- 23 Jun 2020
On 21 April I informed Parliament that we have adopted a four-step plan to respond to the economic impacts of COVID-19 using a Respond, Reset, Restart, Recover approach.
The Scottish Government has brought forward a £2.3 billion response package of measures in the form of grant payments, loans and rates relief and a £230 million restart economic stimulus with capital for shovel-ready and growth projects.
Tailored to the specific needs of the Scottish economy, these measures have provided a lifeline for businesses, workers and the self-employed as they negotiate the immediate crisis providing specific support for hard hit sectors such as tourism and hospitality as well the creative industries.
I have previously recognised the UK Government’s role in supporting business. Our additional schemes are not available elsewhere and have been geared to addressing gaps in the UK Government’s support.
As part of re-setting workplace safety needs we have produced sector specific workplace guidance with business and unions in advance of re-start to help them reopen as soon as it safe for them to do so.
Irrespective of the measures put in place, COVID-19 has brought about irreversible changes to our society and we must be realistic about the longer-term implications of these changes on Scotland’s economy.
COVID-19 has caused death, grief, tragedy and disruption. The economic shock and crisis created by the virus has, through accelerated thinking, instilled a desire for change and necessitated a radical re-think of priorities. It is a chance to shift the dial of business innovation and practices and an opportunity to accelerate the drive to create a greener, fairer and more inclusive well-being society.
I informed Parliament on 21 April of our intention to establish an independent Advisory Group on Economic Recovery. I tasked this Group to provide expert advice on supporting the different regions and sectors of Scotland to recover in a way that facilitates our transition towards a greener, net-zero and wellbeing economy.
The Advisory Group’s report ‘Towards a Robust, Resilient Wellbeing Economy for Scotland’ was published on Monday and contains 25 recommendations for both the Scottish and UK governments as well as other actors in the economy.
I would like to record my thanks to the expert Members of the Advisory Group for their commitment over the past two months to produce a set of recommendations which provide such a strong foundation upon which to rebuild and reshape our economy.
By applying their energy and expertise to developing these recommendations in such a short space of time, Members of the Advisory Group have given us the platform to act swiftly, purposefully and, I hope, in consensus as a country in shaping the course and direction of Scotland’s economic recovery as we continue to emerge from lockdown.
Throughout May and June, the Group has engaged directly with key stakeholders and received over 375 submissions from individuals and organisations. The breadth of the responses confirms the value of the Advisory Group process.
I would like to thank all of the businesses, trade unions and third sector organisations, as well as the wide range of individuals who, despite the challenging circumstances, brought forward analysis and shared their knowledge and insights.
Our enterprise agencies also played a crucial role in enabling the Advisory Group to undertake robust and extensive engagement with the business community and so I would also like to express my gratitude to them.
In particular, I must thank the Chair of Scottish Enterprise, Lord Smith of Kelvin, for convening a number of roundtables giving businesses the opportunity to feed their views into the Group.
The 25 recommendations are wide-ranging and challenging, which reflects both the breadth of the engagement undertaken and the diversity of factors which make up a robust, resilient wellbeing economy.
A theme that emerges strongly is the need to avoid repeating the mistakes of the past where the impact of recessions have been exacerbated by retrenchments in public spending. I wholly support the Group’s clear view that as we come out of the recession caused by the pandemic, we must not return to austerity.
Instead, the report identifies the need for targeted investment to support and stimulate the economy through an investment-led recovery. This requires either an increase in our budget or new mechanisms for raising capital.
As the Cabinet Secretary for Finance noted in Parliament on 16 June, the Fiscal Framework was not designed to deal with the impact of a pandemic, greater flexibility is needed to fully respond to the crisis.
Benny Higgins, in both his foreword and at the daily Press Briefing yesterday, outlined the implications of the pandemic identifying that:
- “The last few months have exposed and illuminated the scale of inequality across the world and here in Scotland”.
- “The central importance of the role of education in the reconstruction of the economy is unarguable”;
He also highlighted that:
- “The prospect of an inevitable sharp rise in unemployment demands direct and urgent intervention”.
I agree on all three counts. The Report provides a series of recommendations to address these themes.
On inequalities, the Report highlights that advancing equality and eradicating discrimination must be at the very heart of Scotland’s recovery, embedded in the design, delivery and review of policy response at all levels of government.
I support this view, not only is it the right thing to do but, as the report makes clear, equality is fundamental to a robust and resilient economy. We cannot ignore the continued inequality that persists in our society and exposed so clearly by the pandemic. Advancing equality must pervade all aspects of our recovery plans.
On education, the report states that Scotland’s recovery must be education-led, prioritising alignment of our skills base to the changes in the economy. The report identifies the need for coordinated action across the education and skills provision to achieve this.
COVID-19 has given rise to new economic trends and accelerated existing ones. Our education and skills system are the foundation of an inclusive, fair and prosperous society and must be adapted to the new realities.
As I informed Parliament on 2 June, the Scottish Government’s commitment to investing in and developing Scotland’s skill base is only strengthened by the pandemic and the report’s recommendations will help us to direct funding to where it will be most valuable.
On unemployment, the Advisory Group’s report identifies that rising unemployment will be a key challenge for Scotland’s economy.
Increases in unemployment will disproportionately affect young people moving from education into the labour market and previous recessions have shown that the repercussions of this will permanently impact on the career prospects of this group unless action is taken to address it.
We must, however, plan for the impact of increased unemployment particularly on young people which is why we have asked the Enterprise and Skills Strategic Board to look specifically at issues related to unemployment.
I welcome the recommendation of a new collaborative partnership with business to deliver change and action on recovery. COVID-19 has taught us just how important the dynamic between business and Government truly is. We need to draw on all talents and expertise in a focussed way with purpose, action and results – we all need to be part of building and creating the post Covid world and the report quite rightly places expectation on both Government and business.
As someone who, 22 years ago, was seconded into Government by the CEO of the company I worked for at the time, Standard Life, to provide marketing advice on launching the New Labour Government’s ‘New Deal’ helping young people into employment I know the value of those connections.
This Government is committed to building a relationship with the business community to take this forward.
What unifies these recommendations is the need for a renewed partnership across the public, private and third sectors and indeed within this Parliament, one that is united around a shared purpose and vision for our economy.
COVID-19 has been cruel.
But we cannot let it defeat us or rob our children of their future .
We must establish the partnerships required to create a robust and resilient wellbeing economy for Scotland.
Together we can use the strengths, the ingenuity and the common collective will of Scotland to recover well for all of the people we are here to serve.
I am committed to working across this Chamber and with the UK Government in order achieve this.
I commend this report to Parliament.