 A penderfyniad rai, mae'n ynig i'n newid o'r Bwysig yn gweithio i Mooshe 3994 i fofio John Mason o'r cyfr攻adau Scotland y fath, ac yr fath yn gy harvestingau maes iawn. Rwy'n mynd i'n mynd i chi i ei wneud gweithio i ddarllenu cyfrmwneidol, i bobl sy'n gweithio i bwysig i wedi meddwl y cwmpasol, a i wedi gweithio i gŵr ar y cyfr-gwyr i gael i gyd, i gael chi'n John Mason will open the debate for around seven minutes, Mr Mason. Thank you very much, Presiding Officer, and I'm very grateful to the chance to have a member's debate in my name today. It takes quite a lot of time to get people to agree with much that I say. This is a subject that has concerned me for quite some time, and if we lose business headquarters and ownership from Scotland, does that not mean that there is a negative effect on the Scottish economy? Does that not mean that a time of downturn is not more likely that a Scottish branch of a business that is perceived to be far away from the centre will be closed down if there is apparently overcapacity? We have seen this quite recently with McVittie's in my constituency, which was floated as a public company many years ago, has suffered from a lack of investment and is now being closed. That is despite the fact that the Scottish food sector as a whole is doing well, and people around the world are willing to pay a premium for Scottish products. Other biscuit companies such as Walkers, Border Biscuits and Tunox appear to be doing very well. A few years ago, when I visited the Faroe Islands, they even had tunox tea cakes in the local shops. However, that is a much wider issue. Over the years, we have lost Stacus, Quickfit, Scottish and Newcastle, Bank of Scotland, and we do not even have the name of the Clydesdale bank on the high street anymore. Right up to date, we are seeing firstly stagecoach almost taken over by national express. Even though it was called a merger, it would have been 75 per cent national express with the HQ down south. Although now it looks like stagecoach will be owned by German investment company DWS infrastructure, which at least would mean some HQ functions staying in Scotland. Then again, we have Capricorn, which used to be called Cairn Energy. It is looking at being taken over by Tullow Oil. Simon Thomson was chief executive of Capricorn and was asked about having a London HQ. He said, quote, that this is all about creating value for shareholders, unquote, and it is reckoned that if that goes ahead, redundancies will be expected to cost some $50 million. Again, we have first group currently rejecting a bid from I-squared capital. I understand that the competitions and markets authority was looking into the national express stagecoach deal. They are clearly a reserved body and we would need to consider an equivalent body in the event of independence. However, their focus seems to be on competition concerns with the assumption that mergers and takeovers should go ahead unless there are serious reasons not to do so. I am just floating some ideas today, but I wonder if we should be reversing that thinking. For example, by assuming that takeovers and mergers should not go ahead unless there are compelling reasons why they should do so, such as a declining market or strong foreign competition. Indeed, I think that one of the interesting things about the point that he just raises there is that there is a lot of academic work and theory showing that mergers very often decrease value rather than add to the value. Is that something that he thinks that we should give more thought to? John Mason. Yes, it was a point that I was going to refer to later on, although I may not actually get that far, but the point that a merger or takeover generally does not increase value, but it shifts value often away from the staff, the employees, towards shareholders. Of course, shareholders are vital and they should always have a way out when they want or need to sell their shares, but other European countries seem to be better than the UK's at keeping more control of their important businesses. We saw that, especially with the Dutch national railways, effectively running ours too. Now, why should that be a good thing? Going further back, Scottish Power was taken over by Ebert Drola in 2007, with no benefit that I can see to Scottish workers or energy users. I should probably declare an interest here, as my father spent his whole working life with Scottish Power, or SSCB, as it was previously was, which, as far as I can see, was a successful company. Why did it not need to be taken over? Of course, electricity should never have been privatised in the first place, and once you float a business on the stock exchange, you lose control. Anyone can then buy and sell it so that you are the mercy of those who want to make a quick buck. As a general rule, we know that the short term overrules the longer term. However, I am not saying that public ownership is always a success. British Airways was not that successful while nationalised, nor was British Rail or in the car industry British Leyland. However, Scottish Power, Scottish Water, Lothian Buses and others have been broadly good organisations in public ownership. I recently realised that the water and sewage systems in every country in the world are in public ownership except in England and Wales. Of course, there are other models of ownership, too. Family businesses, such as Scottish Leather Group, are one of the top leather businesses in the world. The Scottish Family Business Association pushes for continuation of family-owned businesses or models other than flotation. Employee ownership is another model, such as John Lewis's partnership and now Wes Brewery in my constituency. Social enterprises and co-operatives are other