Chamber and committees

That has been a very pressing issue since the Scottish National Investment Bank was established. Prior to the bank’s being established, there were extensive conversations with the UK Government and the Treasury about whether there could be any unique flexibilities for the bank within the fiscal framework. A lot of work was done to build cross-party support so that the UK Government could have the confidence that it was not a political play but was about supporting the bank on those flexibilities.

One of the big flexibilities that the bank would like to have is the ability to carry over budget across financial years. Any investment house will make decisions irrespective of where they fall in the financial year, but the lack of flexibility to carry over that is built into the fiscal framework means that, if we are nearing the end of March, there is a really difficult decision to make as to whether to accelerate an investment decision and, in the process, to carry a lot more risk, or to wait until the next financial year and carry even more risk because you do not know what the budget will be.

We have been working with the bank to consider what further flexibilities might be afforded from within the Scottish Government budget, but it is extremely difficult to see how we can do that without additional flexibility from the UK Government.

Richard—I will hand over to you for the better answer.

Yes. I could take each of the five opportunity areas, including hydrogen, and tell you about where I think we need far greater and closer collaboration with the UK Government. Carbon capture, utilisation and storage is quite an obvious area in which we ultimately need the UK Government to make an investment in Scotland’s opportunity. When it comes to some of the other areas, the big issue that people raise with me, and which they will raise with members consistently, is grid connection. More generally on where we need close collaboration, we ultimately cannot deliver the full scale of our ambition for the five opportunity areas without close alignment with UK Government strategies on them all. I suppose that that is the general gist of my response to the question.

I will give you an update. It might be helpful to remind the committee of the background of that expression of interest linked to Forsyth Black. He was the chairman of the board and resigned from it to ensure an independent and fair assessment. He stepped back from his duties immediately upon disclosing that he was linked to an expression of interest, and the Scottish Government and Prestwick airport subsequently agreed that he would have to resign rather than be temporarily removed from his post. He does not have inside knowledge of competing bids to purchase the airport, as no formal bids have been received.

I do not feel that it would be appropriate for me to share further details, including the number or identity of any other organisations behind an expression of interest, at this time. That is not to say that we cannot come back to Parliament when there is something on which to update you in due course.

As you can imagine, when it comes to spending any penny at the moment, we must take a very robust approach to the impact that a policy or person has. I am hugely enthusiastic about the work that Mark Logan is doing. The work that he was originally tasked with concerned the network of Techscalers and increasing the pipeline of entrepreneurship and of business start-ups.

The track record of Techscalers has been really inspiring. That major piece of infrastructure has been delivered without much fanfare or noise, and it has not been subject to too many parliamentary questions, nor have too many concerns been raised by Opposition MSPs, because that work has been really successful, and it has exceeded the initial expectations that were set down for numbers of businesses and for the amount of additional funding that businesses have leveraged in. My hope is that that will continue to grow.

I have been very impressed with the metrics. Mark Logan is now working in another area: he is working closely with Neil Gray to deliver more innovation in the national health service. Within a matter of months, I have already seen a step change in some of the work that the NHS is doing in taking some of the most exciting innovations in the life sciences sector and ensuring that there is an open door in the NHS to embed that. From a health service perspective, some of the results are astonishing. One outcome, for example, is that the digital dermatology project can cut waiting lists significantly.

It might be helpful to the committee if I were to write more formally to outline what we think the successes have been of having someone in that adviser role who understands the private sector, who has the confidence of the public sector and who brings a different way of thinking to the work that we are doing on innovation in the public sector.

I will give an update on some of the main recommendations. One of Audit Scotland’s recommendations was about political leadership. We did a quick review of governance to look at how we could further strengthen political leadership. On 24 September, the First Minister formally agreed to the creation of a Cabinet sub-committee on investment and the economy, which provides political oversight, with membership across the Cabinet table.

With regard to other recommendations, we have identified additional metrics that can be used to better track outputs and medium-term delivery. Some of that work was already happening—for example, Techscaler data on the spread and impact of member businesses is gathered regularly. The majority of our metrics show positive change, and that was highlighted in the second annual report on NSET. The measures that have been selected for the strategy help us to track progress towards the long-term transformational changes that we seek for our economy. We have monthly metrics that look at things such as gross domestic product growth and job creation, although they are not owned by the NSET team. I do not know whether the committee has seen them yet, but I was heartened to see that the figures that the Royal Bank of Scotland released today show an acceleration in job creation. There are some real positives in that regard.

That also covers evaluation. Audit Scotland recognised that it was too early to assess the impact of NSET, but a section was added to the most recent NSET annual report to discuss the results of early evaluation work.

That covers quite a number of the high-level recommendations that Audit Scotland made.

That is another reason, which I did not give to Colin Smyth, for my strong reluctance to put figures on the finance, because we recognise other partners in the aims of the national strategy for economic transformation, including local authorities and parts of the private sector.

