Culture, Tourism, Europe and External Relations Committee

Meeting date: Thursday, June 29, 2017

Official Report 515KB pdf

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Culture, Tourism and External Affairs

Agenda item 4 is an evidence-taking session on culture, tourism and external affairs. I welcome the Cabinet Secretary for Culture, Tourism and External Affairs, Fiona Hyslop, and her Scottish Government officials: Dr Jonathan Pryce, director for culture, tourism and major events; and Mark Boyce, head of international relations.

I invite the cabinet secretary to make a short opening statement.

Thank you very much for inviting me to the meeting, convener.

I want to update the committee on some of the key areas in my portfolio: culture; European engagement and Brexit; international engagement; and tourism. I thank the committee for its work to date on scrutinising those areas and compliment it on the well-researched and analysed committee reports that it has produced on various aspects of Brexit.

First, I will update the committee on the development of a culture strategy for Scotland. The programme for government committed to the creation of a culture strategy for Scotland on the principles of access, equity and excellence. Culture has intrinsic value and contributes directly and indirectly to the health, wealth and success of our nation. It defines Scotland as a diverse and distinct society with creativity and innovation at its heart.

The development of the culture strategy will involve engagement with artists, practitioners and organisations. We will have a series of public engagements; indeed, we kicked off that engagement at Glasgow Women’s Library on Monday with 90 people from across the culture sector debating and discussing the future of culture in Scotland. That was the first in a series of Scotland-wide engagement events and discussion opportunities with the sector and the wider public; more will follow in the coming months. A national conversation about culture will help to shape a shared vision that articulates the powerful and transformative effect that culture and creativity can have.

With regard to Europe, the committee is well aware that the Brexit negotiations began last week. Our “Scotland’s Place in Europe” paper, which was put forward in the spirit of compromise, argued that the UK as a whole should retain single market membership and that, failing that, Scotland should retain that membership if the rest of the UK chose not to. In light of the general election, in which the Prime Minister failed to secure a mandate for a hard Brexit, we are encouraging her to reach out to the devolved Administrations and across parties and reach a consensus position that can carry legitimacy in negotiations with the EU. We feel that the Scottish Government’s thinking in “Scotland’s Place in Europe” could now be revisited in that light.

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In that context, we are working hard, first, to ensure that there are effective mechanisms for devolved Governments to engage with the UK Government. The terms of reference for the joint ministerial committee on EU negotiations are good but, so far, the working arrangements have failed to live up to the challenges that Brexit has created. Secondly, we want to ensure that the devolved Administrations have a seat at the negotiating table, because it is crucial that Scottish, Welsh and Northern Irish voices are properly heard. The exclusion of the Scottish Government from any meaningful influence over the UK negotiating position during Brexit negotiations would undermine devolution in a very concerning way. I know that the committee has had engagement with Mike Russell, the relevant minister, in relation to those matters.

On European engagement, it is also important to highlight that our efforts to protect Scotland’s relationship with the EU since the EU referendum have not been focused solely on the UK Government. Since the EU referendum, Scottish Government ministers have been engaging extensively with our counterparts across Europe, covering all EU member states, European Free Trade Association states and EU institutions. We have engaged in over 130 meetings and, as we do regularly, I will write to the committee, detailing the engagements that we have had.

The main focus of the engagements has been to ensure, first, that our European counterparts understand the outcome of the vote in Scotland and, secondly, that they understand Scotland’s position, interests and priorities, including our wish to be a member of the EU. Just as important, we want to ensure that our European colleagues understand that, as a Government, we remain strongly committed to deepening European co-operation. It is essential that all of our relations are clearly focused on ensuring that our views on Brexit are known, but we also want to ensure that they are not seen solely through the prism of Brexit. We will continue to work with our European partners in terms of policy, knowledge and co-operation. In fact, next week, I will visit Dublin as part of our on-going work to further deepen our important diplomatic, economic and cultural relationships with Ireland, building on the work of our innovation and investment hub that is located there.

Throughout our engagements with member states, there has been a great deal of interest in and sympathy with what is described as the predicament that Scotland finds itself in. Our stance on the urgent need to clarify the rights of EU nationals has been welcomed. However, it is fair to say that, although the UK-wide decision to leave the EU has been met with a mixture of sadness, disbelief and concern for the future, there is a resolve in the EU to carry on and not just deal with Brexit efficiently but focus on developing the EU for the future. That agenda is being pursued at all levels, not just through the European Commission’s white paper but in individual countries.

When I was in Paris last month, I met the head of the French foreign ministry, and I was struck by the keenness on the part of the French Government to work with Scotland, irrespective of what the future holds. An early priority for us, therefore, will be to renew with the French Government our statements of intent with it on culture and education. We will also look for opportunities for further early engagement with the new French Government.

