerial level and through our officials.
I wish to draw something to your attention, convener. The mistake that you have made in your comment or question about bus orders—I am not quite sure which it was—is the same one that the Prime Minister has made. I listened very closely to his interviews over the course of the weekend. He argued that the Scottish Government had not been ordering buses from Alexander Dennis. The Scottish Government does not order buses. These are two very different things. We do not procure; we provide subsidy. It is important that, as the committee’s convener, you recognise and understand the difference.
I would point out that the Scottish Government has a very strong role in ScotZEB3.
That is a subsidy role, not a procurement role.
Nevertheless—
You understand the difference, yes?
Please stop interrupting, cabinet secretary.
I am just trying to help you, convener.
I always appreciate some help, but we have a formal process here.
The Scottish Government has a significant involvement with ScotZEB3. We have seen alternative approaches in Manchester and Liverpool. It seems to me that the Scottish Government had a very good opportunity to influence things, but it has not delivered in the same manner as those city regions have, and—
Convener, I will need to help you in this regard, in the same way that I apparently need to help Mr Burnham. The Scottish Government does not procure buses—do you understand? You are making the same point repeatedly, which is not accurate. We do not procure buses; we subsidise private operators to do so. We do not procure buses.
I acknowledge—
Both you and the Prime Minister appear to be very confused in this regard.
I do not think that we are. With the subsidy that you provide, you have a strong opportunity to influence where the purchases of buses go. You seem not to be using that subsidy in that manner.
You understand the law that we must adhere to in that regard when it comes to subsidy, yes?
I am not aware of that law, but I still think—
You are not aware of the Subsidy Control Act 2022. I am surprised that, as a Reform politician, you are not aware of it, given that the 2022 act had to be brought in to replace the European Union directives that were there. I would have thought that, given your own political background, you might be more apprised of that, but you appear to have the same level of knowledge in this regard as the Prime Minister does.
I will therefore repeat it for you: we do not procure buses.
Well, I will repeat this: the Scottish Government has an opportunity to influence that procurement through the subsidy that it directs.
Are you suggesting that we go against the terms of the UK Subsidy Control Act 2022?
I am suggesting that other cities have managed to manage procurement better.
That is because they procure. We do not. This is a pretty simple point, convener.
I will bring in Gary Bouse.
Just as well.
I will try not to pre-empt the question that I am going to ask tomorrow—Wednesday—but I can advise that there is indeed a Subsidy Control Act 2022. People may wish to look at section 17(1), which gives an indication that the Scottish Government cannot do what the convener is asking—it provides a subsidy. The Scottish ultra-low emission bus scheme—SULEBS—and ScotZEB have provided subsidy support for the difference in price between a diesel bus and an electric bus. That is a subsidy that is given. I appreciate that the convener has a point of view, but I would suggest that it may be helpful to look at the law, as the cabinet secretary has said. Then, we start to look at the matter in the round, and in Scottish terms. Furthermore, Scotland is not a city. We will go with that right away: we are actually a nation.
I will move on and extend this point a bit, rather than concentrating on Alexander Dennis—as much as that matters to me. I am trying to avoid covering the question that I have coming tomorrow. I think that the Subsidy Control Act 2022 is itself a major problem for Scotland, and not just with buses. I can see it being a challenge for developing heavy industry in particular, because we cannot subsidise heavy industry. Although we should have the cheapest electricity in Europe, and we have the water supply for various things as well, I am concerned that the 2022 act holds Scotland back severely from using our national resources to develop industry.
First, does the cabinet secretary agree with me on that? Secondly, what can we do about getting it changed? Doing so is important. I have a letter ready to go to the Prime Minister, and I am sure that the cab sec has, too.
As one of the individuals who sat on the Subsidy Control Bill Committee in the United Kingdom Parliament, I feel like I probably know more about it than perhaps I should.
