“A Smart, Successful Scotland”
Item 3 is our consideration of the Executive's revised strategy document, "A Smart, Successful Scotland: Strategic direction to the Enterprise Networks and an enterprise strategy for Scotland". I welcome the Minister for Enterprise and Lifelong Learning and Deputy First Minister, Jim Wallace. He has circulated some information and will give the committee an update on the subject.
With your permission, convener, along with my brief introductory remarks on the refreshed strategy, I will say a few words about item 4, on individual learning accounts, and item 5, on the green jobs strategy. I think that that will assist the committee when it moves on to questions on those items.
I thank the convener for inviting me to update the committee on three very important topics. Members will have seen the refreshed "A Smart, Successful Scotland" document. It is important to make it clear that the Executive made a deliberate choice that the document would be a refresh and not a rewrite. Throughout the consultation process, a clear consensus emerged among stakeholders that what they wanted us to do was not to dig up the tree and replant it but to build on what was already there. The fact that we have done a refresh and not a rewrite has been widely welcomed. We also wanted to reflect on the progress that we have made since the initial document was launched in January 2001 and to take account of the new challenges that face Scotland in a changing economic environment.
There was broad support for the three overarching themes of "A Smart, Successful Scotland": growing businesses; global connections; and the development of skills and learning. Numerous underlying objectives come under those themes and we have changed the emphasis of some of them. For example, under the growing businesses theme, we have put more emphasis on growing businesses of scale, and, under the skills and learning theme, we have recognised the importance of the need to reduce economic inactivity. The achievement of those objectives will require partnership working among many organisations including those in the enterprise networks.
The promotion of lifelong learning is also integral to the strategy. The relaunch of individual learning accounts reflects our focus on education and on investing in skills development. In turn, our green jobs strategy will put more flesh on our sustainable development objectives. The aim of the strategy is to stimulate job creation in the new green industries and to increase productivity by encouraging all businesses to make environmental improvements. I believe that there are tremendous business opportunities in areas such as renewable energy, waste recycling and resource efficiency. I want Scottish companies to seize those opportunities and secure a leading role for Scotland. If we succeed, we can reduce our impact on the environment and develop a new generation of green jobs.
We believe that our enterprise strategy is the right one for Scotland. It provides direction to the enterprise networks, but we want a wide range of partners to buy into and support the strategy through their actions. By working together and contributing to the delivery of the strategy, we can maximise Scotland's economic potential.
I propose to take questions in the order in which items were set out on the agenda, as that will make for a clearer discussion. The minister is with us until 3 o'clock or thereabouts, which means that we have quite a lot of time—about 50 minutes—to cover the three subject areas. I will try to judge the level of interest in each subject as we go along and ensure that we cover all three. We will start with questions on "A Smart, Successful Scotland".
Minister, in the chamber on 24 November, you said:
"Our vision is of a smart, successful and sustainable Scotland".—[Official Report, 24 November 2004; c 12156.]
On page 7 of the refreshed document, you talk about our performance in sustainable economic growth in terms of gross domestic product and carbon emissions. I have two questions. Should the local enterprise companies' conditions for advice and grant include a commitment to sustainability? Is it time that we stopped focusing entirely on GDP as a measure of success, as you do in the document to some extent? In other words, would you like to see the word "sustainable" up there in the title of the document, along with the words "smart" and "successful"?
As the partnership agreement indicates, the concept of sustainability is one that flows through and underpins the Executive's activities in general. In the refreshed strategy, we can see that the importance that the Executive attaches to sustainability is flagged up more than was the case in the original document. I do not want to get into a discussion about the semantics of the document's title. If we had changed the title, that might have detracted from the idea that we had undertaken a refresh, not a rewrite. However, as Mr Ballance has pointed out, I have made it clear in my comments, both in the parliamentary debate in November and in our consultation paper on the green jobs strategy, that sustainability is an important part of our economic approach.
During the past year, we have imported environmental and sustainability concerns into decision making by requiring a sustainability audit dimension to all regional selective assistance grants of more than £2 million. However, a number of grants that are dealt with by local enterprise companies may not necessarily lend themselves to such an audit. When our green jobs strategy is published in the spring, I hope that it will provide us with a number of ways in which we can identify how we can promote sustainability and take the idea forward at all levels, including in local enterprise companies.