Earlier this month, I visited Austria and spoke at the Europa forum. The forum, which is now in its 22nd year and which was established on Austrian accession to the EU, is regularly attended by senior Government figures in central and eastern Europe, and the focus of the discussion was the future of the EU. I had the opportunity to meet, among others, the Austrian vice-chancellor and the Bulgarian foreign minister. Both of those countries have EU presidencies next year, at a critical point in the Brexit negotiation.

Although the issue of Brexit was ever present at that conference, it certainly did not dominate it. There was regret at the UK’s decision, but we should be in no doubt that the countries are already moving on and positioning themselves as the future of Europe debate gets under way, with Council decisions on the issue due around spring 2019, when the UK is scheduled to leave.

Whatever the outcome of Brexit negotiations, the relations and trade agreements that are entered into with countries and organisations outside the European Union will continue to be vital. It is very important that we strengthen the global outlook of Scottish society and international relationships and partnerships in areas such as science and culture.

With regard to recent international engagement, I visited Japan in February to support trade and investment connections and discuss ways in which cultural engagement can strengthen our relationship. In April, the First Minister was in the US for a series of meetings with leading companies to promote Scotland’s economic interests and to set out our views on Scotland’s place in the world. In the year ahead, we will continue to build on those relations with our priority countries, through ministers travelling overseas and by welcoming delegations here and to our new hub in London. We will use those opportunities to explain that Scotland is open for business and to highlight the reasons why Scotland continues to be the top UK region outside London for attracting foreign direct investment. It has been a strong year and a tremendous achievement for Scotland, and we are keen to build on that.

Finally, I turn to tourism, which plays a leading role in Scotland’s economy by helping to market Scotland across the globe and promoting inclusive growth through its support for economic activity and employment in some of our most fragile areas. The Scottish Government and its agencies work closely with the tourism sector; we share ambitions through the industry-led tourism Scotland 2020 strategy; and we are seeing long-term growth in both jobs and visitor numbers.

As at March 2016, more than 14,000 tourism-related enterprises were operating in Scotland, which is the highest figure since the start of this decade. Since the start of this decade, employment in the tourism-related industries sector has grown by around 33,000, from 183,000 in 2010 to 217,000 in 2015. Tourism now accounts for 8.5 per cent of employment in Scotland, and we are seeing good results, with visitor numbers for 2016 up by 6 per cent compared with 4 per cent in the rest of the UK. Moreover, expenditure in Scotland has risen by 9 per cent compared with 2 per cent in the rest of the UK. Looking over the longer term, there was a 16.5 per cent increase in overseas tourism visits to Scotland in 2016 compared with the figure in 2010, and overseas tourist expenditure rose by 15.8 per cent between 2010 and 2016.

We know that Scottish tourism is competing in a global setting, and the global tourism market continues to expand. According to the January 2017 United Nations World Tourism Organization publication, “UNWTO World Tourism Barometer”, international tourist arrivals grew by 3.9 per cent last year. We know that there is more that we can do, and we will continue to do what we can to have a greater share of that expanding world market. I have established a high-level tourism working group that brings together senior leaders from the tourism industry, enterprise bodies and VisitScotland to provide the necessary strategic direction for Government and agencies to work together to maximise our potential.

These are challenging times, but the tourism industry is resilient. We will help it grow sustainably and prosper. We do not underestimate the challenges that Brexit poses to the sector, but that is why we are working hard, particularly against a hard Brexit, to preserve the benefits that sectors such as tourism gain from our relationship with the EU.

Finally, the committee will be well aware that this year is the 70th anniversary of Edinburgh’s founding festivals; in fact, we debated the issue in Parliament earlier this month. It is a great inspiration that those festivals, which were founded in 1947, resonate not just across the city but the country and the world, making Edinburgh the world’s leading festival city. We have seen 11 festivals growing around the original three, and I look forward to joining members at festival events over the summer as we celebrate that 70th anniversary.

I am happy to take the committee’s questions.

Thank you, cabinet secretary. That was a very wide-ranging statement and I am sure that members will have questions across all those areas of your portfolio.

I will start with a question on Brexit. We have just taken evidence from the His Excellency Norman Hamilton, the High Commissioner of Malta in the United Kingdom, on the presidency of the Council of the European Union. His Excellency made the point that, the day after the EU referendum result was announced, the Prime Minister of Malta made a broadcast in English to British citizens living in Malta, giving them a cast-iron assurance that their status would not change. He said that Malta was still waiting for reciprocation on that and that there was a feeling in Europe that the British Prime Minister’s statement this week fell far short of expectations. What is your response to that, and what can the Scottish Government do to reassure EU citizens who are living in Scotland at this uncertain time?

