Sixtieth anniversary of CBI Scotland: First Minister's speech - Friday 21 March

In government, we enjoy a very good and constructive relationship with the CBI. And it's absolutely vital that I set out at the beginning of my remarks the importance that I attach as First Minister to having that constructive relationship with the CBI and with the business community in Scotland, and today's lunch is a welcome opportunity to celebrate the 60 years of championing the voice of business in Scotland on behalf of the CBl.

So thank you very much for the invitation to be here and to share some of my thoughts on the situation that we face just now, and I want to talk a bit about how we work together between government and business, because as always, the hallmark of my participation in government over many years, and it certainly runs through my approach to leadership as First Minister, is to create a collaborative working environment between the government and various sectors within the Scottish economy, and that's no more important in relation to the collaboration that we construct with the business community.

But before I come on to talk about that collaboration, I want to set out some of my thoughts on my optimism about Scotland's economic potential and the situation that we face just now.

Scotland consistently ranks as the UK's top investment destination outside of London and the South East of England. We have significant offshore renewables resources, and we're ranked first amongst the UK's nations and regions for green growth potential and opportunity.

Our food and drink sector is a global success with scotch whisky ranked as the UK's top export.

We are also a highly educated and skilled country with a higher share of our population with a university or college education than anywhere else in the United Kingdom or the European Union, and we have key specialisms in digital technology, including data, gaming, artificial intelligence and cyber security, and a formidable reputation, which I was privileged to be part of before I entered Parliament, of the financial services sector in Scotland.

So there are many, many reasons to be optimistic about Scotland's economic potential and Scotland's economic performance, but there's also a need to be realistic about the challenges and the issues that the business community and the Scottish economy faces at this time. I am the first to recognize the scale of that challenge and the difficulty that the business community has experienced over the last number of years,

Tracy mentioned in her own comments, that the combination of Brexit, COVID, the war in Ukraine, the resulting energy crisis and the first inflation shock in about 40 years have all created hardship, uncertainty and really challenging economic conditions, leading to the issues around the cost of living, the cost of employing remains high, and I know that many of you will share my concerns about the implications for the economy of the increase in Employer’s National Insurance contributions, which I think will have a significant and negative impact on our economic prospects.

And as I said, I certainly have not taken in public policy. But to deal with that, we have to focus on what we can do to improve economic performance and economic achievement in Scotland.

And for me, that issue of prioritising economic growth has got to be at the very heart of the government's agenda.

Since I came into office last May, I’ve set out a clear and focused agenda for the government around eradicating child poverty, about supporting the transition to Net Zero, about improving our public services, and particularly our National Health Service, are fundamentally anchored on delivering higher levels of economic growth within Scotland, because we cannot hope to achieve our objectives on net zero, or on eradicating child poverty, or on improving our public services without generating the wealth that is going to be at the heart of future success for our country.

So what I would like you to take away from what I'm saying today is that economic issues and economic considerations are right at the very heart of the decision making of my government.

Kate Forbes, the Deputy First Minister, leads on these questions for me, with a specific mandate to meet the government's efforts on investment, to ensure that we maximize the ability of using the public expenditure that we have available to us, particularly through, for example, ventures like the Scottish National Investment Bank, which is one of the best innovations the government has brought forward in recent years, which is leveraging significant private sector investment into the Scottish economy and making developments happen that ordinarily, we would have struggled to make happen without the contribution of patient public sector capital supporting the process

of economic development, and that concept of utilising public expenditure, whether it's the Scottish National Investment Bank resources or increasingly the reference to the £150 million that we’ve put into the government’s budget, the tripling of our investment in support to offshore renewable developments are all part of trying to ensure that the government plays its part in stimulating investment in the Scottish economy and enabling private sector investment to flow from that. And to that effect, we meet at the end of a week, which I think has been quite seminal for Scotland in terms of the attraction of investment.

On Monday I went to the west end of the city, we hosted the Global Offshore Wind Investment Forum, which we attracted 100 investors from developers around the world to a very focused conversation about how we marry up private investment capital around the world with the opportunities for development either in ports or in the supply chain or in individual offshore renewables developments in the country.

And you know I've been around economic policy and economic thinking in Scotland for a long time, but I considered the events of Monday, which were choreographed and put together by my Deputy First Minister as being a seminal moment in the attraction of international investment into Scotland and providing the foundations for the optimism that I think we, and I’d like to believe we have, about the renewables and the net zero opportunities.

And I really welcome what Tracy said earlier on, about the commitment of the CBI to that journey to Net Zero, because there are so many voices now who are questioning the journey to Net Zero and questioning whether we should undertake that journey, and we only have to look at some of the issues that we are wrestling with as a society today to understand that there is a climate imperative that has got to be addressed, but we have to act in a fashion to make sure that we can reap the economic rewards of that transition to Net Zero, and the Scottish Government is absolutely focused on making sure that we attract the rewards of that, of that transition to net zero.