options, and I note that Paul Sweeney has a motion on co-op fortnight, and I was happy to put my name to that. However, does it really matter who owns the business and where the HQ is? Some would say that profitability, productivity and efficiency are the only things that matter. However, the HQ function also means that the top-paid jobs and the taxes that they pay will be in the home country. Auditors, lawyers, consultants and other suppliers will tend to be there as well. There is usually the spin-off of local hotels and restaurants benefiting, too. In our own case in the Scottish Parliament, as many of us use Edinburgh hotels, restaurants and pubs during the week. I will finish with a few points and quotes that were made in academic and newspaper articles over a number of years. Scott Wright in The Herald on 2 June talked about the loss of headquarters, being a loss of prestige and the global reputation of Scotland as a place where a business of significant size can be built and, crucially, can remain. However, he says that arguably not a lot can be done to stop a takeover. Boards have to maximise shareholder value. Again, in The Herald on 17 June, Colin McLean writes about how change of corporate control in the UK is easier than in other European countries and the potential for headquarters to move or activity to be relocated. Too often, takeover promises have later been set aside. Both Ireland and Denmark have major listed companies on a scale well beyond Scotland's sector. He points out that this takeover trend is concerning. To finish, I have to say on a more positive note that it was good to see that Inverness-based Carleton Bingo, with 209 staff, is becoming Scotland's largest employee-owned firm, well done to them. Maybe I am raising more questions than giving answers today. However, as I said, this is a subject that has concerned me for a while. I think that we, as a Parliament, should be looking at it going forward. Thank you. Thank you very much, Mr Mason. I now call Liz Smith. He will be followed by Paul McLean in around four minutes. Thank you, Deputy Presiding Officer, and I thank John Mason for bringing what I think is an important debate to the chamber. It goes without saying that all of us in this place, irrespective of our political views, are rightly very proud of our Scottish companies and their Scottish heritage. Mr Mason has spoken about several key companies, companies with very distinguished and long-standing Scottish heritage with names renowned across the world. Sometimes there are sound economic reasons, often related to economies of scale, as to why some Scottish companies may wish to give up some control of their assets. However, there are clearly trends of companies in Scotland giving up significant control of their businesses to foreign firms. I can understand why Mr Mason has concern about that. It is therefore of the utmost importance that we work together in this chamber to provide support where it is needed and ensure that, as many companies are able to remain independently competitive. Over my 15 years as an MSP, I have worked very closely over a range of issues for companies such as stagecoach in my own Perth region. Most of my interactions with stagecoach representative have been entirely productive and their willingness to engage constructively with me and other representatives and my constituents has always been greatly appreciated. Moreover, I was relieved to hear, as Mr Mason mentioned, that the new deal between DWS and stagecoach means that the headquarters will now remain in Perth, which would not have been the case if the previous national express merger had taken place. Many of the services that stagecoach run across Mid-Scotland and Fife are absolute lifelines for elderly constituents attending medical appointments, for example, and for students attending their educational establishments. It is important that we continue to support company-like stagecoach through this transition so that those lifeline services continue to operate as frequently as possible. Similarly, I commend the work of John Mendes, most especially as it has had to deal with the exigences of the pandemic. The aviation sector across the world bore the brunt of the Government's all-governments, not any specific government policies, to stop the spread of the virus, and it is obviously very worrying but somewhat unsurprising that the companies in this sector will have to make significant compromises that would not have been the case in normal circumstances. A year ago, I was one of the members of this Parliament, some of them present this evening, who stood outside this Parliament when various representatives from the aviation sector came to tell us exactly what their plight involved. It was not funny, to be honest, listening to some of their stories about their experiences, so I was not surprised when the news came through of the full takeover of a business by Q8's national aviation services. While it goes without saying that the examples of the loss of independent control in Scottish businesses is disappointing and, in some cases, very worrying, I think that we have to also ask ourselves, and Mr Mason was asking us to ask those questions, about why it is that Scottish businesses feel the need to relocate considerable control in some cases to forfeit foreign investors. Like other colleagues, I have had many meetings with business leaders throughout the Covid-19 pandemic, and I have also attended several roundtables with key businesses, one of them just this morning. I think that it is very clear that business confidence in many sectors is weak. Some even feel that policy makers do not see them as a priority and they worry about the future of the Scottish economy. Mr Mason and