The First Minister of Scotland’s statement on the day after the EU referendum, reassuring and welcoming EU nationals living and working here, penetrated and resounded not only through Scotland but internationally. We had put together a plan of action that, regrettably, we had to initiate because of the leave vote. If you remember, the UK Government was in some disarray at the time—there were resignations and no clear messages from anybody—so we should not underestimate the impact that that swift statement from our First Minister had at that time. Addressing the views of EU nationals was clearly a vital part of it.

What has happened is, in my view, a complete miscalculation. It is wrong in so many ways, as has been debated; indeed, the committee has taken extensive evidence on the value, status and importance of EU nationals, which are recognised by the Government, by parties across Scotland and by the general public here. The initial attempt to use EU nationals as a bargaining chip; the Prime Minister’s coming late to the European Council, and her trying some months ago to make a major statement on taking the initiative; and then her trying to explain after the event—indeed, only last week—the UK Government’s view on EU nationals are all elements of a series of miscalculations. They are wrong if they are meant to influence and set the right tone for EU discussions.

Of course we must ensure that UK nationals living in the EU are protected, and I have recently spoken to Finnish Scots about our engagement not just with EU nationals here but with Scots nationals elsewhere. However, it is a miscalculation to start a negotiation without building up mutual respect and trust. What the Prime Minister did on that very first day in Malta set the tone for what could be expected in terms of that mutual respect and trust. The failure of the UK Government to do that is a political miscalculation as well as being insulting to EU nationals.

The other important aspect in relation to where we are now with EU nationals is that the EU itself published papers on its position on EU nationals and the financial implications well in advance of the start of the Brexit negotiations. The UK published its position only after the event, in a statement at Westminster. There are two things to note here: first, we should do the right thing, politically and morally, which the UK has failed to do to date; and secondly, the UK Government should be transparent and realistic about where we are in the negotiations. However, the Prime Minister’s statement fell far short of the required assurances, and the Government will need to redouble its efforts in relation to EU nationals.

The principled perspective of Malta, the smallest of the EU member states, in guiding the Brexit discussions and preparations is an exemplar of what a small country can do with independence, and it shows the authority that it commands in doing the right thing in relation to its counterparts. I commend the Maltese Government. I had the pleasure of being in Malta as it was preparing for the Maltese presidency, and I met a number of ministers, including the foreign minister and the culture minister. Malta has also managed to hold an election during its presidency, which is also a major achievement, but it has certainly been an exemplar in this regard.

Thank you. We are under pressure of time and a lot of members want to ask questions, so I want questions and answers to be as succinct as possible.

I will keep my answers short.

Cabinet secretary, I would like to take you back to the cultural matters that you mentioned at the outset, and in particular to your letter to the committee last week in relation to a screen unit. You will know that, when John McCormick, chair of the screen sector leadership group, appeared before the committee on 30 March, he said on the record:

“The lack of visible progress on the screen unit since it was first mooted in May last year only reinforces the cynicism that is widely felt across the sector ... and the belief that real progress will not be made until a realistic co-operative partnership is established between Creative Scotland and Scottish Enterprise for working towards shared objectives.”—[Official Report, Culture, Tourism, Europe and External Relations Committee, 30 March 2017; c 2.]

You will also recall that the Economy, Energy and Tourism Committee in the previous session of Parliament, of which the convener and I were members, made clear recommendations about the need to develop that partnership. Your letter of 20 June states that, despite the clear delay, you intend to create a screen unit this year. The letter also says, almost in the same breath, that you expect Creative Scotland to make a presentation to ministers in late autumn.

I guess that those of us with experience of civil service advice to ministers know that “in late autumn” means by Christmas if you are lucky.

Exactly.

If you are expecting advice to ministers in late autumn, how on earth is it possible to meet the commitment in your letter to establish the screen unit this year?

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The cynicism of Lewis Macdonald, which is echoed by Tavish Scott, perhaps arises from their experience as ministers in the previous Administration. I do not want to tread on what might be delicate ground relating to your experience with your officials, but it might be helpful if I bring you up to speed on what we are doing. I read the evidence to the committee from the screen sector leadership group, and I have engaged with John McCormick personally on the issues in the group’s report, which is a very good report.

As I indicated in my letter to you, on behalf of the relevant cabinet secretaries—this work comes under a number of portfolios—and the Government, I have secured agreement from Creative Scotland, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and the Scottish funding council to work together, with the Scottish Government, on a project to develop the proposal to achieve and deliver the screen unit, an ambition that is in the manifesto and the programme for Government.

The project has been designed to address the screen leadership group’s concerns in full. The deliverables are due in the autumn, as Lewis Macdonald said. They cover five areas. The first is

“an agreed inter-agency proposal ... for the sector vision and long-term strategy”.

That was a big emphasis of the screen leadership group’s report. The second is on the

“agencies’ agreed roles and accountabilities”.

That has been a consistent concern of the Government and the relevant committees. There will also be a

“common agreed economic baseline assessment report”.