The issue is not an either/or. Economic opportunities can flow from a more sustainable and environmentally friendly approach. Indeed, companies are looking to see what impact such an approach can make on their bottom line by reducing costs and being more efficient in their use of resources. Given that so much of the industrial revolution in the 18th and 19th centuries flowed from improvements to labour productivity, it is not inconceivable that we could achieve considerable gains from improvements to resource productivity in the 21st century. Such improvements will be beneficial to the companies that undertake them, but I also want to see what opportunities there might be for Scotland in innovating, devising and inventing the technologies that will achieve those improvements so that we can gain some commercial benefit from their production.
The other half of my question was whether GDP should be the sole criterion for measuring success.
GDP is our criterion at the moment and we have no proposals to change that. I am aware that a number of academics and others have suggested that a broader basket of measures should be used, but it is not our current policy to switch to such an approach. Although there is a live debate on the issue, there is perhaps a problem with uncertainties over the quality of such measurements. Therefore, although I cannot rule out the possibility for ever and a day, I do not have confidence at the moment that there are other accurate ways of assessing growth.
However, I should also say that a Scottish target for CO2 emissions features in "A Smart, Successful Scotland". Since the report "Measuring Scotland's Progress towards a Smart Successful Scotland 2004" was published back in August, the emissions figures have been revised. Originally, we were not in a very good position—we were almost at the bottom of the pile—but the revised figures place us 15th out of 28. I accept that improvements must still be made, but our position is not quite as dire as the original figures suggested.
Under the heading "the approach: the Executive and the Enterprise Networks", the refreshed strategy document makes it clear that—as the minister and I both know—the enterprise networks are key to the promotion of economic growth in Scotland. Page 10 states:
"Ministers expect the Networks to focus on the overarching objective of sustainable economic growth at all times."
That is certainly what I and many others want to happen.
However, the minister will be aware of discussion in the business press about whether the new chair and chief executive are committed to that agenda. There was a suggestion that Scottish Enterprise believes that it should not really be involved in economic regeneration in inner-city and urban areas. The approach in "A Smart, Successful Scotland" is clear, but can the minister say a bit about the discussions that he or his officials have had on that issue with Scottish Enterprise, as opposed to the local enterprise companies? It is important that Scottish Enterprise provides the lead for the whole enterprise network on the issue.
For completeness, I will read out the rest of that paragraph, which is relevant. It states that the networks should
"focus on the overarching objective of sustainable economic growth at all times. In doing so, however, the Networks should seek to close the gap in opportunities."
That is an important part of the equation and I assure members that the Executive is committed to closing the opportunity gap for Scotland's most disadvantaged communities.
The refreshed strategy provides the enterprise networks with a clear direction to pursue activities that have a primarily economic rationale, but they need to do so in a way that contributes to our goal of closing the opportunity gap. Projects and programmes, wherever appropriate, should be designed to contribute to that agenda. That does not mean that I am asking Scottish Enterprise to undertake the work of Communities Scotland, social work departments or local authorities, but it emphasises the importance of partnership working. The refreshed strategy not only provides a strategic direction for the enterprise networks but involves partners.
On regeneration, there is to be a memorandum of understanding between Scottish Enterprise and Communities Scotland with perhaps a better definition of where their respective boundaries lie. It is clear that both organisations have a role to play. We are working up an employability framework, which we hope to complete by the summer, in which we will try to ensure that, nationally and locally, partners play to their strengths. I indicated that clearly in a letter to the chair of Scottish Enterprise when the refreshed "A Smart, Successful Scotland" document was published. I have discussed the point with the chair on a number of occasions, the most recent of which was a week ago, when I met him and the chief executive.
I am pleased to hear that. To be fair to Scottish Enterprise, a couple of months ago it gave a briefing at which the convener, other members and I were present, in which its commitment to the broader agenda was clear. I had it in my mind that doubt had been expressed. You are saying that Scottish Enterprise is clear about its role in driving the strategy forward.
I am clear about that. We must always be wary of some interpretations given by the press.
I accept that.
My second point relates to something that is covered on page 21 of "A Smart, Successful Scotland". I refer to the large number of people in Scotland—the figure of 600,000 is given—who are economically inactive or so-called workless. I am particularly concerned that a large proportion of those people are found in Glasgow. This might impact to some extent on the discussion on ILAs, but how will you take forward the efforts to reduce that number significantly as the strategy develops? How will you ensure that, as far as possible, the current high number of people who are out of work but who are able to work decreases?
