Chamber and committees

We could certainly supply the committee with useful material as you embark on any such work. It would be a really interesting piece of work to do.

When the city and region growth deals were established, they were established on the basis of what local partners, the UK Government and the Scottish Government all thought were the priorities and strategic interventions that would add value. Clearly, if you are spending money on transport, say, that needs to add value over and above what might be the normal expectation from our transport organisations. It should have been strategic, and I certainly know in my area where those strategic interventions have been made.

It would be a very timely piece of work for the committee to engage in.

A lot of work is already going on with the health sector. The new deal for business group had a recommendation about working with businesses to improve health, which was about how employers could support healthier and more flexible living and working spaces to try to retain staff and attract workers who might be far removed from the labour market. It recommended creating a single point of access through the healthy working lives initiative for employers and workers to access that advice. That is an example of the health and economy portfolios coming together to deliver a service.

I believe that work is due to be given to the health secretary imminently that will contain recommendations on how we work collaboratively to improve health and get people back to work. This is, therefore, a live subject, and I would be quite interested in whether the Economy and Fair Work Committee could do some work that would feed into what the Government is doing.

Thank you, and good morning. I will make some very brief remarks, because this is my first opportunity to give evidence to the committee; I imagine that it will not be the last. I look forward to on-going engagement with the committee and, indeed, with members across Parliament.

When I look at the Government’s four objectives, I see in each one of them the importance of a growing and thriving economy. To that end, the work that we are all interested in, from the committee’s perspective and from my perspective as cabinet secretary for economy, is absolutely essential to delivering all the objectives. Whether we are talking about tackling child poverty, which clearly requires us to focus on employability and on ensuring that there are secure, well-paid jobs; reaching net zero and the importance to that of investing in decarbonisation and attracting private finance to do that; or ensuring that we have thriving public services, ultimately, we need to have a thriving economy that raises the revenue that we can then reinvest.

With the Scottish Government under the new leadership, as it were, of John Swinney, we have a sharp focus on what needs to happen with the economy, and it is clear that we require to work in partnership with trade unions, with businesses and with every sector in order to achieve that.

On coming back to the economy role after being away from it for about two years, it has been interesting to see where progress has been made. I am taken aback by the extent of the progress that has been made in relation to, for example, the implementation of the national strategy for economic transformation. I believe that one of the last announcements that I made before going on maternity leave was about the £42 million investment in the Techscaler programme. Last week, as one of my first events, I went to visit a number of businesses that have benefited from that investment in entrepreneurship and innovation.

The second thing that I have seen is the growth in our green industries. Our approach to offshore wind is a great example of what we want to achieve. We have committed up to £500 million of investment, and we are seeing the consequences of that in jobs, particularly in some of the areas that are most in need of investment and jobs. You will all be well aware of the £350 million investment in Sumitomo, which is one of the biggest-ever inward investments in the Highlands. That remarkable and transformational investment in the Highlands and Islands will create approximately 330 jobs.

That is where progress is to be made. I look forward to answering the committee’s questions on other areas that are of interest.

A lot of that investment has indeed gone into supporting businesses, but it has also gone into the infrastructure that is required. It goes back to Mark Logan’s central thesis in his report in relation to a start-up nation, which said that, ultimately, if you want to create more highly successful businesses—if you want more unicorns—and to be seen as the place to locate as a tech start-up, you massively need to increase the pipeline of business and the number of businesses that are starting, because not all of them will be successful. We do not necessarily want all of them to be successful, because what is symptomatic of successful countries and economies in that regard is a high tolerance of risk.

A lot of that investment has gone into creating the structure—a long-term incubation space and the provision of the required mentors and education. That is the first of its kind in Europe and it is hugely exciting. You can see the international connections that have been forged as a result of what is going on. However, the ultimate test will be in 10 years’ time. In 10 years, if one of the occupants of my job—it will not be me—is celebrating and commending the success of the Scottish technology industry and the entrepreneurship that goes on in Scotland, it will be a success.

From my perspective, the short-term objectives are whether the chief entrepreneur is in place and whether the policies are actually happening and being implemented. They have been implemented—it is one of the most successful parts of the NSET programme. The Techscaler programme is up and running and the businesses are there, pioneering, being innovative and doing really exciting things. The chief entrepreneur is a critical part of that, because it is not just about creating space; it is about creating relationships.