That will help to leverage the future investments that we need. The issue is not about just setting up the unit; we must have the resources to support it. The other deliverables are on the

“Screen Unit purpose, functions, configurations and governance”

and—this is critical to what we all want as part of the unit’s development—

“a single Screen Unit Action Plan with ... targets and streamlined collaborative partner contributions over the period”

from when the unit is established until 2022-23.

Responsibilities for some elements of the screen sector already sit with Creative Scotland, so I hope that the movement to the screen unit will happen as quickly as possible after the blueprint is provided. As Lewis Macdonald said, I expect that to be delivered by the autumn. I hope that my experience of when things happen is not the same as yours when you were a minister. That is what I am intent on.

We have made quite a lot of progress over the past few months. I wrote to the committee on the issue, because I know that you have a keen interest in the area.

My scepticism about timing is not simply a result of experience of the previous Administration. A number of similar commitments have been made under your Administration that have stretched the definitions of seasonal language.

Exactly.

Thank you for your generosity and understanding.

I still do not quite understand—no matter how quick and efficient you personally might aspire to be—how you can take blueprint recommendations, which you will have to make judgments on, in the late autumn and achieve the commitment in your letter that the screen unit will be up and running before the end of the year.

The blueprint will tell us how to get on and do it. I expect from the blueprint something that can be moved swiftly to implementation. I will not get the blueprint and then have to wait and consider which bits of it I like or do not like. The blueprint should have a route map for how we implement the screen unit so that we can move swiftly to do it. We know what we have to do, as a lot of that was set out in the screen leadership group’s report. The issue is making sure that it can be implemented. What I expect from the blueprint is an implementation plan.

I will not tie myself down by saying that it will absolutely be set up by 25 December. I would like it to be done by then—or I could give an extension until 31 December, if we are talking about the year end—but I expect the process to move more swiftly than it has to date. I share your frustration that historically, in the last few years, we have not done it. I am far more certain now that it will happen, because of the combination of the actions that we have taken as a Government collectively, by all the ministers, and the commitment to come to the table that I have received in the last few weeks from the most senior level of all those organisations.

I take that as an optimistic aspiration, and I welcome it.

Of course, the fundamental underlying issue, which was highlighted by John McCormick, is the difficulty of getting Creative Scotland and Scottish Enterprise on to the same page, as in the Northern Ireland model, for example. I know that you have wrestled with that issue, as others have over the last number of years. Are you really in a position in which that can be delivered simply by endorsing whatever blueprint is put in front of you?

The answer is yes, and one reason for that is that, to date, the issue has been a lack of common understanding of the economic assessment of what the investment can deliver and which elements of that can be brought to the table from the different parts of government. Having a common agreed economic baseline assessment report will be helpful in the leveraging that we require for investments.

We have already progressed the production growth fund that we introduced, which has given additional funding in the past few years. The results of the assessment of that show that, to date, we have invested £1.75 million and have achieved an economic return of £17 million. That ratio is very strong, but the challenge is in what could be brought to the table to realise new potential.

We are at a critical point. With the help of the committee, we now have the new channel from the BBC and the commitment for additional spend—it is not as much as we want, but we need to maximise that—as well as growth in demand and the temporary benefit from a devalued pound as a consequence of Brexit. The critical mass of production spend in Scotland offers a great opportunity, but we need the screen unit to realise that, not just in film but, increasingly, in television. The reason for the urgency is so that we can capitalise on television opportunities quickly, which is more imperative than ever.

I have a quick supplementary question on that very topic. As Lewis Macdonald said, I, too, was on the Economy, Energy and Tourism Committee in the previous session of Parliament and have been examining the issue for a long time. Every evidence session that we have had, including the recent one with the screen sector, has suggested that, although Creative Scotland has made a lot of progress, Scottish Enterprise has not. Scottish Enterprise recently wrote to the committee on the issue, in response to our asking it for an update. In that letter, Adrian Gillespie, the acting chief executive officer, said:

“We have a positive and productive relationship with Creative Scotland and other public sector partners”.

From the evidence that we have taken, we know that that is not true. I know that Scottish Enterprise falls outwith the remit of your portfolio, but what can you do to reassure us that it will be properly on board? Screen sector stakeholders have told us that it holds the purse strings and that, if it is not on board, the approach will not work.

There has been a time lag from when the screen sector leadership group’s report was published and even the evidence session, which I know was fairly recent. However, as regards establishing the project that will deliver the blueprint for the autumn, I have, on behalf of all ministers—including the Cabinet Secretary for Economy, Jobs and Fair Work, who has responsibility for Scottish Enterprise—and on behalf of the Government as a whole, secured that agreement from Scottish Enterprise and HIE. It is a question of the leadership that is there, but you are right as regards the funding, which is why having a common assessment of the funding that is required from across the agencies is important. There is a skills element as well, which relates to Skills Development Scotland and some aspects of what the Scottish funding council can bring to the table. That collective approach is stronger now than it has ever been. At the committee’s recent evidence session with John McCormick, no one would have been aware of the movements that we have had to date.

