Scottish Business Growth Group minutes: January 2020

Attendees and apologies

In attendance:

• Minister Ross (DR), Parliamentary Under-Secretary of State, Office of the Secretary of State for Scotland, UK Government (OSSS)
• Minister Forbes (KF), Minister for Public Finance and Digital Economy, Scottish Government (SG)
• Helen Martin (HM), Assistant General Secretary, Scottish Trade Union Congress (STUC)
• Liz Cameron (LC), Director and Chief Executive, Scottish Chambers of Commerce (SCC)
• Matt Lancashire (ML), Director of Policy and Public Affairs, The Scottish Council for Development, (SCDI)
• Ian Wall (IW), Chair, SCDI
• Colin Borland (CB), Head of Devolved Nations, Federation of Small Businesses (FSB)
• Malcolm Cannon (MC), National Director, The Institute of Directors Scotland (IOD)
• Lord Callanan (LMC), Minister of State at the Department for Exiting the European Union (DExEU)
• Oliver Griffiths (OG), Director, Department for International Trade, UK Government (DIT)
• Ramin Hassan (RHa), Export and Investment Policy Team, Department for International Trade (DIT)
• Rebecca Hackett (RH), Deputy Director Policy, Office of the Secretary of State for Scotland, UK Government (OSSS)
• Scott Strain (SS), Head of Trade Promotion, SG
• Martyn McDonald (MM), Team Leader: Business Engagement, Events and Analysis, SG
• Stuart Chapman (SC), Department for Business, Energy and Industrial Strategy (BEIS)
• Thomas O’Driscoll (TOD), Policy Advisor, Business and Trade, OSSS
• Hannah Standring (HS), Policy Advisor, Business and Trade, OSSS
• Steve Thompson (ST), Team Leader, Business and Trade, OSSS

Apologies:

• Susan Love, Policy Manager, FSB Scotland
• Andrew McRae, Scotland Policy Chair, FSB 
• Tracy Black, Director, Confederation of British Industry Scotland (CBI)
• Graeme Jones, Chief Executive, Scottish Financial Enterprise (SFE)
• Phillip Grant, Chair, SFE
• Grahame Smith – General Secretary, STUC

Items and actions

DR made introductions, and noted it is useful that both governments sit together and hold discussions such as this. KF congratulated DR on his recent appointment.

Free Trade Agreements (FTAs)

OG provided an update on ongoing UK Government FTA work. He noted the Conservative manifesto commitments to negotiate FTAs with the USA, Japan, Australia and New Zealand within three years. He highlighted key red lines in the negotiations such as the NHS and food standards. 

He informed the group that public consultations had taken place, and there had been 6,000 responses from the respective exercise. In the autumn, UKG carried out a comment exercise on the Japan negotiations. DIT has been compiling mandates for future negotiations, working alongside the Office of the Secretary of State for Scotland (OSSS) and Scottish Government (SG) at ministerial and official level on policy detail.

The plan is to publish a series of documents setting out objectives and a scoping assessment providing an initial economic assessment for the deal. Papers relating to the US negotiations will be published ahead of other agreements.

DIT has been using 17 Sectorial Trade Advisory Groups (STAGs), and Expert Trade Advisory Groups (ETAGs) as the main channel of engagement with business and civil society on proposed FTAs.

SS asked for clarity on the timetable. The SG remain committed to supporting negotiations and making sure there is a clear process and understanding of the needs for the Scottish economy, highlighting the rural economy as an area of particular sensitivity. He stated there was a willingness to be pragmatic at official and ministerial level.

HM asked for details on civil society and trade union representatives on the Trade Advisory Groups. OG responded in the affirmative and said he would send details.

LC noted that she had attended a STAG meeting the previous day, and expressed some concerns over the need to engage more widely with businesses in Scotland. She noted the discussion had been generally positive, and that there is a plan to organise a meeting of all Scottish STAG/ETAGs representatives shortly in order to co-ordinate the Scottish business voice. OG noted that this was a helpful idea. 

KF noted that while some economic themes and needs remain the same across the UK, there are nuances in the Scottish economy. The SG are often called upon by Scottish businesses to represent them, and want to know how SG will be able to shape negotiations going forward.

