Response from the Cabinet Secretary for Finance and Economy, 21 September 2021
Thank you for your letter of 30 August 2021 regarding the Economy and Fair Work Committee’s work programme priorities. I have provided below responses to your request for updates regarding several areas of interest to the Committee. For ease, I have responded in the order set out in your letter.
We expect provisional frameworks to undergo formal Parliamentary scrutiny from September 2021 onwards, although a recent cross-administration ministerial meeting confirmed that the majority of frameworks are now expected to be published in October 2021. Achieving this aim will depend on further progress being made on the resolution of cross -cutting issues, particularly around how policy divergence agreed through Common Frameworks will be protected from the effects of the UK Internal Market Act, and on how reserved matters - such as international relations and the regulation of international trade - are addressed in Common Frameworks, as these matters will in some instances impact directly on their operation. This includes the Public Procurement Framework, which may be affected by the introduction of legislation by the UK Government, with the potential to impact on policy areas covered by other frameworks. It is important that we understand the extent of any impacts and resolve issues before presenting the framework for Parliamentary scrutiny.
On 11 December 2020 the Cabinet Secretary for Finance shared the summary of the Common Framework on public procurement with the Convener of the Economy, Energy and Fair Work Committee. The Committee responded on 14 January 2021 requesting stakeholder feedback as well as sight of the provisional Common Framework. The Minister for Trade, Investment and Innovation wrote to the Committee on 8 February 2021 explaining that, before any framework can be shared with Parliament, Ministerial clearance through the JMC(EN) process is required, and that, at that time, the Northern Ireland Executive had yet to obtain that clearance. Therefore, although the delay was not related to the content of the procurement framework, he was unable to share a copy of the Framework.
Subsequently provisional confirmation of the Public Procurement Framework was given by JMC(EN) Ministers for the Northern Ireland Executive. The Committee will wish to note that the provisional version of the Public Procurement framework was laid in the UK Parliament and published on the UK Government website on 23 March, before the Scottish and Welsh pre-election periods, and is therefore available for consideration by the Committee prior to formal scrutiny. The Scottish Parliament was notified when this was published.
I can also confirm that stakeholders have noted that they are content for their responses to be provided to the Scottish Parliament for scrutiny, with the possibility that these may be published. A summary of our stakeholder engagement is attached separately for the Committee’s interest.
Jamie Hepburn MSP, Minister for Business, Fair Work and Skills wrote to the Convener of the Economy, Energy and Fair Work Committee on 19 January 2021 to provide an update. Unfortunately an approved provisional framework has yet to be received, therefore parliamentary scrutiny has been unable to take place.
We have expressed reservations in respect of the utility of a services Common Framework, and in discussions with the Department for Business, Energy and Industrial Strategy (BEIS) and other Devolved Administrations (DAs) there has been no agreement on what such a framework would achieve. This is because most services either operate within the principles established under the EU Provision of Services Regulations (2009), as brought into UK law on EU exit, or operate under separate regulations, as is the case for financial services.
BEIS and the DAs will continue to discuss this matter, however there is recognition of the challenges that would arise from a decision to have a services Common Framework in place by the end of December 2021.
Discussions regarding the Common Framework on Mutual Recognition of Professional Qualifications (MRPQ) are ongoing. Following discussions with the DAs on scope, BEIS has indicated that implementation of the UK Internal Market Act should not be included in the Common Framework. In these discussions, the DAs were, in principle, supportive of the idea of the MRPQ Common Framework being a means to facilitate more effective collaboration on Mutual Recognition Agreements through the UK-EU Trade and Cooperation Agreement process and the Common Travel Area.
There is uncertainty around the potential impact of the UK Government’s Professional Qualifications Bill on the MRPQ Common Framework, however BEIS has indicated that the part of the MRPQ Common Framework seeking to implement the provisions of the Bill would need to be kept under consideration as the Bill progresses through parliament, and possibly after the Bill has been given Royal Assent.