Daniel Johnson sit on the same finance committee that I do. We know only too well what the in-depth analysis of the main forecasters is showing, and it is not a happy picture. Let us be honest about that. Businesses are facing rising costs, serious recruitment issues and rising debt, but, as well as there are longer-term structural problems in the labour market, serious productivity issues and skills shortages. Businesses want as much stability and certainty as possible, and that is something that the cabinet secretary herself said two budgets ago. However, at the moment, they do not have either. Plus, of course, they now have another referendum threat and the turmoil that that will create. None of those things is helpful to Scottish business to retain that discreet heritage that we all want to see, but also its economic viability. I think that we should worry about that. I now call Paul MacLennan to be followed by Daniel Johnson again in around four minutes. I thank John Mason for bringing forward this member's debate tonight. I first of all share his concern about the headquarters functions of Stagecoach and John Menzies who may be lost. Those companies are well known in Scotland and have had a strong presence for many years. I worked for the Bank of Scotland for 20 years from 1990 to 2010, and was working at the time of the so-called merger with the Halifax when it became HBoss. Then again, through Lloyd's decision making, it was changed overnight and I literally mean overnight, and that was very noticeable. It is very sad now to see the mound only operates as a museum and a corporate meeting venue. According to the Insider magazine in April this year, the top 10 companies in Scotland were SSC, Scottish Power, Bank of Scotland, Aviva, Royal Bank of Scotland, Virgin Money, Arnold Clark, Weir Group and Shivas Brothers. Other noble companies included Scots Widows, First Group and Aberdeen. Those were all companies that started in Scotland. How many are still headquarters in Scotland and, more importantly, where are investment decisions made? So how do we compare with countries similar in population? Let's look at two of our neighbours, Denmark and Ireland, roughly the same population as Scotland, and, noticeably, both still in the EU. Top six companies in Denmark are MERSC, Dansk, a bank, Novo, Orsted, Calisburg and Vestas. The market capitalisation of those companies is $285 billion, with assets under control of $882 billion. The top 10 companies in Denmark made a combined profit of $16.3 billion. An island market capitalisation of 10 top companies is $482 billion, with market capitalisation of $452 billion. Again, top 10 companies in Ireland with a combined profit of $19.6 billion are top 10 companies. Irish companies included Islay Dairish, Ryanair and Townlake constructions. Now, why is this important? The Danish corporation tax rate is 22 per cent. That is a boost of $3.6 billion to the Danish Treasury alone of the top 10 companies. The Irish corporation tax is 12.5 per cent, a boost of $2.5 billion. Again, only the top 10 companies. This is a prize that Scotland could have. So what do we need to do in Scotland to first retain headquarters in Scotland and attract further investment into Scotland? We need the levers of an independent country, like Denmark and Ireland. We need macroeconomic powers, and we need to be back in the EU. So what are those powers? The ability to set interest rates, the ability to set corporation tax, tax relief for investors, boring powers to support and structure, and, crucially, investment in research and development. So do we have the ability to attract investment into Scotland? It's the number of surveys that were published a few weeks ago on the FDI front, relative to other parts of the UK and to other countries in elsewhere in Europe. Scotland outpaced UK-wide progress significantly. The Irish Government declared that Scotland had made great strides as a destination for FDI in 2021, and its survey revealed that the nation's attractiveness rating from potential future investments had hit a record. It stated that, in a quote, our findings suggest that the outlook for Scotland's FDI is exceptionally bright. Scotland achieved a 14 per cent rise in the number of investment projects to 122. It put in a one-point increase in the UK in the shade, and Europe's 5.4 per cent rise in the shade. The increase in the number of investment projects won by Scotland last year was the fourth consecutive annual rise. The minister again stated that the past year has seen Scotland continue to make great strides as a destination for FDI. Minini can look to the future with even greater confidence. Scotland's record level of attractiveness is underpinned by investors' rising perceptions. The importance of such investment should not be underestimated. The FDI often brings with it very high-value jobs. Such projects are R&D-led and can involve collaborations with Scottish universities. To conclude, the UK's stewardship of the economy and its control of macroeconomic levels hinder Scotland's attracting companies to HQ in Scotland. Scotland needs to be like Denmark and Ireland to have the macroeconomic levels to attract investment and attract business to headquarters in Scotland. Does Denmark and Ireland do it successfully? Why not Scotland? I'm really pleased that John Mason brought forward this debate. I think that it does ask the sort of important questions that we need to ask and indeed the ones that Mr Mason posed, because I think that it does matter where our business and our industry is owned. In part, there is a sentimental reason and I think that Mr Mason alluded to those, that when we see companies like John Mingus, as my mother always told me to pronounce it, not John