Scotland's Economy

Ladies and gentlemen.   Ministers.   Colleagues.   Friends.

I am delighted to be in Brussels today to speak about our policy approach to redefine prosperity, in practical terms.

I really appreciate the invitation for Scotland to be an active part of the R&I days.

And before I move onto the topic of sustainable, inclusive economic growth, let me pass on one simple message on behalf of the people of Scotland to our European friends: Scotland is part of Europe and always will be!

Our strong partnership together in all areas, including Research & Innovation,  matters a great deal to Scotland.

We recognise that international collaboration is essential to:
• Improve lives
• Improve the health of the planet
• Improve Europe’s reach as an innovation leader,
• And uphold European values

Scotland will therefore do whatever we can to preserve and strengthen relationships and alignment with Europe.

We will seek to enable Scottish businesses, universities and other organisations to continue to be involved as fully as possible in EU R&I programmes.

We have made, together with all of you, a very positive contribution to ensuring that R&I remains a key underpinning factor in our social and economic prosperity.

Horizon Europe will take us up a gear, to ensure that sustainability and wellbeing are fully embedded in our approach to R&I challenges.

I am glad that the Scottish Government, together with many R&I stakeholders in Scotland, was able to feed in a strong Scottish response to the recent consultation on Horizon Europe.

Horizon Europe will embed several key missions which I know many of you will have been discussing intensely here over the three days of this conference.

It will come as no surprise to you that Scotland is well placed to contribute, and partner, in these missions.

I understand that this will be about developing an evidence base. And enabling conversations about what the future could look like. About how society, and the economy, can transition sustainably.

With a clean and healthy planet, a fair and inclusive society and a prosperous economy. The Scottish Government welcomes this as a central commitment in Horizon Europe.  This is a commitment Scotland has already made as a country.

I was hugely encouraged to hear that the Horizon Europe missions will be closely linked to the Sustainable Development Goals of the UN.

Scotland was one of the first countries to sign up to the SDGs in 2015.

In Scotland, we have fully embedded the SDGs in our National Performance Framework.

On this slide you can see the outcomes from the Scottish National Performance Framework, and the key SDGs each of those outcomes is aligned with.

We are determined to take our obligations to actively support the SDGs very seriously: within the time frame set by 2030.

Many of the SDGs chime with what we in Scotland have been doing for a long time already as part of the core purpose of the Scottish Government:
o Create a more successful country;
o Give opportunities to all people living in Scotland;
o Increase the wellbeing of people living in Scotland;
o Create sustainable and inclusive growth;
o And Last but not least – Reduce inequalities and give equal importance to economic, environmental and social progress.

It seems therefore we are very much in agreement about what the priorities for our citizens, communities and economies are.

A whole-of-society focus on the SDGs is about taking responsibility for the future in the here and now.  This is in our hands.

I mentioned that our national outcomes include the wellbeing economy.

We seek to progress policies that support the reduction of inequality alongside increasing competitiveness. Around the world there is a growing realisation of the need to focus on wellbeing,  led in many ways by EU nations.

Scotland, Iceland and New Zealand established the Wellbeing Economy Governments, or WeGO, in 2018. We are already learning from our partners.

And with our partners we are considering the challenges of sustainable tourism and natural capital.

The Scottish Government defines inclusive growth as:
“Growth that combines increased prosperity with greater equity; that creates opportunities for all and distributes the dividends of increased prosperity fairly”.

We have been praised by Professor Stiglitz for our approach.

With mounting decades of economic turmoil and a climate crisis, we are seeing the limitations of GDP-focused measurement.

GDP measures the wealth of a nation but it says nothing about how that wealth is distributed.

It measures the output of work, but says nothing about whether that work is fulfilling.

It places a value on the consumption of illegal drugs, for example, but not on the happiness of our children. And activities which boost GDP in the short term, can make the planet uninhabitable in the long term.

The indicators that underpin our National Performance Framework were the product of consultation with the public, business, trade unions and charities.  And they were debated and agreed in the Scottish Parliament.

To track progress towards our national outcomes, the indicators of the NPF measure our performance on issues as varied as income inequality; the wellbeing of children; access to green spaces; perceptions of crime; satisfaction with housing and many others.

None of these are measured by GDP. But all are fundamental to a good society.

The OECD has found that investing in education and training, healthcare, social protection and redistribution – and promoting gender equality – builds solid foundations for stronger and more sustainable economic growth.

Businesses who treat their employees fairly can experience improved productivity, performance and innovation.

