Chamber and committees

Good morning, minister. Thank you for attending the committee today.

Before I ask my questions, I want to take this up a level. A multitude of figures are being bandied about on exactly how much finance is required to enable the just transition and the changes that we need to make. The figures are quite eye watering, and it is generally agreed that, globally, we are nowhere near that amount.

However, in the Scottish context, the Climate Change Committee report points out that many relevant powers that are related to areas such as funding, finance and product standards are reserved. Therefore, my question to you is this: are you getting the support that you need from the UK Government in supplying that level of funding, or are you having to take that out of the fixed Scottish budget, which obviously has nearside time parameters in terms of planning? How is the funding that you are able to realise being managed and actualised?

In its report, the Climate Change Committee called out risks that are down to UK Government action or inaction around low-carbon heat in existing homes. It made reference to “details of market-based mechanisms”, associated funding and so on.

I want to explore the £500 million just transition fund a wee bit more to get a bit more flavour of how the Government is able to release the funding and protect it, given the constraints and the real-terms cut in its budget. Can you give us a bit more information about that to help us understand some of the challenges related to that fund?

You have given us a lot of flavour. Being given more money is one route, but are you hearing the calls from across the Scottish Parliament for vastly increased borrowing powers for the Scottish Government—such as there would be for any normal Government that might want to undertake ambitious policies—so that we can crowd in private sector funding?

We all agree that no Government will be able to entirely fund what is needed, and that Governments will need to crowd in private sector funding, so are you hearing, in your private discussions, the agreed calls from across the Parliament for extra borrowing powers to do that sort of activity? You might not be able to disclose that.

I am sorry if I sounded as though I was having a pop at you, David; I totally appreciate that your expertise cannot cover everything. Perhaps, though, we can fold the issue into future sessions, because the fact is that, although we are talking about what feel like quite big numbers, they pale into insignificance when we look at the whole gamut. You are correct in what you have said about cuts to HMRC, which suggests that the issue will get only worse, rather than better. Although you are right that this is a global issue, the UK is well up the league table for this; I think that it is the second most corrupt country in this regard after the US, although people might argue about that. That is important, because we tend to look at what we can see rather than guess at what we cannot see, which is growing at a rate of knots.

Going back to the convener’s point about the Office of Tax Simplification, I note the big numbers that have been bandied about—the £6 billion black hole in the finances, the fuel duty escalator and £10 billion per month on debt interest. The National Crime Agency estimates that about £100 billion each year is lost to the UK as a result of money laundering while—although figures vary here—roughly £190 billion is lost every year, because of fraud.

The scale of those figures is staggering. Might the IFS consider looking more actively at that, given that we have almost a shadow economy running? The UK Government appears to have no appetite to tackle it; indeed, it is getting rid of the Office of Tax Simplification, even though it is the complexity in the tax system that provides the wriggle room for those startling losses to UK GDP. I am surprised to hear that neither of you has followed up on the plan to get rid of the Office of Tax Simplification.

I am honoured to open the debate, which celebrates small business Saturday.

I encourage everyone to support their local small businesses, which are the heartbeat of our local communities. The small business Saturday initiative is a grass-roots campaign that is in its 10th year and is sponsored in its efforts by American Express. I am sure that most MSPs will meet local small business owners and employees on Saturday, as I will. We should tell them that we will increase our efforts to give them a voice and to support their endeavours in the coming year.

I will come to acknowledge the importance of small businesses in economic and employment terms later, but I start by acknowledging their social impact. Indeed, before the term was invented, many small businesses had been contributing hugely to the wellbeing of society in general and local communities in particular, whether through supporting local charities and providing general advice to customers, or just through being the friendly presence that is willing to listen to people in need. The human face of small business provides incalculable support in local communities.

As a member of the Economy and Fair Work Committee, I was pleased to see the launch this week of our committee report—“Inquiry into Retail and Town Centres in Scotland”. To put it bluntly, most town centres in Scotland would quickly die without the active presence of local small businesses. However, the latter are placed at a huge economic disadvantage far too often, compared with large businesses.

To emphasise another point that is often missed, I note that although some large global businesses that have a Scottish presence can move their money around and take advantage of tax havens, local small businesses typically pay their taxes. That means that the proportion of income tax that is paid in taxes is often much greater for small and medium-sized enterprises than it is for many global businesses, which places the former at an added trading disadvantage. Many members who are taking part in the debate will know of small businesses that have struggled in recent years as the pandemic affected them, and whose owners have been taking out of their businesses significantly less than the minimum wage—yet, they continue.

