 Ffartwyr maen nhw ddim yn gweithio i gafodd cymaint gwyllustiol â'r Gweithgwm Cymru. Felly, mae'n gweithio i gyd yn gyfnog y dyfodol, ac yn ffordd pethau bod yn y syniadol yn fynd. Ynghyddiant pan wneud hynny, mae'n belydd gyfreiddiadau dasgwm cymru, Jackie Bailley. Mae'n ddegwch i ddau ymwneud tyut i ddelluniaeth ar bobl yn iawn, ac yn fwrdd am 4 ar y cyfynnag, private are we all agreed to do so? Yes. Thank you. We turn now to our inquiry into Scotland's economic performance. For our first panel, we have first of all Dr Dan Harbison, chief executive officer of Stratified Medicine Scotland, Dr David Bunton, chief executive officer of Reposell Europe and Clare Mac, CEO of Scottish Renewables. We welcome all three of you and will shortly be joined by Gareth Wynn, who is a stakeholder communications director of Oil and Gas UK. First of all, there is no need to press any buttons on your desk that will be dealt with by the sound system when you speak. If you want to come into the discussion or answer to a question, if you just indicate by raising your hand, I will bring you in as time and questions permitting. Perhaps I could start with a general question about the performance of the Scottish economy over the last 10 years and perhaps just canvass the views of each of you on that, to perhaps start with Dr Harbison. I think that the sector that we represent life sciences has performed very well over the last 10 years. We have a huge number of really interesting and innovative SMEs that have grown to become companies of size and scale. David represents one such company. I think that for us in Scotland, we have a really unique opportunity within the field that I work in, which is stratified medicine. Although we do not directly impact a lot of the companies that are working in Scotland, our influence is global. We work on the pharmaceutical industry and for us there has been a big change in that industry with the demise of the blockbuster model and a move towards more targeted therapies. For us, we have seen a lot of change within the industry that has filtered down to companies such as David's and others who are in the precision medicine, stratified medicine ecosystem. Dr Bunton, I agree with Diane that we have seen a quite difficult spell after the Great Recession and a recovery in the last two or three years. The sector that Repricel is in in pharmaceutical services, I do not have the figures for the last 10 years, but since 2010, it has grown about 30 per cent and we have seen much of that over the past three or four years. I think that there is a very positive outlook in that the infrastructure, the skills that the working population has and Scotland has performed reasonably well in terms of investment outside of London has been one of the most successful for life science investment. There are a lot of positives, but there are areas to discuss where we can go further and opportunities that we can look to build on. More broadly, there is some key strengths in the Scottish economy that we have seen in the past 10 years. Our university sector is acknowledged as one of the best in the world. We have experienced good population growth, which has been helpful to the economy. We have seen quite a heavy concentration in certain sectors energy being one of them as well as food and drink. Thinking more broadly about my own sector in terms of renewables, we have got quite a good story to tell. We have seen install capacity go up from about 3.3 gigawatts in 2008 to about 9.3 gigawatts in 2017. A lot of the development there has been supported by strong mechanisms that enabled big long-term investments and essentially guaranteed a market price for our products. Those are the contracts for difference and renewables obligations systems that were in place by the UK Government, which was good because it allowed renewables to buck the trend of the recession. It somewhat insulated us this UK Government mechanism, which meant that development and investment continued here in Scotland because the risks were mitigated. It is good to hear that Scotland has a bit of global influence and we have key strengths, but what do you see are the key opportunities and risks that are facing your sector and the Scottish economy over the next 10 years? There are a number of opportunities in life sciences that we should build on the areas of strength that we already have. I think that Scotland has always been at the forefront of innovation and is really pretty good at predicting which areas of life science are going to be the next hot areas of research and development. Diane is certainly in precision medicine as one of those. I feel that it is very important that we show a long-term commitment to that opportunity. In the past, we might have swung a little too much between different opportunities, but some of those areas—Diane will say more about precision medicine, but some of them, such as regenerative medicine—I know that there was news yesterday about a trial in macular degeneration. Those are technologies that take a very long time to develop. As a Scottish-based company acquired by a Japanese company, I can see the long-term vision in Japan where it is looking 20, 30 or 40 years ahead. We have to strike the balance of the opportunity and the risk. The risk is that we pick the wrong areas to invest in, focus on and build on, but we have a pretty good track record in regenerative medicine. We have been building on in Scotland for a long time. Precision medicine in the past five to ten years, and also now in digital healthcare, the pharmaceutical services sector more generally. I feel that we are in a good position to go forward from that point. I will not surprise you to know that I agree completely with what David said. For me, the two areas that David highlighted in regenerative medicine and precision medicine are areas where Scotland has traditionally been very strong, but those technologies, as David said, take a long, long time to develop and to commercialise. Actually, I worked on that project that the clinical trial has just had a positive outcome for, and I worked on that project in 2010. It has taken all that time for that product to go from development to an actual clinical trial in patients where it has been shown to work. Those patients were able to see again. It was amazing. In the field of precision medicine, Scotland has a real opportunity here. We have a small, stable population. We have really good health informatics, some of the best health informatics in the world. We have world-leading clinical researchers. We have a real ability to positively impact some of the diseases that are a major burden for the Scottish population. As you are all aware, we have a huge prevalence of many complex diseases in Scotland, and we have clinical expertise in those disease areas. We also have pharmaceutical companies who are interested in trying to find cures and treatments for those diseases. Our really strong health informatics, our stable population, the CHI number, means that we are in a really unique position to capitalise on everything that we have here in Scotland and to really drive the growth of precision medicine approaches, which, again, will have a positive impact on the Scottish economy because it could impact very positively the drugs budget. If you are only prescribing drugs to patients who will benefit from that drug, rather than having a trial and error prescribing one-size-fits-all approach, you can reduce the amount of money that you spend on drugs. You can give the right drug to the right patient, which means that they have more chance of taking that drug and more chance of being treated or having their condition managed. That, for me, is the real opportunity. We are at the cusp here of being able to be a world leader in this particular field, but other countries are catching up. All the countries around the world that you could mention are doing population-based sequencing studies. Before Christmas, there was an announcement from Finland. They are sequencing 500,000 Finnish people and they have electronic records. They are very similar in size of their population to Scotland. They represent a real threat to us, but all countries around the world are doing this approach. We have the opportunity in Scotland to be a world leader in this particular field. As David said, digital health, given our population and the remote parts of Scotland, digital and telehealth is a really important part of the life sciences sector that should not be forgotten. Again, it could have major impact on patients and how they are treated. In my sector, there are a lot of similarities, believe it or not, in that we also have a world-leading renewable sector here in Scotland, but likewise, because climate change has a global dimension to it. There are a lot of other countries that are looking to catch up who have similar levels of strong natural resource. That is our first opportunity. We already have a world-leading industry here and we have very strong and abundant natural resources. The other opportunity that I want to talk about is again similar to what we have just heard about in health and life sciences. Our ability to have brought things through from innovation, so from lab to commercialisation is a long journey, but we have managed it in Scotland and renewables represents a really strong picture around all of that. It is something that we need to be very clear about, given that we have such a strong university sector. That capability is really, really important. Risks in terms of future growth for us, the stabilisation and revenue stabilisation mechanisms that I talked about from the UK Government are currently not allowing for what is our cheapest form of renewable energy, which is onshore wind, to compete for those revenue stabilisation mechanisms, which is certainly hampering the market. We have a lot of estate up here in Scotland already and we are looking to develop a lot more to go through, so that route to market is critically important for the renewable sector. The other thing that we are thinking about a lot within our sector is the supply chain. The contract for difference mechanism is an auction process, which is continually around about driving cost reductions. We are very mindful that those cost reductions can come from various different places and we are having to look at costs across the whole system to make sure that we can drive efficiencies without driving out value in terms of wages and being able to provide exactly the kind of investments that we want to provide. Our investment timelines are very long, they are very risk heavy and that contracts for difference mechanism allows that to happen. It unlocks that investment, so again I come back to that kind of route to market. Again, looking at some of the more positive stuff from opportunities, digital and smart systems looking similar to what we are talking about here are going to be a huge part of the future. In Scotland we have taken a leading role in terms of electric vehicles and that will drive some of this new smart system innovation that we are talking about and investment in there. The other thing is where you think about turning things that are weaknesses into strengths and grid in Scotland has particular constraints. We see a lot of people who are off grid in Scotland and obviously in our more remote and rural areas the constraints within grid have meant that we have had to be more innovative earlier in Scotland. We have a particular strength in that area that we can demonstrate and utilise across the rest of the globe. You have all indicated that Scotland is at the forefront of innovation but other countries are catching up. We heard last week from Professor Muscatelli that Scotland needs to significantly increase levels of research and development in innovation. Do you see challenges in your sector as far as that is concerned? We will increase R&D expenditure. It is one of the key risks for us in Brexit, which is that while we have had phenomenal support around the renewable sector from the Scottish Government and it is part of the way that Scotland has developed its economy, a lot of the funding that we have seen particularly for earlier stage innovation technologies such as MWABE and Tidal has come directly from the European Union who also share our very high ambition in there. That is a big concern because we have companies like Nova Innovation here in