That is why we are prioritising our Fair Work agenda – to embed fairer work practices in workplaces across the country. The Scottish Business Pledge means that our companies sign up to deliver 3 mandatory elements.

Those elements are: to pay the real living wage; to address the gender pay gap; and to avoid the inappropriate use of zero hours contracts.  It also includes environmental impact.

Improving healthcare, raising attainment, expanding childcare and provision of more high quality affordable housing are other key means through which progress can be achieved. In short – we see inclusive growth as a fundamental part of wellbeing. And this needs to be linked to climate goals.  We have established a “Just Transition Commission” to help us make the transition to a low carbon economy in a way that ensures nobody is left behind.

I am delighted that Glasgow is likely to host the Conference Of the Parties 26 conference in 2020.

This is a huge responsibility and opportunity for Scotland and I hope we will have the pleasure of hosting many inward missions from your countries.

In May 2019, our First Minister recognised the global climate emergency.
The Scottish Government is determined to tackle climate change.

Our Climate Change Bill, which has just been agreed by the Scottish Parliament, sets a legally binding target date for net-zero emissions of 2045. With ambitious interim targets for a 70% reduction in 2030, and 90% in 2040.

Like the EU, we recognise that, without the environment, there is no society and no economy.

• The Scottish Government agrees that research and innovation have a key role to play in contributing to the Sustainable Development Goals.
• Collectively we need to help researchers, and businesses, be able to undertake activity linked to meeting the Sustainable Development Goals.
• The Scottish Government is also keen to develop a better evidence base around the impact of our investments in academic research and knowledge exchange in this context.
• Research investments and activities leading to positive economic and societal impacts need to be better evidenced.  I know that this is something that many of you will be working on too.

We are in the process of developing a logic model showing the routes to impact of our key research and knowledge exchange investments.

The evidence framework has been refined in consultation across the Scottish Government and relevant agencies. It will continue to evolve as input from more stakeholders is sought.

Currently, information is being gathered about the indicators that could be used to best evidence the outputs and outcomes listed in the framework.

This quantitative data will be complemented by qualitative case studies.

There are many examples from Scotland of projects changing lives and helping to combat climate change, and I beg your indulgence to mention some of those now.

Like Sunamp, a company from East Lothian I had the pleasure to meet recently, who had an idea for a pioneering technology to provide sustainable heat for homes. Sunamp have developed a heat battery that stores energy as heat, which can be released on-demand to warm a building or deliver hot water.

Through Innovation Vouchers they were partnered with an academic at the University of Edinburgh and worked on improving the performance of their battery.

Working with Housing Associations in Scotland and people experiencing fuel poverty spurred them on to win more grants and inward investment.  They are now partnering with 2 Chinese companies to develop and market their products.

Or the business study graduates at Strathclyde University who worked through the Scottish Government funded Innovation Centre for Industrial Biotechnology, the IBioIC, on their idea for a sustainable business.

Their company – Revive Eco – aims to reduce landfill by extracting high value natural chemicals from coffee waste for use in the cosmetics and other industries.

Working in cafes and bars they were sick of seeing these coffee grounds going into landfill.

They had entrepreneurial skills but needed to access scientific expertise.

They spoke to IBioIC early in their entrepreneurial journey and were impressed by the international and national connections IBioIC were able to leverage to introduce them to people who are now board members, partners and customers.

This is a perfect example how enterprise and research partnership can make the circular economy a reality.

Lastly I’d like to mention the work that Glasgow Caledonian University is doing to eliminate HIV infection, of direct relevance to SDG 3 on “Good health and well-being” and to our NPF outcome “We are healthy and active.”

I will finish my remarks today with some final thoughts if I may on the important topic under discussion at this session.

Evidence from the OECD, the World Bank and the IMF all shows that the delivery of sustainable growth and the reduction of long-standing inequalities are reinforcing, not competing objectives.

We should be bold in following that evidence.  And we should embed the SDGs across everything we do as Governments and institutions.

We simply cannot fail to take steps to fully address the issues of inequality, poverty, and climate change head on.

And some final thoughts on Horizon Europe:

There is no good alternative to being part of the world’s biggest research and innovation programme.
– No good alternative to being part of the biggest network of research organisation in the world
– And no good alternative to freedom of movement and ideas.

Whatever the future holds – we stand ready to collaborate with all of you – our trusted and respected partners.

The world’s most intractable problems will not be solved in a knowledge vacuum.

They will be solved by each and every one of us working together – with courage, positivity and ingenuity.

Scotland will stand with all of you.   Thank you.