Managing Scotland’s finances and working with business to drive our wellbeing economy: Ministerial statement

Presiding Officer,

It is a privilege to open this first debate in my new role as Cabinet Secretary for Wellbeing Economy, Fair Work and Energy.

I wanted to start by paying tribute to my predecessors who have held responsibilities for different elements of the portfolio I am now in charge of - John Swinney, Michael Matheson, Ivan McKee and Kate Forbes.  All have, and will continue to contribute a huge amount. It is particularly pleasing to have seen Kate Forbes back in her place this week after a period of maternity leave. I know what a wrench it is to return to work after a period of paternity leave in my case on three occasions. So I wish Kate Forbes and her family well adjusting to that new normal that we all have to do after that adjustment process.

A growing, thriving economy is about more than just numbers. Economic success means making the most of the incredibly rich resources Scotland has. It means high living standards, people being able to fulfil and exceed their potential, and a dynamic and strengthening business base. That, in turn, feeds into strong and sustainable finances that support public services and communities.

I want to take the opportunity today to underline my commitment to working closely with our business community to maximise Scotland’s sustainable economic growth potential. 

Yesterday the First Minister set out plans to agree a ‘New Deal’ for business and the introduction of a new group, co-chaired by me, which will explore, among other things, how government can better support our businesses and communities using the policy levers it has.

Our message to Scotland’s businesses is clear. We hear your concerns around high UK inflation; supply chain issues; labour shortages; impact of regulation. We will continue to work with you to mitigate the potential impact. In return, we will work in partnership with you to support fair work and support businesses to develop and internationalise, driving prosperity. 

The last few years seen the cost crisis, the pandemic, the impact of the UK's disastrous Brexit and the fiscal instability brought on by the decisions of the UK Government mini budget. These have brought untold damage to the wellbeing in Scotland of people and businesses, and have laid immense pressures on our precious public services and voluntary sector.

Output in the global economy is forecast to slow in 2023, and Russia's illegal invasion of the Ukraine continues to present a risk to global trade and activity.  

The IMF forecast that the UK economy has the weakest growth outlook in the G20 for 2023. 

As a devolved government, we do not have all the levers other countries have to bring forward economic interventions to support their economy, businesses and people or to mitigate UK decision making.

Our FDI competitors are committing greater budgets to incentivise investment. The UK Government needs to invest using the levers they have - and that we would like to enjoy - on a scale that matches Scotland’s ambitions. As shown in a recent publication by the Resolution Foundation, Britain is a low investment state which has ultimately left the us the poorer.

For example, in the US, the Biden Administration is stimulating massive investment in renewables and green technologies through the Inflation Reduction Act; and the EU is following suit with its Net Zero Industry Act and Critical Raw Materials Act. Other Governments are leading the way, bringing markets and investment with them.

But the UK is left on the side lines with the risk that investment flows to the EU and US rather than Scotland.  The UK's lack of action means we are at a competitive disadvantage. There is a narrow window of opportunity to reap the rewards of our renewables revolution, so now is the time for the UK Government to prioritise meeting net zero targets and other vital infrastructure priorities – invest in the economy, rather than squandering Scotland’s energy assets again.

That’s why this debate is so important. In the face of financial and economic pressures, as well as the threats of climate change and child poverty and the need to enhance public services – it is essential we come together to drive our transition to a wellbeing economy. That was the focus of the discussion I had with the organisations representing businesses across Scotland just hours after my appointment.

A wellbeing economy is a strong, growing economy which is environmentally sustainable and resilient and which serves the collective wellbeing of people first and foremost.

It empowers communities to take a greater stake in the economy, with more wealth generated, circulated and retained within local communities, protecting and investing in the natural environment. It provides opportunities for everyone to access fair, meaningful work, and values and supports responsible, purposeful businesses to thrive and innovate.

That is why our National Strategy for Economic Transformation emphasises wellbeing, building on and broadening the sustainable, inclusive growth approach taken previously.

And why one of the three missions announced by the First Minister yesterday is to increase the opportunities in our country with an economy that is fair, green and growing.

To make this shift towards a wellbeing economy we need metrics to track its progress and we developed our Wellbeing Economy Monitor specifically to look beyond just GDP to measure how Scotland's economy contributes to improving things like health, equality, fair work and environmental sustainability.

In committing to a transition to wellbeing economy we can build on our considerable strengths and maximise our potential with the powers we currently have.  With Independence we could do much more. 

Scotland has a rich and diverse economy with many areas of strengths.

But there are underlying structural issues, We have an ageing population and our working age population is falling. That is why we have made a commitment to address Scotland’s labour market inactivity challenges and remove barriers keeping people from contributing economically.

Investing in skills across people’s lifetimes is critical to future productivity and success as the economy and labour market continues to evolve. Apprenticeships provide people of all ages with a great opportunity to upskill and reskill and help them to progress within their chosen career path, providing the skills the economy needs both now and in the future.

Certain industries still face recruitment challenges. I hear about that when I meet employers in my constituencies. So we continue to call on UK Ministers to establish a joint taskforce on labour market shortages. An urgent rethink of UK Government immigration policy is needed to increase access to the international labour that our economy needs.

The Scottish Government has developed a Rural Visa Pilot proposal, which represents a practical, deliverable migration solution. The Migration Advisory Committee stated in its 2022 Annual Report that the proposal is “sensible and clear in both scale and deliverability”. We will continue to push the UK Government to engage with us on this.

We need to do all we can to help people to get into and stay in good jobs by providing the right support – such as employability, health services, or childcare – at the right time, especially for those furthest from the labour market.

The National Strategy for Economic Transformation emphasises the need for high quality childcare enabling parents and carers to work, increase their working hours or enter training and education.

Our recent early learning and childcare parents' survey demonstrated clear positive benefits from the increase in the funded ELC entitlement with almost three-quarters of parents acknowledging that it supported them to work or to look for work.

Our ELC provision – the most generous in the UK - also helps tackle inequalities such as the gender pay gap.

We have ambitious plans to go further. Within this parliamentary session we will build a system of school age childcare and design a new offer for one and two-year olds, starting with those who stand to benefit most.

Our commitment is set out in the policy prospectus that the First Minister published yesterday and I hope to meet with the childcare sector soon to understand where we can support this crucial element of childcare delivery. 

A focus on people's wellbeing, which prevents harm, is good for Scotland's economy. In the face of acute labour shortages for many sectors and businesses, it will help businesses have access to the workers they need to be successful and drive our journey to a stronger, fairer, greener economy.

This will benefit Scotland’s tax base and public finances, while also having positive impacts on our children and future generations.

Through our holistic approach to supporting the wellbeing of our children and young people, we can help improve outcomes in education, employment, health and justice by ensuring they are supported, encouraged and empowered to contribute to, and benefit from, the development of a wider wellbeing economy. By taking a preventative approach now we can reduce issues in the future.

The development of offshore wind can help to achieve a just transition to net zero, decarbonise our energy system, and create good quality green jobs. It is also one of the lowest cost forms of electricity generation at scale. We have huge opportunities in our ScotWind offshore project and Hydrogen and tidal sectors as well.

It is clear we have the plan, the opportunities and the ambition needed to deliver a wellbeing economy but to succeed we need everyone to be around the table.  

The prize when we succeed will be a prosperous, dynamic and thriving Scottish economy where everyone shares in and benefits from our success.

The Government’s motion that I move in my name indicates the steps that we need to take to ensure that we get and reap the opportunities that there are for us all.