Thank you. We will certainly continue to scrutinise, to make sure that that is the case.

I am sure that you will.

I have two questions. To kick off on a positive note, I congratulate the Scottish Government on its contribution to making tourism in Scotland such a huge success at the moment. That is certainly the case in my constituency, where figures have improved dramatically, and in the rest of the country. That shows that Scotland is an attractive destination because of the amazing environment and unique features that we have, which takes me on to the screen and film sector. The evidence that the committee has received is that Scotland has lost out on tens of millions of pounds, and potentially hundreds, if not thousands, of jobs, because of the lack of film studio facilities and other investments in screen sectors. That is certainly the evidence that we have heard in recent weeks. We have lost major productions to other countries because of a lack of facilities. Why do we not have a film studio in Scotland in 2017?

I also want to pick up on the convener’s point about Scottish Enterprise. If a company wants to relocate to Scotland and create 100 or 200 jobs, we are able to find several million pounds to invest in a factory. However, Scottish Enterprise does not seem to recognise the economic value of the screen and film sectors, in which, for similar investments of several million pounds, we could create much more economic activity. I am therefore not quite sure about Scottish Enterprise’s priorities with regard to economic returns for Scotland. Can you comment on that?

On your last point, I think that the common economic assessment will help to deliver exactly what you are asking for.

With regard to the studio issue, we have a number of studio facilities that are either in existence and are being developed or have the prospect of being developed. Pentland studios is one such development but, because that is still subject to planning issues, I cannot go into any detail about it. However, this activity is private-sector led. With regard to your point about Scottish Enterprise encouraging private sector investors to come here because of the jobs that they can provide, there is no difference between that and the studio situation; that sort of thing has to be private-sector led because of what we are allowed to contribute under current state-aid rules. Other areas such as the south-east of England have long-standing studio facilities or, as is the case with the Welsh Government and in Northern Ireland, there are vacant public sector properties that can be invested in and used. Because of the nature of economic activity in Scotland, there is no vacant Scottish Government-owned lot or site that can be easily transformed into studio facilities, so we are dependent on private-sector-led inward investment.

We have a number of prospects, and there are some studios that have already been used. For example, the Pyramids business park in my constituency was used as studio space for “T2 Trainspotting”; the Pelamis building in Leith, which is increasingly being used as an investment opportunity, is a large facility that could undergo more permanent conversion; the Wardpark studio facilities are being developed in size; and, as I have said, there is the Pentland opportunity. However, the reason why we do not yet have the studio facility is that opportunities were missed some time ago or that there is a need for private-sector-led investment because there is no public sector space that can be converted or procured. This is a private-sector-led procurement exercise, but the common economic assessment will help us to see the opportunities for investment. I should also point out that Scottish Enterprise is providing funding to help the Wardpark development, too.

Oh, well—who knows? Perhaps in two years we will have a state-owned film studio in Scotland, because, if things go as we suspect they will politically, we will not have to worry about state-aid rules.

Picking up on your earlier comments, cabinet secretary, I want to ask about outreach facilities. I have mentioned before in committee the huge and mostly unused facility at the former Royal Air Force base at Kinloss in Moray. Some people in the film sector have suggested that it could be used as a location for film work—not, of course, as a proper film studio, but for outreach activity. I also point out that it borders on the Highlands. The fact is that it is sometimes quite difficult to get the public sector to be proactive about such opportunities, and I wonder whether you are willing to speak to the Ministry of Defence to find out whether it would be a bit more amenable to the use of such facilities not just in Kinloss but throughout Scotland. I know that Highlands and Islands Enterprise in Moray is looking at the potential of Kinloss, but I wonder whether the Government would be able to intervene and get the big public sector organisations, particularly the MOD, to be more co-operative.

There is a constant search for what I suppose are called pop-up studios that are located in different places. That sort of thing happens already; indeed, one example is the Pyramids business park that I have just referred to. Given the contact that I have had with local members from different areas on this issue—I believe that John Scott has made similar comments about Ayrshire—I know that it is on people’s radar. Indeed, the location service in Creative Scotland is constantly being contacted, which is why we are getting so much outreach activity or filming in different parts of the country. That activity is very strong, and we want a permanent studio facility to complement it.

Creative Scotland is actively pursuing such work—indeed, the committee might well have asked the organisation what it is doing in that respect—but, as far as Government-to-Government contact is concerned, I am happy to speak to the MOD about the issue in strategic terms and find out whether it is aware of any such places. Unfortunately, some of the feedback that we have had from those who represent more geographically remote parts of Scotland is that the crews and cast quite often want to be in the central belt near to Glasgow and Edinburgh for transport or other reasons.

