Official Report 756KB pdf
Deputy First Minister Responsibilities, Economy and Gaelic
Good afternoon. The first item of business is portfolio questions. The first portfolio is Deputy First Minister responsibilities, economy and Gaelic.
Edinburgh’s Festivals (Economic Impact)
To ask the Scottish Government what discussions the economy secretary has had with business leaders regarding work to maximise the economic impact of Edinburgh’s festivals. (S6O-04866)
We are always working with Edinburgh’s festivals to maximise economic opportunities and to complement the year-round efforts of each of these flagship cultural events.
Alongside the Edinburgh Festival Fringe Society, I convened a round table on Friday 22 August with business, data and diplomatic leaders, exploring how we can collectively maximise the fringe’s economic impact.
With last month’s outstanding Edinburgh festival programmes in mind, I congratulate the artists, performing companies, production teams, supporting staff and everyone whose work makes Edinburgh’s festivals a global cultural highlight.
We know how important our cultural and creative sectors are to the economy and how they can drive growth. In her meeting with businesses following Edinburgh’s festivals, did the Deputy First Minister highlight the benefits of investing in culture and corporate sponsorship of cultural events? Will she commit to further engagement to support private investment in our cultural and creative sectors?
The short answer is yes—I commit to on-going engagement. Foysol Choudhury identified a number of different funding sources. The Scottish Government has provided funding to support the fringe this year, but at that round table, international leaders in particular commented on how much their Governments invest in supporting those from their nations who are performing at the fringe, highlighting that it is a global phenomenon. We are proud to continue to support it.
Scotland’s festivals are a vital part of our cultural landscape, a boost to tourism and an important part of our regional economies. Will the Deputy First Minister say more about how the Scottish Government is working to support festivals in the wider cultural sector in Scotland through the increased funding in the 2025-26 Scottish budget?
As a result of the biggest increase in culture funding in the history of the Parliament, Scotland’s festivals have benefited from significant increases in core funding through Creative Scotland’s multiyear funding programme. A third of that funding programme’s recipients run a festival, and a number of them are receiving multiyear funding for the first time.
Last month, we announced the creation of an expanded festivals fund. The application process opened today—Wednesday 3 September. It is administered by Creative Scotland and supports non-profit arts and cultural festivals across Scotland. The £1.8 million fund will provide up to £200,000 in grants per festival in its first year to those that are not already in receipt of festival expo funding.
Such is the success of Edinburgh’s festivals that, at one point last month, Edinburgh was the most expensive destination in the world for people to visit. There are concerns in the industry about the perception of Scotland as a high-cost destination. Does the Deputy First Minister agree with the evidence that we heard at the Economy and Fair Work Committee this morning that councils such as the City of Edinburgh Council need to take that into account when setting the visitor levy, which is coming down the track?
Murdo Fraser is right to highlight the overall costs of the festivals. Accommodation costs are one of the biggest challenges across the fringe ecosystem because they affect artists, visitors and residents. One of the priority areas for the strategic partnership for Scotland’s festivals, which is led by Angus Robertson, is to look at that issue in greater detail.
Murdo Fraser will also be aware of some of the wider support for artists, particularly the “Keep it fringe” fund, which is administered to reduce financial barriers for artists performing at the fringe. We need to look more broadly at what to do to keep the fringe accessible to as many artists as possible.
Question 2 has been withdrawn.
Digital Exclusion
To ask the Scottish Government what steps it has taken on digital exclusion to address the “weakened” national leadership referred to by Audit Scotland in its report “Tackling digital exclusion”, which was published 12 months ago. (S6O-04868)
The Government welcomes the report and is working with local government to take action on digital exclusion. Our approach has evolved since the pandemic, but our commitment remains firm. We are tackling root causes of digital exclusion while developing sustainable ways to mitigate its impact.
A refresh of the digital strategy, developed with the Convention of Scottish Local Authorities, will set a national direction, followed by an action plan with measurable outcomes. We are embedding inclusion into public services, ensuring that access is not an afterthought, and we will continue to lead cross-sector collaboration, including through the digital inclusion alliance, addressing digital exclusion as a national priority.
She may not be answering this question, but I take this opportunity to say that I was saddened to hear that the Deputy First Minister will not be standing at the next election. She will be missed by the Parliament.