For me, the important point—I probably did not convey this to the convener in the most articulate fashion, so it is probably best to start here—is that I want to see Alexander Dennis thriving, which is why we have provided so much research and development support over the years, and why both I and the First Minister, and officials, continue to engage with the company. Alexander Dennis is hugely important to the area that you represent, and it is equally important that it is able to add value to Scotland’s economy. I would be keen to have a discussion with the Prime Minister—as I am sure that the First Minister would—in respect of where opportunities can be realised to help support domestic manufacturing.
With regard to the 2022 act, I think that it is fair and reasonable to be moderately frustrated by aspects of it, but it is the law, and we need to make sure—as I tried to outline to the convener—that we adhere to that. If there are to be any changes, they would need to happen with the four nations of the UK fully engaged, and we would need to be cognisant of the potential impact that that could have on relations with our friends and allies in the European Union, too.
I look forward to more questioning on that matter; it is obviously significant, and if the Scottish Government is continuing to engage with Alexander Dennis, I think that we, as a committee, would like to understand that. However, we will move to another topic. Martyn Day wants to come in on something.
It is good to see the cabinet secretary here today. He can probably guess which subject I am going to raise—it is project willow, Grangemouth and the industrial sector there.
Project willow identified nine key projects, many of which are dependent on policy change, future supply chains and low-cost hydrogen. Which of those projects do we think are realistically achievable within the original timescale?
Thank you for your question, Mr Day. I will start by letting the committee know that Grangemouth was the very first place that I visited on taking office, because I recognise its profound significance to Scotland’s economy and the impact that decisions that were taken elsewhere have had on its future. I had positive and constructive engagement with the unions, and I am very keen to continue that. I was actually on site with Ineos just last week to discuss the current situation.
More broadly, in response to your question, there are a number of options on the table that are being properly reviewed, both by my officials and by Scottish Enterprise, in terms of their deliverability. My great frustration is that £200 million was promised from the UK Government to help ensure that there can be a transition at Grangemouth and, to date—although I have not checked my emails this morning—not a single penny has been spent. We had a promise from the Labour Party prior to the last general election that it would save the refinery at Grangemouth, and that promise was broken. We then had a promise of £200 million from the UK Labour Government, and not a single penny has been spent.
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We will continue to engage constructively with the UK Government; I think that ministerial responsibility for the task force of which I am a member has changed from Mr Shanks to Mr McDougall. At ministerial level, we will continue to engage as constructively as we can, because I want to see opportunities realised on the site.
I can assure you, Mr Day, that my officials and Scottish Enterprise continue to work at pace to try to ensure that we can make further interventions through the support that has been provided by Scottish Enterprise, because there have been interventions—I have visited one of them. However, we need to recognise that that is public money, and that requires due process to be followed.
Thank you for that. Following on from those comments, would the Government be willing to publish a project-by-project timetable showing the progress of developments as that is happening?
Let me take that away as a suggestion and look at the practicalities of doing so. I say that with quite a bit of weight, because I am conscious of the fact that we are engaging with commercial entities in that regard. Where there are ongoing commercial discussions about the deliverability of a project, those matters would traditionally be kept confidential, for obvious reasons. Although I understand the principle of what you suggest, the practicality might be significantly more challenging. Nevertheless, I am quite happy to have that discussion with my officials and to write to you and to the committee—although, even as I am talking, I am growing more sceptical as to whether that would be deliverable, for the reasons that I have outlined in relation to commercial sensitivities.
Understood—thank you.
Do we have any figures on the destinations and outcomes for the former refinery workers? How many have found other local employment, gone into retraining and so on? Has that been quantified?
I can certainly try to secure that information for you.
On a slightly different note, I was at the Mossmorran task force meeting just two weeks ago, and much of the discussion was framed around the outcomes for the staff there, who have, regrettably, lost their jobs as a result of decisions that were taken elsewhere. There was some pretty positive news in that digital room with regard to destinations, and I would certainly hope that that would be the case for the workforce who were impacted at the refinery.
I can get the specifics to you in that regard, based on the information that we hold. You are right—this is about the workforce. As much as we want to talk about big projects and big sums of money, the workforce is imperative. We are talking about a highly skilled workforce who deserved better, and who deserve better in the future.