OG noted that LC’s idea was helpful, and that DIT are keen to receive representation from businesses on both offensive and defensive fronts. Similarly, OG noted that every six weeks SG and UKG meet at a senior official level, and on the consultations DIT has had full contributions from both the SG and Welsh Government. Ministerial level meetings are also progressing, with Minister Conor Burns (DIT) hosting one on that day, the Ministerial Forum for Trade (MFT).

DR noted that Minister Burns is keen to keep engagement and dialogue with the SG open, highlighting that his first trade visit was to Scotland.

LC stated that there is an upcoming STAG meeting (28 January) in which they will be having an open discussion on how to deepen stakeholder engagement, particularly in Scotland.

ML noted that in order to meaningfully engage, businesses and business representative organisations need to know what the parameters of FTA negotiations are, and asked what information can be shared with business to give better engagement.

OG confirmed that this was to be part of the discussion at the Ministerial Forum for Trade that day. He put forward that the published public documentations will provide clarity on UKG’s vision for the scope of agreements, broken down by sectoral area. This should provide a useful parameter for businesses, and noted that ETAGs will be working on the detail behind this.

HM enquired on whether there will be scope to shape the policy and parameters once the documents are published. OG stressed that these documents will be headline thinking, but there will be a lot of space for detail below leaving scope for engagement. The Outline Approach will be a result of cabinet discussion and subject to collective agreement.

KF highlighted that there should be more clarity after the MFT today, and that this would now be the formal vehicle for continuing engagement. OG confirmed that the terms of reference for the MFT would be agreed that afternoon, and noted that official level engagement would continue alongside.

DR suggested that the MFT be on the agenda at the next meeting.

Action:

• OG to send around details of civil society representation on ETAGs/STAGs

EU Exit

LMC apologised to the group for not being able to join them in person in Edinburgh. He updated the group on the progression of the Withdrawal Agreement Bill and noted that the final stage – at the European Parliament – was expected to happen the following week. He reminded the group that the WAB covers citizens’ rights, financial provisions and the Northern Ireland Protocol. He stated that the UKG had consulted extensively with the Devolved Administrations (DAs) and sought Legislative Consent Motions (LCMs) from the devolved parliaments for devolved aspects of the bill, which had not been forthcoming. He expressed disappointment at this, but emphasised that UKG remain committed to the principles of the Sewel Convention. 

On the future of the negotiations, LMC reminded those present that The Department for Exiting the EU would be wound up on 31 January 2020, with negotiations then being led by a team in No.10 comprising of David Frost and officials. Sectoral issues will be led by the relevant departments.

LC stated that while it is positive that an element of uncertainty has been removed, it is now critical that business organisations are engagement every step of the way. A lot of questions remain around tariffs and regulations. She asked if it was possible to look at increasing the level of communication that is going out to businesses.

LMC noted that this was a sensible suggestion and emphasised that the next phases will be critical – with BEIS, among others, ensuring that businesses are closely involved.

DR highlighted that businesses and business organisations should feel welcome to come to the OSSS with any specific issues.

KF asked whether the UKG had any planned funding announcements regarding business support between 31 January and 6 February, when the SG budget is to be published. 

LMC stated that it was for the Chancellor to determine the budget. He asked if DR could follow up with BEIS on potential business support.

DR confirmed he would feed these comments back to the Treasury.

RH stated that there is an official level meeting with the Business Readiness Team (BEIS) and SG officials to take place the following day.

LC stated that, given the Prime Ministers language around “rebalancing” regions, she felt confident in the expectation that business in Scotland would be supported by the UKG

ML stressed that it is important for both governments to look to the future and focus on the positive opportunities that Brexit will bring. He asked what support to business can be provided in this sphere.

LC recognised the work BEIS had done to ensure businesses are ready for Brexit, but the conversation now should turn to growing the economy, and specifically offering support in identifying new trade opportunities.

Both Ministers agree this was a good idea and signalled appetite to work together to boost Scottish business following Brexit.

IW asked how the repatriation of regulation was being handled. Lord Callanan outlined that under the WAB, all EU rules and regulations would be imported into UK law during the implementation period, following which both the UK and Scottish Parliament would decide regulatory changes. Business input will be needed at this stage. He highlighted that nothing will change in the short term and, even after the implementation period, it is likely that changes will be incremental. He also noted that there will be regulatory opportunities in new fields.

