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I was talking about that before, and I have already said that significantly more people are attracted to Scotland from the rest of the UK than leave Scotland to go and live in the rest of the UK, so we have a positive migration level in that respect. On attractiveness, by that measure we can see that Scotland is significantly more attractive than the rest of the UK, and the gap is widening.

On inward investment, likewise; Scotland has, for the past seven years in a row, consistently outperformed every part of the UK apart from London. When it comes to research and development funding, the latest data also shows that Scotland outperforms London.

Furthermore, the data for last year—the year of Covid—shows that Scotland’s inward investment increased by 5 per cent while the UK’s inward investment was at minus 12 per cent and the EU’s was at minus 13 per cent. While inward investment across Europe was going down, it was going up in Scotland. Scotland is an attractive place for inward investment. Our inward investment plan is hugely focused on increasing Scotland’s attractiveness to inward investors. We have more work to do in that regard, but we are in a much better place than many parts of the rest of the UK, when it comes to attracting inward investment.

Absolutely—I accept that. As I have said, I am hugely engaged and I am very keen to talk to businesses to see how we can help them further.

The rest of the world is focused on a lot of things. This is about exploiting the opportunities that exist; Scotland is extremely well placed to take advantage of opportunities in many of the sectors of the future, including renewable energy, life sciences, the space sector, financial technology and financial services, manufacturing, and food and drink innovation.

As has already been highlighted in answers to questions, what is stopping Scotland is our not having access to the large EU market—exports and imports—because of the restrictions that are caused by Brexit, and our not having access to labour, through the ability to tailor immigration programs, to fuel our growth.

More broadly, I note that Scotland does not have control over the full suite of welfare levers, which would allow us to tailor the system to support people in order to tackle poverty and help to smooth their transition back into work. In many cases, the UK welfare system militates against that. I could go on and on.

The things that hold Scotland back include our not having those levers and not being a normal independent country that can take its own decisions, despite having a suite of advantages, such as that it has the most highly educated population at tertiary level in Europe. Despite all those advantages, Scotland is not able to maximise opportunities and is not as well off as Denmark, Norway, Sweden, Finland, Switzerland or other normal independent countries of Scotland’s size. Those countries have far fewer opportunities than we do, but they do much better than us. Scotland is held back because of the union; the sooner we are out of it, the better.

I can give you that commitment, convener. You are absolutely right. Resilience is important, and there are other aspects beyond what we have discussed today that are part of that broader resilience theme. I am an old manufacturing guy, so the need to do more manufacturing in Scotland is hugely close to my heart, and that kind of focus is essential in developing supply chains that support Scottish businesses and consumers where we can do so. That is hugely important.

The reality, though, is that businesses buy where it makes sense for them to do so, and all we can do is put in place measures that make such decisions easier for them. Interestingly, when we managed to switch production of PPE to Scotland, there was concern that everything would switch back to China again as soon as the markets opened up. However, that has not been the case, and we have managed to hold the position for a load of reasons including innovation—with, for example, Alpha Solway’s move to transparent masks opening up new markets—automation and other factors that have facilitated that. The focus is there, but this is all about making lots and lots of intelligent decisions locally in different supply chains and ensuring that they all add up to make a difference. The PPE example shows that we can do this, that we can do it quickly, that we can hold on to it and that we can use it as a platform for export if we make the right decisions in those settings.

It is a situation—I would perhaps not call it market failure—with different players who are all, rightly, looking at things from their own perspectives. When we consider the whole system, however, with everybody in the room talking about the different moving parts, we can broker solutions that would otherwise not happen. If someone is looking to move goods, they cannot mess about with them and take risks, as they could lose their market. Cost is an issue, reliability is an issue and frequency is an issue. What happens if something goes wrong is an issue. If someone can get goods on a truck to Dover, if there is a ferry every half an hour or whatever and if they can get another truck when they need one, they have flexibility—notwithstanding the capacity constraints that we have talked about. At a Scottish port, there might be one ferry once a week, and if it does not go and people have to wait another week, they have a problem. The issues are multifaceted; it is not just about cost.

We are considering different commodities and routes where it makes sense to consider what the cost gap is, whether it is bridgeable and whether there is resilience that we can build in. If we could move forward a couple of notches on all those things, we could perhaps be in a position where operators and businesses can consider being part of that, consolidating loads among different producers and so on.

All of that is on the table, and hopefully we will make some progress there. In the environment that we are in, the Irish example gives fresh impetus.

That balance is hugely important, but business can rest assured that we are absolutely focused on transport connectivity. Where that requires roads to be upgraded, it will happen. The agreement with the Greens has been structured in a way that allows that to happen, taking account of the imperative to move towards reducing car miles and facilitating modal shift in transport. However, as Minister for Business, Trade, Tourism and Enterprise, I am hugely focused on ensuring that it continues to happen.

Good morning, and thank you for inviting us to join you.