However, that is not an excuse, and there is an opportunity for extensive filming elsewhere, as we have seen. I was in Wester Ross when the Guy Ritchie and Charlie Hunnam film, “King Arthur: Legend of the Sword”, which has just come out, was being filmed. The location was in one of the most remote parts of Scotland. It is possible, and the fantastic crew that we have in Scotland are a great asset and work all over Scotland.

I will undertake to speak to the MOD about Kinloss, in particular, and other potential locations around Scotland.

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The cabinet secretary is with us only until 10.50 and I am anxious that all members who want to ask questions get the opportunity to do so. Again, I ask people to keep questions and answers as succinct as possible.

The committee heard from the British Hospitality Association, which said that hospitality businesses are

“extremely concerned about their ability to stay open, to meet their obligations to the banks and to continue to employ people.”—[Official Report, Culture, Tourism, Europe and External Relations Committee, 18 May 2017; c 8.]

Derek Mackay announced a 14.75 per cent cap on increases in business rates. How will the Scottish Government continue to support tourism businesses, in light of the fact that many local authorities have announced recently that they are having software issues in implementing the cap policy?

I am not aware of the software issues. I will take the point back; it is probably the responsibility of Derek Mackay and people who deal with local government. I will get more information on the issue.

The cap is welcome, and I think that it was welcomed when it was announced. I engaged on the issue, in that I encouraged the finance minister to take it forward. Almost 50 per cent of hotels are completely outwith the business rates system, and those that pay business rates have welcomed the cap.

There is a systemic issue, in that the methodology for business rates calculations for hospitality is to do with turnover rather than profit, as you know. I understand that the Barclay review has taken evidence on the issue and I encouraged the tourism sector to contribute to the review in that regard, as part of my responsibilities as tourism secretary.

The Barclay review of business rates will report at the end of July. If its recommendations are not delivered by April 2018, is there a contingency plan to support people in the tourism and hospitality industry?

The support that we have provided by taking people out of the system completely has been welcomed. I mentioned the strategic work that we are doing through the high-level tourism group—the Scottish Tourism Alliance and the BHA are part of the group, as are the tourism leads from HIE, Scottish Enterprise and VisitScotland.

You are probably aware that, as we speak, the tourism industry is conducting an assessment of the financial pressures. Some of those pressures come not from the Scottish Government but from the UK Government—I am thinking about pensions, national insurance contributions and so on, which have a big impact on small businesses, in particular. The work will provide an evidence base, which I think will be very helpful to us.

I understand your concern about what happens if the Barclay review does not deliver on the issue. You will accept that my job as a Government minister is to accept the report of the review as it is presented to us. It has not been presented to us yet, but I will look at it closely from a tourism perspective, and I hope that the committee will do so, too.

If you are looking into the software issues, you will find that Moray Council, in particular, has an issue with delivery.

As you know, I am not responsible for the software delivery of every council in Scotland, but I take your point about the seriousness of the issue.

The Local Government and Communities Committee is going to have an inquiry into the topic. I have written to the convener of that committee, on behalf of this committee, to highlight the evidence that we received during our round-table session with stakeholders in the tourism industry. It is important to put that on the record.

When will the detailed timetable for the roll-out of the R100 digital connections programme be available to the tourism industry?

The roll-out of digital connectivity, which relates to all industries, is the responsibility of Fergus Ewing and Humza Yousaf, as you know. I will be happy to get the detail from them and forward it to you.

Has the matter been discussed in the strategic group that you mentioned?

If you look at the tourism 2020 strategy, you will see that digital is a key part of it. There are two aspects to that. One is the connectivity, but there is also usage, and they are interconnected. People will want to become more connected for digital transactions once they have had the roll-out. The roll-out of superfast broadband will have been completed for 95 per cent of premises by the end of 2017. However, we then have the additional aspect of coverage to close that gap for the last 5 per cent.

It is worth highlighting that lead responsibility for digital connectivity clearly lies with the UK Government. Had the Scottish Government not intervened, only 66 per cent of premises would have been reached and coverage in the Highlands and Islands would have been as low as 21 per cent. Obviously, everybody wants to make sure that they are connected as soon as possible. There has been progress and the Scottish Government’s commitment and substantial expenditure have been very important, particularly for the tourism industry.

My concern is that only 60 per cent of those that were advertising on the VisitScotland website for hospitality opportunities were transacting digitally. I think that that figure will have improved and I will be checking that with the high-level tourism group. We need that figure to shift to make sure that we are improving productivity opportunities and promoting economic transactions. I acknowledge that it is also dependent on connectivity but, in relation to those figures that I have relayed to you about what is expected in terms of access, I already know anecdotally from people who were not previously connected, but are now, that it is starting to make a big difference.