Of those 600,000 people, it is estimated that about 200,000 want to get into work. I have made the point on a number of occasions that although there is an important social inclusion dimension to the issue, there is also an economic issue to address. If 200,000 people want to work but for some reason are not working, that is a loss to them as individuals and to us as a community, given the contribution that they could make to our country's economic performance. We can use a range of measures, depending on how far from employment individuals are. Our approach to some will be much more challenging than our approach to others—I am thinking of those who are caught up in drug abuse or who are newly released from prison. As a society, we have an important role to play in trying to get people who are quite a way from the workplace into work or closer to employability. Provision such as the modern apprenticeship helps people to gain the core skills that might not be related to only one particular job or activity. I hate the phrase "soft skills", but it tends to capture the idea. It is important that we focus on delivering such skills.
I accept that a range of agencies will be involved, and that is why, in my answer to Mr Watson's previous question, I indicated that we are drawing up an employability strategy so that we have a clearer definition of where the responsibility lies for tackling the different challenges in getting people along the road and into the workplace.
Do you or your officials intend to consider other parts of the United Kingdom? Some cities, such as Manchester, Birmingham and Liverpool, are broadly similar to Glasgow, in that they are post-industrial, if I can put it that way, but seem to have a lower percentage of people outwith the workforce. Are there any lessons that could be learned about why the figures should be significantly different in broadly comparable cities?
I do not have an immediate answer to that question. I am never averse to examining good practice elsewhere to see whether we can learn anything. However, it would be wrong to think that the problems of inactivity are confined to Glasgow.
Indeed. It is a question of scale.
I am aware that a general concern has been voiced by UK ministers as well as by Scottish ministers. I would not have a problem with considering the matter. As I said, the employability working group is working up an employability framework, and I will encourage that group to look for examples of good practice elsewhere in the UK.
I have two questions. First, I want to ask about the intermediary technology institutes, or ITIs. Did the minister read an interesting report in Scotland on Sunday, which mentioned that the University of Sheffield found that it was able to commercialise academic research by raising funds on the alternative investment market?
I did not see that specific article.
Given that the ITIs were set up to address market failure, it has been suggested that there might be no market failure and that funds might be raised from private sources. Would you reconsider that point?
It is not a question of choosing one approach or the other. I would certainly encourage our research institutions to seek ways of finding resources to carry through their work into commercialisation. Indeed, it is not anticipated that all commercialisations and spin-outs will have to go via the ITIs. It might be premature of me to tell you what kind of spin-out is being worked on at the University of Aberdeen, which I visited yesterday, but it is being done because the university is proactive and has sought ways of accessing private and other sources of capital to help with spinning out its ideas and research commercially. It would therefore be wrong to suggest that we are putting all our eggs into the ITI basket; far from it.
We should almost look at it the other way round to see the strength of the ITIs. The example that Murdo Fraser gave was of research that is being done at the University of Sheffield and the way in which that is being put out into the marketplace. I am not being pedantic, but the ITIs are intermediary technology institutes, not intermediate technology institutes. The intermediary function is about mediating between business and the research institutions. That agenda should be driven more by business than by the academic institutions. It is not that the universities are only going to be doing work for ITIs, but businesses should be indicating where they think that there will be a need for further research in order to progress ideas and projects. With business input, the ITIs are the bridge that can help to deliver research from the academic and research institutions. That is a useful string to our bow in trying to promote different levels of research and development in Scotland. We are still in the early days. We have had one contract from the ITI Techmedia, and I hope that we shall see more in the course of 2005, although I was answering questions on this subject yesterday from a business audience and I assured them that I would prefer them to make the right decisions rather than make decisions just to get a headline tomorrow.
I have a slightly more general question about "A Smart, Successful Scotland". The original document was launched in 2000, so it is getting on for five years old. However, some of the key indicators relating to the economy—GDP growth relative to the UK as a whole, for example, and the rate of business start-ups—have not shown substantial improvement in that time. Is the strategy actually working?
Yes. I believe that it is basically the right strategy. I do not want to nit-pick, but the first document was launched in 2001. The important point to make is that it appeared after, rather than before, the original framework for economic development in Scotland. In 2003-04, Scottish Enterprise assisted with a total of 9,700 business start-ups, of which 1,369 were in disadvantaged areas and 192 were high-growth business start-ups. We have exceeded our target for modern apprenticeships, with a total of more than 31,000.
