Hansard

Today, the Scottish Government publishes “Shaping Scotland’s Economy: Scotland’s Inward Investment Plan”. I am pleased to outline to Parliament how it will help to shape Scotland’s economy.

The plan is the second of three pillars that focus on internationalising the Scottish economy. The first pillar was the export growth plan—“Scotland: a trading nation: A plan for growing Scotland’s exports”—and the final one will be our international capital investment plan. All three will be framed by our trade principles paper, which will emphasise the importance of values and of building a fairer Scotland.

Scotland has a strong track record in attracting inward investment. For the past seven years, Scotland has attracted the most inward investment projects of any United Kingdom nation or region outside London. Inward investment has a positive and significant impact on Scotland’s economy. It provides 624,000 jobs, which is more than a third of total employment. It contributes almost £42 billion in gross value added and represents 50 per cent of business turnover. It also generates more than 60 per cent of our business spending on research and development, and more than three quarters of Scotland’s exports.

Because there is a strong positive relationship with productivity, with innovation and with trade, inward investment also strengthens and complements domestic business. It helps to transfer skills, build innovative capacity, support local supply chains and spur exports, thereby creating a more open and outward-facing economy. It also gives local businesses access to global technology, talent and markets. The time is right to build on those strong foundations and to optimise the opportunities and benefits that inward investment brings to our economy and society.

“Shaping Scotland’s Economy: Scotland’s Inward Investment Plan” sets out the actions that we will take to help to create a net zero economy that is built on the principles of fair work and inclusive growth, to create opportunities for women and men across Scotland.

The Covid-19 pandemic has highlighted the need for greater resilience in our economy and the need to build back better. The inward investment plan therefore represents a fundamental shift in focus.

Investors assess key factors including availability of skills, strength of supply chains and access to technology when they make decisions about establishing or expanding their operations. In Scotland, we have been successful at persuading a range of companies that were interested in locating in Scotland to do so.

We now want to apply a more strategic approach, whereby we will focus on the sectors in which Scotland has genuine global strengths, set out our stall confidently to those whose values align with ours, work cohesively across Scotland’s regions to attract inward investment that builds on our many local strengths, and be laser-focused on maximising wider economic and social benefits for local economies and communities. Scotland’s strong position as a progressive, inclusive and outward-looking country will be central to our partnership offer to investors. We want to attract companies, entrepreneurs, businesses and workforces who share our values and can help us to progress our economic ambitions.

Our robust analytical approach has identified nine opportunity areas in which Scotland’s genuine global strengths—many of which are built on our academic excellence—align with global investment opportunities, and offer the most potential for maximising economic benefits across Scotland. Running through those opportunity areas are our focuses on net zero emisisons, digital, and high-value manufacturing. The first of those areas is energy transition—the shift from fossil fuels to renewable energy sources, and use of decarbonisation to reduce emissions across a range of energy-intensive sectors by leveraging our natural resources and deep-water expertise.

The second area is decarbonisation of transport, with a focus on low-carbon powertrains, primarily in heavy-duty vehicles.

The third area is software and information technology—from software development and IT services to games development and telecommunications. That will involve leveraging our globally recognised excellence in informatics and artificial intelligence.

The fourth area is digital financial services, through innovative application of new technology and data to transform how financial services and products are delivered, thereby building on our world-leading fintech cluster.

The fifth area is business services. The global business services sector has experienced a period of significant change from delivery of transactional services to delivery of more complex and higher- value services.

The sixth area is Scotland’s world leading space sector, which is already manufacturing more satellites than are being manufactured anywhere outside California. There is ambition to deliver an end-to-end solution for small-satellite manufacture, launch and data analysis, with a focus on tackling environmental challenges.

The seventh area is health tech, including integrated digital health technology that utilises data capture and analysis, sensors and AI, alongside our world-leading expertise in precision medicine.

The eighth area is transformation of chemical industries, including industrial biotechnology, which is an emerging clean technology that can support the transition from petrochemical-based industries to sustainable manufacturing, using renewable feedstocks.

The final area is innovation in our world-renowned food and drink sector. We will contribute to our ambition for Scotland to be a good food nation by developing food production systems that help to achieve the net zero emissions target. We will do that by introducing advanced manufacturing technologies that improve productivity and sustainability, and by creating healthier food and drink products.