Menzies or indeed others, going to foreign ownership, it is sad. However, I think that there are actually important reasons as well. When those companies' decision making is made elsewhere, when they seek to make their investment decisions, when those decisions are being made in another place by other people, I think that there is intuitively more likely to be reasons that they will not invest necessarily in the place where their acquired business rests, although they might do. I agree with a lot of what Mr McLennan has said. I think that there are questions about the macroeconomic policies, but his contribution also hit upon one of the tensions. While he was juxtaposing those downsides, he was contrasting with foreign direct investment. I would gently point out the F-bit of FDI. We are in a global marketplace and, regardless of our different views on the constitution, at the heart of that is how do we strike that balance between indigenous growth, which we can all agree in, that we have to ensure that we have an environment where businesses are created and grown here, but also acknowledging that it is a global economy, whether we like it or not. In some ways, there are many people—perhaps my benches are not full at the moment—who might be alarmed at some of the things that I am saying, but we cannot undo the global economy. We cannot go back to the 1970s and we cannot put up the walls. I like to think about, for example, of wolves and electronics, which were very successful, founded in the 1980s. Every time I passed their office building, I wondered whether it needed to be like that, that they got bought by Cirrus. However, when you look at it, there are still 300 jobs in Edinburgh employed by them. If you look at their job sites, there are jobs being advertised for senior semiconductor engineers. There is a balance to be struck, but, ultimately, I think that we need to question what we need to do to retain more businesses that are owned in Scotland. Part of that, I think that we need to examine companies' law. I think that we make it too easy. In France, they blocked the acquisition of Danone, a yoghurt manufacturer in 2004, on the basis that that was of strategic interest to France. That is not the sort of thing that you see happening here, but I think that we need to question that. I would highlight on the fact that mergers do not tend to create value. I think that we need to adhere to the market. I do not think that we can just block things out right, but I think that there is an issue there. We also need to look at our own policies. Do we always use the right vehicles? Could we use golden shares when we are doing our co-investment through Scottish Enterprise and Scottish National Investments? Could we use joint venture structures? Yes, we attract the outside capital, but we actually build something here as well. That is something that is used in other countries. I wonder whether there were possibilities with Scotland or other future infrastructure where that joint venture means that we can build infrastructure, but at least we will retain, at least in part, ownership here. We also need to look at our wider policy landscape, because when I am talking to businesses, I know that there is a concern that we are not necessarily retaining those, such as life sciences, and there is a very active concern about whether we are retaining life science businesses. The issues there are not the big ones that Mr MacLennan was pointing to, but they are things such as planning, things such as skills policy. There are things that are absolutely within our control here. I think that there are some really good questions that have been raised. I think that there are some things that are definitely outwith the Scottish Parliament, but there are also things here. Ultimately, that is about growing businesses, which is about growing jobs and growing wages. Ultimately, while economic policy is complicated, it does boil down to those simple things. Thank you very much, Mr Johnson. I now call on Ivan McKee to respond to the debate. Thank you very much, Presiding Officer. It is a real pleasure this debate. It is a shame that there are not perhaps more members who want to take part in it, but the contributions have been excellent by large. I thank John Mason for bringing this debate and pursuing it in such a constructive manner. I would like to start off, first of all, by being clear about the Scottish Government's objective for our economy, which is to strengthen our domestic economy and our recently published national strategy of economic transformation, which is absolutely focused on the actions to make the Scottish economy and Scottish businesses more prosperous, more productive and more internationally competitive. The Scottish Government, alongside our enterprise agencies and partners, are prioritising creating a business environment in which home-grown businesses in key sectors can grow, develop and compete for global market share. To do that, we have to create an environment in which businesses can thrive. We recognise that investment around company growth and scaling can be difficult and limited in the small Scottish market with few players, and Scottish companies often access international investment to support their growth ambitions. We are therefore working hard to create the economic conditions in which Scottish companies can realise the benefits of keeping control of their operations in Scotland. Scottish Government-backed investment funds are designed to fill key gaps in the continuum of growth capital to enable Scottish companies to scale. At the same time, that creates a busy ecosystem of private investors in Scotland affording Scottish businesses more opportunities for growth here in Scotland. The