To do that, we have to do a number of different things. We have to concentrate on strengthening the skills proposition in the Scottish economy, and to make sure that as we transition to a net zero economy, we have available to us the skills that are necessary for that purpose. So the industry led Energy Skills Partnership, the initial version of which was launched in January this year, is an attempt to help offshore oil and gas workers identify transferable skills that are necessary in the transition to renewable opportunities and I’m confident that we can utilise measures of that time and create the ventures that will be successful in that respect to ensure we support people on that journey.

It’s also why we have to act to take steps to boost the working age population in Scotland. That’s what I'm so concerned about in the aftermath of Brexit and the loss of free movement of individuals that we are not seeing the growth in the working age population that is the principal driver of economic growth in our society. So the proposals I’ve put forward around a dedicated Scottish graduate visa where we enable international students who come to Scotland to be able to develop longer routes and stay for a longer period, will help to encourage the growth of our working age population and also to boost economic activity within Scotland.

And we pursue those proposals with energy with the United Kingdom Government, who are the decision makers on those issues in relation to immigration, because for Scotland, measures of that type are critical, mission critical, for enabling us to fulfil our growth ambitions and your support in persuading the UK Government within that step would be enormously welcome.

Now, the second thing we’ve got to do is to focus on innovation and creativity within the economy. And one of the other reforms that the government has brought forward is the creation of the £42 million Tech Scaler program, which is a resource to support those with the ambition to start a company and to bring their technology products or services to the market.

Since this initiative began, the government has invested in more than 900 startup businesses with capital exceeding £118 million pounds, raised by the founders of those companies.

From a network of 14 hubs throughout Scotland to the international pop up ventures that are in Silicon Valley and Singapore, Tech Scaler is creating pathways for Scottish innovators to reach a global stage.

And it's back to that point that Tracy mentioned about the need to sustain an outward looking and outward facing economy where we are encouraging actively some of the most creative individuals within our society to be able to reach much wider markets with the support of public expenditure and I'm so pleased with the progress that the Tech Scaler program is making, and in partnership with the ventures emerging out of our universities, I think it has the potential to significantly refuel the steps that are necessary within the Scottish economy to assist in boosting the availability of new technologies and new opportunities.

The third thing we've got to do is sustain our program of investment in infrastructure, which has been a hallmark of this government, with some major infrastructure projects undertaken and completed that enhance the digital connectivity of the country and the physical connectivity of the country, and the commitments that we have in the Government's program around the A9 and the A96 are fundamental projects to connect Scotland and to ensure that we have the physical infrastructure to meet the needs of the people of our country.

Now one of the things the CBI will have done in all of its history will have been to put the case of business to government, to ask government to take steps that are as helpful and as positive to the work of business in its role in supporting growth in the Scottish economy and I want to set out some of the measures the government is taking through the budget that has recently passed in the Scottish Parliament which will be implemented on the 1st April, which is all about providing stability and certainty to all tax payers, including the business community and to support a growing economy in Scotland.

So we've given a commitment for the remainder of this Parliament that we do not intend to increase the number of Scottish income tax bands or their rates. We've also put in place a competitive non domestic rates regime for the coming financial year, which will mean that over 95% of non-domestic properties will continue to be liable for a lower property tax than anywhere else in the United Kingdom, but we maintain a generous, generous rates relief package, worth an estimated £730 million pounds, and we've tried to develop our business support packages to recognise specific and targeted challenges faced in the business community with additional measures for the hospitality industry and also for businesses operating in remote, rural and island locations.

So we will take steps where we can within our resources to create a competitive business environment.

But please be assured that the commitment that we have given to support investment from the public purse and the whole agenda of economic growth and economic opportunity is going to be central to any propositions that the government brings forward, and most of those will be felt in support to the enterprise agencies and also to the Scottish National Investment Bank, because making sure that we have in place the necessary interventions that will help business to perform its role in conserving growth in the economy is a message that's clearly understood right at the very heart of government.

So notwithstanding the significant challenges that we face in the Scottish economy, in operating in an intensely volatile global market with a degree of volatility that many of us have never experienced in the past, with volumes of uncertainty about what the international trading environment looks like, I want to assure that in all those conditions, the Scottish Government is absolutely focused on making sure we make the Scottish economy as successful as we possibly can do, that we can encourage growth within the Scottish economy, because on the basis of growth, we have the wealth to invest in creating a fair and a decent society, and that's what my politics are about, it’s what my decisions in government are about, it’s what my whole government team are focused on, of making sure that we understand the necessity of generating economic growth in our society and investing that wisely to meet the needs of our population.

In that endeavour, I commit to an open dialogue with the CBI and the business community in Scotland. I thank you for your commitment to Scotland, your commitment to the organisations that you lead and that you take forward and for the work that flows from that, that benefits Scotland and our people. 

Thank you very much.