Thank you. To go back to project willow, it had identified a number of significant skill risks. How far have we gone in identifying those and addressing the skills shortages in the timescales that we are looking for?
We are fortunate in that we are able to work closely with Forth Valley College in that respect. I was able to see at first hand, when I visited the site, the investment that has been made there and the opportunities that will be realised on the back of that. It is about partnership working to ensure that we are able to identify where the potential skills gaps exist for individuals and where there are opportunities for future employment. I can give you an assurance that the work that I have seen in that regard up to now, through the investments that have been made on the back of the refinery closing, has been very good.
I also draw the committee’s attention—because I think that it is worthwhile, and an opportune moment to do so—to the fact that, in the news today and over recent days, we have heard about the potential for diesel shortages on these isles, which will be of profound concern to all our constituents. You will be all too well aware of the role that the refinery played in diesel production for Scotland’s domestic market over many years. It is deeply regrettable that the promises that the UK Labour Government made to the workforce and the people of Scotland were not fulfilled. Much as we had a very difficult situation in relation to aviation fuels, we potentially face a very difficult situation in relation to diesel because of decisions taken elsewhere. I am sure that the committee will be as unhappy about that scenario as I am, at a time when all of our constituents are very concerned about what they are seeing in the news and the price that they are paying at the pump.
I have eaten up my allocation of time, so I will save my other questions for your next visits.
The committee is interested in that issue, and we will try to take a deeper dive into it at a later date.
What evidence does the cabinet secretary have that a food cap will bring down household prices? He will be aware that 23 Scottish organisations have raised concerns about the SNP’s election promise, including concerns about rising food costs, supply chain issues, reduced availability, displacement and the passing on of costs to retailers and food producers.
I think and hope that all of us—although I cannot be presumptive in that regard—are worried about the cost of living and the fact that many of the people whom we represent cannot afford the basics in life, whether that is a pint of milk, eggs or bread. That is why we made the commitment to the public during the Scottish Parliament elections. We were elected to implement our manifesto and that is what we are seeking to do.
As you and the committee will be aware, the consultation is under way. If I recall the date correctly, it closes on 24 November. I assure you, all the business organisations that have written to the Government, and all other interested observers that we will go through the consultation responses with a fine-toothed comb.
However, we cannot have this conversation without recognising the fact that far too many people in Scotland cannot afford the basic essentials. It is incumbent on the Government to explore absolutely every opportunity and avenue available to us to right that wrong. That is what we have sought to do. It is a commitment that we have made to the public, and I am very pleased that we are taking it forward within the timeframe that we set out.
Can you give us a commitment that you are not doing this simply to save face because it was an election promise? A similar measure failed in Hungary and Croatia.
I cannot be more explicit with you than to say that during the recent election, the one before that and probably the one prior to that as well, I spoke to many people in Aberdeen and elsewhere in Scotland who could not afford to turn on their heating or go to the shops. It is incredibly important for the Government to explore all the options that are available to it to try to right that wrong.
We cannot intervene on energy prices. The Labour Party made that promise and has broken it. I see in the news today that GB Energy, which was going to bring down energy bills by £300, has had its budget cut in half. However, where we can take action in relation to a food price cap, it is absolutely incumbent on us to explore that. We made that commitment to the public, and that is the action that we are taking forward.
I am sure that we will be able to continue this discussion beyond 24 November, in the chamber and in committee, once we have the full consultation responses in front of us.
I have a question about non-domestic rates. I will be quick, as I am conscious of the time.
The non-domestic rates revaluation methodology that the Scottish Government applied has resulted in the total rateable value rising by £800 million. Some businesses are experiencing a fivefold increase in their bills. You have already described the pressures that businesses are facing, including higher energy costs. Some of them are shutting shop. Should an urgent response to the fact that people are closing their doors right now be delivered before Christmas?