That is where regional economic partnerships come in, because they are partnerships, and I have had extensive engagement with them over the past few months. Just on Monday, I was in Shetland—I was concerned that I might not get back in time for this committee meeting, because I was in Shetland until yesterday afternoon. On Monday, there was the convention of the Highlands and Islands, which is a grouping including all the local authorities that represent coastal areas, stretching from North Ayrshire up to Shetland. Half of the agenda was dedicated to the work of the Highlands and Islands regional economic partnership, which is engaged in attracting new businesses and delivering housing. On a much more nimble, flexible and local level, that group is able to look at similar issues across those areas and work together to find solutions.

I was very clear with the group that I would love NSET to be a very localised strategy, so that the Government at the higher level is an enabler of what goes on locally. At a local level, I would like those partnerships to identify their big priorities and get on with the job, with the confidence of their communities and with the support of national agencies—in that case, Highlands and Islands Enterprise—and, ultimately, with my support. I would like them to do that along the lines of the NSET pillars, because the overarching NSET aims are just as relevant as they were a couple of years ago.

It might be worth saying that, when the strategy was published, there was real pushback about the fact that we had not name checked every sector under the sun, but my view was always that the aims should be sector-neutral. Again, on the point about innovation, the aims should be applicable equally to any sector. If a local regional economic partnership says that its priorities relate to energy—as is the case in the Highlands and Islands, because that is quite obvious—those aims should apply to that industry.

I gave a lot of evidence yesterday to the Finance and Public Administration Committee on our national performance framework changes. That was interesting, because there was a general criticism about there not being enough focus on economic growth in that. I think of the national performance framework as a way of painting a picture of the Scotland that we want to be, and I do not think that there is much disagreement with any of the objectives—there is a general consensus. You have to build a consensus with something like that, when you are talking about people’s health and wellbeing, economic prosperity and so on. The objectives are aligned with the United Nations sustainable development goals, which is a very laudable aim. Keith McDonald is welcome to come in on that.

Again, those objectives set out the picture of the country that we want to be. The First Minister has taken that and distilled it down into four objectives—I am a big fan of distilling things down to fewer objectives. One of those objectives is economic growth. You spoke about what economic growth can lead to, but it does not have to lead to those things. That will depend on what you see as the aim.

The reason why I argued yesterday that economic growth should not be an end in and of itself in the national performance framework is that it is not an end in and of itself. It is a means to an end. If you view it as an end in and of itself, you will absolutely bake in inequality, destroy the environment and so on. You should see it as prosperity with a purpose. In other words, we cannot reinvest revenue into our public services unless we have a growing economy that raises the standard of living for everybody and thus raises the revenue that can be reinvested. We cannot meet our net zero goals unless private investment is made, because the cost of meeting our net zero goals far exceeds the public sector resources of any Government under the sun. We have to be an attractive place to do business so that we get that investment.

My view on economic growth is that it is not an end in and of itself but a means to an end. However, we cannot achieve that end without economic growth—which is perhaps where there would be a minor disagreement between us. I am open to answering any further questions on that.

My difficulty with that is that, although, obviously, we are delighted when we see an increase in it, economic growth has been incredibly stagnant across the UK for a long time. Child poverty figures have increased and we have had huge pressures on our public services.

I see no conflict between the four aims that the programme for government sets out. I see no way of tackling child poverty, meeting our climate change objectives—which is also an aim in the programme for government—or protecting and supporting our public services without an increase in economic growth. The four aims in the programme for government are mutually dependent. If we were to take out economic growth as one of those four legs, the stool would topple over. It just could not stand.

I am not suggesting that we would necessarily mirror every decision that the Irish Government has taken, but who can look at the most recent Irish Government budget’s support for people in fuel poverty, families with kids, and infrastructure, without being envious of what it has been able to achieve with considerably higher economic growth?

There is an argument as to how Scotland can achieve its aims and ambitions. I just do not think that there is a route to that without economic growth.

That has been considered in the past, with quite extensive work to look at the opportunities that you identify for efficiencies and so on. There are significant legal issues with any amalgamation of the three organisations that you mentioned. The Cabinet Secretary for Transport is probably better suited to answering the technical elements of why they have different forms of governance and ownership.

Certainly, the aim for Ferguson Marine has been to get the boats built then return the company to a private sector buyer who believes in continuing to build boats on the Clyde.

There have been extensive reviews of what might be possible through amalgamation. However, some options have been dismissed because they are not possible under the current governance arrangements of each of the three parts.

If the committee is interested, I am sure that the transport secretary could write with an update on the progress on that question, because it is a very fair one and the Government has been very interested in it in the past. No official wishes to add to what I have said, but the Government will be happy to respond.

The aim in the green industrial strategy is to make things as simple and straightforward as possible in order to deliver on our objectives. Below the strategy’s five opportunity areas are a number of targeted actions that the Government will do to create a successful enabling environment for investment and growth. Those targeted actions include things such as skills, research investment, supply chains, planning and consenting, and housing.

Clearly, a lot of that relies on access to land and facilities. Every week, I have conversations with potential investors who are looking for scale and size. In and around the Cromarty green freeport area, there is talk of a need for 25,000 new homes. By extension, that will require land.

I do not know whether my officials have anything to add on the specifics on compulsory purchase, but I imagine that it is part of the toolbox to enable us to meet the growing requirements for land access and to deliver thousands of homes.