We have seen some improvements, but I would be the first to admit that there is far more to be done in improving business research and development. It is a strategy for the medium and longer term, and that is what we have lacked over a generation or more. A criticism that we have all heard, because it is directed not only at ministers but at all of us generally as politicians, is that we never have strategies or ideas that look beyond the horizon of the next election. "A Smart, Successful Scotland" tries to put in place a number of the building blocks that will deliver benefits in the medium to long term, and it will not necessarily bring about a quick hit. That said, however, there has been progress in relation to modern apprenticeships and assistance from the enterprise networks for business start-ups and some improvements in business R and D.
The wide welcome for our undertaking a refresh rather than a rewrite of the strategy suggests that, in the widespread consultation that we undertook, the key stakeholders, including business, the universities and the trade unions, thought that we were on the right lines; it did not suggest that we should go back to the drawing board and start again.
I welcome the decision to produce a refresh rather than a rewrite. I certainly hope that that will avoid any loss of time and momentum, as has perhaps been seen in other areas where rewrites have been favoured.
On page 25 of the document, the spatial dimension is addressed. With specific reference to city regions, the document observes that
"the success of the national economy depends on the economic competitiveness of our city regions."
What steps is your department taking to ensure that our city regions are effectively developed? In particular, I would be interested to know what work is taking place with local authorities and local enterprise companies within the city regions in that regard. What work is under way within the Scottish Executive to look at international comparisons on the extent to which city regions are economic drivers in many of our counterparts in Europe and abroad? What is being done within those other countries to exploit fully the potential of city regions? Lastly, do you have any specific work under way on how the scale and pace of planned developments in our city regions in key areas such as infrastructure development, transportation, land use and planning might be accelerated so that Scotland's city regions and, in turn, our national economy can keep pace with our neighbours?
That is a wide range of questions. I will pick up first on the final question. You asked me specifically about my department, but the important point about the city region idea—the city region being a catalyst for growth—is that it involves more than just the activities of the enterprise agencies, although their role in our key cities is clearly vital. As has been said, planning is also important. The national planning framework that we produced last year puts the city region idea very much in context. Although the framework is not a detailed planning guideline, it sets out the stall; it is the blueprint or route map for other activities.
On the activities of my department—again, however, they also relate to other departments—there are the proposals for the Clyde waterfront, the Clyde gateway and there is the work that is on-going on the Edinburgh waterfront. Those are examples of significant initiatives that involve the public and—importantly—the private sectors in our cities. However, as I said, the city regions idea also includes planning issues and ensuring provision of a proper transport infrastructure. I also think that cities are about quality of life. As the report says:
"Cities represent the focal point for people, production of goods and services, technology development and retail as well as leisure and recreation."
We want to make our cities attractive places and that ambition exists in most portfolios in the Administration. I am not aware that we have commissioned specific research on benchmarking cities against other cities. However, I remind the committee that Scotland was judged to be the UK region of the future in the Financial Times "fDi" magazine's European cities and regions of the future awards, which were announced at the beginning of last October. Scotland was identified as getting many things right and as being attractive as a region within Europe for investment because of a range of things that we are doing, including the work of the enterprise agencies and Scottish Development International and because of a range of other factors.
I think that I am right in saying that Dundee was voted city of the future because of the activity that has gone on there. I am not saying that I do not enjoy visits to other parts of Scotland, but I thoroughly enjoy visits to Dundee. Encouraging things are going on there. For example, there is the academic strength of the University of Dundee—particularly in the life sciences—and that of the University of Abertay Dundee, which is renowned internationally for its games technology. The city itself has done a number of very encouraging things to try to move ahead.
We can look at a number of specifics, but they are not solely within my department's responsibility; they are embraced by all sections of the Government.
The committee understands and accepts that point. Can you clarify, however, whether the leadership role for developing work on city regions falls within the enterprise portfolio? I guess that the work that was previously run in the cities review would come within that category. If such work is done within the enterprise portfolio, how is that drive being carried through across Executive portfolios and departments to ensure that appropriate steps are taken to develop fully the potential of our city regions?
As I said, Tom McCabe has particular responsibility for the city growth fund. There is a ministerial working group on regeneration. I cannot remember all those who are on it, but it consists primarily of the Minister for Communities and me, with input from the Finance and Central Services Department and the Enterprise, Transport and Lifelong Learning Department.
You also asked whether the Cabinet has a sub-committee on cities. The answer is no. As I said, Tom McCabe, as Minister for Finance and Public Service Reform, also has responsibilities for local government and he has the primary role in respect of the city growth fund.
