Scottish Chambers of Commerce annual dinner: speech

Thank you very much indeed to the Scottish Chambers of Commerce for inviting me again here this evening to address this wonderful event. Thank you, Tim.

Tim, your first state of the nation address as president I thought was excellent. Words of real inspiration, particularly at the end there, but also some important messages for both Scottish and UK Governments and it's important that we listen to those messages.

You did make fleeting reference to the Scottish Government's budget, which will be presented to parliament one week today, so I thought I would start by a reference to that myself.

I can't go into detail but I want to say this to you about it: when it is presented next week I hope what you will see is that it has been a very, very challenging financial time to balance a range of priorities - a range of priorities that all have one objective: to make sure that Scotland is a fantastic place to live, to study, to work, to invest and to do business. That is my objective, that is your objective and working together we will be better placed to deliver upon it.

Specific mentions of the budget will recognise that the strength of our society, and this is true of any country, depends on having strong thriving businesses in a strong growing economy. But of course to help businesses to thrive and to prosper, it is also important that we have the ability to continue to invest in good infrastructure, whether that's transport or digital infrastructure, in support for our businesses like support in research and development, or in initiatives like City Deals. So, the ability to invest in all of those things that are important to businesses the length and breadth of our country is very much in our minds as we finalise those budget details. So when it is unveiled to parliament next Thursday I don't expect that anybody in this room, or indeed anybody across the country will agree with every single proposal in it, but I hope you will agree that it seeks to strike that balance in the right place.

Returning to the event that we have the honour of being at this evening. It is a great pleasure for me to have the opportunity to speak again at this annual dinner. You know the turnout this evening demonstrates that the Chambers network really does continues to go from strength to strength, and we've heard from Tim many of the successes of the network. I'm sure that strength will continue, and that the co-operation agreement you announced last week with Strathclyde Business School, will improve further your ability to serve your members well.

One of the big privileges of my job is that I get to go out and about all over Scotland to visit businesses and business organisations – and so I have the opportunity to see on a daily, weekly or monthly basis what a big and positive difference the chambers make to companies right across our country.

In recent years you have mentored more than 10,000 businesses.

Glasgow Chambers, which I'm sure is well represented here this evening is closely involved in the delivery of next year's European Championships here in the city of Glasgow.

And you also have an important and growing international profile – that's something I'll return to in more detail at the end of my 45-minute speech.

I would focus this evening, as you would expect me to, on some key areas where the Scottish Government is supporting business – particularly around innovation and internationalisation. But – as you might expect, given the quite extraordinary events of the last few days – I will touch firstly, and you'll be relieved to know, relatively briefly, on the issue of Brexit.

The first – actually the most fundamental – point I want to make about it is this one: I think the events of this week have given further weight to an argument that has been made by many people, and an argument that the Scottish Government has made consistently now for well over a year. By far the best – or perhaps it's more accurate to describe it as the least-worst option in the face of Brexit - is to ensure the UK as whole remains within the single market and customs union

I think that's the most appropriate democratic option, given how close the original vote was, given that two of the four nations in the UK voted to remain within the European Union. But it's also the least damaging option for our economy – the Fraser of Allander Institute just last week highlighted that 136,000 jobs in Scotland are directly linked to our EU trade.

And that option also increasingly, in the light of events this week, looks like the only viable practical option. It avoids difficulties, especially in relation to the island of Ireland, issues that have always been apparent, but which are becoming ever more obvious as the rhetoric surrounding Brexit finally confronts the reality of Brexit.

So in these circumstances, single market membership is, in my view, overwhelmingly the most sensible solution, short of retaining full membership of the EU, which would be my preference. Staying in the single market avoids some of the biggest practical problems of Brexit, it prevents the worst economic harms and it should provide a compromise that can unite different opinions.

So the Scottish Government will continue to make common cause with anybody and everybody, across all parties and all parts of these islands - who will argue for that continued membership of the single market and customs union, because it is the best approach not just for Scotland but for all the nations of these islands.

The second point I want to make - and this will be the focus of the rest of my remarks - is that whatever happens under Brexit, the Scottish Government will continue to focus on making sure that Scotland is a great place to do business, in making sure that we have the best possible environment for all of our businesses here in Scotland right now and for those who want to locate here.

That's why, for example, we moved quickly to implement most of the recommendations of the Barclay review on non-domestic rates – something that I know has been widely welcomed.

It's also why we continue to invest so heavily in the infrastructure of our country. The dualling of the A9 will be Scotland's largest road infrastructure project in at least a generation. The improvements to central Scotland's motorway network are already reducing journey times on the M8 by up to 20 minutes and in the coming months, we'll see the first electric trains on the Edinburgh to Glasgow rail line.

If you take digital – an area which has been the subject of lots of discussion recently – Scotland is making quicker, faster progress in its broadband deployment than any other part of the UK.