Scotland who have managed to get really strong support from those funds for their technologies, which is allowing them to do the journey that I was talking about from innovation to commercialisation. It is a big issue for us to consider. I would say for us absolutely that it is an issue. Our role as an innovation centre is to work between the university sector, SMEs and industry and to help to translate those really exciting innovative ideas that universities have into commercial output. Funding for those projects and the ability to assist those companies is vitally important. As the innovation centres we were set up with a pot of money that we were allowed to use to see projects, our innovation centre worked with David on a really exciting project. Having the ability to have that pot of money that you can do with really innovative and risky things because very often you just do not know what the outcome of a project will be before you start, that is the whole point of science. In order to have some money that can be used to see really exciting and innovative projects, to me is an issue. Again, the Brexit issue raises that because there is a huge amount of European Union funding that we can tap into, that potentially we will not be able to impact what we are doing. On the plus side, there is a lot of money from Innovate UK. For me in particular there is a lot of emphasis on precision medicine and data. We are also using an awful lot of data within the precision medicine field. Having access to money from Innovate UK is hugely beneficial to us but then what we need is really innovative SMEs that we can work with who are prepared to take the risk and take the time to write the grants to get that money from Innovate UK. All of those things take time and it has to compete against all the other things that they are trying to do as SMEs, which grant writing is not necessarily very high up and their rate doesn't perhaps, David, can comment on that. I think that that is always a challenge to ensure that there is sufficient investment at the early stage of company growth and for spin-outs and startups that that investment comes not only from in Scotland venture capital business angel networks and Scotland has been very well supported by business angel networks but also Scottish Investment Bank, which is the most active investor in life sciences in the UK. That support of match funding, some of the early risk capital that's come from business angels or private investors or in most cases the founders putting their own money in, that's a matching investment for early stage R&D and getting those companies across that barrier from proof of concept into an actual commercial product and starting to generate revenue. It's a really, really tough phase and I think that we've, you know, Scotland's led the way in that and again I just want to, you know, really emphasise how important that is to those spin-outs and startups that we get them over that hurdle. The next challenge in that next phase of development more than research is the scaling up and the higher levels of investment, which again we've done well in total numbers of invested companies, but perhaps not as well in the total value or the average investment that's been made into companies allowing them to grow more quickly. So some of the funding from Europe, Horizon 2020, SME instrument, we've done okay but perhaps not as well as we might and it's important that we don't lose access to some of those funding mechanisms, which can really help to take companies across that first barrier of risk and then help them to scale up. Is that because we've heard evidence to say that the vast majority of SMEs are very, very small in Scotland and we're missing this middle section or middle range-sized companies? Is that partly the reason why we're having these difficulties? You mentioned, I think, that your company that you worked for, where it was taken over by a Japanese company, was that because of future financial investment that was required? Yeah, that was a means for us to achieve the level of investment that we needed and they've been as good as a word and that's something where it's important that we get that long-term investment from companies because we don't want to see that research base then move into a different market and the scale up to happen elsewhere. So it's mostly selecting which type of investors we attract and that we try and make it an attractive ecosystem and that's been an emphasis for precision medicine is that what's attracting inward investment is not only the company that's the main thing is the company and the opportunity it represents but it's also that supporting ecosystem of the universities, the NHS, the skilled pool of talent in the country so it's trying to get all those things together as a selling point. My last question is in relation to Brexit, both you, a couple of you mentioned the fact in terms of finance at Brexit, it's a difficulty but in terms of research and development, etc, there's a lot of collaboration goes on across Europe and also there's access to skilled labour, could you maybe say a wee bit of difficulties that that's going to face your sector in the next 10 years? We recently looked into this so in our sector we have a number of relatively large companies alongside the smaller businesses that operate just in Scotland who are internationally owned so by their very nature they do operate globally. For us it's we don't use volume low-skilled work sort of like the sort of food and drink industry perhaps does we don't have a seasonal element to it so that's not such a big worry for us. It is more to the high to mid-skilled collaboration type roles that we are really concerned about and where freedom of movement would certainly impact us. In terms of the sort of global market, if we want to develop these kind of subsidy free projects, any tariffs or barriers that come in as a result of that would be very very difficult for us as well. In terms of trade barriers of course like that, renewables and energy as a whole presents a bit of a Brexit bridge for us here in Scotland. We have to collaborate because that's the nature of our energy system now and the way that it's kind of operating so we've got the opportunity to maintain those links and to use our sort of energy system as a way of building bridges outside of Scotland as a result of Brexit. Follow-up from Gillian Martin it may be one or the other of you may want to come in with a bit on the last question from Gordon MacDonald as well. Gillian Martin. Thank you, so Gordon's been talking about some of the issues that affect you in reaching your potential and you've talked, you've referenced other countries in the world, absolutely Japan. Is there anything when you look at other countries that you see them doing that would be something that we can adopt to solve some of these issues that you've found about reaching your potential? In the field of life sciences, regenerative medicine and precision medicine, I think one of the real assets that we have in Scotland is our electronic health records and our patient data and I think for me that I've heard people say that that's Scotland's new oil, that appears to be the phrase that's used more often than not and I think that is a fantastic asset that we have. The challenge that we have is that we are not building this from scratch, we are starting to think about how we can use our data in a very productive way for patient benefit and for Scotland's economy. The challenge that we face is that countries like Estonia or Qatar who haven't had the national health system started from scratch so they've actually been able to build a system that works very well and can be interrogated and integrated quite easily. The challenge that we have is that ours has grown organically and so it's probably a bit less structured, a bit less ordered and for me that's where I see the real opportunity that Scotland has this huge wealth of data that we could use in lots of different ways for the academic community, for the clinical community, for the SME community and the pharmaceutical industry to really, really improve Scotland's health and Scotland's economy and how do we restructure that in a way that it's easily accessible and more importantly ethically available. So I think that when you look at countries like Finland and you look at countries like Estonia, they have managed to build really helpful infrastructure purely and simply because they're starting from scratch and I think that makes a big, big difference when you're trying to kind of morph something into something different when you already have a huge legacy of data existing. And with respect to the R&D and the collaboration side of things, I think for me the challenge is that our universities here in Scotland, we have world leading universities and what we really want is to make sure that the best and the brightest people come to work in Scotland, come to do their research here. At Glasgow we were fortunate enough to encourage Professor Andrew Biancon to come from Sydney to work in Wolfson wall up at the GarseCube estate. He works on pancreatic cancer, a huge unmet medical need in that disease. We work with him on a project. He's managed to attract £10 million of CRUK funding into his lab. He's now doing precision medicine clinical trials on pancreatic cancer, a fantastic achievement for Scotland. We need more of those people to come to Scotland and to do that groundbreaking research here. But it's not just the big professors, the big heavy hitters, it's the research students, it's the graduate students, people wanting to do PhDs and postdocs here. We need to make sure that we have an environment that encourages them to come and to work in Scotland. And then we have an opportunity for us as an innovation centre to collaborate with some of the best and the brightest people in the university sector to work with people like David. So we should be reducing the barriers to entry for them to get into precision medicine projects. People in Scotland might be working in precision medicine, but they're not actually aware that that's what they're doing. We need to find those companies and we need to work with them and collaborate with them and help them to achieve, to grow, to become companies of size and scale. As David says, we have this issue with companies remaining quite small and quite niche and how do we enable them to scale up? So working with fantastic academics, working with the innovation centres and the innovation centres being properly funded so that they can see these projects, these risky projects, that the SME community just don't have necessarily the funds to do. So we need to be less risk averse? I think so, yes. I think we have to be bold. I think it's the opportunity for, it's certainly in my sector, the opportunity for us is there. We are, certainly we have all of the components to be a world leader in precision medicine, but we are not the only one. Finland is, I keep going on about Finland because they are comparable to us in terms of population and they have been incredibly successful at attracting funding to do population-based sequencing studies. So 60 million euros went into Finland just before Christmas to sequence 500,000 Finnish people. The Finnish Innovation Centre gave 20 million euros to that project and they have six or seven pharmaceutical companies, including Pfizer, AstraZeneca and big blue chip companies, working with them to help them to exploit their expertise in this area. Why haven't they come to Scotland? Why aren't we doing that? We could do that. In the renewable sector, I'm just interested to see if there's anything around your route to market issue. There's different setups in different countries, but what we do hear from members is that in some other countries, despite them being within Europe and within the same state-aid structure that we sit within as well, there has been investment in infrastructure in other European countries, so things like ports and harbours that have facilitated their competitiveness, so they've been allowed to do that. The other area that I think is really interesting, I had the benefit of going to Switzerland in the last couple of years to see how they work on skills. Their skills system is very different to our own in that they are very, very heavily dominated by apprenticeships rather than the graduate route. The links between industry