With regard to the wider economy, some small businesses are part of a much larger critical supply chain. We often forget the breadth of small business services. Small businesses span a huge variety of activities—for example, operating a taxi, providing private nursery and childcare services, being the local sparky or plumber, working their croft, providing specialist research services, being the local lawyer or accountant, and often making better and cheaper coffee than the big chains that do not pay their taxes. The list goes on.

Although small businesses often serve larger businesses, too often that is not reciprocated. Many small businesses face late payments from larger businesses and owners sometimes find it difficult to access affordable loans from banks to invest in their business. Too often, the relatively small sums that they need to access are not on the radar of lending houses. Despite that situation, SMEs are critical to the economy.

A Scottish Parliament information centre briefing called “Scotland’s Business Base—Facts and Figures” has indicated that sole proprietors, owner-manager and employee-director companies

“accounted for 70 per cent of”

the 364,310

“private sector enterprises in Scotland”

in 2020. They employ thousands of people in every constituency in the land, and they are often long serving in local communities: in some cases, they are family-run businesses that span generations.

Small businesses have been critical, too, in helping communities to cope with the many privations that the Covid-19 pandemic created. Simple things, such as delivering local groceries to old-age pensioners while checking that they are alive and well, have more than an economic impact.

We all face the cost of living crisis; that is no less true for small businesses than it is for individuals. However, some people seem to imagine that businesses have it easy in comparison with individuals, but that is not true. Inflation is a common and deadly enemy. We have a cost of living crisis and a cost of doing business crisis, both of which are effected by the same enemy.

Some specialist small businesses are trying to support our economy by trading internationally, but they are finding that things have been made immeasurably more difficult because of Brexit and the barriers that have been erected to trading in Europe. The international reach of many small businesses has been critical in keeping open our window to the world. We must ensure that our trading policies reflect the realities that small businesses face. They do not have the luxury of saying, “Brexit is behind us”, because it is not, for them. They are living through the catastrophe that is Brexit to this day, and will have to do so into the future.

As parliamentarians, we must always do more to support our SNPs—I mean, SMEs—and recognise their worth in our constituencies. That was a Freudian slip! We must listen more to their problems and act to support them in difficult times.

I am very much looking forward to hearing other members’ speeches, and I thank all the members who signed my motion. As I close, Deputy Presiding Officer, let me do so by sending out our heartfelt thanks to the thousands of small businesses in my constituency, Falkirk East, and across Scotland that are so critical to the economic and social life of our local communities.

I am thoroughly enjoying Willie Rennie’s discussion about federalism while fully disagreeing with him. I gently point out that federalism would not in any way address the issues that he highlights around the cost of living crisis, as it does not enable the critical macroeconomic powers that are needed to grow our economy.

When speaking at this point in a debate, it is often difficult to add something fresh, but I will endeavour to do so.

I must comment on how empty the Conservative benches are. Can Conservative members not bring themselves to come here to defend their policy?

One might have imagined that the UK Government would have learned something about the risks of cliff-edge legislation, but it appears that it has not. The Tories are making the damage of Brexit worse and, regrettably, the Labour Party has become their pro-Brexit handmaiden.

I, like anyone who has been paying attention, am deeply concerned about the implications of the Retained EU Law (Revocation and Reform) Bill, which is taking us down a Tory blind alleyway, with scant regard for standards and protections and for businesses being able to trade effectively.

The sunset date—or drop-dead date—of 31 December 2023 means that, unless the UK Government or the Scottish Government and its respective Parliament review individual pieces of legislation and make amendments, existing legislation will cease to have effect. The scale and complexity of what is involved is staggering, and effective implementation is quite simply impossible in those timescales.

As has been mentioned, the recent letter that was signed by trade unions, the Institute of Directors and others notes:

“It is unclear how the UK’s governments and parliaments will cope with the vast amount of legislation this will involve … There is a huge risk of poor or potentially detrimental law entering the statute book.”

Other commentators such as the Hansard Society have also made their concerns clear. It has determined that the bill represents a complete abdication of the scrutiny responsibilities of the UK Parliament.

The UK Government has suggested that there would be no fewer than 2,400 pieces of legislation involved, spread across 21 areas of government, but it is worse than that. We should note the comments of Brendan O’Hara MP during the bill’s committee stage. He said:

“no fewer than 1,400 other pieces of legislation have been discovered, and goodness knows how many more are yet to be identified. If the Bill passes unamended, all those will be added to the almost 4,000 existing pieces of legislation that will be sunsetted in 13 months’ time. Why on earth did the Government set such an arbitrary deadline for themselves?”—[Official Report, House of Commons, Retained EU Law (Revocation and Reform) Bill Committee, 22 November 2022; c 94.]