The UK Government and the DAs have previously committed to having an MRPQ Common Framework in place by the end of December 2021, though this is subject to the concerns outlined above.
As requested, please find attached separately a copy of the Enterprise and Skills Review Board’s Annual Analysis report.
Following the work of the Advisory Group on Economic Recovery and the publication of the Scottish Government’s Economic Recovery Implementation Plan, we have undertaken work to investigate the capability and capacity required across all phases of a transaction, including response, advice and shareholding. This included the establishment of the short life working group.
One of the important lessons we have learned is the need to consolidate expertise and to transfer knowledge between the teams leading these interventions. One improvement has been in bringing together responsibility for management of the Scottish Government’s ongoing interests in Ferguson Marine (Port Glasgow) and Burntisland Fabrications Ltd (BiFab) into a single team, building on their existing commercial finance capacity and enabling the sharing of knowledge and expertise.
Additionally, in Spring this year we established a new division - the Rapid Response Division, whose consolidated expertise and capacity convenes a specialist response service when businesses are in distress and approach the Scottish Government with a request for support. These two teams are contained within the Covid Business Response and Support Directorate in order to maximise synergies and capacity, and capture learning in this area.
The Permanent Secretary provided an update to the Public Audit and Post-Legislative Scrutiny Committee on 19 February 2021, which welcomed the recognition from the Committee and the Auditor General on the improvements made in this area. She set out that further lessons would be learned from Scottish Government investments, and that these would be applied to support continuous improvement. I welcome this approach and would be happy to provide a fuller update to the Economy and Fair Work Committee if that would be helpful.
Our ten year strategy for economic transformation will set out how we can, in partnership with business, become a net-zero economy in a way that enhances prosperity, equality and wellbeing. Some of Mr Higgins’ future-focused recommendations will help to inform our thinking as we develop the strategy.
Throughout the pandemic, the Scottish Government worked closely with banks in Scotland to better understand how we could protect businesses and facilitate economic recovery.
Through the new Banking Barometer, we continue to engage with the main banks to monitor business liquidity. I have quarterly meetings with Scottish Financial Enterprise (SFE), and Ivan McKee MSP, Minister for Business, Trade, Tourism and Enterprise, will meet SFE monthly to discuss intelligence from the barometer, as well as our broader strategy for Financial Services.
My officials are working with SFE to reconvene the Financial Services Advisory Board (FISAB) imminently. We are committed to growing our Digital Financial Services sector, attracting new investment and good jobs to Scotland, building on commitments made by the likes of Barclays, JP Morgan and Morgan Stanley to their Scottish technology hubs.
Mr Higgins' report made a number of specific recommendations to the UK Government on the debt management of Covid-19 loan schemes. The UK Government acknowledged in a letter the points on forbearance and undertook to keep all measures under review. The Minister for Business, Trade, Tourism and Enterprise hopes to meet with HM Treasury shortly to discuss how the specific needs of the Scottish economy can best be understood as we move into the next phase of economic recovery.
Mr Higgins rightly identified the importance of recapitalisation across the economy in his report. Investing with Purpose, the Scottish Government’s Global Capital Investment Plan, focuses on leading with our best opportunities, identifying sectors where Scotland can demonstrate real international comparative advantage, mapped to strong global demand.
These principles are also reflected in the review of the Scottish Tech Ecosystem that I commissioned from Mark Logan, and we are working with business to take forward its recommendations.
Our Vision for Trade also aligns with Mr Higgins’ recommendations on trade and access to markets, and sets out a blueprint for how we will collaborate with partners to see Scotland succeed at doing business around the globe.
I do not view these reports in isolation, nor investment as an end in itself. These reports collectively provide a clear direction for delivery of a bigger and stronger entrepreneurial base in Scotland, aligned with more active investment markets. The work to deliver that is underway and will also be reflected in the National Strategy for Economic Transformation, which we expect to publish this Autumn.
