Official Report 366KB pdf
Good morning and welcome to the seventh meeting of the Economy, Energy and Tourism Committee in 2015. This morning, we will take evidence from Brian Wilson, the author of the “Wilson Review of Support for Scottish Exporting”.
I ask everyone to switch off their mobile phones. If anybody has any other electronic devices, I ask them to put them to silent because they interfere with the broadcasting system.
Good morning and welcome, Mr Wilson. We have already taken evidence on internationalisation and exports from Scotland, and your review has been mentioned by many people. You were complimentary when you went around gathering evidence for the review, but you also state in it that there should be a seamless and co-ordinated approach to exports. There is a lot of frustration around, and some of that is about the fact that there is, to use your word, a plethora of different organisations. Since the review came out, what advance has been made, if any?
Thank you very much for asking me along.
I understand that there is now a working group between Scottish Development International, UK Trade & Investment and, I think, the Scotland Office that is taking forward the review’s recommendations. It is welcome that there is a follow-through from the review and that it has not just disappeared into an abyss. I am sure that the committee’s work will help to inform that.
In making the point about the seamless approach, which came across all the time and which I am sure every review of Scottish exporting for the past umpteen years has heard, I was trying to avoid the usual clichés about one-stop shops and to go beyond acknowledging the problem to come up with some sort of solution. The best that I could come up with was a single organisation. I was wary of creating the problem of having too many organisations by recommending the establishment of another, so I came down in favour of having an almost virtual organisation called “export Scotland” that would create a framework.
To the people who come through the door, it does not matter what organisation they deal with. All they want is that they come through the door and that there is a logical progression: that they get the support that they need or answers to the concerns that they have and come out the door with a conclusion. That conclusion might be that they should not be exporting at all or should not try to export to China before they export to Ireland. There is a range of possible conclusions, but the important thing is that there is a process.
Therefore, the onus seemed to me to be on the plethora of organisations, led and guided by Government, to create a seamless approach. The problem just now is that there is not only a plethora of organisations but a lack of co-ordination among them, so the person or business that enters the system has no sense that they are into a single channel that will lead them to a definitive conclusion.
Why is there a continued lack of co-ordination? Is it because organisations just want to have the autonomous aspect of exports without engaging? You said that you do not want to use the term “one-stop shop”, but you are promoting a single portal for gathering the information.
I sure that there are a lot of historical reasons and all the usual factors that we are familiar with. There are always silos and people defending their territory. Some local authorities think that they have the right to offer a service and not necessarily relate to other bodies. Things can also just fall between two stools.
I am sure that we will come on to talk about the relationship between SDI and UKTI. There are areas in which nobody is doing something for the wrong reasons but things just happen. There are probably some bad reasons for the lack of co-ordination but, by and large, it is just habit and custom that there has not been enough pressure to join up working.
That is where Government has a role. It has to say what has to happen and show the way that it has to be done. If those organisations are going to be part of the overall Scottish exporting effort, they should buy into the concept of an export Scotland entity.
Some organisations, such as Scottish Chambers of Commerce, think that they are doing a good job and being quite successful.
If I remember rightly, I do not criticise anyone in my report and say that they are doing a bad job. There is a real horses-for-courses element to it. I have seen trade missions organised by all these organisations, and some have been very good and some have been a lot less good. For example, I have seen Aberdeen Chamber of Commerce operating effectively in the oil and gas sphere. I am not saying that one is good and one is bad, but the historical legacy is that they all exist and we need to make sure that they are all serving the same functions.
Thank you for that. I am quite sure that we will expand on elements of the review as we go on this morning. I will bring in Chic Brodie first.
One of the issues that you raise in your report is access to finance and how it is the most significant barrier to exporting. Having run export companies, I would contest that. There is a lack of exporting culture in the market and difficulty with adapting and achieving local representation. How much time did you spend looking at issues other than finance?
We probably spent a lot of time doing that. We met a wide range of companies and pretty much everything in the report is a reflection of what we heard rather than any preconceived ideas.
I would probably define two fundamental problems. A relatively small number of companies come into exporting, and SDI is trying to address that. The issue of finance is for those who have crossed the threshold and said that they want to become exporters. They might have a market, but finance kicks in as a problem.
For example, we met representatives from the Bank of Scotland who were exceptionally open and honest in saying that, under their new guise as part of the Lloyds Banking Group, and compared with other parts of that group, it had seriously underperformed as a supporter of exporting. It has the will to change that. Similarly, the work of what was the Export Credits Guarantee Department and is now UK Export Finance has been far too narrowly restricted to some sectors.
We heard that, once a company has come into the exporting network, finding financial support and getting over the initial hurdle of exporting, factoring and all the other elements that make exporting a realistic proposition is a serious problem for them.
As far as the division of our time is concerned, there is probably a list of the companies and organisations that we spoke to, and it was pretty extensive.
What you say also conflicts with one of the better chambers of commerce, which, at our committee meeting last week, confirmed that finance is not a problem. The problem is with how we translate the need to export and facilitate support, particularly to small businesses.
One of the other things that your report highlights is the shortage of skills, which is probably true. You then go on to suggest that universities and colleges might run courses. A skills shortage is not going to be changed unless we transfer experience and the intellectual property rights of some products that universities produce that could be exported but never reach the market.
How can we transfer to others the knowledge of current exporters and those who have been successful in exporting in the past? What makes you believe that running courses is going to help people get to the market in the way that they need to?
A recurrent theme in what we heard, particularly from small businesses that wanted to become exporters, was that mentoring is an important part of the process. They told us that, where it works, it works well. If an experienced exporter is prepared to pass on its skills and experience—whether because it is looking for subcontractors or some other self-interested reason or whether it does it for purely pro bono reasons—that is a valued facility for the companies that benefit from it.