Sure. I do not know whether the high-level tourism group has met yet—

It has met on a number of occasions.

And has it discussed this issue?

Yes. I have raised the issue of penetration and the feedback that I got from the STA at the last meeting is that it was starting to see a step change. Normally, as you know, when people do not have something, they complain about it—quite rightly and understandably. Now we seem to have a change in the situation; there are more reports about the positivity of having the connections and the opportunities.

We have also put together a digital tourism fund for skills, and there has been more of an uptake of that because more people can now transact digitally. There has been a series of workshops across Scotland and there has been a significant step change in the uptake on those workshops, with more people coming to them and wanting to take part. It was discussed and I have just relayed the tenor of the discussion to you. It was very useful to have the feedback from the STA and its views and perspective on that.

But you accept that the micro tourism businesses in the most far-flung parts of Scotland are the very ones that do not have any digital connectivity at all at the moment.

That is why the final 5 per cent will be of particular importance. I think that the committee could also be helpful in this regard in relation to the wider economic agenda. I referred in my opening remarks to the fact that, for tourism in particular, penetration to all parts of the geography of Scotland is integral to the inclusive growth agenda as part of the economic strategy. That is part of my responsibility, but I hope that all of us who are interested in the tourism sector and in seeing digital connectivity reach fragile communities that are dependent on tourism will think about the impact that we can have in relation to the inclusive growth agenda, which is very strong indeed.

Thank you.

Thank you for that answer, cabinet secretary. It touched on some of the points that I wanted to raise. We have taken quite a bit of evidence over the past couple of months and there are quite a few interesting areas so, if you do not mind, I will just fire everything at you—feel free to answer as you can.

One of the most interesting sessions that we have had so far has been on the differentiated system for immigration. I do not know whether you have seen the report from Dr Eve Hepburn about that. I would like to get your thoughts on that and on how you think some of it might be progressed. I do not know whether that is being looked at in your portfolio.

On tourism, some massive projects are going on. Just outside my constituency, in Dundee, the V&A is being constructed. I was listening to the comments that you made about the reach of tourism into other areas. I think that the V&A will be a massive boost for the local area, but we also need to look at how the other areas surrounding it—Angus, Aberdeenshire, Fife, and Perth and Kinross—can benefit and how everyone can benefit from it across the whole region.

Some of the evidence that we have heard over the past wee while has been about events. We have the national events and the local events. For some of the bigger national events, there has been quite a large contribution from the Scottish Government. What support is available for those local events that are on the verge of becoming large national events? What support is available for those events that are looking to grow?

How long do we have?

Dr Allan is giving evidence after you, cabinet secretary, and immigration policy is part of his portfolio. It is up to you, but you might wish him to address that question.

Dr Allan is taking a lead on some of the areas that Mairi Evans asked about. On the wider portfolio, I had a conversation this week with the newly reappointed Secretary of State for Culture, Media and Sport, Karen Bradley. On the exchange of people and ideas in culture, I emphasised to her that any migration system that is predicated on the high-net-worth salaries of bankers might not be appropriate for culture. We have a common understanding that the quality, skills and attributes of the individuals are the life-blood of a strong creative sector. However, for a substantive response, Ms Evans might want to address the question to Dr Allan.

Ms Evans makes points on the physical location of facilities such as the V&A and major events. We have the European championships next year and I hope that the committee will take a keen interest in the event aspects of that. We had a big delegation in from Berlin. I am not sure whether the committee got a chance to meet members of that delegation and discuss the connections that we have with them.

There is a lot in the question about how we grow smaller events into bigger ones. One of the reasons that we have our themed years is to try to do that by upscaling existing events. For example, on Saturday, I will be in Paisley for the year of history, heritage and archaeology promoting a lot of the events there that promote the heritage of textiles. Those events take place regularly, but we can use the opportunity of themed years to upscale them, realise our ambitions and make them sustainable. They get a kick-start from EventScotland, but the themed year enables them to take the leap to be more sustainable and bigger in future.

Ms Evans can write to me if she has any other issues, but that is a cursory reflection on the big, wide comments that she made.

Cabinet secretary, you just mentioned the themed years and you spoke earlier about events. You know of my interest in, and support for, marine tourism, which has become very important to the Scottish economy. At a cross-party group meeting on Tuesday evening, the issue of what will happen with European funding when we come out of the European Union was raised. The challenges of leaving the European Union include the uncertainty of the situation as a whole but, in particular, European funding can be an important element of projects such as the MalinWaters project and the cool route project. With your role in highlighting to the UK Government how important tourism is for the negotiations, have you stressed the importance of European funding to such projects and the positive effect that it can have on marine tourism in Scotland?

On trying to influence the UK Government’s priorities for the negotiations, you have had plenty of evidence from Mr Russell on some of the frustrations that we have had with getting basic engagement for priorities.