By the end of this year, just a few weeks from now, fibre broadband will be accessible to 95% of properties across our country. That's good progress but it's not far enough, which is why Scotland is now the only country in the UK which is committed to investing (details will be in the budget) to achieve 100% coverage of superfast broadband by 2021.

We've made that commitment partly because, as a matter of basic social justice, it's vital that all parts of the country have access to broadband. Digital access these days is as crucial as turning on the lights or the tap but it's also essential to the health and the success of our economy.

We know that rural Scotland is crucial to our future economic success – that's self-evident if you look at sectors such as tourism, food and drink and renewable energy. And we know that broadband is essential to the sustainability and prosperity of our rural communities.

Of course there is always more to do – and I am very well aware that statistics aren't at all particularly helpful for any business or family which doesn't yet have access to good broadband – but we are making significant, rapid progress. And we are doing that in a way that will bring major benefits to every part of the country.

And as part of that support for businesses, we are also prioritising some very specific measures to support innovation and boost productivity.

The strategic board of the enterprise and skills agencies will have its first meeting next Wednesday. It will play a crucial part in ensuring that all of our public interventions - around £2 billion that the Scottish Government and our agencies invest every year in skills and enterprise - will have the biggest possible impact. And of course, Nora Senior, a past president of the Scottish Chambers, will chair the board, and Liz Cameron, your Chief Executive, is one of the members.

The work of the board is important. I think we're at a really important time globally, but also for the Scottish economy. I've said on a number of occasions in recent months and will say it again this evening that our collective aim as a country should be to make sure we are in the forefront of economic and technological change in the years and the decades ahead. We should aim to be the inventor, the designer, the producer of the innovations that will shape the future – not just a user of those innovations. And next week's budget will deliver support that we believe is needed to help achieve that aim.

For example, we will set out increased funding for business research and development by 70%. In addition Benny Higgins is leading work to establish a Scottish National Investment Bank. And we are providing significant additional support for entrepreneurs – for example through the new £4 million 'Unlocking Ambition' programme.

We are also taking steps to better promote certain sectors of the economy where we know that we have specific opportunities and strengths.

To give just one example of that, I'll announce on Monday the location of our new national manufacturing institute. We know that advanced manufacturing offers big opportunities for businesses across Scotland, so we will ensure that companies in the sector have access to the specialised expertise and support they need to succeed.

Of course our commitment to innovation goes hand in hand with a focus on internationalisation.

That's an area where we have already had some significant successes.

The value of Scotland's international exports has increased by 2/5 in the last seven years.

That's good – we should celebrate it - but we know there is still much to do. As I have already said, Brexit – particularly a hard Brexit – presents a genuine danger to exporting businesses.

And even as things stand, more than half of all of Scotland's exports come from just 70 companies across our country. Every time I sight that statistic I'm struck by the challenge of that, but also by the enormous opportunity that that presents to broaden our export base and encourage more small and medium sized businesses in particular to think about international markets.

As Tim outlined, the Chambers network has an extremely important role to play. I've seen very recently – when I've spoken at major Chambers of Commerce events in Dublin and Gateshead – just how highly regarded the Scottish Chambers are by their partner organisations. And I know that that's not just true on these islands, but in towns and cities around the world.

When I spoke at this dinner last year, I announced Scottish Government funding to help the Scottish Chambers to develop better connections with overseas chambers.

It's fair to say you've done a huge amount with that funding. In fact, you've strengthened links with chambers in more than 20 different countries – I think that is absolutely fantastic progress – countries in Europe and right across the world, from Kenya to Canada. In China, for example, there is now a Scottish Chambers trade hub in Yantai, on the Yellow Sea coast.

And so two weeks ago, so pleased have we been at that progress, the Scottish Government announced further funding to help the chambers create local export partnerships across the country.

These partnerships will bring together Scottish Development International with local authorities and local support organisations.

They will offer support and expertise to companies – especially small and medium sized enterprises – which don't currently have experience of exporting. By doing so, they will play a vital role in helping us meet our overall aim of getting more and more businesses to internationalise.

And the partnerships, I think, are a further demonstration of the point I made at the outset. The Chambers of Commerce network makes a significant and positive difference to businesses the length and breadth of our country.

Locally you provide detailed support and advice for companies; nationally you provide a strong voice for business, often a challenging voice to government, as is rightfully the case; and internationally, your networks help to promote Scotland and Scottish products around the world.

So, as the Scottish Government seeks to build a fairer, more competitive, more internationalised economy in the years ahead, your contribution will, I am sure, become ever more important.

That's why we are so supportive of the work that you do; and it is why it is such an enormous pleasure for me to be with you this evening. So I hope you now do enjoy you dinner. Let me wish you a pleasant evening and if not too early let me also wish you the best of the festive season.