As the committee knows, Scotland is part of a global economy. International trade is an important mechanism through which we can enhance our place in the world and build diversity in our supply chains. Recent events, including Brexit, Covid, the blockage in the Suez canal and other challenges, have exposed vulnerabilities in our supply chains. Scotland’s remote communities, in particular, often suffer disproportionately through being at the end of long supply chains or requiring smaller volumes of products.

This has been a challenging time for many businesses, but we have also witnessed tremendous resilience and ingenuity. Supply chain shortages have accelerated change, created new opportunities for some Scottish firms and prompted innovative solutions. Perhaps the clearest example was the sourcing of vital national health service supplies such as personal protective equipment throughout the pandemic.

We witnessed companies diversifying from producing whisky to producing hand sanitiser, electronics firms repurposing production lines and subsea specialists turning to making ventilators in previously unimaginable timescales. Pre-pandemic, all our PPE was sourced from abroad; now, with the exception of gloves, the vast majority of it is manufactured here in Scotland.

Some firms have gone on to develop innovative new products that are being sold to the rest of the world. Alpha Solway, for example, a Dumfries-based company, recently developed a transparent mask that is one of only a handful of such masks that are United Kingdom approved and available on the market today. Demand for that product has extended overseas, with recent orders having been placed for millions of those masks by clients in the European Union, and additional opportunities are emerging.

We will continue to maximise supply chain opportunities for public sector procurement, and our investment in economic assets such as the National Manufacturing Institute Scotland, innovations centres, the Scottish manufacturing advisory service and others will support manufacturers to adapt to changes and constraints in the supply of materials and components. In addition, I have a programme of work on-going with port and airport operators and others to determine the scope for Scotland to export more of our products directly, thus increasing resilience and reducing our carbon footprint.

In its sessions so far, the committee has highlighted that the labour market has tightened and vacancies have increased. We are working with business organisations to develop our working with businesses action plan, which is focused on employability skills and fair work principles, to identify actions to mitigate the impact of labour shortages. We are investing more than £1 billion this year to drive forward our national ambition for jobs and an additional £500 million in this session of Parliament to support new jobs and to reskill people for the good, fair and green jobs of the future. We continue to call on the United Kingdom Government to make changes to the immigration system to combat shortages of skills and labour following the exit from the European Union.

Our new 10-year national strategy for economic transformation will focus on developing the skills that Scotland’s future workforce needs and on maximising the use of Scotland-manufactured components in areas of new market opportunity.

Robust and resilient supply chains are the bedrock of a thriving economy. We must take every opportunity to strengthen Scotland’s supply chains.

I look forward to our discussion.

We continue to press the UK Government to change the rules, but, obviously, it is a reserved area. We can do what we have done with regard to PPE and other things, which I mentioned earlier. We continue to do a lot of work through our supply chain development programmes and other activities, to look for opportunities to manufacture more products in Scotland in order to create economic opportunities here and build resilience. That is the primary lever that we have to tackle the issue.

Of course, clearly, there are many things that we cannot manufacture here competitively. We can manufacture many things in Scotland, but not everything. Increasing manufacturing here is part of the answer, but it is not the whole answer.

There is a gap, but the gap is not as big as you are making out. From memory, in terms of labour market inactivity, we are at 22 per cent and the rest of the UK is at 21 per cent. There are differences, but they are not hugely significant.

In response to an earlier question, I focused on understanding the make-up of the 750,000 people who are not in the labour market. Some of them are in that situation for good reasons: they are in education, they suffer from ill health or they are taking care of their families. However, we need to understand what we can do at the margins to reduce that total number. Obviously, if even 100,000 of those people—to pick a number at random—were back in the labour market, that would be helpful in the situation in which we find ourselves.

For every part of that cohort, there will be a different answer. For parents who are returning to work after having children, childcare provision will be important, so the increase in free childcare hours is hugely important. In rural areas and in some parts of cities, there are issues around transport and access to economic opportunities. Again, the Government is hugely focused on addressing those. For people who have ill health, there might be opportunities for some to access training and support that will enable them to become part of the labour market, which is great for them and for the economy.

One of the interesting differences between Scotland and the rest of the UK is in the number of students in the labour market inactivity pool. We are exploring that further so that we can understand the issues. However, that is a double-edged sword, because we have to ask whether we want students in the labour market when they should be more focused on their studies. There is a balance to be struck.

We are increasingly deeply involved in understanding those issues and driving forward programmes to address each of them separately, because the answers for each cohort are different.

Yes, that is a concern and I know you have taken evidence that has covered some of these issues already from COSLA and others, who will be closer to some of the practicalities of this. From a Government and Government agency point of view, we are in a position where we can access legal advice and we can take a view on things. We are typically talking about larger sums of money, bigger investments and so on. It makes the process more complicated, more difficult, more challenging and more uncertain, and, for smaller organisations that are dealing with the issues and trying to support economic development locally, those challenges are multiplied. It is too early to see examples of the impacts that you mention, but I have concerns the situation that you outline may well be the case.

On the second part of your question, which concerned what we can do about it, clearly, we will continue to challenge the UK Government on these issues, but we are open to having conversations about the specific organisations that may find themselves in that situation and how we could work with them to help them navigate the uncertainties that exist as part of this process.