On the more formal transmission of skills through courses, I think that an underlying theme of the whole report and everything that we heard is that there must be a bit of a culture change so that we have a culture in which people think of exporting as a possibility, so we must ensure that people are educated—either formally or informally—into the idea that exporting makes business more interesting, exciting, profitable and adventurous.
Many companies could benefit from such a culture change. It should be ingrained into business courses. There should be exporting dimensions to any business courses that are run in universities and colleges. However, people also need to learn a lot of logistical skills. One of the things that I have learned at the sharper end of being involved in exporting is that there are complicated disciplines around tariffs and so on, and there are all sorts of obstacles that must be overcome if a company is to become an exporting company.
Would it not be better if the experience of those who have actually done it, felt it and got the T-shirt could be harnessed and if those people could be encouraged to propagate the culture that is needed in terms of export? That connects to what the people from the Scottish Chambers of Commerce told us. I do not see that coming from universities—certainly not currently.
The approaches are not mutually exclusive; I would have thought that both were of benefit. There are courses on a lot of things in universities and colleges, and I would not have thought that one that included “exporting” in its title would be anything other than a good thing.
Before Mr Brodie moves on, I will bring in Joan McAlpine for a brief supplementary question.
Mr Wilson, you quite rightly mentioned the importance of mentoring. We talked a lot about that with the Scottish Chambers of Commerce last week.
In your report, you talk about the narrow base of Scottish companies that are involved in exporting. In terms of matching companies up with similar ones, does that narrow base mean that there are not enough companies to be able to give exporting expertise to up and coming companies? If so, how can we overcome that?
I think that there is something in that, although a company in the textile sector can advise a company in the food and drink sector on the essentials of exporting—they do not have to be in the same sector.
I would approach the issue from the other end, because there is still a lot of capacity for more big, successful companies in general to mentor, if they can be encouraged to do so.
The problem with the narrow base is that there are so many big sectors in Scottish exporting that the rest becomes pretty marginal. We need to get to more companies in the sectors that are underrepresented. We are never going to change the balance, because the big ones are so big—financial services, whisky, and oil and gas—but there are plenty around the edges that could be involved in mentoring, too.
Back to Mr Brodie.
I have two brief questions. First, in the executive summary of your review, which is good reading for the most part, you understandably dwelled on what might have happened to exports had the referendum decision been different. I will not rehearse that. However, as part of a review, one would have thought that one would look forward to what might happen if, for example, we came out of Europe. What is your view on that and how Scotland’s export community should address that issue?
10:15
I think that I put a number on it in the report. I say that 330,000 jobs in Scotland depend on exporting to the European Union. If you ask me for a personal view, I think that it would be bonkers to come out of Europe. For the purposes of the review, Scottish exporting would be extremely adversely affected. I have no doubt that, in due course, every company and trade union that has a vested interest in ensuring that jobs and prosperity are maintained will say so.
My second question is about Scotland the brand. As you will be aware, there is a view that Scottish products need to be clearly branded. What is your view of the made in Scotland brand?
Scotland has a strong brand in some sectors and some markets. That should be reinforced and widened.
We have a hybrid identity in exporting. One of the things that I am involved in is Harris tweed. In some places, Harris tweed sells for being Scottish. It also sells for being Hebridean. In the fashion market in particular, it sells for being British. Above all, though, it sells as a product of quality. We cannot say that this identity or that identity is what sells it. We need them all, because there are different approaches in different markets.
I support Scotland the brand where it is appropriate. There are some sectors in which the Scottish brand is very strong, such as tourism, whisky and food and drink. However, there are other areas where the fact that something is from Scotland does not really matter much at all.
We should market things on what sells them. We sell Harris tweed to Chanel, but the company does not use the Harris tweed label or trademark. Chanel sells it entirely on the basis of quality. We should not get hung up on identity; whatever suits the product and the market best is the basis on which to sell it.
That leads us neatly to the question of how the Scottish and British Government agencies responsible for promoting exports and trade work together. You say some interesting things in your report. Given the things that you found in your investigation, what is your view of the relationship between UKTI and SDI as a whole? Broadly speaking, do you think that it is particularly positive and functions as it is meant to?
Broadly speaking, yes—I think that it is positive. I think that there is mutual respect between the organisations, and I have seen them working well together. I have heard British ambassadors singing the praises of SDI and saying that UKTI should be doing some of the things that SDI does in certain markets. Similarly, I have seen SDI calling on the services of UKTI.
There is a broad synergy that works in many cases but could undoubtedly work better; it could work better in the markets and at home. Those are some of the things that I have signposted in my report. The working group is now looking at that and there is recognition of it. The political environment of the past few years has not necessarily been conducive to sorting these things out. Now, for purely commercial and trade reasons, this will go forward well.
On the position for companies in Scotland considering exporting, you identify some evidence of companies not being particularly aware of the expertise of UKTI and where it functions beyond the scope of what SDI does. What are your central recommendations for how UKTI could better promote its services to potential exporters in the Scottish market?
SDI is, for its own reasons, a very focused organisation. It has a matrix of markets and sectors and, if a business falls within that, SDI will almost certainly do a very good job for it.
This is a question of scale and range. For most businesses the first stop might be SDI, but we have found evidence that businesses that did not fall into the SDI categories were not referred to UKTI as they should have been. That is one area in which a gap exists. If a company is trying to sell a product in a market in which SDI is not represented, that company should at least be referred to UKTI and told what it can offer.
There is a push effect and a pull effect in this area. A lot of the programmes that UKTI runs are underrepresented in Scotland. That is partly because there is a UKTI perception that Scotland is covered by SDI, and there is probably also a slight push from Scotland, saying, “Look—this is our territory, and we do not necessarily want to promote that programme here.” Scottish exporters are therefore unaware of programmes from which they could benefit.