An urgent response was provided when the First Minister met Sir Tom Hunter and when the Deputy First Minister and the finance secretary stood up in the chamber and outlined our intentions in relation to undertaking a review. That work is very much under way, as Ms Hamilton will be acutely aware.
I recognise the cost pressures that businesses face and the cumulative impact of those pressures on businesses—I think that we all do. Although we have responsibility for some of those costs, we are not responsible for the vast majority of them, whether that is energy prices or employer national insurance contributions, which have had a crippling effect on the business community in recent times—particularly on small businesses that would otherwise not have to pay business rates, thanks to the policies of the Scottish Government—
Yes, but the revaluation forces those businesses out of that small business bonus scheme—
Indeed it does, which is why the Deputy First Minister set out the actions that she intended to take in that regard and why we are working towards them. We recognise and understand the challenge that exists there—just as we, of course, need to take a holistic view in respect of non-domestic rates. Ms. Hamilton and a lot of her colleagues like to come to the parliamentary chamber and ask the Government to spend money, but to spend money, we must have money, and we need to raise money in a sustainable and sufficient way. That is a conflict that we have to resolve in Government; we do not have the benefit of sitting in Opposition and saying, “Cut taxes and spend more money!”, as many others do.
As outlined to the parliamentary chamber, the work that the Deputy First Minister has undertaken to do is under way. As we move into the budget process, we will need to deal with the wider arguments in relation to not only taxation, whether that is non-domestic rates or otherwise, but the necessity to have public services that the public can rely on.
It is the cabinet secretary’s role to take care of economic development and ensure that businesses do not shut up shop. That is how you can grow the economy and create more money for public services.
Ms Hamilton, with all due respect, your early questioning was sceptical in relation to the Scottish National Investment Bank’s investments—
Oh, I take losses seriously. I will leave it there, thank you.
I am cognisant of time, but we have a bit of leeway, and I am conscious that a few members want to come in with questions. I bring in Kate Campbell.
Thank you, convener. I wanted to ask about skills. We had a briefing from the Scottish Parliament information centre that set out quite a lot with regard to apprenticeships. We then had a discussion this morning, and I understand from that that a lot of that work will sit with Alyn Smith. Is that right? It is obviously really important to the economy. What conversations or interaction have you had about your role in relation to funding for apprenticeships?
When people ask us what we want to achieve, we obviously say economic growth, but what we actually mean is that we want productivity to increase, and key to improving productivity is to ensure that our workforce, whether our young people or adult learners, has the skills that it requires. You are absolutely correct to say that Alyn Smith will lead on much of that work. I will have regular discussions with him in that regard, because we share the desire for our workforce to be fully skilled up.
You are right to outline the Government’s intentions in relation to the 150,000 apprenticeships that we are seeking to bring online. The programme for government was very clear in respect of the national skills plan for 2027 and we have the £10 million workforce development fund as well.
I draw the committee’s attention to the fact that Audit Scotland was right to highlight that progress has been made in relation to skills. However, we recognise that more could and should be done. From the discussions that I have had with the business community, I know that it is keen to ensure that our workforce is tooled up to meet its expectations and the shortages and challenges that it sees coming forward. That is why Skills Development Scotland will be taking forward a number of actions in relation to engineering, digital and construction, and we can broaden that out into the energy and financial services spaces as well, because that is going to be crucial.
We can spend lots of money through the Scottish National Investment Bank and our enterprise agencies, but we also need to make sure that our workforce has the ability to capture the opportunities, and we hope that the investment that the Government is putting in will deliver that.
10:00
My next question is about the huge increase in apprenticeships. Are you thinking seriously about which sectors need those apprenticeships, and about where the capacity exists to support them?
Yes. I outlined the work that Skills Development Scotland will be taking forward in relation to the skills needs assessments. The reason why we have identified the likes of engineering, the digital space, construction, the energy sector and financial services is that we know that those sectors can grow while, at the same time, providing young people and adult learners with the skills to capitalise on that.