Joint working is highlighted in the document as being key to the success of the strategy. How can the Executive help to encourage more joint working between universities and the business sector beyond that which results from the intermediary technology institutes? Scottish businesses should work with the best research facilities, whether in Scotland or in other countries.
The document also talks about the need to encourage enterprise and entrepreneurship skills. Excellent business education is, of course, provided in our universities. However, calls have been made for a new dedicated business school to be set up in Scotland. What are your thoughts on that?
I endorse the importance of partnership working and joint working, something that is also endorsed in the strategy. Partnership working and joint working between the universities and business is important, not just through the ITIs. Two other measures—SEEKIT, which is the Scottish Executive expertise, knowledge and information transfer, and SCoRe, which is the small and medium-sized enterprises collaborative research programme
Did you say "SEEKIT" or "sleekit", minister? [Laughter.]
Seek it and you will find. SEEKIT and SCoRe are programmes that are principally geared to businesses in the small and medium-sized enterprise sector. The Executive recognises that, whereas global corporations have the capacity to have one or two people whose job is to make connections with universities, smaller businesses do not have the capacity to do so. The aim of SEEKIT and SCoRe is to ensure that interchange is facilitated between universities and SMEs. We recognise that, although small businesses have good ideas, without help they do not have the time or resources to follow them through with the universities. The programmes are one way in which we are trying to help in that regard.
The universities are to the fore in taking the initiative and engaging with the business community—after all, universities are also looking for resources. Although the 2004 spending review settlement is very beneficial to our higher education sector, universities would be the first to accept that state funding is not their sole source of funding. Universities know that they have to go out and win contracts and to engage better with the business community. I meet regularly with university representatives and am encouraged by the fact that they are doing that. Universities are proactive in trying to promote their activities to the business community. In terms of entrepreneurship, in the past we have discussed "Determined to Succeed: Enterprise in Education" and the importance of promoting entrepreneurship in our schools in particular.
The issue of a dedicated business school has raised its head on a number of occasions; I have asked officials to prepare some work for me so that I can decide whether we ought to go down that road. The initial feedback that I have received is that the case for such a school is doubtful. That said, we should not turn our backs on the possibility.
Before I bring in Christine May, I ask her to make a declaration of interests.
I apologise to the convener, committee members and the Deputy First Minister for my late arrival, which meant that I missed item 1.
I have two new interests to declare, the first of which is my appointment to the board of Community Enterprise in Strathclyde, which is a not-for-profit organisation that deals with community regeneration in the social economy, but not only in Strathclyde. I spoke to the local member before I accepted the position.
Secondly, I declare that I have been co-opted as a board member of the East Fife Football Club Supporters Trust. I hope that all members—including the Deputy First Minister—will join me in wishing the club success tonight in its replay match against Dunfermline Athletic.
We will not ask you who you went on holiday with in case you have any other interests to declare.
I stayed at home in Fife. I will take members' silence as tacit support and pass that message on to the club.
In 2001, I believed that "A Smart, Successful Scotland" was the right medium-term to long-term strategy for Scotland; I still believe that. I include the ITIs in that. However, at the time I was a member of the Scottish Enterprise board and I expressed concern about the ability of local enterprise companies to be flexible at the margins where matters might be particularly appropriate to local economies.
My question follows on from Susan Deacon's question about the city regions. I support those because our cities are the hubs of the economy. However, the peripheries of those city regions are also important. Although it is not directly referred to in the document, I would be grateful for the Deputy First Minister's assurance that there will continue to be flexibility in generating a renaissance in the economies of peripheral areas, such as mine. Of course, it is not just my area that is affected; parts of Glasgow are just as badly affected by long-term unemployment as is Methil.
I am happy to give that assurance. Although in response to Susan Deacon's question we quite properly focused on the cities and the fact that they could be catalysts, that must not happen to the exclusion of other parts. One of our objectives is wealth creation; the benefits of growth should be experienced in all parts of Scotland.
I draw Christine May's attention to page 10 of the document, which states:
"The Networks must continue their drive for consistent and high quality business support within their areas. They must also continue to allow for discretion in addressing local opportunities and needs."
I hope that the words and their spirit address Christine May's concern. I add that if East Fife wins tonight, then beats Celtic, and is drawn against Dundee United, which won last night, I am sure that the committee will be interesting.