The value of the chief entrepreneur being in a Government role is that he can work across portfolios. Last week, we had an important meeting with the Cabinet Secretary for Health and Social Care and a lot of different businesses around technology and progress in the national health service. We know what some of the biggest drivers of health inequalities are, so where can technology such as artificial intelligence, wearable devices and other innovations reduce health inequalities? The chief entrepreneur is a key part of that, because he can speak to the economy space and the health space.

Absolutely. You look at tax as a toolbox, and you never look at just one tool. When it comes to income tax, we are not only without a toolbox; we only have parts of a few tools, because we do not have control over any of the allowances, incentives, gift aid or other aspects. We can control only rates and bands, and that is quite a blunt instrument. Most tax experts would confirm that.

Income tax interacts closely with other taxes such as national insurance and so on. The Government has always been clear that we need a stable, effective and coherent toolbox of taxes in order to make decisions about the economy. It is unfortunate that the UK Government, in its current form and in its potential future form, does not seem to be interested in resolving that.

My view is that it should be a long-term endeavour. If you start playing around with a process and a structure that is working, you jeopardise the medium to long-term aims and objectives.

In the past few weeks, the First Minister has said—I reiterate it this morning—that you cannot continually raise tax. He has been clear about that and I have no hesitation in endorsing that position.

Secondly, we also need to be led by evidence. Having held the finance brief before, I am very conscious of the need to be led by evidence, because there is an important role for feedback, consultation and personal experience. I take the examples that you have shared very seriously. You have referenced individuals whom I know and engage with.

The evidence from His Majesty’s Revenue and Customs, which could never be accused of being anything other than an independent and respected statistics-based organisation, is quite fascinating. It has published the fact that, on average, more than 4,000 more people are coming to the country than are leaving it. Therefore, we need to look at tax in the round, and we also need to look at what else attracts people to move to, live in and work in Scotland. It has to be evidence led. Four or five years ago, we said that the Council of Economic Advisers would be constantly reviewing what the behavioural change might be, and we now have HMRC publishing these figures.

The third point—you will think that it is obvious why I am saying this—is that, when it comes to tax, the Scottish Government has very limited means of raising additional revenue because of the way in which tax has been devolved. There are non-domestic rates, which contribute enormously to public revenue, but income tax is the primary one. The levers around income tax, as you will know, are extremely limited. When setting a budget, the Scottish Government has very few levers available for changing tax or raising revenue. That is why my role and the committee’s role have never been more important, because economic prosperity and economic growth are absolutely essential if the Government is to be able to continually reinvest in our public services. Clearly, 14 years of quite challenging finances being given to the Scottish Government do not help either.

Although I accept the date point, in every single one of the Government’s budgets, when it has done anything on tax, the accusation has been the same. The HMRC information covers the period in which Opposition MSPs have been saying that the behavioural change will be enormous, but HMRC is saying that that has not actually played out in the detail.

Things are already different. Things are already different in the nature of our engagement—

Wellbeing is still very much a focus, and that is not because I get emotional about it. However, if you read out my job title at the beginning of the meeting and included everything that used to be in it, that would form an opening statement in itself. There was an opportunity to have very clear job titles, particularly as there are many different areas in my brief.

On obstacles, I have asked the team to look at examples of good practice and to try to replicate those across every experience that businesses or workers have with any form of government or public body. For example, two investments were made the week before last, in Sumitomo and Haventus. I am not sure about the extent to which this is appreciated, but I am very struck by the fact that those businesses can go anywhere in the world. They can choose any jurisdiction to invest in in a global economy. So why invest in Scotland? They can speak for themselves, but the feedback that we got was that they found a receptive public sector, a willingness to work with them, and an ease in getting answers and going through processes. I would like to see that replicated in every experience that external investors have when they choose where to invest and, indeed, when Scottish businesses are trying to grow and develop.

I know that the new deal for business group has reconvened the regulatory review group, which is chaired by Russel Griggs. That is looking at how every portfolio of Government—from public health to the environment to education—interacts with the economy and businesses’ experiences, basically. That is my mission. You asked about what making the economy grow and removing hurdles means. My point is that we should make the positive experiences consistent right across every experience that a business or an inward investor has.