According to the Lloyds consumer index, 15 per cent of adults lack foundation-level digital skills, and 9 per cent of households have no internet access. That is not just digital exclusion; it is exclusion from healthcare, education and democracy. Twelve months on from the report, we have still not had a strategy. Indeed, the Scottish Council for Voluntary Organisations has withdrawn from working with the Scottish Government, because those at the SCVO fundamentally disagree with the direction of travel.
Despite £764,000 coming from the United Kingdom Government’s £9.5 million digital innovation fund, there are no plans from the Scottish Government on how it will spend that money. Will the minister set out how the Scottish Government intends to tackle digital exclusion and how it will spend the £764,000 that is coming to it?
We welcome the fact that the UK Government is now taking action on digital exclusion, and we want to work with it on that. We welcome the resource that will come to Scotland as part of the budget mentioned by the member. Once that cash is with us and we work things out with COSLA and those in other sectors regarding the refreshed strategy that I referred to, it will be put to good use on top of the existing budget for connecting Scotland. That work is already under way and the budget is being spent on tackling the issue.
We have to find new ways to proceed. The member is quite right in that a gap of 15 per cent is one that is too large by 15 per cent, especially in this day and age, when artificial intelligence and other technologies are becoming increasingly important. Everyone should have the same opportunity to take advantage of the digital world in which we now live.
It is important that the voluntary sector, the business community, the Government and the public sector are all working together on the issue. That is the solution going forward, and it will be at the heart of the new strategy. I very much welcome the partnership that was announced just last week, I think, between Virgin Media O2 and citizens advice bureaux. The Scottish Government has assisted that partnership, which will deliver thousands of free smartphones to vulnerable groups in Scotland. That shows what can be achieved by working together, and we have to support such initiatives going forward.
Keeping Scotland at the forefront of digital literacy and innovation is a priority that will enable Scotland to pioneer the industries of the future. Can the minister say more about Scotland’s upcoming innovation week and about how we can maintain the momentum, both for our economy and for our society?
The member raises a good point. I am very excited by Scotland’s first national innovation week, which will take place later this month. I hope that members will pay attention to it. It will display and showcase a lot of the amazing innovation that is under way in every single corner of Scotland.
Digital inclusion is an important area that can be supported by digital innovations. Over the past couple of years, I have met people in many companies that are working on new devices, software and so on that can benefit people who may be harder to reach. The member raises a very important dimension to national innovation week, noting Scotland’s track record and pedigree in innovation.
Scotland’s Start-up Economy
To ask the Scottish Government what assessment it has made of the recently published NatWest Group and Beauhurst’s “New Startup Index”, indicating that Scotland has one of the fastest growing start-up economies in the UK. (S6O-04869)
I am hugely encouraged by the NatWest’s “New Startup Index”, which shows Scotland’s strong performance in business formations. Scotland saw 17.9 per cent growth in new business incorporations compared with 2024, demonstrating significant momentum in the start-up economy. We are by far the fastest-growing start-up economy in the United Kingdom and one of the fastest growing in Europe. That growth is not accidental; it is thanks to sustained investment and focus by the Government and policy choices such as the Techscaler programme, alongside the ambition and hard work of Scotland’s innovators and entrepreneurs, who should be enormously proud of themselves.
Does the Deputy First Minister agree that the report shows that Scotland is the fastest growing start-up economy in the UK and one of the fastest growing in Europe, with investment growing by 120 per cent in just over four years? Does she agree that that remarkable progress has been achieved by forward-thinking Scottish Government policies, in the face of Brexit damaging trade and labour markets and successive UK Governments failing to deliver the investment that Scotland needs? That is especially the case in rural communities such as mine, where all and any opportunities and such positive growth are very much welcome.
It is certainly encouraging to see the output from the work that we have undertaken in the past few years to change our enterprise support from being quite generic to, instead, vastly improving the scale and quality of infrastructure that is tailored to high-growth founders.
Scotland’s transformation into one of Europe’s fastest-growing start-up economies is a testament to that ambition and to the resilience and innovation of our people and businesses. The 120 per cent growth in investment over just four years is not only impressive but a clear signal that our forward-thinking policies have delivered real results. That has involved working in partnership with several different organisations. It was kicked off by Scotland’s first chief entrepreneur, Mark Logan.
