Chamber and committees

The Minister for Small Business, Innovation and Trade met the Chief Executive of the Scottish Chambers of Commerce on 18 April. The First Minister and the I had a call with the main business organisations on 20 April and the Chief Executive took part in that call. The Director General for Economy, Gregor Irwin also met the Chief Executive on 21 April. Details of all Ministerial engagements and expenses are proactively published by the Scottish Government, including the costs of travel and accommodation. The information can be accessed in the followng link: https://www.gov.scot/collections/ministerial-engagements-travel-and-gifts/.

I have written an introductory letter to the Chief Secretary to the Treasury which was copied to the Chancellor of the Exchequer. I will meet with the Chief Secretary on 2 May to discuss matters such as the cost of living crisis, NHS funding and the Scottish Government’s priorities.

I would welcome a meeting with the Chancellor to discuss the key issues facing Scotland, including how the UK Government might use its reserved powers to provide more support for our people, businesses and public sector through these difficult times.

The SFC’s Fiscal Sustainability Report is an important contribution to the debate on fiscal sustainability and highlights potential impacts of demographic change on the Scottish public finances over the next fifty years. These challenges are not unique to Scotland, and are prevalent in many high-income countries. However, Scotland lacks a full range of levers to deal with these in the way that other countries can, particularly over migration.

Within the powers at its disposal, the Scottish Government is committed to ensuring the public finances are on a sustainable trajectory. This will mean growing our economy and by extension our tax base, and embedding delivery and value for money at the heart of our public services. Central to this will be overseeing public service reform, focused on delivering more efficient, person-centred public services. The Fiscal Framework review will also be vital and must ensure the Scottish Government and Parliament has the necessary powers to manage the risks we face within our devolved responsibilities, and to support economic recovery. The Scottish Government’s approach to managing the public finances over the medium-term is set out in the Medium Term Financial Strategy, due to be published in May 2023.

In 2023 we will also launch a new Talent Attraction and Migration Service for Scotland, and publish an Addressing Depopulation Action Plan. And we will continue to press the UK Government to make the vital immigration reforms required to meet Scotland’s needs.

While the Scottish Government will continue to manage the public finances diligently with the powers we have, it is our view that the current constitutional settlement is insufficient to properly tackle the long-term challenges that Scotland faces. Ultimately, Scotland must be independent with full control over the economy and powers over migration to secure the stability of our public finances.

The three R100 contracts have a total value of £648.7 million. By the end of March 2023, £116.4 million had been spent, which is line with our expectations at this stage of contract delivery. The remainder of the funding will be utilised in the period to March 2028 when the North contract will formally be completed.

The R100 programme also encompasses the Scottish Broadband Voucher Scheme which had issued almost £6m in voucher funding by 31 March 2023. As the R100 SBVS is demand led it is not yet known what the cost of delivery will be upon completion.

The Scottish Fiscal Commission’s Fiscal Sustainability Report sets out that the projection of lower GDP growth in Scotland than the UK is primarily due to demographic change, with Scotland’s population aged 16-64 projected to fall by 16 per cent over the next 50 years, compared to a fall of 2 per cent for the UK.

This presents a risk to Scotland’s long term economic competitiveness and while the challenges of an ageing population are not unique to Scotland, Scotland lacks the full range of powers to deal with these in the way that other countries can, in particular with the UK Government’s current immigration system failing to meet the needs of Scotland’s communities in addressing both labour market and demographic challenges. In the short term, the Scottish Government is using the powers it has to address Scotland’s population challenges and in 2023 the Ministerial Population Taskforce will launch a new Talent Attraction and Migration Service for Scotland, and an Addressing Depopulation Action Plan will be published.

Furthermore, the National Strategy for Economic Transformation sets out the action the Scottish Government is taking to deliver a wellbeing economy which will increase productivity and international competitiveness, and deliver fairer, greener prosperity for all Scotland’s people and places.

The R100 contracts, which are delivering full fibre, gigabit capable connections across the length and breadth of Scotland, are currently expected to conclude during 2027-28.

For those properties beyond the reach of the R100 contract build or commercial coverage plans, the R100 Scottish Broadband Voucher Scheme – offering vouchers worth up to £5,000 – remains available to help secure a superfast broadband connection.

The International Trade and Investment budget funds the delivery of three key plans. These are: A Trading Nation - Scotland's Export Growth Plan; Scotland's Inward Investment Plan and Scotland's Global Capital Investment Plan. Together these work to deliver economic growth as well as a stronger, fairer, greener Scotland that benefits everyone. They enable Scotland to be a highly productive and innovative place to live, work and do business on a global scale.

Evidence shows that our plans are working:

In terms of Inward Investment –

• The EY Annual Attractiveness Survey 2022 showed that Scotland has been the top performing region or nation of the UK, outside of London, in attracting FDI, for the past 7 years.
• Scotland’s FDI projects outpaced Europe and the rest of the UK – Scottish projects were up by 14% from 2020, compared to 5.4% increase in Europe and 1.8% per cent increase in UK.

In terms of Exports –

• Comparing with the previous year, when oil and gas are excluded, Scotland’s international goods exports increased by 20.5% in 2022 compared to 2021. This compares to a 13.3% increase for the UK.

International Trade and Investment’s budget for 2023-24 will be targeted towards the next phase of delivery which will:

• Set the direction on new Market Opportunities to attract high quality inward investment (and associated spill over benefits) and the technologies required to deliver our ambitions in areas such as Energy Transition, focusing on Scotwind and Hydrogen, Space, and Decarbonisation.
• Scale up Scotland’s trade promotion, international reach and profile; promoting Scotland on world stage at key events such as COP28.
• Continue targeted support to enhance our firms’ export capacity. In particular, delivering three Sector Export Plans (SEP) – Life Sciences, Technology and Renewables and the development of a Hydrogen SEP to support the growth of renewables exports from Scotland and identifying new and critical markets
• Push forward our capital plans to support the economy, including exceeding our commitment to the annual capitalisation of the Scottish National Investment Bank, and renewing support for the enterprise agencies and delivery partners.

Scottish Government Ministers and officials meet regularly with David Lonsdale, the Director of the Scottish Retail Consortium (SRC), through engagement with the SRC but also through other means such as the Scottish Government Retail Industry Leadership Group (ILG) - of which Mr Lonsdale is a member. The most recent engagement with the Director of the SRC was held on 22 March 2023. The Scottish Government greatly values regular updates, intelligence and input from the Scottish Retail Consortium which is informing rationale for it’s overall response to the cost crisis and challenges facing Scotland’s retail sector.

Scottish Government officials meet with local authority Directors of Finance representatives on a monthly basis and last met on 10 March 2023. The Scottish Government will continue to meet with COSLA and individual local authorities on a regular basis to cover a range of topics, including current and future budget pressures.