There are a number of priorities for the different areas on tourism. Freedom of movement is clearly up front for everybody. I will continue to stress that.

The second priority is funding, whether on the culture side—the creative Europe programme—or some of the European pots that have been strategically influential in helping leverage. We have had pressures on public finance and reductions in capital funding, but the ability to align Scottish Government priorities with the Heritage Lottery Fund, other environmental lottery funding and, indeed, structural funds and other European funding has created a critical mass to do things that would otherwise never have been done. We also have pressures because the lottery funds are reducing in the coming years. If one of the legs is taken away—European funding—it compromises some of the other projects, as you rightly say.

10:45  

We have pulled together what we think the European funding contributions have been worth in my portfolio. We think that, over the last period, there has been £23 million for creative industries, £36 million for the historic environment and £5 million for museum and galleries. On the tourism side, some of the funds are not necessarily directly related to our Government responsibilities, but they have leverage elsewhere.

As 2020 will be the year of Scotland’s coast and waters, I again congratulate you and the cross-party group on recreational boating and marine tourism for helping to persuade me that that would be a good thing to do. Scotland has a third of the land mass of Great Britain and extensive coasts, so there are strong opportunities for marine tourism. If the UK Government is intent on exiting the EU, it is important still to get the funding that we would otherwise have secured—whether for agriculture, fisheries or marine tourism—as it makes a big difference.

With reference to Tavish Scott’s point, some of the most remote parts of Scotland are on the coast and those are the areas that will benefit most from that funding. For example, the economic opportunity that having a pontoon at Fort William has given to that community shows us what can be done. We have big ambitions and I do not want them to be curtailed because of a lack of EU funding.

Certainly cabinet secretary, your points—

Can we be as brief as possible?

Absolutely.

Cabinet secretary, your points are absolutely accurate. There is genuine concern in the wider marine tourism sector because of the hard work that has taken place to get us to this point. Do you think that the UK Government fully appreciates and understands the situation that Scotland faces in terms of tourism and, specifically, marine tourism?

No.

That was brief. Thank you, cabinet secretary.

Cabinet secretary, I return to culture and to the youth experience fund that the Government announced. I recognise that the fund is a manifesto commitment for the Scottish National Party. Can you explain the thinking behind targeting it at primary-school-age children?

Inspiration is the first word that comes to mind. We have seen young people’s involvement in activities in lots of areas being very successful. The youth music initiative, which was evaluated recently, is a good example of such involvement. A number of our national companies already do extensive outreach work. For example, I have seen Scottish Opera working with the community in Bo’ness. A lot of outreach work is happening all over. I am very keen to have such work happening around the theatre experience, in particular, and to look at how we can improve the situation.

We are not quite ready to implement the youth experience fund. Part of what I have to do is to identify the funding that would allow us to implement it. Involvement is important, particularly at primary school. We know that, regardless of parental income, if young people are involved in arts and culture at an early stage—it is not just about seeing it but about participating in it, which is why it is called “experience”; a lot of the things that happen are proactive workshop activities, so it is not just about seeing a show for example—they are more likely to be the audiences of the future. When poverty is a key aspect of what we are trying to address in society, the experience that I have described can make a big difference.

The plans are in progress, but the fund is not yet deliverable. We are trying to identify what all the different companies and collections already do as we do not want to displace what they are already doing. We want to make sure that we reach parts of the country and communities that do not currently have the opportunity to get that experience.

I absolutely recognise that and you outline very agreeable aspirations. I asked the question because, when we had a round-table session with representatives from the museums and galleries, I asked about the experience fund and the feedback seemed to be that primary school engagement is not necessarily the problem. They said that they struggled with engagement with pupils aged 11 and up at secondary school. The feedback suggested that what is holding a lot of those institutions back from engagement with primary schools is their own capacity. A witness said that they could do

“four or five times as much”,—[Official Report, Culture, Tourism, Europe and External Relations Committee, 25 May 2017; c 28.]

but that it is a matter of their own capacity. Essentially, they struggle to engage with teenagers, particularly in the senior phase of secondary school. That is why I wonder about the age range at which the experience fund can engage with young people.

We set out that the fund should be targeted at primary schools because of our experience with other art forms. I read the discussion to which you refer with interest and we are engaging with the collections and the companies to establish what they are doing already. I am prepared to be flexible, so we are open to dialogue if, for example, they say, “Actually, for theatre, galleries and so on, it would be better if this was aimed at secondary schools rather than primary schools.” However, we have to get the evidence base from the collections and companies, and that is what we are currently in the process of doing.

Brilliant. Thank you.

We have finished the session at dead on 10.50. I thank the cabinet secretary. We will have a brief suspension before we move on to our next witness.

10:50 Meeting suspended.  

10:54 On resuming—