Towards a robust, resilient wellbeing economy for Scotland: Report on written submissions to the Advisory Group on Economic Recovery

6. Submissions from Business

Key themes and priorities raised by businesses both through the open call to views and directly to Lord Smith of Kelvin were summarised by Scottish Enterprise and are reproduced below.

6.1 Scotland's Competitive Advantage

The recovery will be lengthy and troublesome for the business community, and remains highly dependent on the length of restrictions, any recurrence of the virus, and the effectiveness of the government response.

Scotland has several natural asset strengths, particularly in the food and drink, tourism, renewables and technology sectors. In order to thrive and for opportunities to emerge, realistic and pragmatic changes are required to reduce regulatory obstacles and create a welcoming, enterprise-led market. This recovery and acceleration should not be achieved at the expense of other sectors, rather there needs to be rational prioritisation.

At a macro-economic level, there is a requirement for long term, patient capital investment to support profitable sectors, ensuring that Scotland continues to maintain global competitive advantage while remaining cognisant that sectors will recover at a varying pace. Moreover, infrastructure spending will be key to recovery and should be steered towards resilience for managing future risks, such as climate change. There is wide consensus that this crisis presents Scotland with an opportunity to emerge as a leader in renewable technology and production with strong support for green infrastructure, including energy transition, decarbonisation and carbon capture utilisation and storage.

6.2 Businesses and Sectors

Additionally, it is considered that the robustness of the supply chain will be critical to Scotland's recovery, re-building local suppliers where necessary. The food, pharmaceutical and energy sectors should be actively considered in assessing the strength in depth of the supply chain and revisions to the public procurement process should follow to enable appropriate resilience. Furthermore, Scotland should capitalise on opportunities presented through digital technology and decisive data-led decision making as has been evident through the crisis, which has demonstrated technological adoption and acceleration.

At an enterprise level, there are a range of risks identified regarding employment, debt, markets and investment. Particular concern is given to those sectors where there is a requirement for large numbers of people participation, primarily hospitality, tourism and travel. Methods to stimulate demand and modifications to social distancing specifications will be crucial to viable levels of demand. Retail, food and drink, creative industries and education will also be heavily impacted, and, across engineering base, there is severe pressure on oil and gas and aerospace.

Across all sectors, SMEs are most exposed, particularly regarding short-term cash flow. While cash flow funding is the immediate priority, patient, longer term support will be required for investment in R&D and innovation, supply chain development, apprenticeships and training and infrastructure and practices that can improve productivity.

Access to loan and equity funding for early stage businesses will be required to foster new businesses, particularly in technology-led sectors. There is a consensus that government focus should be on viable businesses, with caution and de-prioritisation for sectors and businesses that were in structural decline before the crisis. Support should therefore be linked to the broader societal priorities, especially those with sustainability credentials. There is consensus that the recovery from this crisis presents Scotland with an opportunity to become a global leader in renewable energy and green technology, a core natural strength. This is a moment to accelerate that opportunity not retract commitments.

Throughout, there needs to be a tailored regional and local response, acknowledging the differentiation throughout the country. The attractiveness and vibrancy of cities and urban areas will be vital to the recovery of industries throughout Scotland, particularly tourism and the creative sectors. This is especially true in Scotland's overall ability to attract exceptional talent. A better eco-system is required to ensure a more joined-up and effective enterprise network across Scotland.

6.3 Labour Market and Skills

The stress to the labour market will have implications for different groups, unemployment, future of work and managing existing and emerging inequalities. The move towards home and remote working will remain permanent or semi-permanent in several sectors. This provides opportunity for increased productivity and greater flexibility. However, unless managed effectively and creatively, it risks deepening inequalities for certain groups namely those with disabilities, minority ethnic groups, women and the young and old. As there is increased dispersal of work, digital skills and infrastructure will become even more vital to the economy, therefore securing universal, fast digital access will be vital to tackling inequality. Additionally, the costs of homeworking will need to be considered ranging from health and safety practices to energy use.

Some sectors will see largescale decline resulting in significant unemployment. This will make reskilling a national priority particularly for those at the bottom of the labour market and young people entering the job market. Research shows that those facing long term unemployment will likely be hardest hit, so creative consideration is required in alleviating this trajectory. A reduced working week has been intimated, however a broader approach to flexible working will be required to accommodate multiple industries and demographics.

Reskilling should focus on future opportunities and industries and be delivered in partnership between business and education providers. Programme opportunities and workplace training through higher and further education should be accessible and affordable for all, regardless of geography, so every effort should be made to facilitate online learning. Further, the talent pool should be broadened by using greater flexibility to bring in people with caring responsibilities, disabilities and older people.

The employer and employee partnership will be critical to ensuring that fairness is reflected through the economy, so employee voices should be engaged and represented through workplace decision making.

6.4 Net Zero Wellbeing Economy

To build a wellbeing economy there will need to be a plan for inclusive growth and a strategy focused on achieving Net Zero outcomes. This will require the recovery to take advantage of Scotland's natural strengths, both in sustainability and health and wellbeing.

The move to homeworking and on-line shopping has created a compelling opportunity for remote communities if it is properly enabled by digital access. Further there is opportunity to redress the current imbalance that exists across Scotland by incentivising urban-rural migration. There should be a focus on communities and regions that have been hardest hit by the crisis, recognising the importance of place leadership. Special attention should be paid to ensuring all communities and people can participate in the new economy, recognising that the third sector has a key role in enabling vulnerable groups.

The crisis has the potential to be the catalyst for transformational change. Reduced travel and pollution as well as an increased reliance on local economies creates opportunity for rural and local natural environments. This presents the case to build community resilience through construction and infrastructure programmes, such as building greener, smarter, affordable homes, as well as the restoration of derelict buildings and re-use of commercial property.

Routes to a Net Zero economy require debate as to whether the focus be on incentivisation of mainstream businesses or a re-invented economy. However, taxation should be actively considered as a means to stimulate the economy's transition to Net Zero.

6.5 Collaboration

Central to the overall recovery will be the corresponding roles and relationships between institutions across Scotland. Its success will depend on more collegiate politics across UK, Scotland, regional partnerships and local authorities. Full recognition should be given to regional variation and circumstances, with the roles of communities and volunteers harnessed for a more participative democracy. People should be fully engaged in the national effort to revive and restore the economy.

People and business' trust in government will be vital in the recovery and vice versa. This will require ongoing understanding and empathy of the evolving change. Required will be a continuous engagement with business organisations in designing and delivering recovery and greater data sharing between business and government.

Scotland needs to take more advantage of its size and ability to make bold decisions by delayering the strategic forums and programme management that can stifle decision making, in particular the acceleration of planning and regulatory reduction.