IW reminded that those present that for most businesses December 2020 is just around the corner.

CB asked for an update on frameworks. LMC confirmed that UKG and SG are continuing the discussions on this.

RH stated that documents are in circulation at official level, with plans for extensive business engagement. OSSS can give an update on when the planned engagement will be taking place.

Action:

• OSSS to update members on when business engagement on frameworks will be taking place

Export plans

RHa, Head of Export and Investment Policy at DIT, presented to the group on the UKG export strategy, and its progress over the last year. In particular he mentioned the launch of the Export Champion Service, the integration of UK Export Finance (UKEF) with UKG trade support and the UKEF launch of the General Export Facility (GEF). He also mentioned recent successful government to government agreements, such as the one with Peru around the Lima Games.

Minister Forbes looked for a commitment from DIT that they would continue to provide embassy support in to order to assist the SG export objectives. Minister Ross confirmed he would discuss this issue with Minister Burns.

Liz also enquired as to what work DIT is doing around trade promotion and business opportunities for the 2020 Olympics in Tokyo, as well as COP26. She stated it would be good to see how UKG and SG are working together to make cultural events like this a success for Scottish businesses.

RHa confirmed that he would ask the responsible directors to come back on this, and emphasised that he appreciated the DA need for support from the DIT overseas network.

SS then provided an update on the SG export strategy – A Trading Nation. In particular, he noted that whilst exports are increasing, as a share of the economy, they are static. He noted that the SG are focusing on specialities in terms of sectors, and on the top 500-1000 companies in terms of an export base. However, he made clear that the strategy was not disregarding SMEs.

HM stressed that more could be done in order to grow the UK’s manufacturing base, to boost struggling domestic companies. Highlighted that some companies also could diversify and consider exporting as part of their strategy, rather than relying on UK procurement. SS agreed with this point and suggested procurement was currently too fragmented.

KF highlighted that the UK Industrial Strategy had been on the last agenda, and stressed the need to ensure it is working closely in tandem with industry in Scotland.

ML noted that the top 500 companies mentioned by SS are reliant on their supply chains being productive and stressed that there should also be a domestic focus on improving productivity to ensure we can be competitive.

KF supported this sentiment, pointing to the Scottish National Investment Bank (SNIB) as an example of a long-term, outcome based approach.

IW made the point that the Climate Emergency question is a permanent one, and one which much be incorporated into a business and trade strategy and involve strategic engagement. He noted that establishing for ourselves a reputation around strong regulation on climate is one area in which increasing regulation may actually strengthen rather than constrain businesses.

LC similarly underlined the need for an effective strategy to transition, and to take stock of a 20-30 year policy, noting that SG have recently pulled back a number of promises to business under the climate change banner.

DR highlighted that this is a pertinent moment to be considering this, as COP26 provides an opportunity to use momentum and create a legacy. He back ML comment regarding supply chains, noting that this is often easy to overlook, but is integral.

KF supported the point made regarding the potential business opportunity that the Climate Emergency presents, noting that others will look towards countries who get it right and are strong in this sphere.

SS noted that the environmental impact assessment of their export strategy will shortly be available online. LC asked if economic assessments are likewise done for all policies.

MC commented that both exporting strategies makes sense, and added that the devil will be in the implementation. In terms of feedback to IoD members, he asked what the key priorities are, and how these should be fed back.
KF stressed that the most important metric to know is exports ad a percentage of GDP, and that this needs to go from 20% to 25% in the next 10 years. SS confirmed that if members would like more detail regarding messaging and KPIs this could be taken offline. 

Action:

• OSSS to circulate both presentations electronically. SG to update the group on economic impact assessments on policies

AOB

LC highlighted the Audit Committee report on measurements in regards to City and Growth Deals and noted that it would be good to get a better understanding of both Governments’ response to this.

DR suggested that it would be helpful for both governments to report on this at the next meeting, and highlighted a need to communicate investment better, particularly around City and Growth Deals.

ML reminded the group that COP26 was now imminent, and there was general agreement that this should be an agenda item at the following meeting.

KF and DR thanked all those present, and DR passed on the thanks of the Secretary of State for Scotland.