I am not saying that those examples are the rule—I would like to think that they are exceptions—but it is obvious that everyone can benefit if there is more synergy between the two organisations in terms of what they have to offer.
I emphasised in the report, and I do so again, that what SDI does it does very well. I would highlight the need to improve the relationship rather than make any criticism of SDI.
That is helpful. On overseas markets, you mentioned in your report that there are some places around the world in which SDI operates where it co-locates with UKTI or British trade offices, and other places where that does not happen. Is that significant, or is it reasonable to say that co-location works better in some markets and is not as important in others?
Co-location works better than non-co-location—if that is a word—everywhere. It makes complete sense. In the past year or so, SDI has opened an office in Rio in UKTI premises. There was not much space, but space was made and I think that the SDI office has now expanded. I am told that the relationship works well.
If there is a physical distance, it is much less likely that information will be shared. I will give one example. The delegations from Scottish missions were coming in via SDI, which would clearly have benefited from contact with UKTI. There was no physical co-location, so UKTI sometimes heard after a mission had gone that there had been a Scottish mission that it could have helped. That is just silly. If there is no co-location, there is much more likely to be a them-and-us atmosphere.
The situation is very dependent on personnel, too. The numbers of people in such places are small, so if they are socialising with and talking to each other, a good relationship is much more likely. If there is any kind of stand-off, things become territorial. Co-location, the sharing of information and all those things make complete sense.
You have mentioned a couple of times that a working group has been established. Who is leading that group and who are its members?
I have only been informed of it—I am not participating. I understand from the Scotland Office that the working group involves SDI and UKTI, but the Scotland Office is not too sure about that. In addition, a formal UK Government response to the review is being prepared, which will reflect the setting up of the working group.
You looked at leadership on the issue as part of your review, so it would be good to know who is leading the group, but the committee can follow that up.
I will continue with Lewis Macdonald’s theme of the relationship between UKTI and SDI, which you said that you thought worked relatively well. In your review, you highlighted that there is a
“London-centric approach to their overseas marketing by UKTI and other bodies”,
which you said
“will require a conscious adjustment of mind-set on the part of UK trade promoters.”
Last week, Professor Love told us in evidence:
“From my experience of working with people at UKTI, I can say that they typically regard trade support as having been devolved to the Scottish Government to administer through SDI, and that is pretty much it.”
He said:
“UKTI is ultimately responsible for Government trade support, and it has set aside a block grant for that activity and expects most of it to be dealt with by SDI.”—[Official Report, Economy, Energy and Tourism Committee, 25 February 2015; c 12.]
Since your report was produced in 2010, has there been any change in that mindset?
The report came out—
Some of the evidence that you took dates back to 2010.
I do not know the position; I think that UKTI is working on it. I do not disagree with what Professor Love said in the quotations that you read out, but the picture is variable. For example, the part of UKTI that deals with oil and gas and with infrastructure is based in Glasgow and Aberdeen. Other parts of Britain might have complaints about that, but there is no problem in that respect from a Scottish perspective.
I do not remember whether the comment that you read out was about a specific sector, but a good example comes from the Scottish financial sector. When I was the Minister for Trade, I always thought that it was a bit odd that the lord mayor of London, who is the only unelected civic leader—if he can be called that—in the country, virtually has the status of trade ambassador. He trots off around the world promoting the City of London.
That is fine, but there is no reason why someone from the Scottish financial sector should not do the same sort of job in the name of the UK, because the Scottish financial sector and the City of London are all part of the same jurisdiction for financial services. The existing arrangement has grown up through habit and custom. There has not been enough recognition that other centres that provide the same service should be represented to the same extent.
It is more a case of changing a mindset than changing a structure. There should be push and pull on that. SDI, the committee and whoever else should say to UKTI that they want Scottish financial services to be represented in every part of the world. If my report or the committee’s discussions serve a purpose, it is to remind people that the way in which things have been done is not necessarily the way in which they should always be done and that UK trade promoters need to be conscious of their wider responsibilities.
You mentioned the assumption by people in UKTI that responsibility for trade support has been devolved but, to be fair, plenty of other people in UKTI and in the embassies around the world are acutely aware that their obligations are to every part of the UK and that responsibility for trade support has not been entirely devolved, and they go out of their way to encourage trade missions and trade support to come to Scotland.
I think that Richard Lyle has a supplementary question.
No—it is an entirely separate question.
How effective is UKTI as an organisation? A report by the European Union entitled “Supporting the Internationalisation of SMEs” states:
“In terms of exporting there is considerable scope for improving the performance of UK SMEs.”
The report says that 21 per cent of small and medium-sized enterprises in the UK export, as compared with an average of 25 per cent among the 27 countries in the EU.
The report also considers the percentage of internationally active SMEs that use financial or non-financial support. In the UK, 5 per cent of exporters had gained financial support, whereas the figures for Austria and Turkey were 47 per cent and 32 per cent respectively. Only 5 per cent of UK exporters used non-financial support, compared with 23 per cent in Slovenia and 19 per cent in Cyprus. How effective is UKTI as an organisation?
10:30
All such organisations contain strengths and weaknesses. You have probably just illustrated one of them. Under the ECGD, export credit finance was far too heavily geared towards a narrow sectoral base. The revamping of the ECGD into UK Export Finance is a conscious effort to redress that. It has set aside quite a large budget for supporting SMEs, and it has people based in Scotland who are embedded in SDI, which is another innovation.
There is an awareness that such support has to extend. There is no doubt that, historically, the ECGD was closely geared to the defence sector and the major infrastructure sector, rather than SMEs’ needs. That is reflected in the statistics and needs correcting.
I have the privilege of being the committee’s European reporter. My point follows on from Gordon MacDonald’s excellent exposé about the contribution of SMEs. On a visit to Brussels, I found that Scotland is not fully aware of the COSME programme—the EU programme for the competitiveness of enterprises and small and medium-sized enterprises, which comprises €2.3 billion for investment in small businesses—or of the horizon 2020 programme. Furthermore, Scotland does not have a small business envoy. The UK does, but there has been absolutely no communication.