The review of statutory debt solutions is underway and good progress has been made. The first stage was rightly focused on the priorities that would help address the immediate impact of the Covid-19 pandemic, and also considered measures that would be appropriate for permanent change.
This process has been stakeholder-led, building on the approach taken through the Ministerial Working Group on Statutory Debt Solutions. Policy officials convened a series of stakeholder meetings in late 2020 and broad consensus was reached on a number of recommendations. This culminated in the Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021, which came into force in March 2021. These regulations made permanent provision for improved and lower cost access to those in need of debt relief through bankruptcy, particularly the most financially vulnerable.
The second stage of the review is in progress and is centred on the operation of existing statutory debt solutions, with the aim of providing recommendations and options for improvement. Due to the wide-ranging nature of this review, three expert working groups have been established, including stakeholders from all sectors. One of the groups has a sole focus on recommendations made in the Committee’s report on Protected Trust Deeds (PTD), published in May 2020. The working groups anticipate that recommendations and options will be presented to Ministers later this year.
The Scottish Government has also been involved in stakeholder discussions to explore how some of the Committee’s recommendations on PTDs might be addressed, at least in part, through non-legislative means. A PTD protocol was drafted and considered by stakeholders, and will be implemented in October 2021. A ‘Dear Trustee’ letter has been published advising Insolvency Practitioners (IPs) who sign up to the protocol of the required changes in practice. The volume provider IP firms operating in Scotland have all signed up to the terms of the protocol.
A third stage policy review is planned, with timing and scope currently under consideration. Rather than assessing the operation of existing schemes, this review will examine the extent to which long-standing mechanisms on debt best meet the needs of a modern economy.
As you are aware, we want every home and business in Scotland to have access to superfast broadband of 30 Megabits per second (Mbps). As of 6 September, I can confirm that 1,592 properties in the Central lot have now had connections delivered as a direct result of R100 contract build, with another 3,052 connections currently in build, and in the South lot 1,595 connections have been delivered, with a further 4,288 connections currently in build.
The remodelled Speed and Coverage template (SCT) for the R100 North lot contract, which takes account of changes in commercial build plans, was approved by the Building Digital UK assurance board on 26 August. The online checker on the Scotland Superfast website has been updated accordingly, meaning that people residing in the North of Scotland can now check whether or not they will benefit from contract build, or whether they can claim a main voucher through the R100 Scottish Broadband Voucher Scheme. Build work has already begun this month around Oban in Argyll and Bute, as well as Portlethen and Newtonhill, in Aberdeenshire.
Concerning the Scottish Broadband Voucher Scheme, as of 16 August 861 connections have been delivered – 303 via the interim voucher portion (IVS) and 558 via the main voucher portion (MVS). A further 704 vouchers have been issued (67 interim vouchers and 637 main vouchers), and 375 have been requested (38 interim vouchers and 337 main vouchers)
We are currently developing a collaborative response to the Review of the Town Centre Action Plan, working with COSLA and other partners. We expect to publish a final joint response before the end of the year.
Work continues on the development of the Retail Strategy, in partnership with the retail sector, trade unions, COSLA and our Skills and Enterprise agencies. The Retail Strategy Steering Group was initially put on hold due to the pandemic and the impact it was having on the retail sector. However, since January the group has met five times. It is focusing on the three key themes of people, place and the sector. We expect the Retail Strategy also to publish later this year.
I hope you find the above information helpful. I would be happy to provide additional information or respond to any further questions you have, and I look forward to discussing the Scottish Government's plans for economic transformation and recovery in person at the Committee session on 29 September.
Yours sincerely
Kate Forbes
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Enterprise and Skills Strategic Board Annual Analysis Report (2MB, pdf) posted 23 September 2021
Procurement Common Framework: Overview of stakeholder engagement (339KB, pdf) posted 23 September 2021