National Economic Forum: June 2021

Host: Kate Forbes MSP, Cabinet Secretary for Finance and the Economy, Jenny Gilruth MSP, Minister for Culture, Europe and International Development

Facilitator: Louise MacDonald National Director, Institute of Directors Scotland

Scribe: Matthew Farrell, Scottish Government

Introduction and background

The facilitator for the discussion, Louise MacDonald, the National Director for Scotland at the Institute of Directors, set out the plan for the session and reiterated the questions contained in the discussion paper.

The aim of the session was to look ahead and to think about the longer term. The country has been through a traumatic time in the last 15 months and many are still in survival mode. Although we are not yet out of the pandemic, we need to think about how to move out the response phase, and take forward the work of planning for recovery and the longer term.

The Cabinet Secretary for Finance and the Economy, Kate Forbes MSP began the discussion, giving an introduction to the Scottish Government’s current priorities, highlighting that success in economic recovery and transformation must come through partnership and collaboration and calling for attendees to contribute their ideas for solutions to the challenges we face. The Cabinet Secretary asked for contributions to focus on three points:

• where do we collectively want to get to
• what do we want the marks of success in our economic recovery efforts to be
• how are we going to get there - what are the tools and levers required?

Topics discussed: harnessing the pace of change

The discussion began around the significant pace of change during lockdown, across government, the private sector and the 3rd sector, highlighting the positive points that change can happen quickly when the circumstances require it, and that maintaining that pace of change as we move into recovery can help to support ambitious aims for transformation. Other points raised here included:

• to harness this pace of change and maintain the fast-paced innovation and adaptation we have seen so far, will require having the correct models and frameworks in place to support businesses, and ensure the correct skills base and workforce capacity is available
• central to this pace of change will be rationalising the economic policy landscape, removing potential clutter to simplify activity and focus on key objectives – helping to avoid gaps and duplication of effort
• this rationalisation should be informed by wide and open consultation - the support provided by government works best when it responds to articulated rather than perceived needs from businesses, third sector organisations, communities and individuals
• to benefit from this pace of change, leadership is important from all parties involved in the economy – leading with courage to step out of the normal way of doing things and building on the collaboration we have seen throughout the pandemic

Hardest hit sectors

 A number of participants raised issues faced by the companies and sectors that have been hardest hit by the pandemic and are still operating at reduced levels under current restrictions. Many participants also highlighted the importance of hearing personal perspectives on the scale of the issues faced. Other points raised here included:

• many businesses and sectors are concerned about the end of furlough and what that means for job losses and viability of companies, supply chains and sectors
• the jobs lost during COVID-19 and through an abrupt end to furlough may result in future skills gaps in some sectors
• a significant proportion of the hardest hit business are important to the future of our town centres and places, and have a strong role to play in terms of community cohesion
• town centre and community-based businesses are also important in providing flexible labour opportunities and labour opportunities for women
• many businesses in the hardest hit sectors are focussed on survival and the very short term and need to think about how to make sure that those business can stay afloat during this period as they will be important to the post-COVID economy – particularly considering the age and gender makeup of the workforces of the hardest hit sectors

Participants led a wide-ranging discussion on the tourism sector with some of the main points raised including:

• in sectors like tourism the downturn is impacting front line companies but also a wide range of supply chains and support services
• international travel and a recovery in overseas visitors will be central to a sustainable tourism recovery
• it is important to protect and maintain the world class assets and attractions that draw people to Scotland as the sector recovers
• it is important to create the right conditions for recovery with support in place for businesses to adapt and diversify, to continue to develop the skills base in the industry and make it attractive for people to visit but also to come to work in the sector and for services and tourism infrastructure to locate here

Making Scotland the place to do business

Many participants contributed on how to make Scotland a more attractive place to do business, setting out the steps that the Government and other stakeholders in the economy can take. These focused on a number of key areas:

• innovation and the need to maintain the pace of the adaptation and innovation seen during the pandemic response. Participants suggested that Government could support by simplifying the innovation landscape and through encouraging business to invest in innovation to transform their products and services
• participants noted the importance of improving productivity levels, proposing support for greater levels of capital investment in Scotland’s businesses to give workers the best tools to do the job
• greater incentives to encourage inward investment were also suggested
• it was highlighted that skills availability is a key consideration in Inward Investment decisions and that systematic early engagement of skills providers is important to ensure co-creation of appropriate skills plans and pipelines
• the value of creating the right conditions for recovery was also raised, including the importance of providing clarity over the short, medium and long term, helping business to plan, and sending the right signals to companies investing in Scotland or locating their activity here

Transforming the economy

It was noted that in surviving through COVID-19, many businesses have had to adapt and change fundamentally and the need to accelerate digitalisation during the pandemic was a key example of this.

• participants highlighted that we are facing an unparalleled opportunity for a transition to a digital economy – change has been accelerated by COVID-19 and Scotland’s young workforce can be central in taking this forward
• as part of digital transformation, broadening investment into a wider range of companies, to support access and capability across all groups of society will be vitally important and will assist in addressing issues like improving levels of investment in female-led tech firms
• existing work including the Logan review has been helpful in setting out the pathway and what the next steps and future is for tech-led industries in Scotland
• the importance of support pathways for micro businesses that are vital to communities was also noted, including funding for young entrepreneurs. It was noted that these measures are particularly impactful in rural and islands areas
• whilst participants acknowledged the positive role of the Young Person’s Guarantee, it was also highlighted there should be an increased focus on the generation of young adults and addressing the potential long-term impact of COVID-19 on their employability

Participants noted that the strong wellbeing economy narrative should be embedded into plans for transformation and recovery – highlighting some additional areas for focus:

• narrowing a societal inequality gap that has been exacerbated by COVID-19
• taking a more holistic view of the contribution of business to society, looking beyond turnover and jobs created to think about how to improve wellbeing and impacts on the communities they are located in
• create a more diverse business landscape
• supporting more women to be able to step forward in leadership roles
• extending innovation support to non-traditional scale-up industries

Low carbon

In terms of a just transition to net zero, participants discussed that that stepping up investment in low carbon infrastructure and tech can be positive for job opportunities and economic activity as well as helping towards our ambitious climate change targets.

In line with the theme drawn out elsewhere in the discussion, it was highlighted that fully taking advantage of the opportunities that recovery, and particularly a green recovery will present, will take really strong collaboration between all levels of government, industry, trade unions, sector leadership, skills and enterprise agencies.

The discussion also covered what Government could do to support low carbon investment, including developing appropriate frameworks, incentives and regulation to enable low carbon investment options, and identifying ways to support activity where private investment is not yet viable. Similarly participants raised the importance of increasing public awareness to support informed decisions about low carbon options and sending clear signals to drive behaviour change.

Closing comments

The Minister for Culture, Europe and International Development, Jenny Gilruth MSP, provided closing comments thanking participants for their contributions and summarised a selection of key points for further consideration, noting the importance of this type of engagement, which will continue through the process for developing the 10yr transformation strategy and reiterating that Ministers want to continue to hear from business on their priorities and ideas for recovery and transformation.