Chamber and committees

Many big employers in Scotland are doing a lot. We work closely with all of the business associations and organisations in Scotland on those agendas.

Small businesses and some medium-sized businesses might face some challenges. Clearly, we have to work with them so that they realise that there is a lot more that they can do. It is obviously easier for big organisations, such as banks or supermarkets, that have various departments and resources to devote to that work, but small and medium-sized businesses could do a lot more, too. We are trying to focus more on that.

We are doing more. That is why we will imminently publish the refreshed fair work action plan, which I mentioned earlier. The idea is to encourage employers to become fair work employers, which means being flexible, including by offering flexible hours and implementing other measures, such as: giving employees a voice in the workplace; employing people for a minimum of 16 hours per week so that they have a decent income to make it worth while; and paying the real living wage. There is more to do on the real living wage, although we are doing really well on that in Scotland just now: 91 per cent of people in Scotland are paid the real living wage, which is above the rest of the UK by a reasonable margin.

The fair work agenda is important with regard to this debate, particularly in relation to attracting people in the older age group who might have taken early retirement and who have since had a change of heart or are keen to do a few hours here and there. At a time when we are facing labour shortages, we need employers to be more open-minded, become fair work employers and offer more flexibility to suit the needs of older people and, indeed, other parts of the population. It is not just about older people, but there is a bit of an untapped resource there that we should look at as a country. That is all part of the fair work agenda.

We have a diverse economy—that is just a fact—but most employers, if not the vast majority, have the ability to be flexible. I meet more and more employers who are becoming more open-minded and are offering more flexible conditions and hours of work. Perhaps other members are meeting such employers, too.

The world of work is changing. The pandemic has played a big role in that with working from home, hybrid working and much more flexible work that takes people’s circumstances into account. Employers are also much more inclusive.

We fund a number of projects and initiatives to help employers consider how they can take on more people with disabilities, adapt their workplaces and so on. We also fund Flexibility Works, an organisation that promotes flexible working. Various projects are being funded at the moment to push forward all of those agendas.

As you will be aware, there has been an expansion of resources for mental health in Scotland and a reprioritisation. As you rightly said, mental health and chronic pain are the two underlying causes of the figures around long-term illness and inactivity rates in Scotland. A lot of help, which is funded by the Scottish Government, is made available for employers in Scotland to call on to help people with mental health issues, and other issues in relation to occupational health, get back into work.

It is very difficult for us to pinpoint because, as I said in my opening remarks, every person’s situation is different, whether we are talking about people with disabilities or people with mental health or chronic pain issues. They also quite often have multiple issues, which is why they are long-term inactive.

Alastair Cook might want to contribute to that, because his specialism relates to mental health.

Sure.

It is an issue. I have come across it in my constituency, and I am sure that it is an issue throughout the Highlands and Islands. We have started discussions on that internally and with the further and higher education sectors. We probably have a bit more work to do with the private companies, because we are finding that the big players are sending technicians and engineers up from the central belt to rural areas, but they are less likely to do that if there are only a couple of jobs, because of the travel and time issues. Ironically, many of the areas where there is more fuel poverty are in the north of Scotland, so that area should be prioritised. We have to address that issue through our skills system and education system, and there is a bit of work going on on that.

I thank Fiona Hyslop for raising that question; it is pertinent to today’s report from the Climate Change Committee, in that it reminds us that many of the steps to get to our net zero targets lie with the UK Government taking the right decisions and not just the Scottish Government, because we do not hold the powers over all the issues.

It is also worth saying that the Acorn project is not just a project for the north-east of Scotland; it is also relevant to Grangemouth, for instance, which we discussed recently. It is a crucial project and, as Sir Ian Wood said, if I remember correctly, not giving the go-ahead for track 1 status for the Acorn project for Scotland is like a football team leaving its best player on the bench. Portugal did that last night and got quite a good score despite it. However, the principle is valid because the project is vital for not only Scotland, as Fiona Hyslop says, but the rest of the UK to achieve its net zero ambitions.