Of course, huge swathes of the bill involve areas of law that are devolved to our Scottish Parliament. The Hansard Society notes that the bill

“encompasses a range of policy areas which are within devolved competence, including agriculture, culture, education, environment, fisheries, health, housing, rural development, tourism and transport.”

The process by which powers can be used by a UK or Scottish minister is not clear, and the bill has no provision on what should happen in cases in which a UK minster alone decides to pass secondary legislation in an area of devolved competence. The UK Government’s impact dashboard does not even differentiate between reserved and devolved powers. The fact that the bill is being described as

“creating a framework for these conversations to be had”

shows that there has been completely inadequate planning. Yet again, the UK Government is failing to deal with the Scottish Parliament with respect.

The incoherence continues. For example, only UK ministers are given the power to extend the sunset deadline, but the power to remove the sunset entirely is granted to both UK and devolved ministers. How exactly will that work and give certainty to businesses and the legal profession?

The bill will make worse the already difficult complexities that have been created because of the interaction between divergence from the EU, the devolution settlements and the operation of the imposed internal market act. The final committee stage is being held at Westminster today, but we already know that the Tory Government has rejected a series of amendments that have been tabled.

All that is a nightmare for many sectors, and it invites chaos for many areas, from employment law to health and safety and all else in between. It is legislation that is aimed not at creating stability but at vastly increasing uncertainty, and which is aimed not at making trade with Europe easier, but the precise opposite. It is little wonder that the Hansard Society has said that there are serious implications for the future of the union. At least that is one area where we know what the answer is—Scottish independence in Europe.

I just want to put on the record that I note the presence in the gallery of my constituents Wendy and Ian Thomson, who tragically lost their daughter at a very similar age to the age that my daughter is now. I applaud and salute their bravery and efforts in cascading and getting out information about this tragic disease.

I welcome the debate, which my colleague Paul McLennan initiated in response to the Fraser of Allander Institute’s report, “The Economic Impact of Scotland’s Renewable Energy Sector”.

I, too, have been concerned for some time about the weakness of data collection in relation to Scottish business and the economy, so I am glad that the issue features in the report. I also acknowledge that, although there are reasons to be impressed by the progress that has been made in Scotland, such as the 27,000 jobs and £5.6 billion of output that have been mentioned, the data provides no grounds for complacency. There remains much to be done, and I add my voice to the calls for more utilisation of solar energy, among others.

A recent analysis from Landfall Strategy Group indicated that the prospects for the renewable energy sector are huge and that the current output could eventually be dwarfed. Indeed, the potential is there for the sector to be economically even more significant than the oil and gas sector if policy development is effective, investment is supported and focused appropriately, and the necessary supply chains are developed.

It would help if the Scottish Parliament had the comprehensive range of powers that is needed to address all the matters involved. Currently, fundamental powers, such as those relating to taxation policy, energy policy and the ability to borrow to invest are located at Westminster. Imagine what could be done if all parties here agreed that those powers over Scotland’s renewable energy future should be vested here for the benefit of Scotland.

Given that much has still to be done, I would like to introduce an important area that has been mentioned, which relates to data definition and collection requirements. In that context, I agree with the Nobel laureate Joseph Stiglitz, who wrote in 2019:

“Getting the measure right is crucially important. If we measure the wrong thing, we will do the wrong thing. If our measures tell us everything is fine when it really isn’t, we will be complacent.”

If we are truly interested in impact, it is not good enough to simply extend what has historically been gathered in other sectors and then do the same for the renewables sector. We need to develop and capture new metrics that encourage wellbeing.

Also, as I have consistently argued, we need impact data disaggregated by sex. I can see no reason why the creativity and dynamism of women should not feature strongly in the renewables sector. Capturing the right data will be only the start of ensuring that women are at the heart of the just transition in the sector as it develops.

Some people have argued that part of the problem is that the renewables sector is seen as a market rather than a sector in its own right. Tragically, we have been reliant on data gathered for other sectors—from construction to professional services, forestry and shipping. Therefore, we must collect the right data to inform policy making. I agree with a similar view expressed by members and Scottish Renewables.

In data collection and in ensuring that women and wellbeing are at the heart of all policies, we have a joint mission ahead to which I look forward to contributing.