Increased Taxation (Highlands and Islands)
To ask the Scottish Government what discussions the economy secretary has had with ministerial colleagues regarding the economic impact of any increased taxation by United Kingdom, Scottish and local governments on people and businesses across the Highlands and Islands. (S6O-04870)
Ministers have regular discussions with their colleagues on a range of issues that have an economic impact, including growth and taxation.
In relation to recent tax rises, of most concern to us is the additional burden created by the UK Government’s decision to change employer national insurance rates and thresholds. Undoubtedly, that is having an impact on businesses in the Highlands and Islands and across Scotland. The UK Government’s own economic impact assessment confirmed that the changes will result in lower employment and higher costs for businesses across the UK.
Businesses across my region are facing growing pressures on their bottom line, with increased energy costs, regulation and tax bills. Meanwhile, their customers’ spend is impacted by cost of living issues as well as on-going increases in their own taxes, most notably council tax.
In Orkney, two popular local hospitality businesses announced before the summer that they were closing their doors, while others that I spoke to during my summer tour of the Highlands and Islands made it clear: they are not sure, even with the huge effort and sacrifices that owners and staff often make, that their businesses are sustainable in the long term. They do not feel that the Scottish Government—or, for that matter, the UK Government or local government—truly understands the crisis that is facing our restaurants, pubs and bars, nor the devastating impact of the policies being wrought on the sector. Does the minister recognise their concerns? If he does, what will the Scottish Government do to better support our hospitality businesses?
As a member who represents a constituency that lies in Mr Halcro Johnston’s region, I am very familiar with some of the issues and concerns of my local businesses. Those concerns are reflected throughout the Highlands and Islands and, indeed, in many parts of Scotland. I recognise the pressures that many businesses, particularly smaller ones, face at the moment. The First Minister and the Scottish Chambers of Commerce have made representations to the UK Government on its forthcoming budget, to ensure that measures come out of that to alleviate the massive pressures on businesses.
The businesses that I speak to are talking mostly about national insurance contributions, VAT, tourism and a range of other issues that are the responsibility of the UK Government. We in Scotland must pay attention to those pressures and take them into account, as must local authorities in their decisions in the coming months.
The Deputy First Minister highlighted some exciting statistics about the new businesses being created in Scotland, with record-breaking increases in the first six months of this year compared with the first six months of last year, and a pleasant surprise from those statistics was that the sector with the biggest representation in that increase in new businesses was hospitality. Clearly, the situation is patchy across the country. In saying that, I am not talking down the pressures that the hospitality sector is facing in a variety of areas—I speak to those businesses very regularly. Indeed, I want to congratulate The Pier, a new cafe in the hospitality sector in Lossiemouth, which has opened in the past couple of months. There are new businesses out there that are doing a great job against very tough backdrops, and we should congratulate them on their resilience.
Spiralling energy costs and Labour’s national insurance hike are squeezing the public sector and businesses alike and limiting their ability to grow and invest. Does the minister agree that Labour must urgently abandon that tax on jobs? Can he say any more about the support that the Scottish Government is offering to businesses in Scotland’s Highlands and Islands?
I join Emma Roddick in her appeal to the UK Labour Government, which, when it was first elected, said that it had a growth mission but went on to introduce an increase in tax for businesses that is causing real problems. If I had a pound for every time a business raised that issue with me, I would be a very rich person.
The national insurance rise is a huge issue that is of equivalent importance to the energy issue. It is perhaps the biggest issue that is being raised by businesses—especially small businesses—throughout Scotland at the moment. I appeal to the Labour Party to take that on board in the forthcoming budget. The NI increase is crippling businesses the length and breadth of Scotland. We have had rising energy costs when we were promised lower energy costs, and rising business costs when we were promised a growth mission.
Question 6 comes from Tim Eagle, who joins us remotely.
Regional Growth Deals (Highlands and Islands)
To ask the Scottish Government whether it will provide an update on how growth deals are growing the economy of the Highlands and Islands region. (S6O-04871)
The substantial £242.5 million that we are investing in four growth deals across the Highlands and Islands will empower and enable regional partners to deliver a wide range of projects that are tailored to local needs and circumstances. Those projects, which have been chosen by local partners for their areas, will deliver infrastructure, housing, skills, transport and innovation to drive economic growth at local and regional level and secure lasting benefits.