I was at a meeting of the North Sea transition forum in London a few days ago. That forum is chaired by the UK minister and I attended on behalf of the Scottish Government. Of course, everyone travelled down from Aberdeen but, unfortunately, the UK minister had to go and answer an urgent question and was not at the meeting, so we had an Aberdeen gathering in London. That is one of the things that we have to deal with.

Someone said at that meeting that we are in danger of making the same mistakes as we made before. We have a massive opportunity to do the right thing and create jobs and new industries, but we are taking too long to make the decisions, so we might lose out. We might not be first mover and other countries will get ahead of us.

The UK Government has to treat the matter with a lot more urgency. The Acorn project must be given the go-ahead. It is critical. The Scottish Government has put £80 million on the table to help meet some of the project’s demands and work with the UK Government to get the go-ahead for it. There is constant communication and correspondence between Michael Matheson, the Cabinet Secretary for Net Zero, Energy and Transport—as well as, I think, the Deputy First Minister—and the UK Government on Acorn, so I hope that we will soon get the green light for it.

I have a photo on my phone—I will not show it to the committee—of me, after a recent visit to the St Fergus gas terminal, standing next to the pipeline that is ready to take about 30 per cent, if I recall correctly, of Scotland’s emissions to the Goldeneye field and store it in an empty reservoir, recycling part of the oil and gas industry’s infrastructure. However, we just cannot get the go-ahead. We have the infrastructure in Scotland that is ready to use. We are ahead of the rest of the UK in that regard. We also have the academic expertise based in Scotland. Therefore, it is vital to go ahead.

The final point that I will make concerns jobs, which is the just transition part of the issue. We were told that, from 2022 onwards, we could create up to 15,000 jobs, going up to about 20,000 jobs by 2013. That is a lot of jobs. For instance, it is a big percentage of the jobs in the oil and gas industry in the north-east of Scotland just now.

This is about jobs and achieving our net zero targets.

Good morning to the committee. I am delighted to have my first opportunity to come along and speak to you in my role as the just transition minister with responsibility for employment and fair work, as well. I look forward to this morning’s engagement. I am pleased to have the opportunity to make a few opening remarks, to set the scene from the Government’s perspective.

Public understanding of a just transition is, I hope, increasing. Nonetheless, I think that we all accept that there is still a long way to go. For me, a just transition is about the benefits to the Scottish economy, to jobs and skills, and to affordability—particularly, in this day and age, for those who are least able to afford the changes that we will require in the years and decades ahead. It is also about tangible benefits for Scotland’s communities and people and ensuring that we achieve the fairest possible transition between now and our net zero targets for 2045.

A just transition to net zero will be challenging, as is all change. In Scotland, we have seen damage caused by rapid structural changes in the past. As the committee is aware, many of our former coal mining communities are still feeling the impacts of what was inflicted on them 40 years ago.

We have a fantastic opportunity to harness Scotland’s resources, and there is no doubt that the opportunities that we face are vast. To give a couple of examples, we have the potential to produce 5GW of hydrogen in Scotland by 2030 and 25GW by 2045. To put that into context, 5GW of hydrogen is approximately 15 per cent of current energy use in Scotland. Establishing Scotland as a leading producer and exporter of green hydrogen could also support up to 300,000 jobs and contribute up to £25 billion to Scotland’s gross value added by 2045. Across the United Kingdom, 31,000 jobs have already been created in offshore wind, 30 per cent of which have been created in Scotland. Those are some signs of the progress that can be made, and which is being made.

At the heart of the just transition is a commitment to a planned and managed transition to net zero, as was stressed by the first Just Transition Commission in its report. Having accepted the recommendations of the first JTC, we are now developing just transition plans for key sectors in Scotland.