The people in Brussels were not particularly impressed by the level of engagement on the small business side. You are saying that the ECGD previously had a reasonable reputation, as I understand it. We are missing out on engagement with large markets because we are not a member state and because of the lack of communication. One gets a flavour that suggests that the garden is rosy, but it is not.
Communication is two way. There should be—
It has changed recently, from our perspective. There is nothing coming our way.
I am surprised at that. I would be surprised if the working party that is following through on my report did not address those points, and I am sure that its members will read your comments. That is exactly the kind of area where information has to be shared.
I have mentioned the high-value opportunities programme, which is critical. It is being conducted on a UK basis. I do not want to get into the politics of it, but the UK can make a substantial effort when it comes to major contracts in various places in the world. Such opportunities are important because they cascade all the way down to subcontractors and sub-subcontractors. Thousands of companies can be involved in one high-value opportunity.
I was concerned—the report covered this—about whether the information about high-value opportunities is sufficiently shared around the country, so that Scottish companies and companies in any other part of the UK are aware of the potential from a single contract that is being pursued at a UK level. In exactly the same way, if UKTI is aware of European programmes but they are not being rolled out sufficiently in Scotland, that is a structural deficiency that should be addressed.
I am interested in whether Governments are a help or a hindrance in this. It is a fact that, over the last period, the Scottish Government and the Scotland Office have been largely in conflict with each other. Do you see them as being in competition, and is that detrimental? Is there evidence of co-operation developing, so that rather than the UK Government and the Scottish Government acting separately, there is a shared interest in supporting business?
I wrote the report at a time of political sensitivity and I tried not to make it attract debate in relation to referendum issues. I therefore hope that it is as relevant now as it was before last September. It is straight down the middle. The deficiencies that I identified were evident throughout the period during which we took evidence and still need to be addressed.
There was never a point at which SDI at a professional level had a stand-off with UKTI. I do not think that a conscious problem arose out of the constitutional disagreements. On the other hand, common sense suggests that it was not a time that was conducive to maximum co-operation. Points were being made that Scotland should be doing this and Scotland should be doing that, and there might have been an attitude that people wanted to do things separately rather than together. We are dealing with human elements and personal views.
In some respects, that atmosphere has probably affected the past few years. However, there is no reason for it to have an effect now. The issues that I identified are exactly the same now as they were before September 2014.
Any sensible person looking at the subject would conclude that it is better to take both organisations’ strengths. If the constitutional set-up were different, Scotland would have a different trade set-up, but I would have argued that it was not as good as the one that we could have now. Currently, we have representation in every corner of the world.
For the time being at least, the situation is clarified, so it makes total sense for Scottish business to take advantage of the Scottish set-up, which is good and focused, and of the UK set-up, which is good and is much more broadly based. It is as simple as that. There is maximum interest in co-operation, rather than in any conflict.
I am interested in the way in which Governments can sometimes inhibit business. Even though I do not particularly believe in the free-market philosophy, I sometimes feel that business survives despite Governments, rather than because of them. If there were one thing that government at any level could do to support businesses to export, what would it be? Would it be the single portal? Would it be providing mentoring and a consistent approach? Is there something else?
I do not think that there is one particular thing. The Government can drive the single portal.
Every document says that we want more companies to export, and the Scottish Government has set specific targets. The numbers game matters. Increasing the number of companies that export does not necessarily make a huge difference to the value of exports, because many of them will be small exporters. However, it is important for every one of those businesses and their communities.
If we are to meet the numbers targets, it is essential that exporting is made at least achievable, if not easy, for companies. We have heard repeatedly, and it is supported by my experience, that people do not know where to go and that it is too confusing for them to get into exporting, which means that they put the idea aside for another day. Instead of an ethos that says, “Let’s do this, get a push behind it and give it a go,” there is one of saying, “For heaven’s sake, we went and saw X, who pushed us on to Y, who said that they don’t deal with that and suggested we see Z.” That has been many companies’ experience not over five or 15 years but over 50 years. The same complaints would have been heard no matter when the report was produced. I have heard the one-stop-shop line so often that I was conscious of the need to avoid it, so I came up with another cliché instead.
I have one last point. It would make sense for people to go through just one system. What you say about being honest with people—they can do X but they should not do Y—probably makes sense. You talked about conflict with local authorities, which perhaps thought that they had a role over other organisations, but for small businesses in a very localised area, a city-driven export model to support companies would make sense. Harris tweed, which you have experience of, might be different, because people other than folk in the Western Isles get it. However, there must be elements—such as in rural and remote areas—that would be better supported by more local business support. How does that fit in with the single portal?
I think that the idea fits in fine. The issue is that everybody should know what everybody else is doing. It becomes daft when an SDI mission arrives in Moscow in the same week as a UKTI mission, because they will not both see the right people. One of them will, and I would bet my bottom dollar that it will be the UKTI mission. The issue is much more about co-ordination than about saying that someone should not be doing something.
I am a great believer in the city model. I have seen Glasgow and Aberdeen working effectively in this field. I would not want to shut them out and say that there should be a Scotland-wide or UK-wide approach.
Glasgow should work with the Scottish Council for Development and Industry, the SCDI should work with SDI, and SDI should work with chambers of commerce. Everyone should know what everyone else is doing, and there should be co-ordination. It is not beyond the realms of human possibility to achieve that but, in practice, wherever I have gone—whether as a trade minister or subsequently—I have heard horror stories about delegations arriving in places for no particular reason, embassies or consulates not knowing what to do with them and, by the way, a mission had been there the previous week to do exactly the same thing. That is just stupid, yet it has been extremely difficult to address. If it can be addressed through the review, we will have achieved one small step for humankind.
