First Minister's speech at News UK: 'Scotland in Business'

Thank you, Richard. I am grateful to News UK for inviting me to speak today. It is great to see so many people here.

The last time I spoke in this building was in 2015, for the Times CEO Summit. As an opportunity to discuss some of the big issues facing Scotland and the UK, I found that event really valuable. So I am delighted to be back today for a similar type of discussion.

The focus of my remarks today, relatively brief remarks, will be Scotland's economy. I want to talk about our determination in Scotland to be at the forefront of innovation in the years to come. More specifically I have been asked to talk about our strengths in data driven innovation – and the huge potential benefits of that for both our economy and our wider society.

Fundamentally, we want Scotland to be one of the countries that is inventing and designing and manufacturing the innovations that will shape the future – not just the future of our country but future of the word. Not just a country that is using the innovations designed and manufactured elsewhere. So we are very deliberately taking a range of actions now to make our economy competitive, but also to ensure that Scotland is well placed to help lead the next era of transformational change.

That is something, if we get it right, that will undoubtedly bring massive economic benefits – but it also speaks to Scotland's history, and our sense of who we are as a country. After all, a talent for innovation and entrepreneurship runs very strongly throughout the history of Scotland. Many of the advances that shaped the modern world that we inhabit today – the steam engine, the telephone, penicillin, the television, many, many more were discovered or invented by Scots.

That tradition endures to this day. Scotland's businesses and our universities remain at the cutting edge of research and development – in key sectors like energy, life sciences and digital technology. We want to build on that – by supporting the talent and potential of our entrepreneurs, our inventors and our businesses.

Now, I do not intend to dwell on Brexit too much today – but it is obviously relevant to any discussion about our economic future.

Most of you already know the position I take – I deeply regret the UK's decision to leave the EU. And I believe the absurdity of the on-going UK Cabinet discussions and disputes over post-Brexit customs arrangements strengthens one of the basic arguments that the Scottish Government, together with many businesses, has been making. And that argument is that in our view the best approach - if the UK is determined to leave the EU – is to remain in the single market and the customs union.

It is the obvious democratic compromise, in a UK where 48% of voters – and two out of four nations - chose to remain in the EU. And it's also the least damaging solution economically. So my government will continue to make common cause with allies - including other political parties and governments and businesses across the UK, for a measured, sensible approach.

However, the prospects of Brexit reinforces the importance of all of the other steps we are taking to create a strong business environment. Scotland is working hard to attract inward investment. We are already the most successful part of the UK outside London and the south east when it comes to attracting inward investment. The Scotland is Now campaign, a coordinated campaign including all of our agencies is about marketing Scotland, not just as a good place to invest, but a good place to work, to live, to study and to visit. We are taking a range of actions that are about ensuring we have a competitive business environment, a competitive economy and some of these actions, if I can be frank, also involve addressing areas where we think we need to do better.

For example – we've recently taken the decision to increase government support for business research and development by 70%. We know that it is one of the best drivers of innovation, business's own expenditure on R&D. We recognise it is an area where Scotland needs to do better in the future than we have done in the recent past.

We're creating a National Manufacturing Institute – Scotland has a long tradition of manufacturing excellence. We want that to continue as manufacturing becomes more advanced in the future. We are determined to be at the cutting edge of manufacturing skills and research. That has big advantages for a number of sectors – energy and aviation for example, to name two of them

And, we're establishing a Scottish National Investment Bank to complement the finance already available from the markets and in particular provide ambitious, innovative businesses with access to strategic and patient capital. The bank's implementation plan is based on the recommendations of Benny Higgins – the former CEO of Tesco Bank. The bank will be mission led, it will be about providing the capital and support to businesses to help them deal with the big challenges of the future. The transition to a low carbon economy, for example. We aim to capitalise the bank to the tune of £2 billion.

We also appointed Ken Barclay – the former Chairman of RBS – to chair a review of our business rates system to make sure they are competitive and we are already implementing most of the review's recommendations – something that has been widely welcomed by businesses across Scotland.

It is worth mentioning that we are seeking to balance a fair and competitive tax rates, overall, coupled with the lower cost of doing business for many other reasons in Scotland, with significant investment. Not just significant investment in our NHS, our education system but also in infrastructure, in business support, in housing. These are exactly the kinds of things businesses need to thrive and grow. These things are all vital to a good society and a competitive economy. And they are an essential part of Scotland's offer to business.