strategic direction behind that and the policy action that we are taking is well articulated in our global capital investment plan. Through our enterprise agencies, we provide a wide range of funding and support for Scottish businesses, including R&D grants, the Scottish Co-investment Fund and the Scottish Loans scheme. It provides domestic companies with an opportunity to achieve their growth ambitions in Scotland, as well as increase productivity and enhance efficiency. However, funding growth should be appropriate for the type of business, and it is not a one-size-fits-all. That can come from a variety of sources, both private and public, and domestic, as well as international. What is important is that business gets the right investment and support the need while we build an open and effective economy. Acquisitions, when right for a business, give companies access to global technology, talent and markets and support their growth ambitions. Just because a company is acquired does not mean that there is no longer a focus on Scottish operations. Often it can mean that the acquired business has afforded the opportunity to flourish. In fact, Scotland outperforms other countries on measures of business performance after acquisitions, and there is little difference in the inward investment acquisition rates between Scotland and other small European nations. Clyde space, for example, was acquired by Swedish AAC in 2019. In that acquisition, I have seen continued investment in Scotland, providing Clyde space with access to new investment, skills and global markets. That investment is a catalyst for growing the talent base here in Scotland in the space sector. Another example that John Mason will be familiar with is soapworks in my constituency. It was a business that struggled for many years and had many difficulties operating as a private company. It was acquired by a Colombian group Dabon two or three years ago and has since gone from strength to strength for their investment, access to new markets through Dabon's global networks and a much more competitive business, saving more than 100 jobs as a consequence. The Clyde space example in particular illustrates that, in direct effect, acquisitions can have on our economy, with international investments delivering a wide range of benefits, including improving Scotland's reputation in certain key sectors. Space is one, life science and many others. It also helps to secure investment through supply chains in Scotland and unlocks a learning and experience for business leaders on how to grow their businesses. It is also worth noting that the substantial financial contribution that mergers and acquisitions make to the Scottish economy in 2021 alone, £2.8 billion in capital was raised from external investors. However, it is also worth pointing out that this is a two-way street. Scottish companies who look to grow their businesses abroad can do so in order for them to grow to an international scale that often acquires companies in target markets internationally. Earlier this year, Glasgow-based packaging distributor McFarlane Group acquired Pacman. A German business is part of its growth strategy, and that will help to move the Scottish-based firm to expand into European markets, illustrating the importance of truly international economies. Would, in where group, both substantial Scottish businesses have made significant acquisitions internationally over the years? Indeed, stagecoach has been mentioned several times in the debate that has made acquisitions in Canada and the United States and, indeed, in Poland through the course of their growth trajectory. It is very much important to recognise that that is a two-way street. Our current approach to creating an open, outward-looking internationally-facing economy requires balance, a point that was made very well by Daniel Johnstone. The best investment ecosystems contain a diverse range of sources of capital and mergers in acquisitions provide a key form of investment for fast-growing Scottish companies. The point that Daniel Johnstone also made about joint ventures is something that is very well made, and they have a key role to play in many scenarios. It was also aware that the power to regulate corporate transactions, including the ability to restrict changes in ownership where it is in the public interest to do so, is reserved to UK Government entities such as Bays and the Competition and Markets Authority, the CMA, who I met recently to discuss the various issues. The Scottish Government has no legal power to intercede in scenarios where decisions are made that do not align with Scottish policy priorities and, as part of the UK Scottish ministers, have limited ability to protect, encourage, maintain and grow our desired wellbeing economy. Additional constitutional powers will enable us to make decisions that are tailored to Scottish business needs, and, in an independent Scotland, we will have more levers and resources at our disposal to support Scottish businesses and the Scottish economy, a point that Paul McClellan made very well. Through the delivery of our national strategy for economic transformation, the Scottish Government is working hard to ensure that Scottish businesses have access to the right support, including capital to grow their businesses. We are focusing on the actions that can be taken within current constitutional arrangements to transform Scotland's economy, and we will continue to support our businesses and the individuals in upskilling, as well as to utilise new digital technologies and to create a new world-class entrepreneurial nation that is productive and innovative. Scotland's businesses will have the best possible environment to thrive and grow here in Scotland.