A couple of weeks ago, we heard about the SCDI having previously run programmes with support from the Scottish Government, but that support has not been renewed recently. I think that you mentioned that Aberdeen and Grampian Chamber of Commerce is effective at supporting companies in its area to undertake export activities. Do you have a view on the role of the SCDI and the chambers of commerce? You have partly answered that in your comments about mutual communication being critical. Is closer public-private collaboration needed in planning and organising things such as trade missions and export promotion?
Yes. This is about co-ordination and not about shutting anybody out. The SCDI has a distinguished pedigree, and it will carry on as a body that promotes exports. It is a membership-based organisation so, if nobody wanted it, it would not be there. It also tends to adopt a more multisectoral approach to trade missions.
The SCDI has a role. I do not see why SDI would not franchise some of its work on trade missions to the SCDI. The main thing is having co-ordination and not duplication, so that we do not reinvent the wheel.
Good morning. Brian Wilson, you have had a long political career; you have been energy trade minister and you know the working of Government inside out. I would say that it has been an illustrious career. You have talked about export Scotland; let us say that we are going to make you chairman of it. What does export Scotland need to do? Does it need a separate headquarters? Who would be based there? Who would you pull in to make all these people gel together? I ask because you are correct: everybody is working in their own wee silos and nobody is getting the message. Some companies want to export but cannot because they face dealing with so many different organisations.
We all know how the Government works and how councils work, and there are a lot of good chambers of commerce. I totally agree with your point about one trade mission going somewhere one week and a different one going to the same place the following week and neither of them knowing what is happening.
10:45We are in the UK and we have loads of embassies throughout the world. What would you do to establish export Scotland and how much would it cost to run it?
If we want to address the problem of having too many organisations, the solution is not to create another one, so I was wary of suggesting that there should be an export Scotland. I would not suggest that there should be a separate headquarters or staff or budget for something called export Scotland. I would do it by reconfiguring the resource that we have already and putting additional responsibility on SDI.
What I say in the report is that the initiative should be led by ministers and we should be able to call it to account and see that what is required is being done. I do not want to create another bureaucracy.
What would be your overall strategy to drive it forward?
On the narrow point, my overall strategy would be for the Scottish Government minister who is responsible for trade to say to SDI, “We want to get rid of the long-standing problem of duplication and confusion for the business that is entering the system. That is an absolute priority and it is your job. We are going to call it export Scotland so that, in every local government area in Scotland, there is a sign to show that that is where companies go if they want to start to export. There will be somebody sitting there who will point those companies to the most appropriate starting point.” That can be done without creating the bureaucracy of another organisation by using the resources that are already in place.
Some months ago, I had the good fortune to go on a visit to Taiwan that the Taiwanese Government paid for. We met a Scottish SDI chap—
Reggie Wu.
Yes—you know him well. He had to cover the whole of China, Thailand and Japan. He is one guy who is trying to push Scottish exports and the main thing that he was pushing was Scotch whisky. He was doing an excellent job but he said that he really needs help and he needs more people. Should we look at the areas in which we are already involved and give more help to them so that our people can go out and see more companies? What sort of cost would that be?
I do not think that Reggie Wu covers China. SDI has offices in China and it has plans for more.
Taiwan is a great example; I know it quite well. When I was Scottish industry minister in 1997-98, I had quite a lot to do with Taiwan because, at that time, 90 per cent of Taiwanese investment into Europe came to the UK and 90 per cent of Taiwanese investment into the UK came to Scotland through a cluster of Taiwanese businesses.
There was a terrific trade ambassador in Taiwan—he was not called an ambassador for political reasons—called Alan Collins. He fully bought into the approach. That was a great example of a British embassy in all but name being productive for Scotland. Taiwan is also a big market for Scotch whisky and some other Scottish exports. That was a good example of how we can utilise the embassy’s resources while having more than one Reggie Wu—maybe we have two or three people in a stronger Scottish team—working closely with the embassy.
Taiwan is a good example of where, by having a co-ordinated approach between the two presences, we can maximise the bang for the buck as well as the benefits for Scottish business. I would be very sympathetic towards any one person trying to cover regions. Almost by definition they are wasting their time, because their presence would be tokenistic. SDI recognises that. Consequently, it has a focused approach on certain markets.
To summarise, export Scotland would be led by a Scottish minister and, with everyone feeding in and driving it forward, we could get a lot of bang for our buck.
I would recommend that the portal approach is made a priority, in order to clarify the co-ordination side. That is one point.
I have not done this, so I am guessing, but if you had a telephone directory and you wanted to know where to start exporting would you know where to look? Given all the other organisations that have “Scotland” after the first part of their name, why not have that for export, too? No matter which local authority area you are in, you would find “Export” under “E” in the directory. That does not seem to me to be overcomplicated.
In 1997-98, you were a minister in the Scottish Office. In 2002, you were back in the Department of Trade and Industry. Did you hold the views then that you have now? If so, did you try to influence collaboration and co-operation in the direction that you have put down in your report?
I think that I probably did. I was the trade minister at the time that UKTI was being set up as the British Overseas Trade Board’s replacement. I had a lot of dealings with UKTI in Glasgow and Aberdeen on oil and gas and the other issues that it dealt with there.
On the specifics, I cannot remember, to be honest. I probably did not do that in relation to co-ordination and the portal approach when I was in the Scottish Office. My views have developed over the years, particularly as I travelled abroad as trade minister and gained experience of that approach.
I just wondered whether the review was based on your previous experience as a minister and whether the frustrations that are expressed in it were matters that you did not take forward at the time but wish that you had.
I would like to think that I progressed some of the issues at the time, but I would not claim omnipotence.
In the “Challenges and responses” part of the report, you talk about the need for better air links. I think that we are all in agreement on that. However, you do not look at surface transport or sea links and ports. Is there a reason for that?
