Economy Secretary addresses Edinburgh Chamber of Commerce
Last week, Economy Secretary Derek Mackay addressed the 2019 Edinburgh Chamber of Commerce Business Awards. Read his full speech below.
The Edinburgh chamber was formed in 1785 to promote the economy and business of the capital. A much smaller place than today, it was nonetheless already punching way above its weight in the world.
Barely a decade before Adam Smith had written the Wealth of Nations partly in Panmure House on the Canongate. Published in the same year the United States declared its independence from Britain, Smith articulated an acute observation on the behaviour of people markets and countries. He sided with openness and trade and specialisation at what we are good at. He learned much from his mentor David Hume though they were very different personalities.
I’m excited to observe how vibrant and leading you are today, and I am convinced we are, despite the obvious adversity, on the cusp of something very exciting for the capital and the country. With a strong pro-business pro economy leadership.
So congratulations to Edinburgh Chambers and the team and members involved. Keep at the ambition and keep on the back of people like me.
Edinburgh is an outstanding place to live, work, raise a family, grow a business, be educated and be entertained. Stewarding what makes us world class while also unleashing the potential for the city to face the opportunities ahead and lead the growth of the country.
The economy is driven by population, participation and productivity – the 3 Ps – and all matter. In Scotland – I am pleased to say – there is a consensus behind population growth. This is because it is a demographic imperative but also because we know we haven’t kept pace with the best performing small advanced economies.
Their growth and wealth levels are ahead of ours meaning we must grow faster to stop falling behind and then faster still to catch up.
That must be our ambition. We have all the intrinsic assets we need to be a success, there is nothing other countries have that we don’t. We just need to agree the actions and deliver them.
And if our population is to grow we will need houses of high quality, good places to work, hotels and of course transport, energy, water and digital infrastructure.
Scotland attractiveness is strong, and our reputation is strengthening. Our economic strategy is based on innovation, infrastructure, internationalisation and inclusion.
Why inclusion? Because I believe employment, a meaningful job is the best social and economic policy.
This is a land of plenty, and yet still we witness poverty. I am driven to ensure that poverty should not impact on a person’s success, but our nation’s success should impact on poverty.
Specifically on place we need standards and iconic creativity as we grow new communities across the waterfront and to the west of the city in particular. These areas represent two of the most important economic development opportunities in the UK.
We are an optimally sized country, we can make this happen. We can be agile when we want to. The challenges before us mean we need to.
I’m not a namedropper, as I said to President Barrack Obama when I met him in Edinburgh two year ago.
I mindful of the words of his former Chief of Staff, who said “never let a good crisis got to waste.” The transformation of Scotland’s economy has already begun. And we are all going to have to pull together in Scotland to get through this.
I read with great interest what David Murray wrote in today’s Scotsman. He shows commendable ambition to contribute to the city with his own company’s development investments. But he voiced great frustration at how the planning system can be so much better, faster and more responsive. Parliament is considering planning right now, and I urge all parties to ensure it is fit for purpose and enables the right developments.
Strong partnership working between business and public sector is essential.
National and Edinburgh Economy
Our economic growth is higher than in the rest of the UK. Our GDP grew by 1.3% in the year to September 2018 – compared to 1.1% in the UK. Our unemployment rate fell to 3.5% – the lowest on record.
And significantly, Scotland’s productivity growth has been higher than any other country or region of the UK – including London – between 2006 and 2017. And, of course the higher education sector in Edinburgh is world renowned – with a legacy of invention and ingenuity.
The role of the Scotland’s universities in driving our economic growth cannot be underestimated. They are responsible for globally renowned research, provide employers with a highly skilled and qualified workforce and partner with businesses both in Scotland and across the world to create new products and services that enhance lives.
I am keen to build on their success as engines of knowledge and growth and ensure that they fulfil their significant economic potential.
That is why I have asked Professor Anton Muscatelli, Principal of University of Glasgow, and one of our foremost economists, to work with the Strategic Board, the Scottish Funding Council and the higher education sector and report back to me by the Autumn of this year on how Universities can further achieve these aims building on the existing evidence and good practice in this area.
Economic Action Plan
I am unashamedly pro-business and pro-growth which is why I launched the Economic Action Plan last October, to provide both stimulus and stability for the Economy. As a Government we are increasing infrastructure investment.
We are taking the recommendations of the Barclay Review on business rates, the business rates increase will be less than inflation, I will continue the Business Growth Accelerator which suspends rates liability for new builds until 12 months after they are first occupied and ensures improved properties do not see increases in their rates bill until one year after completion of the works. This relief is unique in the UK.
We are already delivering the most generous rates relief package in the UK, worth over £750 million. That includes the Small Business Bonus Scheme which is giving more rates relief than ever.
