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Good morning, convener and colleagues. Thank you very much for inviting me to be here. I welcome the opportunity to discuss the wellbeing economy, fair work and energy portfolio spending plans as set out in the budget for 2024-25.

You will have heard the Deputy First Minister speak about the challenging context for the recent budget, as well as the many opportunities that lie ahead. The budget underlines our commitment to progressing the First Minister’s three missions of equality, opportunity and community. Our focus on delivering a fair, green and growing economy is underpinned by investment in this portfolio and wider investment across Government of £5 billion that will make an economic difference.

We are committed to green growth. We will scale up renewable energy, with investment of £67 million as part of our commitment to provide up to £500 million to anchor a new offshore wind supply chain in Scotland. Combined with funding via enterprise agencies and the Scottish National Investment Bank, the total support for offshore wind in Scotland for 2024-25 is £87 million. That investment will stimulate and support the private investment that is critical to the growth of the sector. That is one of the greatest areas for us to achieve growth, transform our economy and leverage private capital, as was identified by the First Minister’s investor panel. To help to realise that, we will, this year, set out a green industrial strategy to ensure that we seize the economic opportunities of the transition to net zero.

The budget is focused on funding that will have the biggest economic impact possible. It will increase investment in digital connectivity by more than 50 per cent, and we will expand our Techscaler programme, progress the implementation of the national innovation strategy and begin delivery of the “Pathways: A New Approach for Women in Entrepreneurship” report to diversify and encourage more entrepreneurship, particularly to see more women start and scale their own business. Our Techscaler and digital roll-out programmes are examples of our strong progress in delivering our national strategy for economic transformation ambitions.

I wrote to you last week advising that the national strategy for economic transformation is being refreshed so that it remains fit for purpose in a changing landscape and is focused on delivering as fast as possible in the areas in which we have a competitive advantage. We continue to support business, including by freezing the basic property rate—delivering the lowest such rate in the UK for the sixth year in a row—and providing a package of reliefs worth an estimated £685 million. The small business bonus scheme remains the most generous of its kind in the UK—it takes an estimated 100,000 business properties out of rates altogether—and, across all elements, 95 per cent of businesses in Scotland are estimated to be paying lower rates than those anywhere else in the UK.

Our missions and values are the guiding principles of the budget, and that is clear through the actions that we are taking to promote a fair economy, including recognising the critical role that employability has in achieving the First Minister’s three missions. I believe that, despite the challenging fiscal context that we are faced with, we have developed a package that will help to deliver a fair, green and growing wellbeing economy.

Thank you, and I look forward to the discussion that we have before us.

We have provided relief and have acknowledged the challenge in our island communities. We have provided 100 per cent relief to island community businesses in that sector, in acknowledgement of the fact that there are challenges. If we could have done more, we would have done so. The decision that we have taken is evidenced by the fact that, in England, there is a real-terms cut to the NHS budget. At a time of challenge for our NHS, when we are recovering from the pandemic, the right decision was taken.

That is not to say that we are not looking at all that we can do and at other opportunities that might be available. That was part of the reason for the meeting that Tom Arthur, the Deputy First Minister and I had with industry representatives last week. It was very constructive, and further engagements are planned ahead of the UK budget in order to look at what relief and support might be able to be provided in devolved and reserved areas. I absolutely appreciate, and I articulated to them my understanding of, the challenges that the industry faces. If we had had the finance available to provide alternative support arrangements, we would clearly have considered that, but, at that stage, the fiscal context was such that we were not able to do that.

That is because of the tax decisions that we have taken, which Mr Fraser opposed.

The UK’s migration system works for one part of the UK, not for the whole of the UK. We need a much more flexible migration system that is tailored to the needs of the composite parts of the UK. Short of independence, that would be the right thing to do. It is possible in Canada, and it has been possible for us to have Scotland-only elements of the UK migration system, such as the supersponsor scheme for displaced Ukrainians, for which I previously had responsibility.

It blows my mind—it beggars belief—that the UK Government continues to have a one-size-fits-all migration system that means that Scotland is not able to attract the people from around the world whom we want to attract. Once again, I appeal to the UK Government to accept proposals such as the rural visa pilot, which has been proposed and is supported not just by the Scottish Government but by other parts of the UK as a way of ensuring that we have a flexible migration system that responds to the economic needs of the communities where we need to ensure that we have suitable labour market access and that our public services and businesses continue to thrive.