No. Those links probably were not raised as much as the air links were. I am not sure how much of an issue that is seen as. I am in favour of as many direct communications from Scotland as possible. To return to the Harris tweed example, everything that leaves the UK does so from ports in the south. That is perhaps not ideal, but it is the established procedure. If there were more cargo options from Scotland, I have no doubt that, over time, that could change. However, I think that the history is that that has been quite difficult to sustain.
I want to explore that issue because Professor Alf Baird, the professor of maritime business at Edinburgh Napier University, has made a submission to the inquiry in which he makes the point that
“The United Nations trade agency ... argue that seaports have a specific ‘facilitation’ role”
in encouraging trade. You have alluded to that in your comments. I was not able to join to my colleagues when the committee visited ports as part of the inquiry, but I understand from what Professor Baird is saying that the lack of a direct port connection and the quality of the ports are holding us back.
I am very happy to defer to the professor on that. When I referred to air links, it was less about freighting and more about personal or business communication. However, I would not for a moment contradict or disagree with what the professor said.
One of the things that Professor Baird talks about is the very unusual situation that has existed since the Tory Government under Margaret Thatcher in that the ports are privatised and have a monopoly. We have private companies that are owned by private equity based overseas controlling our main ports and taxing those who use them. It is almost like a private tax, which Professor Baird argues is really holding back business and needs to be addressed as a matter of urgency. Has anyone ever raised that with you?
To be honest, no. Not all ports are owned by foreign equity—for example, Clyde Port is not. Greenock is still a big exporter of Scottish goods such as whisky.
Thanks very much.
To continue on this theme, my understanding is that European Union transport policy permits member states to co-finance “motorways of the seas”, as the EU refers to them, and that tendering and subsidy options have been taken up by Spain, Ireland, Denmark and Italy along those lines. Professor Baird highlighted the fact that Scottish ports handle £8.1 billion-worth of freight but the two main ports in Ireland—Dublin and Belfast—handle £90 billion-worth of freight. My colleague Joan McAlpine referred to the situation whereby the UK Government has withdrawn from managing or regulating ports and has, in effect, given that power over to the market, and freight predominantly goes through the likes of Tilbury. Has that situation been of benefit to Scotland? Should Scotland have its own maritime policy?
I would be in favour of promoting Scottish ports, but the ports are privately owned and run, and they live or die by their commercial success. My guess is that the use of the ports has probably gone up rather than down in recent years. Clyde Port was in a Sleepy Hollow situation for a long time but probably has a much more dynamic management now than it did when it was a trust port. I suppose that the issue is to a large extent about geographical location and cost. I guess that it is more economic—I am not saying that it should be—to freight our products to Tilbury or whatever and have a short sea crossing to Europe than it is to do it directly from a Scottish port. Presumably, if that was not the case, a market opportunity would have been taken.
Perhaps part of the problem on the east coast, which is obviously closer to the continent, is that Forth Ports appears to be starving the likes of Grangemouth of investment. We recently toured Grangemouth, which is in a dire state. When I asked someone there what capital investment there was, I was told that it was £2 million or £3 million a year, which strikes me as a pittance. I think that we have allowed the market to let the likes of Grangemouth to wither on the vine a bit. We certainly heard that from one of the freight companies that we visited, which told us that it had asked for additional investment to be put into Grangemouth to make the whole operation more efficient but that the request was rejected.
I think that something has to happen; otherwise the likes of our east coast ports are going to suffer.
That sounds like a cue for another inquiry. [Laughter.]
I think that the ICI Committee is doing that already.
Mr Brodie can ask a very brief supplementary question.
11:00
Going back to the European funding point, I note that €26.2 billion is available for port development, but there is no connection between Scotland and Europe—we have to go through the UK.
On the point about universities and colleges, Brian Wilson suggests in his report that universities might run courses. Scotland’s universities have huge capabilities in developing new technologies and new products, but they do not seem to be able to transfer those directly to the market or to take up positions in the growing markets. What should the universities be doing to transfer their skills and capabilities—operating as a Scottish entrepôt, if you like—to the markets?
Almost every university now has a campus outside Scotland. They have campuses in the middle east and in China, and they have activities going on all over the world. There is an opportunity there for a synergy between their presence in those countries and the promotion of other exports. Education is in itself a big export, so there could be a tie-in there.
I agree that the record of spin-off companies turning into successful exporters is disappointing. I am sure that SDI is aware of that, and it could work with the universities to try to encourage more of them, once they turn into free-standing companies, to look at international markets. By and large, universities are involved in developing new technologies, so they would be broadening the range of potential Scottish exports.
Universities probably have a big part to play in changing the culture. They are internationalising themselves, and they should be helping society to think more in terms of international trade.
I know that the meeting is coming to an end, but I just want to mention something that relates to courses and the academic approach. Everything that we have talked about has, quite reasonably, been about trade promotion, but the other side is trade diplomacy. That is immensely important for Scotland in particular, because our ability to export is conditional on our relationships with other countries and representation through international trade bodies and so on. Again, in most embassies around the world, one would certainly find Scots involved in trade promotion and in trade diplomacy, which is a very particular discipline. It would be no bad thing if we had a cadre of people who were very aware of the complex issues involved in the global regulation of trade.
I will bring in the very patient Mr Harvie.
Good morning. I want to touch on a few issues around the context in which international trade takes place. Some people will always see international trade simply as a question of, “More of everything, please.”
A few minutes ago, Brian Wilson used the phrase—I hope not tongue-in-cheek—“one small step for humankind”. I like to think that most of us would hope that international trade has a wider benefit than the amount of money that is being made by people in this country. It can raise everybody’s experience in terms of environmental standards, labour standards and social justice, and development in developing countries.
