Hansard

I welcome the debate on Scotland can do. It is clear that there is much to be done to raise the level of entrepreneurship in Scotland. My amendment refers to that challenge. Before I turn to the detail of that, it is important to set out the economic backdrop to the current situation.

We are seeing good economic progress in Scotland after a difficult and turbulent period. The economy continues to grow strongly and the projections are that that will continue. Employment is at record levels. Unemployment is still on a downward trend, and youth unemployment and the claimant count are at their lowest since 2008. The tough decisions taken by the previous Westminster Government have paid off and the new Conservative Government will continue on the path that has helped to deliver economic success.

The nature of the economy and the employment market is changing, so we have seen fewer public sector jobs but more jobs created in the private sector. Since 2010, nearly 127,000 new private sector jobs have been created in Scotland, bringing us close to a near-record high of over 2 million, and some 35,000 new businesses have been created over the past five years. We are therefore seeing some progress in the right direction, but there is much more to do.

According to the Office for National Statistics, in each year from 2011 to 2013 Scotland accounted for 7 per cent of the UK’s businesses—below our population share—and Scotland has a below-average rate of business births. According to the Scottish Government’s statistics, in 2013 Scotland had 49 new business registrations per 10,000 of the adult population, in comparison with a UK figure of 67. However, if we take London out of the picture the UK figure would be 58 per 10,000 resident adults, so we lag behind even that. Although we are getting better, we still have some way to go to match the UK average, even if London is excluded from it. It is important that we set in context the very good work that is on-going and to which the Deputy First Minister referred in his opening remarks.

It is not just the Scottish Government’s statistics that highlight the issue. The recently published report by the Enterprise Research Centre, “Benchmarking Local Innovation: The innovation geography of the UK”, shows that the three areas of the United Kingdom with the weakest innovation performance overall are eastern Scotland, Northern Ireland and Cumbria. According to that study, Scotland is consistently towards the lower end of the table across a range of measures, including product and service innovation, new-to-the-market innovation, process innovation, strategic and marketing innovation, research and development, and collaboration.

The most successful areas tend to be in central and southern England, with clusters around Cambridge and Oxfordshire showing the greatest success. However, even in the north of England, the Tees valley, which is the best performing of the northern economic areas, is generally doing better than Scotland. It is therefore not just in terms of the bare statistics that we are not doing as well as we should: according to those independent academic reports, we are lagging behind other parts of the United Kingdom.

It would be interesting to know—perhaps the Deputy First Minister could address this in his winding-up speech—whether the Scottish Government has done any recent research into why we perform relatively poorly. It is perhaps easy to see why our figures lag behind those of London—one of the great cities of the world, with a dynamic, fast-moving economy—but we are still performing worse than the average in other parts of the United Kingdom.

We will all have our own ideas on why that should be. Traditionally, the Scottish economy has had a different structure, with a larger public sector than elsewhere in the UK, and we might have different cultural attitudes towards risk taking from those in other parts of the UK. However, before we can properly devise measures to close the gap, which must be our ambition, we need to understand the reasons for our historical poor performance.

There are three national indicators on performance to help us measure progress towards becoming a world-leading entrepreneurial and innovative nation. First, there is the aim to increase the number of businesses in Scotland, and we have heard the statistics on those. Secondly, there is the ambition to increase spending on research and development. Although that increased in the period from 2006 to 2013 from 1.35 per cent of gross domestic product to 1.55 per cent, the increase was lower than the rate in the European Union as a whole, meaning that the gap between Scotland and the rest of the EU has increased and we have fallen further behind. Thirdly, there is the ambition to improve knowledge exchange from university research.

All those indicators show us how much more work needs to be done. In that context, the Scotland can do project—the Scottish Government’s enterprise and innovation strategy—is a welcome set of measures. We warmly welcome the range of initiatives that have been outlined, some of which were set out by the Deputy First Minister this afternoon. For example, the Deputy First Minister referenced the Scottish EDGE fund, which grew out of the Entrepreneurial-Spark programme that was headed by Jim Duffy. I know from speaking to people who have been involved in that programme what great value it is to budding entrepreneurs, who very much appreciate in particular the experienced mentoring and the provision of peer-to-peer support from those who have experience. I also welcome the fact that the initiative is supported by the Royal Bank of Scotland, which has a particular ability to provide finance for those who are looking to start up new businesses.

The Deputy First Minister referred to the work of public agencies. The Economy, Energy and Tourism Committee is always keen to scrutinise the work that is done by public agencies and to look at their focus on improving entrepreneurship. The feedback that we have had about agencies such as Scottish Enterprise and Highlands and Islands Enterprise from account-managed companies tends to be very positive. However, I think that there remains an issue as to whether we have the right level of support for companies that do not meet the criteria for account management. Is business gateway providing the right level of support for everyone else? Do we see the

“aligned and focussed business support to improve entrepreneurial and innovative capabilities”

that the “Scotland CAN DO” report refers to? Do we see enough support for entrepreneurs and innovative businesses to enable them to work in the digital economy?

The report also refers to access to finance. Although the situation may be improving slowly with the overall improvement in the economy, it is clear that that is still a major barrier to business expansion. What we are seeing, as the committee found last year, is companies resorting to more innovative approaches such as crowd funding and angel investors in order to raise the capital that they need, but serious attention is still required in that area.

The action framework makes reference to the need to grow exports. I commend to members the recent report from the Economy, Energy and Tourism Committee on internationalising Scottish business, and specifically our recommendations. A lot of good work is on-going, but it is still the case that too few of our businesses are exporting, and those that are doing so are in too limited a number of sectors. Scottish Development International, the lead agency, is doing good work and is highly regarded by those who benefit from its services, but is it doing enough to reach those who have the potential to export but do not currently do so?

The committee found that there is a need for a single portal for businesses that need advice on exporting, and there is a sense that we still have too cluttered a landscape and, in some areas, unnecessary duplication of effort. We felt that SDI was the public agency best placed to lead that work in Scotland, having a co-ordinating role with the others involved and also having full engagement with the private sector.

All those areas need attention, but the most significant part of the strategy will be in changing culture. We need to promote entrepreneurship and innovation at all levels of education, from schools through to colleges and universities. Every student in further or higher education should have access to entrepreneurship training, because we in Scotland are good at producing ideas but we tend to fall down in translating them into wealth-creating businesses. The Universities Scotland briefing for today’s debate has a lot more to say about some of those ideas. If I have time, I shall turn to them in my closing remarks.

It is absolutely right to say that we need role models to inspire young people in entrepreneurship and innovation. Television programmes such as “The Apprentice” and “Dragons’ Den” might provide good entertainment, but they do not always provide the most positive view of the business world.

The can do strategy has a long list of strands of work that are being taken forward. They are all worthy and it is probably the case that there is no silver bullet that can deliver the growth and entrepreneurship that we all want. I hope, therefore, that the current strategy will deliver greater growth in entrepreneurship and I hope that we can all share the ambition that we make Scotland at least as entrepreneurial a nation as our neighbours elsewhere in the United Kingdom.

I move amendment S4M-13338.1, to insert at end:

“; expresses concern that Scotland lags behind the rest of the UK in business start-ups, with only 49 new business registrations per 10,000 of the adult population in 2013, compared with a UK figure of 67, contributing to Scotland having a lower underlying number of business enterprises compared with the rest of the UK, where Scotland accounts for a 7% share of the UK total, lower than its population share should merit, and believes that Scotland’s ambition should be to raise its level of entrepreneurship to at least the UK average”.