There has, in the last decade, been significant investment in Scotland in transport infrastructure right across, from the north to the south of the country with some flagship projects, as part of that the new Queensferry Crossing, for example.

Our focus over the next few years is very much on digital infrastructure. Our aim is that by 2021, all properties, 100% properties in business and residential will have access to superfast broadband at speeds of 30 megabits per second or greater. That goes significantly beyond the UK government's proposals for any other part of the UK. And it will help to ensure that investment and growth are shared across the country. Something that is important in any country but particularly one where one in five of our population live in what can be described as remote and rural areas.

Another hugely important investment we make is in our universities. Scotland has one of the most skilled populations anywhere in Europe with more universities per head of population than any other part of the EU. Five of them are ranked among the top 200 in the world. And we lead every other part of the UK, both in attracting R&D projects – and in setting up businesses to commercialise the research that is done.

One of the areas where that is most apparent currently is in our tech sector. Scotland already is home to 1,000 tech companies, almost 100,000 graduates from tech related fields – and incredible success stories, like Skyscanner.

That success is underpinned by our expertise in big data and informatics. The Edinburgh School of Informatics at Edinburgh University is ranked number one of its kind in the UK – and among the top 1% in the world. Our Data Lab – one of our eight national innovation centres - brings that academic expertise together with industry – to identify and capitalise on new opportunities.

All of that is helping to put Scotland is at the forefront of data driven innovation.

For example, we are already emerging as a leading centre for the development of financial technology. Edinburgh and Glasgow have a higher rate of FinTech start-ups than any other part of the UK – including London. Our Data Lab is already partnering with the likes of HSBC and Standard Life Aberdeen on FinTech R&D. And the Scottish Government, along with our business community and the University of Edinburgh – has established FinTech Scotland – an organisation designed to focus on the needs of that industry and drive its growth.

We are also pioneering research on artificial intelligence and robotics – technologies that all of us know could potentially transform the way all of us live, work and think. The Edinburgh Centre for Robotics leads a consortium of UK institutions specialising in both these fields. The consortium recently secured £36 million for research into the use of robotics in offshore energy, a really important area for Scotland, not just in the traditional oil and gas sector but increasingly, in renewable energy as well.

And last year, academics from Heriot Watt University were among the three finalists for Amazon's Alexa Prize. They successfully produced a 'socialbot' - which could converse socially with humans.

This expertise in AI is also opening up opportunities elsewhere. Our life sciences sector - Scotland is long renowned for innovation in medicine and life sciences. We are now leading pioneering research in precision medicine tailoring healthcare to fit an individual's genetics and lifestyle.

Our clinical expertise, our expertise in genomics, and our access to high quality healthcare data, perhaps the best and most joined-up healthcare data anywhere in the world make us a natural centre for this new approach to medicine. That's why, in 2016, AstraZeneca selected Scotland as one of just a few major centres for its global genomics initiative. It's a ten-year project which aims to sequence 2 million genomes from around the world – and the data gathered will then be used to develop new medicines. It's just one of many examples of some of the real pioneering work that is currently being done in Scotland. Innovation is vital, being able to innovate is vital to the kind of emerging industries that I have spoken about, but also important in our more established traditional industries and we are seeing also real examples of innovation in traditional industries from textiles to shipbuilding to food and drink as well.

So our determination is to remain at the forefront of all of these areas and to focus on doing what we need to do to ensure that that is the case. I mentioned some of our investments in infrastructure, the manufacturing institute, the investment bank and we are also investing heavily in City Deal. For example, the Edinburgh City Deal which will be so important to building on our strengths in data and digital, is one which the Scottish Government is investing £300 million, it's a deal worth over £1 billion in total. These kinds of investments are important for business and important for our ability to stay at the forefront of innovation.

I said at the start, that is something Scotland has done throughout our history. For centuries, we have been at the forefront of transformational change and we want that tradition to continue. We have in Scotland all the talent, expertise and ambition necessary to lead the world into the next revolution just as we helped lead it into the industrial revolution.

That is why we are taking the range of action that I set out and many others beside and why we are so determined to provide the support to our inventors, entrepreneurs and businesses. And it is why we will continue to do everything we can to attract talent and investment to our country.