and academia are very, very close, so industry sets the standards for vocational courses, which I think certainly seems to power up their economy. I think that's something I know that we are seeking to change in Scotland and I think that a faster drive towards that would be a good thing. In other countries as well, particularly France is the key area and you see in Canada as well, there's a lot of weight being thrown behind wave and tidals, so there is a lot to be gained from driving these new technologies. Wave and tidals has been a sector that has been loomed large in the Scottish landscape for obvious reasons because we've got lots of natural resources and we are still trying to build an industry of scale there. We're doing very, very well with Gain. This is one of the areas where we've got really obvious world-leading prowess in this area, particularly of Orkney, and that's one of the really key things about the renewable sector, is that it can reach parts of the economy that other industries potentially can't reach. I think it's that recognition that we could use this to create the kind of economy that we're looking for here in Scotland. Do you feel there's enough been done to encourage people who've maybe got transferable skills in oil and gas, for example, to move over to renewables? I think that that's an absolutely critical point and I'm really glad that you've touched on it. It would be very good for us to work with the enterprise agencies to make sure that we make the best use of those skills that we do already have here in Scotland because there are a lot of transferable skills, particularly between oil and gas, floating offshore wind and wave and tidal. To be able to capitalise on what we already have would really help in terms of competitive advantage and help us to work on that cost reduction cycle that we're currently looking at. Thanks, convener. Up to now, we've looked mainly at sectors and I was just wondering if you could give us examples within your sectors as to companies that have maybe done better or, conversely, companies that have done worse. What is it about these companies, except Dr Bunton, you are a particular company, so I don't know if that makes it more difficult for you or whatever. If you want to tell me that everybody in the sector is doing equally well, I'm listening to that as well. Dr Bunton. I think that there are certain companies that have done extremely well in Scotland and have led the way in global terms. Bio-outsource is a very rapidly growing pharmaceutical services company and, interestingly, there are three or four other companies, such as Vatrology by Reliance, all in that similar area of testing the safety of manufactured pharmaceuticals. Scotland's built up a reputation. It's known for the quality of the work, the assurance that the customers have of having a very highly regulated and very carefully delivered approach and good customer service. All those softer elements, if you like, have played a big part in the reputation of that whole sector. Were they just lucky in choosing that sector? No, absolutely not. I think that there's been some very good science that's underpinned that, which originally has come out from universities and has underpinned the regulatory development. The science has led the way as to what regulations should be used to test the safety of certain manufactured products. What's been really successful is very good business skills and commercialisation around that from companies like Bio-reliance and Q1 Biotech built up that area and now other companies and some of those same people have gone recycled back into those new businesses and scaled those businesses again, done it again. So the skills in the universities that you've mentioned, the two that I guess are linked, so would you say that that was a key that a successful company is going to have a very close link with university? I would say that that's key as a starting point, but what's really the scale that's been achieved is the commercial skills. I think that's something that we want to see in other clusters. There's maybe not enough of a focus on developing our scientists to have not only good science but good commercial skills. So there are not that many of those really focused commercial business people around and perhaps our reticence in Scotland to see sales and business development as a vocation and a real career and that's something that I think these companies have excelled in and they've sold Scotland as a place of excellence and that's why they've gone on to employ hundreds of people in Europe. They've been doing around 40 per cent of the biopharmaceutical testing. So I think it's the science from the universities for sure but also having the right business and commercial skills to grow that and to build around that. Is that your view, Dr Harrison? I would agree with David. I think that Scotland's CRO and pharma services industry is world renowned. When I worked at Pfizer, we worked with many of the companies who are based here in Scotland so it's definitely an area of strength for us. I think for me there are other areas where we need to think about really exciting areas of research and therapeutics and looking at new medicines so we have a lot of very interesting SMEs who are coming up, who are working on particular diseases, CalDAN working in fibrosis, Marinad working in inflammation but these are very small companies then how do we grow them to become companies of size and scale? What kind of investment can we give them to enable them to grow? We've had some successes, there was I met pharma who was acquired by Merck, new carna who work in oncology had one of the largest IPOs so we do have successes in this area but they're few and far between. And what's been their secret? For I met pharma they were working in a very hot area of science, they're working in immuno-oncology which all of the pharmaceutical industry is very keen to get products that are interesting in that field so they were in the right place at the right time with a company who may be needed to acquire some assets. New carna have a very interesting way of treating cancer and I think they just had a compelling story and the belief that it was the right way to go but I think for other companies getting that next level of investment is really, really critical. It's how do we grow these companies to become companies of size and scale and I think that for me is the challenge. Will that normally be selling to Japanese or Chinese or American company? Not necessarily, I mean certainly that's the case that's happened with Merck and I met and David and Repressel but I think in other cases what happens is that the idea starts in Scotland and goes to America and is commercialised. I think that that is another thing that also happens. It is really important that we have this recycling of skills through our ecosystem and I think as David said that doesn't happen as much as it should do. We still have this fear of failure that to fail is a bad thing. In America that's not seen to be a bad thing. If you go and do a startup and the startup fails you start the next one. It isn't hung around your neck like a millstone. You learn from what happened before and you don't do it again. It's how do you build on those failures. My background is in business development so I would agree with David that the ability to go out and to commercialise early stage research or research from SMEs is vitally important and people who have an understanding of the science and a business acumen to go out and commercialise those opportunities is something that I think is lacking as well and it's hugely, hugely important. That's great, thanks so much. Ms Mack, is that an issue in your side as well? Do the people with the science have good commercial skills? I think what's been good for our industry has been the revenue stabilisation mechanism and the subsidy system that we talked about because that's created a really strong environment for further private investment. I think that's the thing first and foremost. I think I have to agree with the points that Diane was making around about fear of failure. One of our industries where we are seeing two really world leading companies in the tidal sector so we've got Magine and Scott Renewables who have both come through that process of innovation failure, learning from those mistakes and going forward. Part of the plan to move forward with that marine sector is to be able to enhance and accelerate all that learning and use that to drive cost reductions. Two of the key factors that really have supported different technologies within my industry is their ability to be innovative, to take on innovation but also to be international and to think about international markets. What we're solving here in Scotland in terms of renewables is a global issue. It's around about combating climate change and being open to being able to reach out to those international markets and diversify. If I think about just two other companies, we've got Windhoist who are based in Ayrshire who have operations in pretty much every European country and two in Africa, their ambition is not constrained by being here. They're very much open. Is that just up to the individual company and the individuals or can we, as the public sector or Scottish Enterprise, do anything to help that? Yes, absolutely. We've seen strong support from both Scottish Enterprise and Highlands and Islands Enterprise here as renewables was obviously identified as a growth sector and I think we've taken the right approach to this given our really abundant natural resources. We've got 25 per cent of Europe's wind power, 25 per cent of the tidal resource, 10 per cent of the wave resource. There is a debate on going, as I said, around the members, about investments that happen in other countries around supporting infrastructure, which I think potentially could be helpful, sort of ports and harbours and that kind of thing. We're really keen to work with the agencies to try and smooth out some of the work for the supply chain, because we do share the supply chain in a number of areas with oil and gas and being able to do a bit of supply chain planning I think would stand us in pretty good stead. Okay, thanks so much. Thank you. Thank you. Andy Wightman Thank you very much for convening. We've heard quite a lot about automation in recent years or so. There's mixed messages around it. I was just wondering what your view is it on it, is it something that can be harnessed to improve Scotland's economic performance or is it something that poses challenges? I think for us, I'll go first because you guys hopefully have quite a lot more to say about automation and change. We're a relatively modern industry in renewables and we've been relatively well penetrated in terms of automation, in terms of our system type stuff. By that I mean just being able to change the optimisation of wind farms and that kind of stuff. That's the really exciting things that are happening within Scotland right now and I had the pleasure of going down to Castle Douglas to see Natural Power's new smart operation centre down there, which is all about trying to optimise yield from wind farms, trying to make sure that we get the best kind of designs in there. That kind of automation is ever present in our industry, so wind farms are operated from a distance and have been for quite some time. There's lots of great productivity gains that we can get from being a bit smarter in there, just around about how we get people on and off sites, being able to check people's work tickets and that kind of thing against databases rather than having to do it by paper when we get in there, so that kind of thing is really, really exciting. We're in the renewable sector more of the disruptive force than the disrupted, so we don't face the same issues in terms of changing out technology and people. It's not quite the same. Where it will really impact in the energy sector is more at the consumer end, which is where we have to, again, in Scotland, we've got quite a really good opportunity here to be very, very good at new smart energy networks, new localised energy networks. People will take a much more active interest in their energy use and energy efficiency by being able to use the data that we can present to consumers, allowing them to make good choices and to allow us to make choices about where and how we