We will build regional clusters of expertise around specific strengths to make Scotland a more attractive proposition for potential investors, and to ensure that all parts of Scotland benefit. Space, for example, is a future opportunity area for Shetland, Moray, Edinburgh, south-east Scotland, Glasgow, the Western Isles and Sutherland.

Food and drink innovation is already strong in the Highlands and Islands, the north-east, the south of Scotland, Glasgow and Argyll and Bute, and there is significant potential for growth across all those regions and more.

Although there remains uncertainty about the long-term impacts of Covid-19, independent analysis suggests that our opportunity areas are likely to be among the more resilient throughout and beyond the pandemic. We will seek investment opportunities that offer higher spillover benefits for the domestic economy, so that inward investment contributes to economic recovery as well as helping to shape Scotland’s future economy.

The revised approach seeks to deliver 100,000 jobs over the next decade. The focus on wider spillover benefits could deliver significant additional benefits to Scotland’s economy over the next two decades, including a £4 billion increase in annual gross domestic product, a £2.1 billion increase in exports and a 1.2 per cent increase in Government revenue, which would represent an additional £680 million a year, at current prices.

That will ensure that indigenous businesses throughout Scotland have the opportunity to benefit, and that we can develop strong domestic supply chains and provide new skills and job opportunities for Scotland’s people. Delivering additional high-value jobs is a key benefit for our nation. Scotland’s skilled workforce is its number 1 asset, so we now need to ensure that our workforce has all the skills that are needed to attract greater flows of inward investment, and so that we benefit from the new jobs that will be created.

We will undertake a digital skills drive to increase the number of people with advanced digital skills. That will also help to retrain and re-employ people who have been losing jobs in other sectors due to the pandemic, which will help the wider economy, as well as individuals, their families and communities.

Home working is not a new concept, but it has become more significant in response to the Covid crisis. There will be a strong role for Scotland to play in the pivot to a remote-working or distributed-working model. Aligned to development of our “Moving to Scotland” resource, we will focus our effort on promoting Scotland as a global leader in the creation of a supportive environment for remote, distributed and local working.

Our targeted approach to inward investment creates significant potential for innovation and enhanced research and development. We will build on existing activity—including Interface, our seven innovation centres, the new National Manufacturing Institute and our industry leadership groups—to further strengthen the ties between academia and industry, and to ensure that our higher education institutions maximise their contribution to attracting inward investment. A key aspect of supporting stronger ties between academia and industry will be work with universities to agree a collective approach to stimulating inward investment and innovation, including through handling of intellectual property.

We need a clear-sighted laser focus to succeed in delivering on the ambitions in “Shaping Scotland’s Economy: Scotland’s Inward Investment Plan”. We will focus on strategic investments that will shape places and deliver high-value jobs, with the ultimate aim of allocating £20 million per annum to that work. We will streamline and align our approach across the entire team Scotland international effort behind this new strategic direction. That will include supporting specific “Scotland is now” marketing activity to promote our nine opportunity areas to international audiences, and to get the message across that Scotland is open for business to everyone who shares our vision and values.

I am acutely aware that I am launching the inward investment plan at a time of huge uncertainty. Here in Scotland and around the world, Covid-19 continues to create economic harm, and to have dreadful impacts on people’s health and wellbeing. Although many businesses are focused on simply keeping afloat, we are determined to build back better and to use the disruption that is being caused to address vulnerabilities and fragilities—not least in global supply chains. Despite the pandemic, companies continue to choose to invest in Scotland, including, in recent months, tech businesses Trustpilot, Illuminate Technologies and AdInMo. Only this month, the global life science business Thermo Fisher Scientific announced the creation of another 200 jobs at its site in Perth.

We also face Brexit at the end of the year. Whether there is no deal or a bad deal, all the analysis shows that Brexit will harm many parts of Scotland’s economy. We must work even harder to put across the message that Scotland is not the UK, and that our values and ambitions are different from those of the UK Government. That backdrop makes Scotland’s inward investment plan all the more urgent and vital. Leaving things to chance would risk the progress and success that we have had to date. To put it simply, I say that now—more than ever—we need to have in place a plan for inward investment that targets effort and resource strategically, to shape Scotland’s economy in the future.

I am therefore proud to be the minister who is presenting “Shaping Scotland’s Economy: Scotland’s Inward Investment Plan” to Parliament today, and will be happy to take members’ questions on it.