That strategic approach is really important, but it is also important to say to the committee that this is not just a matter for the Government. We need to work in partnership with our colleges and universities and our business community. There are some great examples of that across Scotland. I will be moderately parochial for a moment and fall back on the work that has been undertaken in the Energy Transition Zone in Aberdeen, where we have the partnership with North East Scotland College and Shell to bring forward a proposal that allows young people to harness the opportunities of the energy transition so that the economy has that stable footing both now and in the future.
From speaking with organisations and individuals across Scotland, I think that there is a very positive story to be told. However, there is, of course, more work to be done, and I will work closely with Mr Smith to ensure that that happens.
I hear a challenge in that regard from young people, who often say that they have skills, but it is a challenge to match those skills to the jobs that are available. To me, it feels important that there is an analysis of where needs exist and how we can match them up with the skills, training and development.
I have another question about skills. When Stephen Boyd gave evidence to the committee, he said that training should also happen in the workplace and that employers have to engage more with skills. That point was not just about people entering the workforce, but about progression and productivity. What can the Scottish Government do to try to influence the long-term conversation with employers and get that focus on the important role that they play in long-term skills development?
I alluded to that in my answer to your previous question, but I probably did not provide the necessary emphasis. The £10 million flexible workforce development fund exists for that reason. It is there to incentivise employers to upskill their workforce, whether that is young people, parents or carers. The thing that heartens me in that regard is that, in the engagement that I have had with the various organisations that I have met over recent months, I have seen their willingness to invest in their employees. If we work with them and help them to do that, it will be of mutual benefit and benefit us all.
I have absolutely no doubt that Mr Smith will drive that agenda home now that he is in his new role. I assure the committee that, given the importance that I place on productivity with regard to Scotland achieving economic growth, I will be working closely with him on that.
I have a question that ties in with what Kate Campbell talked about. In the evidence that we have taken over a four-week period, we have heard that, although we have a huge base of people who have come through university and are highly qualified in artificial intelligence, they are struggling to get positions. This is not about AI data centres, but about AI itself.
This might be too big a question for you to answer in the time that we have left, in which case you could provide a written reply, but what potential do you see AI having for Scotland’s economy, given our significant skills base?
Earlier this year, the Government, led by the former Deputy First Minister and Richard Lochhead—I will take a moment to thank them for their outstanding work as parliamentarians and as members of the Government—produced “Scotland’s AI Strategy 2026-2031”, which outlines what we intend to do over the next five years. From that, the AI Scotland programme identified 10 key actions. I will not run through them all, because I am conscious of time, but I encourage members to sit down and read the report in full if they have not already done so.
What underpins that is, of course, the opportunity that exists on AI. We need to be clear about taking an ethical approach to AI and be responsible in how we use it, recognising that data and regulation will constantly have to be aligned. However, whether that is in relation to users, skills, companies, innovation, data centres or the associated infrastructure, there are significant economic opportunities.
One that I draw to the committee’s attention relates to semiconductor capacity. That is an incredible success story for Scotland. During the summer, I met Clas-SiC in Fife, which is a world leader in that regard, primarily in relation to electric vehicles. Ultimately, if this is realised in Scotland, there will be a domestic benefit, and our semiconductor industry can be at the forefront of achieving those gains. From an economic growth perspective, I am sure that the committee would be keen to see that realised, because not only does it give us sovereign capability but, importantly, it ensures that we have jobs and opportunities being harnessed here in Scotland.
It is not for me to outline what the committee should seek to do in the future, convener, but I am keen to come back to the committee to discuss the strategy in more detail and to bring officials with me, so that the committee and Parliament as a whole can have a full discussion on not only the challenges but the domestic opportunities for Scotland’s economy.
I welcome the fact that we are taking a studied—I would not say cautious—approach. To me, that is sensible.
Thank you, colleagues. That has been a good full session, and we have discussed a number of interesting avenues. I appreciate the offer from the cabinet secretary to speak to us about AI, which is a significant issue.
I thank the cabinet secretary and his officials for coming—haste ye back, of course.
I suspend the meeting to allow a changeover of officials.
10:08
Meeting suspended.
10:09
On resuming—
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