However, some of the countries that the Scottish Government identifies as emerging high-opportunity markets, such as China, India and the middle east, are places in which Scottish companies that are developing an international presence will find it very difficult to achieve decent labour standards in their supply chain, and decent human rights and basic social protections for their employees who are sent to those areas, whether those relate to gender, sexuality, religion or other protected characteristics for which employees are used to seeing some protection in this country. Corruption may be more common in some of those markets than it is in this country. The same applies to the way in which companies are—I will be generous in saying this—drawn into complex mechanisms for avoiding paying tax.
What is the responsibility of Government, either at a UK or Scottish level, and of the support services that Governments put in place, to engage with those ethical, social and environmental criteria and to encourage companies to take a proactive response to those issues?
I think that the responsibility on Government is very strong. The corporate responsibility should also weigh heavily on those companies. To be fair, I think that it does weigh on most companies—certainly the major ones—that are involved in those kinds of projects.
The attitude to corruption is probably very different from what it was 20 years ago or even more recently, and that is a result of legislation. No British company that is involved in overseas trade is under any illusion now as to whether, if it is prepared to participate in corruption, it is breaking the law not only of the host country but of this country. There is a cultural change that has been driven by legislation.
Again, every responsible employer and company in this country, being bound by health and safety legislation and human rights legislation, should apply the same standards in the markets in which they are operating. If that puts—
Specifically, are you aware of anything that UKTI, SDI, or either Government is doing to engage with companies that are developing trade links with China to ensure that there are basic labour standards in the supply chain?
I know that embassies are very aware of those considerations and would certainly issue codes of practice and guidance that would state that, if a company was going to benefit from the support of a British embassy or UKTI, it would be expected to maintain standards under international regulation.
So UKTI issues codes of practice on that issue.
I would be pretty sure of it—I cannot speak for UKTI, but I would be very surprised if it did not. It would certainly issue in-country guidance on the prevailing standards and expectations.
It might be useful if we could seek confirmation of that and, if such codes exist, get a copy of them before we conclude the inquiry
Absolutely—thank you, Patrick.
Lewis Macdonald has a question on globalscot.
Before I come to globalscot, I want to add something for completeness of the record. Mr Wilson, you will be aware that Aberdeen Harbour is a dynamic and successful trust port, and a major exporting port, that is not inhibited from accessing funds from either Europe or elsewhere.
On globalscot, you spoke a moment ago about the importance of embassies engaging with exporters and informing them about the local situation and expectations.
With regard to your review, I think that it is fair to say that, although you found that globalscot was a good idea, and that it is a good network that sometimes works exceptionally well, the findings were mixed. What would you recommend to make the scheme work even better—or to make the rest come up to the standard of the best?
You are right. It was brilliant—it was the most complete curate’s egg that I have encountered. Some people had great experiences, and some had awful experiences. That speaks for itself. One just had to keep sifting the list. Inevitably, such a list starts off with the good and the great. There are people who say that they want to be part of the network, and the question is whether they have done anything, or done it well, in the interim. There needs to be a check on that. Checks happen, but perhaps they should be done more rigorously.
Globalscot is a really good idea that goes back to the mentoring argument. If a company has a connection with someone in a market who is not only a source of knowledge but a source of encouragement and of contacts, they could not ask for anything better. However, if they place faith in that contact and the contact does not deliver, that is a big blow to morale. The principle of globalscot is very good; the issue is purely the execution, and addressing that will depend on getting feedback about whether people are fulfilling their role well or even at all. There is no point in people having the name if they are not doing anything. I am sure that SDI and the globalscot organisation are aware of the situation. They just need to keep saying, “Thanks very much for your services, but we are bringing in a few new people.”
If you had undertaken a report on UK export services rather than focusing specifically on Scotland, would you have recommended that the globalscot network could have a wider application? Does Scotland have a market advantage in the UK in that regard, and would others do well to learn from it?
Yes, I think so. There is an ethos among Scottish people abroad. They often want to help people who are trying to emulate what they have done. I am sure that the network could be replicated. Of course, there are also cross currents. There will be plenty of people who are not necessarily Scottish but who would provide the same service. That is not peculiar to Scotland. I have a UK business ambassador role, and there are exactly the same issues with business ambassadors. People are weeded out because if they are not doing anything, there is no point in their carrying the title. That is a sound general principle.
So although it is not quite the same, there is something parallel—the UK business ambassadors have similar functions.
They are not quite the same.
Your report raises the issue of ministerial engagement with visits, both inward and outward. Particularly in relation to whisky, there are issues about whether the approach is as co-ordinated as it might be. Do you hope that UKTI and SDI might look at that jointly, or would that need to be taken forward at political level?
That has to be considered at Government level and not just by the trade organisations. It is important that serious missions are led by somebody who has the status to deliver leverage in the market. That is what the business ambassador role does, rightly or wrongly. If I arrive as a UK business ambassador, people will not know me from Adam, although they probably do not know the minister from Adam either, so it does not make a lot of difference. If someone has status and is recognised as a qualified leader of the mission, that creates serious leverage that would not be there otherwise. It is important that ministers do that where they can to deliver value and, if they do not do it, that somebody of comparable status does it. Again, there is no point in duplication. The approach should be co-ordinated and the resources should be used in the most effective way.
We have to remember that businesses, some of which do not have a huge amount of money to spend, have to commit. If they send someone on a mission, they are sending someone away for a week and they are paying them and paying the costs. Serious people are not interested in trade tourism. They want outcomes, and therefore Government in whatever form—they do not distinguish—has a duty to deliver a serious service to them. That means creating access and links with potential partners and introducing them to the right people. Those things are important. The leadership of such missions is significant.
Ministers in both Governments should co-ordinate that in a way that is coherent and that addresses specific markets.
Absolutely. There is no point in having two ministers involved, from whatever Government—this applies to the other devolved Administrations too. It is crazy to have two ministers in town from the same state in the same week or month.
