Chamber and committees

I will direct my opening question to Chris Brodie. I was heartened to read the submission from Skills Development Scotland, because it makes clear the differences between skills gaps, skills shortages and labour shortages. In my opinion, such distinctions are vital if we are to understand the people element of supply chains.

We have already started to explore skills gaps and shortages, and other members might want to ask about those issues. I want to talk about labour shortages. In your submission, you note that labour shortages occur due to there being too few bodies, which could be down to issues of demographics, economic inactivity or reduced inward migration.

I want to understand, on an evidential basis, the specific impact that demographics and a lack of inward migration are having, and which issues that can be perceived as structural we need to address. I would like to know where we are right now, and I have another question about where we will be in the future. What is your opinion on where we are now, and on why we are there?

Lastly, I am sure that the B word—Brexit—might come into it, but I want to understand whether, without inward migration, we can have enough bodies in Scotland.

In that case, I will move on to my other area of questioning. I have read the excellent report that Paul Little produced with Audrey Cumberford, and I have a couple of questions about it.

You make a very clear case for focusing on excellence rather than competence and, with regard to WorldSkills, I understand that, as well as being a competition, it develops international standards and therefore enables international benchmarking and increases the competitiveness of the contributing countries. Is that correct? Can you tell us more about the thinking behind the move from competence to excellence that you outline in your report with Audrey Cumberford?

Yes. I want us to be very specific about the difference between skills gaps, skills shortages and labour shortages, and to understand where we are now with structural issues as far as labour shortages are concerned. As a result, it would be helpful to get on the record and in evidence what you are actually seeing in your area.

On a point of order, Presiding Officer. My application failed. I would have voted yes.

I speak as someone who, for many years, has been concerned about banking in general, and I draw members’ attention to my entry in the register of members’ interests: I remain an ambassador for the all-party parliamentary group on fair business banking at Westminster. I am grateful that, for once, I can make a positive speech about an important aspect of banking that is helping investment and business, that is focused on the future and that is building success.

The SNIB has three bold ambitions, although some would say that they are too ambitious and will be difficult to achieve. I agree with the latter, but, for me, the former—while boldness and audacity of ambition can only ever be striven for—is exactly the point.

We can already see that, in its first year of operations, the SNIB has been pursuing its guiding missions and strategy to real effect. That is a tribute to everyone involved. Scottish Financial News reports that, in its first year, the bank has agreed deals that are worth an estimated £160 million across eight projects. Five of those are focused on contributing towards net-zero developments, two on harnessing innovation, and one on building communities. It would have been understandable if the first year of operations was focused solely on building institutional capacity and engagement, so such early investment in support for critical areas is to be greatly welcomed.

We all know that the model that is required for patient capital is different, as is attitude to risk. During the debate, perhaps we will be able to focus more on that when we look at the work of Scottish Enterprise in comparison to that of the SNIB. Since patient capital is about investing for the future, it is likely to be some years before we can properly measure the effect of the bank’s investment strategy.

I am sure that I am not alone in being heartened by an open declaration of ethics and good governance, as they encourage institutional behaviours that rest very easily with our financial tradition in Scotland. It is important to emphasise the ethics around the SNIB. However, such progress brings its own challenges. In the light of COP26 and in considering the needs of the Scottish economy, there is so much that we need to do, particularly in relation to our net-zero ambitions and supporting innovation.

I note the comments of Willie Watt, the bank’s chairman, when he spoke in Glasgow at COP26. I think that we will all have heard this, but, for the record:

“The Scottish Government has given ... a promise of £2 billion over the first ten years of the bank’s life. It is insufficient to crack the missions. We need to be able to raise third-party capital and we want to earn the right to borrow on our own balance sheet.”

I agree with that statement. Given the lack of real borrowing powers available to the Scottish Government, it is in some respects remarkable that it has had the foresight to make such medium-term funding commitments. However, had we a much more effective and appropriate fiscal framework in operation—or, indeed, if we were independent—we would be able to borrow to invest and to do so much more.

Briefly, I hope that, in her closing remarks, the minister will be able to reflect on the following questions. Does the Government agree with Willie Watt that, to achieve the bank’s mission, we need to be able to develop its ability to raise third-party capital? She may want to reflect further on leverage. Does the Government agree that, in renegotiating the fiscal framework, it is in Scotland’s interests to ensure that the Government has significantly enhanced borrowing powers, in order to enable further Government investment in the SNIB?

I applaud the early work of the SNIB and look forward to the stage at which it will have been merely an hors d’oeuvre for a more substantial course in the future.

On the issue of risk, we know that, habitually, there is often a problem with the attitude of main high street banks to risk. We should reflect carefully on where the SNIB can contribute, and I would welcome Murdo Fraser’s comment on that point.

My second and last question is for Paul Hunter and/or Professor Simms. It is a slightly cheeky one. It strikes me that we do not have that many people who understand supply chains. Even so-called supply chain directors might just be logistics specialists or procurement specialists. That is my perception. Does Professor Simms or Paul Hunter have a view on that? Do we fundamentally have too few people who understand what supply chains are, given our background of being in Europe?

Thank you.

As a final word, do you have anything to add to that, Paul?

Thank you. Needless to say, I strongly agree with you. I see that Paul Hunter wants to come in.

That is a very good point.