The energy strategy and just transition plan for energy will be published soon. We will set out a road map for delivering on our energy ambitions for 2030 and will lay out our vision for Scotland’s future net zero energy system. We will also develop a place-based plan for the Grangemouth energy cluster, working with important partners including the Grangemouth future industry board.

We are beginning to develop sectoral just transition plans for land and agriculture, transport, and buildings and construction. I confirm today that we will publish outline plans for those three sectors next spring in order to support a period of intensive co-design of the policy detail for each of them. Those outline plans will include draft outcomes for each sector and initial policy suggestions to work towards those outcomes, and they will set out some of the key issues that co-design will have to address. They will also set out an evidence base to underpin each of those plans. They will help to deliver net zero in a way that is fair for all and ensure that the cost of the transition will not disproportionately burden those who are least able to pay. We have already expanded programmes such as our Home Energy Scotland service to support those who are most impacted by the cost crisis.

Good planning can provide the certainty that communities, businesses and workers need during this period of change, and our approach to just transition puts co-design at the core of planning and policy. Over the summer, we engaged with almost 1,500 people to develop our draft energy strategy and just transition plan. That included face-to-face workshops, surveys, digital dialogues and community events. As I mentioned, we will also have a huge period of engagement and co-design next year to support the development of all the other just transition plans that I mentioned are coming. It is really important that people are able to shape those plans, because, without societal buy-in, it will be impossible for us to reach net zero in a fair way.

We know that some parts of Scotland are already transitioning to emerging industries. That is most pronounced in the energy transition, especially the transition of our oil and gas industry. The industry has provided economic opportunity and high-value, high-quality employment for more 50 years, especially in the north-east. It has become a vital cultural touchstone for many communities, which is not dissimilar to the role that coal mining played in many places across Scotland in the past.

However, it is a declining resource, and we have a profound and urgent responsibility to accelerate to the fastest possible just transition in order to protect opportunities for workers and to bolster regional and national economies.

That is one of the reasons why we launched the £500 million just transition fund for the north-east and Moray, with the first £50 million committed in September. That fund includes finance for large-scale transformational projects, community-level action and, crucially, the testing of concepts and technologies that may be rolled out in other parts of the country. It helps to finance organisations, businesses, communities and individuals to transition, creating jobs in low-carbon industries and supporting the provision of skills.

In conclusion, just transition is a big, broad agenda. Working on how to deliver a just transition in Scotland is a learning experience—we are learning as we go. It is not always easy to shift from concept to delivery, but it is clear that we are making lots of good progress. I am focused on maintaining the pace and ambition of this agenda as we head into 2023, which will be a crucial year of delivery for the just transition to net zero.

I hope that my opening remarks help to put into context the challenges that we face and the opportunities that we have, and I look forward to your comments and questions.

Notwithstanding the significant challenges that the report highlights, I genuinely believe that we are approaching many different tipping points in the transformation of the Scottish economy in the next few years. You just have to look at the news of the past few days to see that projects have been announced to create new green jobs and contribute to decarbonising Scotland.

I absolutely accept and the Government accepts that we have spent a lot of time rightly putting in place the frameworks, funding and policies. Now, it is about delivery. That is the clear message from the report. We have to get on with delivering. A lot of work is taking place across Government to get to the point of delivery so that we can start to achieve many of the targets.

It is a good question. It is a pet subject of mine, because we were criticised when the ONS was publishing its green jobs statistics, despite the fact that we were aware that many green jobs were being created in Scotland. The ONS has now accepted that its definition needs to be updated and it is currently reviewing its definition of green jobs, so I hope that we will get a more accurate definition.

However, we have also seen independent research carried out by Skills Development Scotland, working with the University of Warwick and the University of Strathclyde. The report was published just a few weeks ago and I am sure that the committee will be very interested in it. The report says that, at the moment, there could be up to 100,000 green jobs in Scotland—it may be less—and gives explanations of the definition of green jobs.