generate energy in the future. I think in the high value manufacturing area, which is another key sector of life sciences in Scotland, with GSKs, and long-standing major employer here, and also startups and spin-outs that have taken manufacturing processes into the market. That's certainly opportunities to automate and lead away. I think also in areas like digital health that we're seeing increasing automation. However, that's not only about the actual laboratory processes that may be involved in those sorts of areas. I know that Diane will comment more in the precision medicine area, but we've certainly seen some of the more routine laboratory tests become commodities. Where we can really stand apart from the rest of the market is the application of the analysis of the data, the utilisation of that to make a real impact on patient health and for adding value to companies. It will be a combination of the automation processes and the value add that comes back to our talent pool in the country, making sure that we have that link between those two elements. As David said, life sciences has long been familiar with automation for many of the companies that we've talked about earlier with pharmaceutical services. Using robotics to do high throughput screens so that you can screen millions of compounds very quickly and very efficiently has been done for years within the industry, so that's nothing new in life sciences. I think that the interesting opportunity is around AI and data. As I've said, we have a huge amount of data here and to actually mine that data and find interesting things that could impact patients' health. Using AI on that data for me is a real opportunity and there's lots of companies that are springing up who are looking at the possibilities of using that. Actually, that's across all data, not just health data, where I think there could be some real groundbreaking innovative things that come out of using those two technologies together. Can I start by showing a little bit of ignorance here? Dr Harbison referred to the term chi. Where I come from, that's a cow and I'm suspecting it's not the case here. It's the community index number. It's the number that you get when children are born in Scotland, anyone who touches the health centre has a chi number. When you go to your doctor, all your prescription data and the imaging data and your blood work is all associated with this particular number, which is hugely powerful. Scotland's economic strategy identifies six designated sectors—food and drink, tourism, life sciences, financial and business services, creative industries and energy. From your perspective, what benefit is having those designated growth areas with the policy behind it? What does that benefit you by? I think it's the joined-up nature of support that's going to bring that long-term commitment for some of these sectors. I'm coming back to points about the time required to see the economic benefits of precision medicine and regenerative medicine. Some of the areas that we're now expert in, I mentioned the pharmaceutical services companies that are now off-scale. That's taken a long time for that to come from the science. Some of those breakthroughs in science were in the 80s and 90s and are now creating hundreds of jobs. Having it identified as a sector allows us to pick out the main areas of importance. In life sciences, it's the infrastructure, the talent pool, it's having the right regulatory environment, which I think is another point related to Brexit that we must protect and have a very strong regulatory environment. It's investment. We know that if we get those things right, we can scale up the companies. I agree. Being part of a sector means that we can co-ordinate our activities, focus on the areas in which we truly have world-leading expertise and think about how best to co-ordinate all those activities. How can we encourage more investment into Scotland from VCs or from companies that are looking to acquire interesting and innovative technologies? Being part of that and having that co-ordinated approach to a particular problem is a good one. For us in renewables, it's largely similar. That's signalled a level of ambition here in Scotland, which is very helpful to us in bringing in international collaborative partners, in bringing in investment and in bringing visibility to us because we're monitoring and measuring all those sectors and are able to take our place on what generally is a global stage as well for renewables to be able to lay claim to what we've actually achieved here in Scotland, so it does it. Has that co-ordinated approach? The word coming through very strongly here is co-ordination. Is that done within the sector itself or is it by the Government or is it a partnership? How does it actually function? We are obviously the trade body for renewables, so we do an element of that co-ordination because we sit across all of our sectors and are able to quite easily identify where the strengths and weaknesses are and where the linkages are between them. For us, the key linkage is that we sit very much between the UK Government policy and Scottish Government policy. The revenue stabilisation mechanism is a UK Government policy piece, whereas our actual deployment and delivery is very much governed right here in Scotland through the planning and consenting process. Being able to that co-ordination is absolutely critical for us and that's an area that we continually focus on to try and make sure that we get that right so that we can create the best environment to have a renewables business here in Scotland. On the co-ordination manifests itself in similar ways across all the sectors? I think that it has to be in partnership. I think that if it's all Government led, it may be the wrong direction that's selected in terms of that market feedback. So it has to be a combination of the investment infrastructure and the supporting environment from things like the Scottish Investment Bank, the export assistance from SDI. Those are important Government interventions if you like to support the economy, but the companies are providing that barometer of where the markets are going and where the future opportunities are coming from. The partnerships have to be right there. Other than that, the strengths of the universities and the NHS are great, but they're not perfect. We shouldn't kid ourselves that everything is absolutely perfect there. I think that the NHS is a unique structure that we can work in partnership with for economic benefit and patient health, most importantly, but there are still ways that we can improve that. Things like the health innovation partnerships have tried to address that problem that some companies may have found it quite difficult to engage with the NHS as customers. I think that we need to go further in still working together in partnership, but in my view it has to be the industry base. If we're talking about economic performance, it's the industry base that's sensitive to the changes in what their customers want and where the market is going and that they can help to work with the Government, with the universities and the NHS to try to direct strategy. So would you say that the balance of the partnership is about right between the Government and the different sectors at this time? I think that Scotland really has led the way with things like the Scottish Investment Bank. We've been ahead of the game there and it's very important that we keep that up and that for early R&D funding we make sure that we don't fall behind after Brexit because it's very important for that early investment. I think that the balance between NHS and companies is something that's improved a lot but it's still not perfect. Just to take a slightly different angle, do you think that companies within your own sectors are confident enough and supported enough to sell more goods to the internal market and, importantly, to the international market? Are they at a position that they have that confidence to get out there and expand? I think so. I think that the support that we get from organisations like SDI to go to meetings like for us and I'm sure for David and other SMEs in the Scottish ecosystem going to conferences that are essentially partnering meetings. It's almost like speed dating with a potential customer. You go to Boston, you go to San Diego, you go to areas of life sciences expertise anywhere in the world and SDI can help you to facilitate those meetings. They very often have office space in those cities where you can take space, hot desk and have those meetings that can enable you to meet potential new customers. The work that SDI does in that respect is very helpful. We've now been joined by Gareth Winn. I wonder if you had any comment on that particular question. Yes. Firstly, I'm really sorry to have been so late, clearly a big confusion on the timing start for me, so apologies for that. To your question, I think for the oil and gas sector, the home market and the export market are linked in order to create a really strong platform for exports. We already export something like £12 billion a year of goods and services from our industry overseas, but in order to have that, you need the strong base here to develop the expertise and the know-how to be able to export it to other parts of the world where it might be useful. There are some other offshore basins in Brazil, Indonesia and others where the skills that are right here in Scotland are very exportable. It's a key part of the sector deal in fact that we've just proposed to the UK Government to enable us to build on that and to create some centres of excellence based here in Scotland to help us to develop that a bit further. Just a final question there. Do the companies within your sectors consider boosting exports to be important, or is it a secondary consideration to expand them in the company domestically? In the renewables sector, one of the key constraints around export, if you will, is that we're putting electrons somewhere else. It's about modernising our grid and being able to get the correct kind of interconnectors that we need in order to be able to export some of our resource. Everybody is well versed in what happens quite often in the wind industry, which is that the wind is constrained by the fact that the grid can't cope with what it can generate. That's a really key issue for us. There are a lot of programmes and projects going on through off-chain and national grid in order to modernise that, but there are also other options that we can think about around the islands in particular and what their capacity could be in order to export northwards. A similar story for my sector is that there are two dimensions in which we can secure a longer term future for the companies that are operating currently only or mainly in oil and gas. The first is diversification into other energy sources and in that respect our sectors overlap and the other is geographies. It's a big part in particular for the companies operating in the supply chain in oil and gas. I'd like to move on to questions from Kizia Dugdale, just conscious of our time at the minute. Thanks, convener. I've just listened to the remarks that you've made already this morning. We've had references to the need to maintain high standards of regulatory regimes across Europe. You've talked about the importance of free movement of labour across Europe. You've talked about the importance of tariff and barrier free access to Europe. You're also just generally the importance of collaboration across the nations. Can you just spell out to us in the clearest terms you can how big a deal Brexit is and the consequences of either staying or leaving the single market within leaving the European Union? I think for me because the area that we work in is global. Actually, I think the impacts of Brexit will possibly be slightly less with us than for other industries because pharmaceutical companies will go and work with the best people irrespective of where they are in the world. David has highlighted some of the concerns about the regulatory approval system and what the impact of that might be, the impact of recruiting the right talent. We've talked earlier on about really exciting and innovative research being done in the universities because people have come here. I think that that is a concern that if we can't attract the right talent here, particularly if you think about