In fact 90% of properties pay less business rates than they would if they were located south of the border, and that’s just rates. It is already more affordable to locate in Scotland than elsewhere. I support a competitive tax regime, but that isn’t in itself the key attraction for Edinburgh, or Scotland. It is our people, our knowledge and skills base, and our ecosystems.
The economy is transitioning. With or without brexit.
We are establishing a National Retraining Partnership working with employers, unions, colleges and universities, and training bodies to provide upskilling and reskilling training resource. Having staff who are skilled to meet the fast-paced changing skills needs of the future.
And as the First Minister announced at the Scottish Chamber’s annual dinner in December, we are investing £20 million to boost exporting – helping existing exporters to ramp up overseas activity and creating business-to-business peer mentorships, for new exporters. And working with the Edinburgh Chamber and others to drive business-led activity that works for individual companies and for Scotland as a whole.
To boost access to finance we have the £500 million Scottish Growth Scheme, now providing access to microfinance, debt and equity to support the individual needs of Scotland’s ambitious companies.
Today I have published the legislation for Scotland’s National Investment Bank, and Im putting our money where our mouth is. I’m investing £130 million in the establishment of the Bank to provide long-term patient capital for key economic investments. That’s patient finance to support the economy.
Data Driven Innovation
Our £300m investment in the Edinburgh and South East Scotland City Region Deal includes £60 million for the Data Driven Innovation programme, providing a significant step-change in our productivity and ensuring Scotland – with Edinburgh of course as our capital – is an internationally recognised vibrant, inclusive, open and outward-looking digital nation.
Innovative businesses – like many of you – are maximising the new opportunities fostered by City Region Deal investment across the region. In doing so, you are building a pool of talent with the digital skills and aptitudes necessary to grow and flourish.
Together, we can create the ‘Data Capital of Europe’ here in Edinburgh, through direct capital investment and by ensuring an environment that nurtures and attracts further innovation and investment.
I’m also excitied to be taking forward the National Manufacturing Institute of Scotland. The means to boosting manufacturing productivity and innovation in Scotland. Reindustrialisation, with an eye to skills and technologies of now and the future.
And the analysis published last week by my Chief Economic Adviser about the projected impact of a No Deal Brexit shows the scale of likely damage to the economy is profound. A potential shrinking of our economy by up to 7% and a drop in exports by up to 20%. That’s why a No Deal Brexit must be off the table.
I could go on but I prefer to focus on the positive actions we are taking to help business prepare for an uncertain Brexit outcome.
Last year we launched Prepare for Brexit a multi-agency campaign aimed at creating a sense of urgency around preparing for Brexit, raising awareness among businesses and translating that into action.
This is practical business support available through Scottish Enterprise’s website that offers advice as well as access to grants for consultancy support to help companies prepare. The low levels of preparedness some smes is a concern. Im generally an optimistic person, but is not the occasion to cross our fingers and hope for best.
Brexit will affect every company is some way, check out the support that exists.
I’m meeting regularly with the banks, and am currently working on our economic response and recovery plan, but with the best will in the world we mitigate all the impacts of brexit, and particularly a no deal brexit.
In these times of uncertainty, it has never been more important to make the most of the ingenuity and contribution of our people. We pride ourselves on being on an open, outward facing country that welcomes everyone – and that goes for respecting each other, too.
For me, fairness and removing inequality are key to Scotland’s economic success. If we do nothing, the cost of social failure will be borne by all of society including business.
Fair Work is also about breaking down and removing barriers to opportunity. That’s why the we have launched the Fair Work Action Plan, to support a Fair Work movement which brings real value to all employers and all workers. There is much evidence to show sustainable growth is built on equality, opportunity and innovation. And I sense a real appetite for Fair Work from businesses.
Scottish Business Pledge
One of the ways business can be a part of that drive for both fairness and boost to productivity and competitiveness is through the Scottish Business Pledge.
We have reviewed and relaunched the business pledge just this week. We will introduce a business-led leadership group to put business in the driving seat of promoting the values and benefits of adopting the best practices that boost productivity and competitiveness.
And tonight, I’m pleased to recognise Edinburgh Chamber of Commerce as the 600th business to make their commitment to these shared values and ambition. A warm welcome to the network and great role model for others once again.
I want to end by congratulating all those nominated tonight and I wish you luck, and the recognition you rightly deserve. Being in business is hard work and I want to thank you for your continued commitment and drive which underpin Scotland’s economic success.
I trust the conversation we’ve begun here tonight demonstrates that I mean business and that together we will build the resilient, economically sustainable and successful Scotland of tomorrow.
We know what needs to be done, now let’s get on and deliver for our future. Thank you.