The growth deals are delivering jobs, infrastructure and certainty of investment, as was highlighted in the recent Economy and Fair Work Committee report. However, current levels of inflation remain an on-going concern. There is scope to further extend the benefits of the growth deals in areas such as Moray by ensuring that any just transition funds are split fairly and by actively supporting other projects along the energy corridor between Aberdeen and the green freeport in Invergordon.
Can the Government confirm that it is monitoring the effects of inflation and its impact on projects and that it will ensure that the just transition funding that impacts Moray, which has the potential to expand the projects in the area under the growth deal, is split fairly between the three council areas?
The member raises a number of important issues that are high on my list of priorities. He mentioned the impact of inflation. We remain closely involved with each of the growth deals in order to understand what is affecting progress, particularly when it comes to infrastructure.
The member also mentioned other schemes, such as the just transition fund. It has long been my view that growth deals established a different way of operating. That tripartite arrangement between the Scottish Government, the United Kingdom Government and local authorities has worked really well, and I think that it is a great model for the future.
Calls have been made for a second phase of growth deals, and we are very happy to continue to engage with the other participants in the tripartite arrangement—the UK Government and local authorities—to look at how we can progress that. However, the member was right to refer to the funding that is available right now, which can be delivered in response to applications that are made. I could go into detail on the various projects that have already benefited from just transition funding, but I will simply say that I have been really impressed by what local partners have delivered with the funding that they have received.
I apologise for being slightly late in getting to the chamber.
With the islands growth deal now in its delivery phase, positive outcomes are already evident, such as the recent completion of the £2.3 million University of the Highlands and Islands north-west and Hebrides campus transformation project. Can the Government give an update on some of the many other ways in which, working in conjunction with the deal, the Scottish Government continues to support the growth of economies across the Highlands and Islands?
There is a long list of ways in which we are doing that. The list is probably too long to go into in this question-and-answer session, but I am more than happy to give Mr Allan chapter and verse in writing. It could include our allocation this financial year of more than £56 million to Highlands and Islands Enterprise to support its work with businesses and communities across the region. We have also approved £7.5 million of funding to support community investments, which is helping 30 community anchor organisations provide vital services for their communities.
There is the £33.7 million to develop Stornoway deep-water port on the Isle of Lewis, which is a key piece of infrastructure that is needed to optimise opportunities for tourism and renewable energy for the Highlands. The Scottish Futures Trust estimates that that development is capable of unlocking between £5 billion and £7 billion over the next decade.
There is also direct investment specific to our islands in this year’s budget, including the provision of £9 million to island-focused investments, in addition to the continued support that we are providing across portfolios such as transport, housing and health.
As I have said, it is a very long list, and I am more than happy to give Mr Allan the detail in writing.
Steel Companies (Operations in Scotland)
To ask the Scottish Government whether it will provide an update on its discussions with GFG Alliance, Liberty Steel and Alvance British Aluminium regarding the companies’ operations in Scotland. (S6O-04872)
The Scottish Government is in regular contact with management at Alvance British Aluminium, Liberty Steel Dalzell and the wider GFG Alliance.
The Lochaber businesses are performing well, employing more than 200 people and making significant contributions to both the local and Scottish economies. GFG remains committed to the future of the Dalzell plant and has firm plans to restart operations in the near future, after securing a contract for 40 kilotonnes of plate for maritime use.
I will provide a statement to Parliament next week to set out further details on the Scottish assets and our discussions with GFG on their future.
There will be scepticism in Lochaber and Lanarkshire, as we have had so many false dawns before. At the smelter, we were promised a wheel-making plant, 2,000 jobs and a billet plant, but none of that has happened. Indeed, last month, it was on the verge of being struck off Companies House. The workers at Dalzell have been sitting at home for months, as the company cannot afford to buy the materials to fulfil any orders. There has also been the forced liquidation of the speciality steels business in the UK.
If things are going so well, has the company indicated when it will pay back the £7 million loan to the Scottish Government? How long will the Scottish Government give the GFG Alliance to deliver before it steps in?
We are committed to continuing to work with the owners. It is worth recognising that, after many years, the two businesses in Lochaber and Dalzell are still operating and continue to maintain employment in those locations, which was far from certain previously. What the Scottish Government has done in working with the owners to keep those plants employing people locally is not insignificant and needs to be recognised. We will continue to work with the owners, and we have significant contingency plans in place for any eventualities, should there be any change in circumstances.