areas where there's a great lack of skills and IT in particular as one of the areas. There is a real lack of data scientists of bioinformaticians and we are doing a lot within the innovation centres, the data lab in particular, to make sure that we have the skills to work in this space, but not being able to attract those people to Scotland would be an issue. A little bit the same for oil and gas. The issue for us is not so much in or out of the customs union but the customs processes. If I paint a picture for you, imagine a platform in the North Sea that has a critical pump that fails for whatever reason at the moment. There's at least one of our operators that relies on pumps being manufactured in Italy and if that were to break, they will ship that pump post-taste from Italy directly. If that process is quick and smooth, the tariffs are not such an issue as the customs barriers. It's not to say that the tariffs don't matter. Of course they do in an industry that's fought so hard to bring its costs down since the downturn of 2014, any additional cost would be an issue. If we ended up with world trade organisation terms, in effect the cost of operating our industry would more or less double if we were on world trade organisation terms. Obviously that's a worst case scenario so hopefully it won't come to that but that gives you an idea of the scale of it. I think that ours is very similar in that, yes, the impacts are probably slightly less in renewables than elsewhere but the drive in renewables is all around cost reduction as well, very similar to my colleague in oil and gas. Anything that would impact that process, the landscape is changing. The whole of the energy system is facing increased pressures on costs across all elements of projects so we need to ensure that Scotland is the best place and the most competitive place to establish a renewable energy project and that would be our key aim. You mentioned skills, if I can invite you to consider the role of enterprise and skills agencies in the work that we're doing just now and ask you to comment on whether you consider the landscape to be cluttered and how you would evaluate the quality of the advice and support that you may or may not have received. In terms of skills, I'm very interested in all of the work that's been happening around the enterprise and skills review to change the skillset. I've already mentioned my experience in Switzerland about apprenticeships and we're already kind of moving down that road. I think that what we would very much welcome is working more tightly around those more place-based economic development plans because that's very much where renewables can really come into its own and we've seen this certainly in the last couple of years as remote islands wind has developed. It's obviously going to have, because of its grid and connection charges, a much higher cost of energy but it does have other aspects to it on the socioeconomic front, which will drive some very strong positive outcomes for areas of Scotland that wouldn't ordinarily be attractive to other broader industry groups. That's where we're very keen to work with the enterprise agencies on that and, as we said earlier, about looking at transferring skills in from oil and gas and smoothing that supply chain for both of our industries too. I agree with most of that as well. From our point of view, we've got around 300,000 people working directly in the industry across the UK and more or less half of those are in Scotland. The big challenge for us is how to make sure, as with most technical industries, how we get more well qualified engineers, people with a technical competency coming through, whether it be at apprentices or graduates level to replace some of the ageing workforce that are starting to reach the end of their working life. Anything we can do on that front is a good thing. Are we doing anything on that? Are there questions about the quality of the support that you receive? Yes, there's a lot of good support out there but there's one particular issue that I think you could possibly help us with, which is the way in which the apprenticeship levy is rolled out, at least from an oil and gas point of view, because here in Scotland the institutions that effectively provide the training that qualifies are not the ones that are most useful to our members. For that reason, our members are telling us that they're not unhappy with paying the levy, but they are a bit unhappy about the fact that some of the places that they would like to take their trainees from and don't qualify and therefore they can't draw down effectively on the benefits of the levy in Scotland, at least. I think that in terms of skills, development and life sciences that we are having set up a US subsidiary we've found it much easier to recruit here and to get good scientists and part of that is the combination of the academic and the practical skills. I've seen a couple of concerning statements from graduates that we've been recruiting about the extent of the practical skills being replaced by simulation, computer simulation and so on, so it's just a note of concern. I don't think that it's a huge worry but just to maintain the quality that we have, we are. We do punch above our weight in terms of our life scientists and that practical element is really important to our undergraduates. I would agree with that. I think that, as David said, we have a very strong research intensive universities here which produce really skilled graduates. I think that for me the concerns are around data scientists and informatics and making sure that we have the skills in order to make the most of all the stuff that's coming out around AI and other new technologies. But also I think that, as I said earlier, getting people who are scientists with business acumen or people who are project managers, I think for graduates to think much more widely about what they could do with a science degree, that it doesn't necessarily mean that you have to be at the bench and working in the lab. David and I probably both started off there but neither of us are there now. I think so to get graduates who come out with an ambition to do something different, they don't necessarily have to work in the lab. What needs to change to make that happen? We've heard evidence in previous weeks on how in China there are compulsory business elements in all undergraduate degrees. Is that the type of thing you're looking at? That's happening. I think that it's up to industry to also play the part in actually offering that type of training. So the Skills Development Scotland has started a CV competition. It's now an apprenticeship or sort of work placement competition and that's grown very rapidly and students benefit from a summer long work placement and get those commercial skills. So I think that that's something that we need more companies to buy into. It's not only about intervention but about the companies offering those opportunities. We do that in our innovation centre and in the other innovation centres we've had students come in to work in the summer or to work in their projects and we've not only offered them projects that are lab based in my innovation centre, we've offered people the chance to do a business development role to see if it's something that they would enjoy doing. One of our recent graduates worked with us on a project, did very well and worked with Innovate UK. With respect, the question was about what happens within universities before they arrive in your doorstep, so should there be more done around businesses within the state element of the system? I think that again, there's some elements that are being built in with training and regulatory compliance and graduate skills. There's graduate skill master classes that Caledonian University have developed. So these are small projects that I think students have really bought into and they are attending them in high numbers and they are things that we could integrate more into the undergraduate programme. Jamie Halcro Johnston Thanks very much. I was going to ask a number of the issues that were covered by other colleagues. I would ask very quickly, does the current education and skills structure in Scotland, do you think that that will meet, if it's not changed, your future needs and the needs of your sectors? It's a very difficult question because we all know the stats around how many jobs don't exist yet and that kind of thing. I think that we are quite lucky and we are quite well blended. Again, I'll go back to experiences in Switzerland because I looked across the whole system and saw what happened in the career development. It's interesting to reflect on the points that you have made in the graduate space. We went to careers day for school-age children around 14-15, but I was really struck by the level of confidence in them. Those kids were expected to write their own CV, get themselves into an interview, get through that interview and it really did give them skills at a very, very early age, which was helpful. I know that some of the modern apprenticeship network does allow for that to happen and the foundation apprenticeship model does allow for that to happen here. It just felt like a really good way to equip their young people well for the world of work. I think that, in general, we need to focus more widely on preparing our young people for the kind of world they're going to enter and that in my industry does mean that they will probably be working in a much more international world. We look at the oil industry and there's a bit of an adage that goes around that, no matter where you work in oil across the world, you'll hear a Scottish accent. That's what we want to see for renewables as well, and it's that recognition that your career will very much potentially be based around international travel. It will be based around doing international projects and working collaboratively with people in those skillsets that are really, really important for the future. On the kind of careers advice and business engagement with schools, with colleges and like, how early should that be happening and are we getting involved or business getting involved early enough now? I would say that the key moment is when people move in Scotland towards choosing their hires. That's the key moment in time because that's where they start to narrow down the breadth of their education and it begins to, if not lock in, lock out certain options, particularly if we want them to go down a more technical route. I agree with a lot of what Claire was just saying about the foundations that are necessary. I do think that we could redouble our efforts still on STEM subjects and, in particular, whether people coming through want to go into infrastructure engineering or oil and gas or renewables, that foundation of STEM is absolutely fundamental. No matter how much we're doing, we can still do more. I think that that's true here in Scotland and then true across the UK. Dean Lockhart. Thank you very much. I wanted to return to the question of commercialisation of innovation because I think that it's a very important part of the economic business development analysis. We've heard examples today and in other sessions of startup companies and new technologies established either in university, colleges or business in Scotland being bought by overseas investors because overseas investors have a longer-term outlook. Given that we have hundreds of millions of pounds being spent by the enterprise agencies and we've got the new Scottish National Investment Bank coming on stream, what can we do to address that gap? What can we do to keep more innovation in Scotland and more innovation developed here to be owned by Scottish companies going forward? Is it largely a question of money being available, long-term patient capital, or are there other considerations that we can look at to address that gap? I think that there is the patient capital question and we're all quite well versed in there. I think that there is a huge opportunity in my industry between the muted Government-owned energy company and the Scottish National Investment Bank to work together. That can be a very powerful combination for us in terms of developing not only innovative technologies and then getting them on to the market but being able to help in that scale-up space. There's a lot of really interesting work being done at the Hunter Centre at the