You said in your report that the Scotland Office is “well placed” to be a “bridge” between the UK Government and the devolved Administration—the Scottish Government. Is it still your opinion that the Scotland Office should lead on this?
I do not necessarily think that it should lead—
You said that it is best placed to do this.
11:15
I said that it was best placed to provide a bridge. I think that it has done that by initiating the report and by bringing together Scottish Development International and UK Trade and Investment to take it forward.
I am probably in a fairly small minority in this room in thinking that—given the de facto constitutional situation—the Scotland Office should be important to Scotland, because it should be representing Scottish interests in the areas where that is required, just as the Scottish Office did in the past. I think that this is an area in which it could perform a useful role as a co-ordinating body. Whether it is the only occupant of that role is not for me to say, but I certainly would not try to exclude it. To a substantial extent, we are dealing with improving and making more sophisticated the relationship between a Scottish Government body and a UK Government body. That will need someone to ensure that that relationship always works in the best possible way.
I am conscious of time, but Richard Lyle has a brief question.
I will try to be brief.
The Scottish Government wants to increase the value of exports. We are currently at a base of £23 billion, on 2010 figures. You have produced an excellent report, Mr Wilson. What progress has been made on its recommendations? If all the recommendations were implemented, could the Scottish Government’s aim of a 50 per cent increase in exports be achieved in the timescale that has been set out?
I am not saying this in the specific context of the issue that we are discussing, but I am not a great man for target setting. I have never really seen the point of it. The only point of setting targets is to refer to something that applies once you have gone—nobody ever goes back and checks.
I would not put numbers on things. If the right things are done, you maximise the opportunities. It is absolutely right to try to increase the number of exporters. Of course, you must recognise that that does not necessarily incrementally increase the value of the exports because, as I said earlier, a huge proportion of Scottish exports come from a small number of sectors. However, that does not mean that the area is not important.
For example, in Harris Tweed Hebrides, we export about 70 per cent of what we produce. That is probably a blip in the export statistics, but more than 200 people in our remote, peripheral communities in the Hebrides are in well-waged employment, and they would not be if it were not for exports. If you apply that to each of your communities, you can see that you need only one company in each area to get good at exporting for it to have a transformational impact in exactly that way.
I am not into big numbers, but I have absolutely no doubt about the importance of exporting, and I think that it is worth taking forward.
I know that the convener has asked me to be brief, but have any of your recommendations been implemented? Do you have any frustrations with regard to your report not being implemented?
No. I am actually delighted that the thing has been taken forward through a working group. I have been around politics long enough not to have high expectations of the speed at which Government moves—far less Governments. It would not have surprised me if the report had gone off a cliff or if there had been a sort of stand-off, with people saying, “I’m not talking to you,” or “We’ll do this our own way.” The fact that that has not happened is good, and the fact that SDI and UKTI are engaging with each other will do me for the time being. Realistically, the test will be how much has been implemented when we come back in a year’s time. The political period has not been right for some of the recommendations to go forward, but implementation can happen now.
I am sure that you are delighted that the committee is taking the issue forward at this time.
I am. We can all feed in towards a shared objective.
It is refreshing to hear somebody say that targets, rather than continuous improvement outcomes, are a waste of time, so thank you for that.
On business tourism and attracting inward investors, do you have any comment on air passenger duty, which we know will change, and the visa arrangement system that is currently deployed by the Home Office?
Visas are a constant problem because there is a conflict of interest within Government. Usually, when visa restrictions are imposed there is a good reason from one perspective, which may not be a good reason—or may be a bad reason—from another perspective. I do not think that we can adjudicate on that.
Any country would be faced with the same issues. There are countries with which we might want to facilitate trade through a non-visa regime, but there might be good security reasons why a visa regime should not be lifted. We cannot generalise. The interests of trade should always be taken into account and there should be no one departmental veto.
What was your other question about?
APD.
I was around when APD was introduced in the 1990s. People have forgotten that APD was introduced as an environmental measure, rather than as a tax-raising measure. It does not seem to have worked very well as an environmental measure. At the time, people predicted that once it was there it would just keep increasing.
I think that APD does not apply if you start your journey in the Western Isles, where I live. That means that flights are slightly cheaper, which is a good thing from a social point of view, but whether that is a good thing from an environmental point of view might not be so obvious. I do not think that it makes a huge difference from a trade point of view, do you?
Yes, I do.
I have a brief supplementary question on APD. Much of the rhetoric around the Scottish Government’s position on APD up to now has suggested that APD will be halved and then scrapped, if and when the Government gains the power to do so. The Smith proposals and the draft legislation flowing from that process seem to imply that that is what will happen.
The new economic strategy reframes the situation and says that the Government wants to replace APD with a different tax. Do you think that it is possible to achieve a tax regime for aviation that both increases connectivity—which is what the Scottish Government says that it wants to do—and decreases the environmental impact of aviation, and if so, how?
It is not a question that I have pondered. My instinct is that APD is not as big an issue as—
You may be right.
APD was introduced in the guise of an environmental measure and has essentially become a tax. It is not obvious to me that it is a deterrent to flying because flying continues to increase. There is such variation in air fares that prices are affected by factors other than APD.
If I was to inherit responsibility for APD, I am not sure that I would want to transfer APD to some other tax. Someone is going to be taxed to pay for getting rid of APD, so it would seem to be more of a gesture than a substantial benefit.
I feel that I am getting outside the terms of my remit.
Probably.
Thank you for coming, Mr Wilson. Your evidence has been very informative and the review made extremely interesting reading. The committee welcomes it in taking forward its work.
I extend Murdo Fraser’s apologies for not attending today’s meeting; he is engaged in a meeting in Brussels, which is why I have convened the meeting.
11:24 Meeting continued in private until 11:41.Previous
Attendance