As I have said, I will make a statement on the matter next week, when there will be a further opportunity to give more information.
News that the Labour Government has taken control of Liberty Steel in Yorkshire was another kick in the teeth for the Scottish workers at Grangemouth. Does the minister agree that it would appear that Westminster’s support for industrial assets and regional economies depends on which side of the border they are found?
I invite the minister to respond, to the extent that that falls within the broad reach of the question lodged by Mr Rennie.
During the general election campaign last year, the Labour Party made bold and far-reaching commitments on intervening to support Grangemouth’s transition in the near term. So far, unfortunately, those commitments have not materialised in the way that we had all hoped.
The UK Government’s commitment to deploy £200 million from the National Wealth Fund in Grangemouth in the future is to be welcomed, but we need to see the sort of at-scale intervention that we have seen in other parts of the UK—and now, if we are to avert further industrial unemployment loss across the industrial cluster.
I am sure that the minister will welcome the fantastic news on Sunday that Scotland—by which I mean Glasgow—has won the biggest shipbuilding export order in this country’s history, with five type 26 frigates going to Norway. However, the frustration is that, as it currently stands, no Scottish steel plate will be able to be supplied to that programme unless we can get Dalzell back up and running. Will the minister give an assurance that he will do all that he can to get it back up and running, so that we can get steel plate from Scotland into those fantastic Scottish frigates?
I give that assurance. As I have said, we have been working extensively with GFG on the potential for new orders. I have also indicated that there were maritime orders in the pipeline, and we will be able to give more information on that in the near future.
We will continue to work with the owners to look for other opportunities to get the plant back up and running, but it is worth recognising that it is only through the work of the Scottish Government and Scottish Enterprise that the plant is still capable of fulfilling those orders, as it has been supported through this period of time.
Grangemouth Cluster
To ask the Scottish Government what discussions the economy secretary has had with United Kingdom Government ministers regarding the potential impact on the Scottish economy of recent developments with the Grangemouth cluster. (S6O-04873)
I have regular engagements with various UK Government ministers, not least yesterday, when I met the energy minister Michael Shanks to discuss Grangemouth in particular.
The Grangemouth investment task force and Grangemouth future industry board continue to be fruitful vehicles for collaboration between the energy secretary and United Kingdom ministers. In May, I asked the Secretary of State for Business and Trade for a meeting to discuss wider issues in the Grangemouth cluster to jointly secure the future of Ineos Olefins & Polymers Europe (UK) at Grangemouth. The Minister of State for Industry responded to me on 29 August, and I very much look forward to having that discussion in due course.
The cabinet secretary has alluded to concerns that are increasingly being raised about contagion as a result of the impact of UK Government policies on the energy sector. My immediate concerns are the vital chemical cluster around Grangemouth, but I am also concerned about the throughput of the Forties pipeline and, therefore, ultimate viability. It is also clear that the energy profit levy is biting investment hard, and I find it staggering that there is no sign of the promised £200 million—paltry though that may be—from the UK Government. I know that discussions have been had, but is the cabinet secretary any clearer on whether the UK Government plans to follow through on the promises that have been made and, consequently, on timescales?
Michelle Thomson has raised a number of important issues, and I will start with the wider cluster. We are very conscious of the challenges faced by the wider chemicals business. I meet the chief executive of Ineos O&P Europe (UK) monthly to provide the business with an opportunity to update me on how global market pressures in the wider energy landscape are impacting on operations at Grangemouth. I am also engaging directly with the UK Government on those matters—indeed, I raise them at most of my meetings with the Secretary of State for Scotland—and I am pleased that the Scottish Government has been able to make some progress on the issue.
The member mentioned the energy profits levy. She will have seen my comments yesterday on the need for a very urgent replacement of that fiscal regime and on certainly not having to wait until 2030.
Lastly, the member talked about some of the wider opportunities that are emerging through project willow and how we unlock the National Wealth Fund commitment to funding. That is a particular priority at the moment. We know that some of those opportunities are far advanced. In fact, that was the nature of my conversation with Michael Shanks yesterday—looking at how we progress that to secure the funding and get the opportunities in place.
That concludes portfolio questions on the Deputy First Minister’s responsibilities, economy and Gaelic.