University of Strathclyde in this space and I think that I'm watching that very closely because I think that they are doing very well in there. For us, renewables, for me, provide a really excellent living example of getting things from innovation into commercialisation and being able to bank that knowledge and use it across sectors. That's not unique to my sector. This issue of the so-called valley of death or fear of heights is the other way. I've heard that kind of termed as people not being able to be too big is being able to genuinely utilise what we already have. We do have some big companies here who stay here and manage to be the big fish around the place. Being able to bring all of that knowledge much more closely together would really stand us in good stead. I think that there's a whole combination of factors that really are at work here. I think that the long-term incentive political support, national investment in things like the oil and gas technology centre and some of the things that we've put into our sector deal, which sort of build on that and creating a certain sense of excellence. I think that all of that is important to maintain. Beyond that, the other thing that's really important is to make sure that Scotland remains a good place to do business in general, which means the right tax regime for personal taxation, the right and make it a nice place to live because it will make people sticky. In our industry, we've got a much improved fiscal environment. We've got a good regulatory environment. If we layer in those things for stimulus for innovation and technology development and maintain the attractiveness of the place to live and work, that combination of things is what will ultimately make us stand out and stay strong. I think that if we have more companies that are market led from the outset and speaking also from personal experience, I've been a university spin out, we probably weren't focused on the right market to start with. That limited how much we grew initially until we actually went out and developed commercial skills and looked to export. I think that it came back to those development of good commercial business skills in the ecosystem. Not all of those spin outs and startups are going to scale. I think that there are many ways to see the ones that are in the right market and have the biggest opportunities to grow from there. Sometimes it will be inward investment and that doesn't mean that the company isn't anchored. I think that the anchor point is based around the skills of the people, the regulatory environment and the quality of work that is delivered. That is for the pharmaceutical services, it is the people, for the manufacturing sector, it is the people and it is also the infrastructure and the long-term investment. Inward investment can play an important part. Some of the startups and spin outs might need to look at ways to consolidate them or select the winners earlier and back them further. That is something that the Scottish Investment Bank and Scottish Enterprise do look at and are considering. As that transition happens not only from early seed funding into other forms of funding of debt finance and longer-term capital, I have to say that angel investors are pretty patient in many cases. They want to be able to recycle those funds. An exit is not necessarily a bad thing. It allows that investment to go back into early-stage companies again. For many biotechnology companies globally, acquisition is an exit strategy. It is not necessarily a bad thing. As David said, it enables some of the capital to be recycled but also some of the skills and experience to be recycled back into the community. It is about how you make those people stick so that, if a biotech or a WESM is bought by someone, how do you make sure that you retain the skills and the knowledge that have been generated as they have grown their company? I will put on that line, which is an example from our industry where private equity investment into the industry has in many ways invigorated sections of it. If you buy a new asset, you tend to want to do something with it. In some ways, I do not think that we should worry about having outside investors coming in as long as it is on the right basis and that it is in a properly regulated way. I will suspend the meeting at this point. Thank you very much to all of our witnesses for coming in and we will reconvene about 10 to 2. Welcome to the second session in our economic inquiry. We have a new panel of witnesses with us for the most part. First of all, Willie McLeod, Executive Director of UK Hospitality for Scotland. Malcolm Ruffhead, Chief Executive Officer of Visit Scotland, Ewan MacDonald Russell, Head of Policy and External Affairs, Scottish Retail Consortium, Mark Crothall, Chief Executive Officer of Scottish Tourism Alliance and James Withers, Chief Executive of Scotland Food and Drink Limited. Welcome to all of you. Also, we have Gareth Wyn, who, due to an administrative mix-up, had only been in part of the earlier session. He is going to join us for this as well, but perhaps not involve himself in some of the questions that we have covered with him earlier. Welcome back to you as well. I will start with a fairly general question, which is about the performance of the Scottish economy and how the Scottish economy has performed over the past 10 years in general and in your particular area or sector. Who would like to go first? I am happy to volunteer to go first. You are in MacDonald Russell. For the retail industry, we have a kind of locus on this through our interested consumers. Obviously, pretty much everybody in Scotland is a consumer of the retail industry. As one of the largest private enterprises, we have got 240,000 workers, stores in pretty much every community and we have had a retail turnover of about £25 billion. In terms of the performance over recent years, we track that through our own Scottish Retail Sales Monitor and also the Scottish Government produces the Retail Sales Index. They both tell pretty much the same story. We saw from 1999 to 2008 year-in-year sales growth was about 5.9% in Scotland, slightly lower in the UK. There was a definite change then. 2006 it has been 0.5%, 0.5% each year, and that is about a quarter of the UK rate. That has been driven by the kind of factors that we would expect since financial crisis. We have seen nervous consumers, we have seen a downturn in economic growth, and the GDP will broadly track those things in terms of consumer confidence and consumer spend. It has also come at a time when the retail industry has gone through an enormous process of change. The last five years have altered pretty much every facet of our industry, whereas digital rises as technology and automation take hold, and at a time when we have seen a number of quite significant public policy interventions. It is an interesting time, but it is quite challenging as well. From a food and drink perspective, the last decade has been a success story from our point of view. Back in 2007, our sector was static in growth terms. It was worth about £10 billion. It had been worth roughly around that amount over the previous five years as well. A new growth strategy was put in place and we have seen it become Scotland's fastest growing export sector and one of the best-performing domestic sectors. Interestingly, some of the factors that have driven that set have been out with our control. When the exchange rates worked in our favour, food price inflation was a factor that drove the turnover growth, but there are quite a few areas in which Scotland has acted a little bit differently to other parts of the UK and, in fact, the rest of the world. If we look at the growth of food manufacturing industry in England between 2008 and 2015, it was around about 13-14 per cent. In Scotland, it has been almost double that, so we have been growing approximately twice the pace of the rest of the UK. So real success, and there are a few reasons for that, which no doubt we will get into later on discussion, but overall we are in a growth phase and we think that some of the real opportunities still lie ahead for us. I should have said at the outset that don't feel each of you that you have to answer every question either, so if you want to come in and just indicate by raising your hand, the sound system will be operated independently. William McLeod. We just make some observations really on part of this hospitality and licence sector. Clearly, we are a major component of the tourism industry, but we don't just deliver services to visitors to Scotland, we're delivering services to our resident population for leisure and business purposes all the time. The most recent figures that we have are that hospitality, the wider hospitality industry, employs just over 300,000 people in Scotland with a GVA contributing to the economy of just over £6 billion. That shows quite a significant growth since we did similar figures back in 2010. We have an industry that is growing, is fairly buoyant, is supported very much by tourism, but is also supported by the resident population going about their daily business, looking for entertainment, accommodation for short breaks and people eating out and drinking away from home. Gareth Winn. The oil and gas industry has had a tough time in Scotland in the period from 2014 when the oil price collapsed, but it still employs more or less 150,000 people in Scotland. In 2016 and 2017, it still provided around a bit over £200 million of contribution to the Scottish Exchequer. This year, we're anticipating a better year, so the OBR in the UK Government recently just announced the roundabout £1 billion of production taxes in this coming year and for the next five years. The majority of our members are now saying that they're going to hire more people this year, so hopefully we've seen the worst now of the reductions in people. Just on the tourism front, just to pick up where Willie had started it, we've seen really good growth since 2010 and certainly in the last couple of years, not only in growth of volume of visitor and spend this year, in the past in particular international spend, but in the growth of a number of enterprises that started up. We're just over 14,000 now, so clearly there's an appetite. We launched our national tourism strategy as a collaboration of industry, industry led back in 2012, and that's really stimulated a lot more engagement around the tourism agenda. I think that our markets have changed and there's certainly growing markets from all around the world now, which is encouraging. Last but not least, Malcolm. I think that what we've seen over the last decade is the resilience of the tourism industry. It's come through pretty tough times, not just in the UK but globally. It's now worth £11 billion of economic activity to the Scottish economy, makes up 5 per cent of the Scottish GDP. Over the last decade, what we've seen is the GVA in the industry grow by 42 per cent, which again illustrates underlying strength of the industry. As Willie mentioned, in the broader visitor economy it's about 300,000 jobs, but within tourism it's 217,000. It's spread the length and breadth of the country. It touches every single constituency in Scotland and sustains a lot of very fragile communities, particularly in the rural areas. One of the great things is that the industry and the public service bodies are working much closer together, probably at any time, than I can remember over the last decade. What are the key opportunities and challenges that are facing your sector and the Scottish economy up for the next 10 years? I think that a workforce is probably the biggest challenge. We need a workforce to be able to service the increased volume. We've got an ageing population and a gap as a sector across the UK. We're one that is under-resourced anyway. There are particular skills within that sector, which are probably more needed than others. Chefs in particular are one in great shortage. As we change, looking at language skills and technology skills, our key to the sector has evolved. Workforce without question is the number one concern that comes through from the majority. How do we get more people seeing a career in tourism as a wider career of choice? There isn't this perception of it just being quite narrow in something that you do if you fail at school. I think that there are many opportunities. Tourism is actually one of