That is belied by the fact that we have record levels of foreign direct investment and a foreign direct investment growth rate that outstrips that for the rest of the UK and for Europe. I repeat that, in every year for the past 20 years, Scotland has had net inward migration from the rest of the UK. Perhaps some of the people who arrive in other parts of the UK choose to move to Scotland.

I thank Maggie Chapman for those questions. It is true to say that our employability funding has had to reduce this year to £90 million. We are confident that, working with our regional economic partnerships and local employability partnerships, we can continue to see the provision of strong employability support that is person-centred and focused on ensuring that we continue to close the disability employment gap and do all that we can to work in a collaborative approach with third sector partners. In Dundee, for example, I was able to see evidence of a group of, I think, eight different third sector partners that came together to provide an employability service that was truly person-centred, because each of those third sector partners represents a different interest group and specialist group for disability services, mental health support and other elements. I have been incredibly impressed by the work that has been done.

I am keen that we do all that we can to continue to support that work and that participation continues to be voluntary. We are seeing both anecdotal and clear evidence that such work is making a real difference and that not having a mandating and sanctioning regime as part of it is making a discernible impact on people’s willingness to engage, and to engage for a longer period. We are seeing strong results off the back of that work.

We will continue to assess the positive and the potential negative impact that our spending decisions have in areas such as employability. Obviously, I am keen to ensure that the committee is furnished with further information as those assessments are carried out.

Yes, to answer Maggie Chapman’s question directly. We had a discussion—not in this committee room but in another—with cabinet secretaries and the Deputy First Minister, as Maggie Chapman would expect, looking at our fairer Scotland duties and ensuring that the decisions that we were taking were cognisant of those duties and informed by them. We had discussions in relation to this and other portfolios, considering our impact on child poverty and other elements. Those discussions were part of the decision-making process, yes.

The first thing to say is that, in Scotland, we have near record-low levels of unemployment at 3.8 per cent compared with 4.2 per cent for the rest of the UK. Again, I am not complacent about that, and it brings its own challenges for employers, including on skills and access to labour. It is important that we continue to assess the skills landscape, which is what Graeme Dey is doing in response to the Withers review, in order to ensure that we have a skills system that is as responsive as possible to the needs of employers and the needs of those who want to enter the employment market for the first time or want to transition within the labour market and move on, such as in the energy sector. We will continue to focus on that area. Graeme Dey is obviously very exercised and is going round the employer networks, the skills sector and others to ensure that our response to Withers is as informed as possible and that we come forward with a landscape that will be as supportive as possible for those who are seeking access to skilled employees and for those who are looking to retrain.

Employability will, obviously, be a shared responsibility between Mr Dey and me, but the Government is making increased investments in the college, university and school sectors. There is, I think, an increase of £158 million in further and higher education through this budget. I will need to get that checked. We are continuing to invest in the skills system to ensure that we are meeting the needs of not only those who need to get on in work but those who are looking to access the labour market.

I thank Mr Stewart for that and for highlighting the good work of the business in his constituency.

I was in the north-east—in Aberdeen—with the First Minister for the launch of Scottish Enterprise’s new corporate plan, which is focused on three key priorities, one of which is inspiring innovation. Its investment decisions are filtered through those lenses, one of which is around inspiring continued innovation. We continue to expand through the budget the likes of the Techscaler network, which is about providing the ecosystem that ensures that new business start-ups are able to establish. We also continue to support the likes of SNIB and others that provide some of the early stage investment, but there are other opportunities and areas regarding early stage investment opportunities in Scotland on which I am happy to follow up in writing.

That last thing that I would say is that, particularly in the energy space, we are cognisant of the fact that we need to plot a path and set a direction of travel for what we are looking to focus our public sector funding on, not just for the new renewable energy supply chain—the offshore wind supply chain—that we are looking to see established in Scotland, but for the catalytic impact that those investments can have in leveraging private investment. That is why the green industrial strategy that we will publish before the summer will be so important. It will take decisions and will say that we will prioritise certain sectors. In some cases, that will mean that some people are not happy, but we will take decisions on the basis of the evidence that we have received from our engagement and the support that we have received from the likes of the First Minister’s investor panel.

As Mr Stewart will understand, when we talk about innovation and early stage investment support, a risk is attached. We have to accept that there will be an element of risk. Some innovations will flourish and the businesses will do incredibly well, and we want to see that in Scotland. Others, in some cases, will not do as well, but I want to make sure that we have an ecosystem that supports innovation, where new businesses can establish and which attracts further capital from private sector investment. We are already seeing the early stages of that good work come through, but I want to see more.