In a couple of responses you mentioned the importance of partnership arrangements and of organisations working together. The document covers that in the section on success through partnerships, which lists several different organisations and bodies that could be involved in such arrangements. A number of the suggested partnership organisations strike me as being fairly obvious, such as the higher education institutions and so on. However, a couple strike me as being not so obvious, for example the quality organisations and the cultural organisations such as the Scottish Arts Council. What is being done to ensure that organisations that might not consider that they have a role in the strategy are aware that they should be actively promoting it, and will you give us examples of what is happening on the ground?
I will explain why I believe that both sets of organisations are relevant. I return to my answer to Susan Deacon on the city regions and the culture and recreation opportunities in them. Culture goes hand in hand with successful economic development. It is not only that jobs can flow directly from activities that have a culture dimension; we are also trying to attract people to Scotland, or to particular locations within Scotland. One of the attractions might be that a place has a vibrant cultural life. There is therefore a role to be played by the various cultural organisations.
There are also the equalities organisations, in respect of which I return to what I said about employability. The equalities organisations reflect the fact that Scotland will maximise its potential and individuals will maximise their potential if they are given the opportunity of employment and can participate in the life and work of their communities. Therefore, I believe that the various equalities organisations can be important partners in trying to ensure that the barriers that have been identified that prevent people from being able to take their place and to move forward in the workplace can be eliminated. Gender equality organisations have a role to play in addressing the question of gender equality—the role of women in the workplace—and in trying to ensure that there are more business start-ups among women. You will note that, at the end of the section that you mentioned, we say:
"we will ensure that the role of … NDPBs (non-departmental public bodies) and agencies in contributing to"
the implementation of a smart, successful Scotland will be
"reflected in strategic guidance and corporate plans"
that the Executive agrees with the NDPBs.
I have two or three questions for you on "A Smart, Successful Scotland", the first of which is on private sector research and development. As you know, although some progress has been made in the spend on private sector research and development—it is now running at just over £600 million a year—we need to double that to achieve the Executive's strategic target of having the same percentage of our national income spent on private sector R and D as is spent by our competitors. On top of what is being done, which shows some improvement in the situation, we need a step change in the level of investment in private sector research and development. How are we going to achieve that?
I accept the importance of that question. It is welcome that we have improved the situation, but I accept that a significant step is needed to take it further. I am not going to pretend that I have the answer to that; however, I assure you that I have been having serious discussions with officials about the kind of levers that we have and the incentives that are needed.
Most recently—although I suspect that this is not yet reflected in any of the figures—we have introduced R and D plus, which is a grant scheme operated by Scottish Enterprise. I think that I am right in saying that Rhodia Pharma Solutions Ltd in Annan—I was there in August last year—was the first company to receive money from R and D plus. It is a relatively new scheme that has the support of the European Commission, and it can focus on R and D needs, especially in large companies, without regional selective assistance, which almost invariably must have jobs attached to it. I am not going to pretend that R and D plus will be the answer to all the problems, but it is a measure that we have introduced to address them. I accept that there is more to be done and I assure the committee that my officials and I are considering what other incentives can help.
My second question is a related question about mobile inward investment. We all accept the fact that the days of the large manufacturing assembly plant are over, by and large, given the competition from the far east and eastern Europe. Nevertheless, there are many attractive projects related to research and development that do not necessarily involve a large number of jobs but which involve a large amount of wealth creation, intellectual skill and so on. Are you satisfied that the incentives that are available in Scotland for that kind of foreign direct investment project are adequate?
R and D plus was introduced to address that. As I said in answer to the previous question, I am not going to pretend that R and D plus is the whole answer; however, it was a specific response to that specific issue. We must see what other measures we can introduce.
For companies that are looking to invest in research and development facilities, one of Scotland's attractions is the quality of our workforce, especially in areas such as the life sciences and the most sophisticated electronic technologies. I am told—I am very pleased to hear it—that the quality and skills of our graduates and skilled workers who do not have a graduate qualification give Scotland an edge.
I will not name the companies, but when I told an indigenous company that an inward investor had told me how satisfied it had been in its early days in Scotland because of the quality of the graduates it had employed, the representative of the indigenous company told me, "Yes, they took three of ours." Joking apart, in the spending review, the Executive made an important investment in higher and further education.
Do you benchmark the effectiveness of our incentives for FDI projects against those of our competitors in other parts of the European Union?