the sectors that's growing worldwide. That brings with it numerous challenges in terms of competitiveness as a destination. It means that there are challenges around competitiveness as an industry. We have to overcome a number of those particular issues. Skills, in the broader sense, capacity and capability are our ability to compete on a global stage in terms of technology. The take-up of technology within the industry is still lagging behind many other countries. Even yesterday, we saw that Australia just announced a new $12 million tourism bid fund for conferences and events. You are seeing massive investment from countries such as New Zealand and the States of Canada, so it is a very competitive global market and we need to be able to compete. The big opportunity that we see is a growth one. Our industry is now worth $14 billion. We launched a new strategy last year and we believe that it could be worth $30 billion by 2030. That is about growth at home. We are working closely with the tourism industry to make sure that our food and drink offering is a shining light as far as Scotland's tourism potential for visitors is coming. We need more of our companies to trade across the rest of the UK, so there is much more growth opportunity there and a real transformational opportunity overseas. That is built on two things really for us. The growth of Scotland's brand and identity as we term it the land of food and drink. There has been a lot of work on going to have sectors working collectively to build that brand and that story, which really resonates overseas and increasingly resonates at home as well. We are not going to compete on cost as far as our products go. If you want cheap food, you would be better getting that from somewhere else, but we can absolutely compete around high production standards, strong provenance story. The second building block for us is the collaboration piece that Malcolm referenced. The close working between industry and the public sector in tourism has been a complete game changer for us in food and drink. Ten years ago, I worked at the national farmers union at the time, and we pretty much worked in a silo. We did not talk much to our fishing counterparts, we did not talk much to the trade bodies like the whisky association, the seafood body and the red meat body. Now we work collectively to create a single plan and, crucially for us, the Scottish Government and their agencies over the last ten years have swung in behind that plan. There is more that we need to do to deepen that collaboration, but that combination of working collaboratively, building on that brand and then investing in skills, innovation and supply chain means for us, we see huge growth opportunities. Brexit is absolutely a short-term hurdle, we need to clear. 30 per cent of our workforce are nationals from other EU countries, 70 per cent of the food we sell out of Scotland goes to the European Union. That is absolutely an issue that we need to tackle, but it does not take away from an underlying view of huge opportunity for us over the coming years. For our industry, on a 2035 time horizon, we have a vision set out that is built around two strands, and the next 10 years is about getting us on that track properly. The two strands to it are maximising the economic recovery, making sure that we make the most of and get as much of the oil and gas that is in the North Sea out on a cost-effective basis. That means holding on to the cost improvements that the industry has delivered in the downturn. The second one, which is really important, is developing the supply chain to have more exportable expertise, and that means helping them to improve their margins. A lot of the supply chain has been holding on to revenue at very slim margins, so we need to help them to boost that. On that 2035 time horizon, we think that there is about £920 billion of additional value to be got, if we can get it right. A couple of things. Firstly, if our industry grows, even in line with the somewhat disappointing growth of the last few years, that will be worth £2.5 billion to the Scottish economy, it is really quite significant. I think that consumers are likely to really benefit and continue to benefit, and that is from technology and from the really strong competition in the industry. We know that shop prices in total have fallen for the last four and a half years, and that has had a huge impact on households. I think that the third point is that the job profile in the industry is changing. The jobs are broadly becoming better and they are broadly becoming higher paid, but they are becoming fewer. That leads on to the tech point, which sits both in the opportunities and the challenges. It is very much double-sided that technology is changing every single element of retail. My favourite stat is that 50% of online shopping is done on smartphones now, because people are doing it literally on the move. What that means on one side is that we have opportunities to be more sustainable, to be more efficient, but on the flip side there will be huge changes to the current profile of our industry. We know in the last eight years that 16,000 Scottish jobs have gone. We know that 1,800 shops have closed. We anticipate that those trends will continue in those broad terms. We did a report last April, which said that a fifth of Scottish jobs up to a fifth might close. I do not know exactly what that is. That is only twice the current rate. On one side, we will see extra growth. On one side, we will see better jobs, but there are huge challenges and how that happens, particularly because those changes are likely to be quite asymmetric. Retail areas that are successful and that have high footfall that are desirable will do well and others are likely to lose out. I agree that our tourism industry has a huge opportunity for growth, and certainly in hospitality, notwithstanding the well-publicised recent difficulties of some businesses in the casual dining sector, we still see a massive opportunity for growth. However, I think that growth has the potential to be constrained, as Mark pointed out by the labour market. We are not quite as dependent as the food and drink industry on non-UK workers. On average, in Scotland, we are about 18 per cent non-UK, a mixture of EU and non-EAEA employees, but it can be as high as 65 per cent non-UK in some city centre hotels. To keep it in proportion, in hospitality, we have got about a quarter of a million people who are UK citizens employed in our industry. However, if it seems likely that we are going to see free movement ending, our industry is going to be in pretty serious trouble. We are a labour-intensive industry, and we will continue to need people to deliver services to our customers who look for them seven days a week, 24 hours a day, 365 days a year. We will need to address the labour market issue. Part of that is going to free movement ends. We have to look at the UK level at a fairly radical view of the immigration system. The current tiered system of tiers 1 to 5 will not work for our industry, given the way in which it is structured. You have just taken that point forward. You have talked about the immigration system, but is there any other way in which we can tackle the shortage of workforce that appears to be facing us in terms of tourism, food and drink sector? In particular, how do we tackle the skill shortage that we are looking at? If I could lead off on that, I think that there are difficulties when we have such a high level of employment currently in the UK or a low level of unemployment. The industry is taking steps to address that. We ourselves as UK hospitality have worked up a 10-year plan to look at how we can make our industry a lot more attractive than it currently is to people who are not necessarily looking for an academic career but are looking for vocational opportunities. That is an industry that we can offer entry-level and elementary jobs that allow people to move very rapidly through the career structure, but we have to become much better at demonstrating career progression not just to the employee themselves but to parents, to school teachers, to careers advisers and other influencers. That is something that you will be aware of, I think, of the UK Government's industry strategy. There is an industry sector bid for tourism and hospitality with the UK Government at the moment. We are awaiting a decision on that. There is a career of choice programme in there that my organisation will lead on. Indeed, even if the industry sector bid is not approved, we intend to progress for that, because there is a real constraint on our growth if we do not address labour market shortages and skills shortages. Mark Rothel. As Woody has touched on, it sits in the tourism sector deal at UK level but also in our national tourism skills investment plan, which is an industry working group with Skills Development Scotland behind it. There are a number of really good organisations, Springboard and Princess Trust, which have hit Scotland all working together to encourage the youngsters to see that this is a career of choice perceptions of mum and dad are quite rightly so one of the ones that we need to change. However, I still feel more could be done in schools, particularly at primary school level around the teaching, working force, having a better understanding of what tourism is about and the careers that exist in the sector. It is quite narrow in a lot of their thinking. The industry will do wherever it can to go into schools. This year of young people, we are doing a lot of that as well, but you are fighting against many other sectors as well. Perceptions of it being a poor career of choice in terms of poor pay and not being really aware of what Woody has highlighted around the opportunity to accelerate quite quickly through into very diverse jobs, well-paid jobs, which can also take you around the world as well. It is something that is not necessarily known or understood. I echo much of what has been said. I think on the skills issue much of the responsibility to increase attraction in the sector sits with industry. Certainly in our sector, we have neglected that issue more than we should have done and we will have to step up a bit more whether companies are engaging with schools, whether it is about taking on internships. I think that the foundation apprenticeship model that Skills Development Scotland has created looks quite innovative and quite interesting. From our sector, we are now looking to make sure that we blow well past the target that Skills Development Scotland has for the number of places that they want to fund in our sector through foundation apprenticeships This year, 10 years ago, we said that there was not enough connection between food and drink and the education system curriculum. Actually, I do not think that that is fair now. I have a son in primary school and a daughter in high school and they will do more food education in two weeks, and I probably did in 13 years when I was at school, so I think that things are changing. However, there is a bit of how we connect different initiatives. One of the things that I think that Scotland can be very good at sometimes is doing an awful lot of things with very laudable reasons, but they can be a bit disparate. There are projects already that engage with primary schools, secondary schools and the college network, but they are not as well joined up as it could be. I can barely drive anywhere in my car without hearing a recruitment advert for the armed forces, for example. There is probably a lot of investment going into recruitment, awareness raising in food and drink, but it is just not as well connected up. That is a job that we have to do with industry alongside the public sector. The problem with my last question is that, in terms of boosting productivity within your sector, there obviously has to be a lot of investment in seeding, particularly in retail, the growth of digital technology, internet sales and so on. Is your sector in general, whether it is tourism, food and drink or oil and gases, enough investment into new technology in your sector to improve sales? Productivity has been a real issue for our sector. Food and drink productivity figures look fantastic because we have the whisky industry in there. You strip whisky out of it and it is a more mixed picture. The level of R&D investment in our sector is lagging behind the