I am not sure that "benchmark" is the right term, but we always try to see what other countries are doing. I was recently told that the French could produce a package that was much better than ours and, as always, we followed that up. The matter is rarely as straightforward as that, but if we get intelligence, we follow it up. Part of Scottish Development International's work—which it does well—is to keep in touch with companies, particularly those that have interests here. That does not happen only when a particular project is up for grabs; SDI tries to find out from companies what their investment strategies are and when it hears that another EU country can offer X, we are pretty quick to find out more detail about that.
We often hear from the business community that Scotland needs a level playing field. That comment is usually about business rates, but I want to widen out the issue to include matters such as transport costs, the costs of accessing markets and labour costs. Has the Executive undertaken an exercise to examine whether Scotland is on a level playing field or what we can do to create a level playing field?
The closest we have come to that in recent times was in the work of the manufacturing advisory group, which examined comparability of business rates. A preliminary investigation shows that such a comparison is of limited use because some of our competitor countries have a different approach to business taxation and do not tax property as we do through business rates. Therefore, we examined the range of corporate taxation using a measure that the Confederation of British Industry used in submissions to HM Treasury, which included an element of transport costs. The study showed that although we lag behind some competitors, over the piece Scotland is above—in the favourable sense—the EU 15 average and had a competitive advantage over a number of EU countries. I am not sure whether that information was passed to the committee at the time, but I more than willing to make it available now.
That would be useful.
For my final question, I obviously have to ask about the reports in The Herald and The Scotsman this morning about a study that Scottish Enterprise commissioned. There were many interesting quotes that related to "A Smart, Successful Scotland", but I will pick a couple. The Herald quoted the study as saying that
"This low-value service bias combined with a large public services sector is not likely to produce a globally competitive knowledge economy in Scotland."
The Scotsman said:
"The researchers say Edinburgh is the only place in Scotland able to act as a strong magnet for migrants and that the whole of the country, except Glasgow, needs better transport links with the rest of the UK."
Given that the study was commissioned by Scottish Enterprise, have you had time to read it?
I have read reports. The study was also well trailed in the Financial Times yesterday. My answer is that that is why we have the smart, successful Scotland strategy. No one could challenge the fact that the thrust behind a smart, successful Scotland is the aim of building a high-value activity and knowledge-based economy.
The quote that I saw in yesterday's Financial Times was a travesty of what the economic strategy is about. It suggested that the only thing that we are interested in is tourism. Let us get this right: tourism is an important industry for Scotland. Given the growth in world tourism, we would be daft to miss out on it. Traditionally, tourism has been associated with lower-paid and lower-skill jobs, but I am sure that, given his previous engagement with the issue, Mike Watson would agree that it is not only about growing our tourism market share. Tourism must also become a sector of our economy in which we place far greater emphasis on skills and training than we have done so far. The tourism strategy that the Executive announced last year made great play of the fact that improving skills and training is an important strand.
No one can suggest that we are focusing on a low-skill service-based economy if they examine the areas that we are focusing on, such as ITI Techmedia, ITI Life Sciences and ITI Energy, and our promotion of quality food and drink. Indeed, the thrust of a smart, successful Scotland is a recognition that Scotland's competitiveness and future economic well-being are linked to how we develop and promote high-value and high-skill jobs and industry.
We all agree that that is all going in the right direction, but the issue is scale and impact. According to the Scottish Enterprise report, we still do not have the scale to get the impact that we need to turn round the Scottish economy and get it up from 36th to the top 10 of competitiveness.
As I said in answer to an earlier question, the strategy will not bring us the hit and the headline tomorrow. That does not mean that we should not implement it. Perhaps one of the problems is that we did not do it earlier.
We have had a pretty tumultuous 40 or 50 years. Dare I say, convener, that when you and I were at school what we were taught about Scotland's economy was based on the staple industries of shipbuilding, coal and steel? We have seen the first major transformation, and it has been a huge upheaval. In the 1980s and 1990s we had the inward investment that was referred to previously, with the establishment of large-scale production plants, many of which were linked to the electronics industry. Scotland has not been alone in experiencing the downturn in that industry—far from it—which has caused further upheaval. We are not going to create the successor to that situation overnight, but the strategy shows that we are going in the right direction and it highlights our areas of acknowledged expertise and excellence. We have to build on that. The strategy can provide the required scale of success in the future.
It would be useful if we could get access to the Scottish Enterprise report, because it will contain a lot of factual information.
You can see it. I am informed that it is on the internet, but that is probably the last place to look if you want to find something.