average of the Scottish economy. It is now increased, and food productivity is up 71 per cent since 2007, but there is much more to be done there. I think that the whole industry 4.0 jargon, but the whole next phase of artificial intelligence, augmented reality and big data robotics is a huge amount to be done there. One thing that we will be interested in looking at with the Institute of Advanced Manufacturing or the Scottish Government investment is how we can tap into that. We have a phenomenal track record of innovation in Scotland. Historically, over time a lot of the real innovation food and drink has happened because we have had international companies come into Scotland and invest here. I think that there is much more that we can do to tap into particularly our world-class research base. We will perhaps move on. You may be able to come back and cover those points in some of them in the next question. John Mason. Thanks, convener. I realise that there is quite a lot on the panel. We have so far looked at—we have mainly talked about whole sectors such as food and drink and things. I was wondering if you could each give us one example of a success story within your sector, either an individual business or it could be a sub-sector. Can we learn a lesson from that, either the rest of the sector could learn or we as the public sector could learn from? Ewan MacDonald Russell. Definitely not going to pull out an individual member because I won't make it back to next meeting in one piece. Probably the biggest one is the way that we have seen multi-channel retailing develop. I think that is a huge example of where we have had quite a lot of high street stores who saw the digital revolution coming and, rather than hide away or not, have completely refisted their model. If you look at two or three of the high street changes, the way that they integrate their website, the way they integrate the store and they link the two between the two so that you can bring products back into a store or you can collect certain things. One particular one has a couple who have food businesses as well and they will link up their high street and food businesses in the same manner. That way of trying to build the synergy so that the consumer can get things at every point, that is massively efficient. That has actually been quite effective when we talk about the online versus non-online world. It is the multi-channel bit and it is the really interesting element that has really challenged that. I think that is a tremendous success, but it does take all the things that we spoke about. You need to put a really significant investment in tech, you need to change job profiles, you need to train people. It is expensive to do well, but it has been really successful in some environments. Can small retailers copy from that or is that purely for big retailers? I think that the full multi-channel bit absolutely works on a smaller scale, particularly in quite specialised areas. If you manufacture or develop a certain type of product or range of products, if you have got good transport links, you have got good broadband connection and people are willing to do that, it will work well. Easier probably for smaller businesses to do the pure online as well as a store model, but it still applies. In our sector, I will probably not be allowed to name a name, but I think that the big success has been the reduction in costs, which has allowed us to get more oil out and to be sustainable at a much lower oil price. A significant component of that success as a result of the new players coming into the market and collaboration with the supply chain. Whereas in the old world, you might have had an operator effectively letting a contract, and it was all done on a master and servant basis, if you like. However, now increasingly, and the way forward is going to be in collaborating to find the best ways to deploy the new technology. A lot of the big players in the North Sea now are names that a few years ago you probably never heard of. Has that been patchy, or has all companies learned that lesson? It started off patchy, but I think that it is becoming the norm. It is becoming the way things are done. There is a broad recognition within our members now of the fact that this has been a good thing. It has helped the industry to address the significant challenge that it has faced over the past few years. I think that it has given them the appetite to do more. We will see more and more of it. Not least because some of the new players are private equity investors into it who actually need the supply chain. They outsource a lot of the operation of the rigs and the production to service companies. That relies on them collaborating properly to do the job right. I look at a destination. The word of collaboration has come up. I take Argyll, in particular the Argylls and Isles Tourism Co-operative, where around a national strategy they have created their own. Through the working-together peace and leadership and some investment and support from Highlands and Islands Enterprise into the project managers in the area that the destination has really punched above its weight, and they have got tourism embedded, great marketing plans and a real sense of where there is challenge around some of the technology and connectivity. They are still delivering a much higher quality product and there is a sense of real ownership. That is a stand out as part of a destination. Who has made that happen? Is that the council or is it the HIE? It is a collaboration of everything. It comes back to what Malcolm was saying earlier. I think that we are in a place where, never before, we have got the partnerships between the agencies and the industry. It does come down to having some very strong volunteers of individual leaders at destination level from industry who are prepared to give up their time voluntarily and lead something, but knowing that they have got the support and the partnership approach with the agencies, they are happy to take that on and do it. There comes a point where there is only so much time available to those individuals, but equally, there is also a pipeline that needs to come through where is the next leadership group. We are seeing the same evolve in the Outer Hebrides. We have obviously got great work being done. I think that it is better for a tale of that to keep it out. I will stick to our guile thing as the stand out. That is great, thanks. I think that cross tourism is probably not quite as well known, but it is at the cutting edge of technology, certainly over the last 10 or 15 years. What that does is it generates a whole load of benefits for small businesses as well as for larger businesses. It generates data, which means that you can use that data to get evidence-based decision making, which means that you increase the return on your investment. It also means that, in terms of infrastructure development, we can look at overlaying supply and demand, so that we make strategic decisions in terms of where we want to place public resources. In terms of what was mentioned in your previous session about artificial intelligence, that allows us also to make sure that information is pushed through to users at their point of need, so that they get the information that they want at any point in time. It also allows you to reduce distressed inventory if you are a player on that, and there is no reason why small businesses cannot have a shop window to the world if they embrace the technology and learn how to use it. We have heard before that some accommodation providers cannot book online with them, and that was a disappointment. Is that something that is changing? It is, but it is slowly mixed. It is a slow process. When we embarked on the joint activity around increasing capability and capacity, about three years ago, the figure was sitting at about 36 per cent of businesses that would transact online. That figure now is just under 50 per cent, so there has been pretty good growth, but there is a long way to go. Even if you take the Visit Scotland referrals to small businesses, what we do is take the number of referrals, look at the average transactional value for a booking and the number of nights, and it comes to a £700 million opportunity for businesses. Now, over 50 per cent of small businesses are cutting themselves out of that. That principle of collaborative working has translated into a change in how we operate and how we work. When we look at other small countries that we compare ourselves to that are successful in food and drink exports, the likes of the Irish and New Zealand, one thing they had, which we did not have, was dedicated food and drink expertise on the ground in key international markets. We did not have that. The SDI network is phenomenal and they do a phenomenal job, but historically they had been a team of generalists. They had to be experts in food and drink and oil and gas and tourism and life sciences and financial services, which is a pretty tough ask. We wanted food and drink dedicated specialists, so we brought the industry together and sat down. We were pretty ruthless in prioritising key markets and we put funding together. The industry put money on the table and that was matched by SDI. The Scottish Government ministers put money in and we recruited a team of now 11 people who are in 11 cities around the world opening up. We also get the suggestion that exporting is patchy. Some of us actually from the committee went to mention a name, Loch Lomond Brewery, and I think that they are very driven by exports, but I do not think that every micro brewery or every small brewery is driven by exports. Is there a lesson in there somewhere? You are making some kind of general points, but what are the specifics? On par, that was driven by the fact that we needed a greater ambition around exporting. We have a minority of our food and drink companies. There are 890 food and drink manufacturers in Scotland and a minority of them are still exporting, but by creating that resource in market and identifying real, tangible opportunities and getting beyond the abstract of international market opportunity and bringing customers from Hong Kong and Dubai and New York into Scotland to meet companies, it has helped to get more companies thinking about exporting. What has then happened for the likes of some of the craft breweries is very few of them can fill a shipping container themselves. Very few of them can employ an export sales manager themselves, but they now do that collaboratively. There are collaborative groups of brewers who are working collectively and that is a great offer to go to a hotel or bar chain in the Far East and offer a portfolio of different products. You then pull in from a combination of small companies here, consolidate together single invoicing, single export sales manager worker on their behalf and then going out to market. The challenge that is maybe creating is creating more demand than we can maybe meet, so that is the longer term issue. Perhaps last word on this point to Willie Macleod and then we move on to questions from Andy Wightman. I will try to be brief. It is probably small in the overall scheme of things, but none the less significant. If I may, I will go back to labour market and skills issue. About four years ago, a group of hotels in Scotland, including Gleneagles, the Torriddon, Cameron House, suffering from fire damage, the principal hotel group and others, Apex hotels, Edinburgh based, embarked on the Scottish apprenticeship and hospitality, which saw these companies bring an intake of youngsters straight from school who wanted to follow a vocational training route rather than an academic route by going to further and higher education. They followed a structured two-year apprenticeship where they can move from between the participating hotels that are given a grounding in housekeeping and food and beverage in front of house. They experience some of the back office functions of marketing and other normal administrative functions. That has been a highly successful venture over the last four years, which these companies have determined will continue. A week ago, I went to an event in Glasgow that saw the handover from one group of apprentices to the other. I was impressed by the confidence, the calibre, the capability and the way that these youngsters saw an opportunity in our industry. I think that that is a massive success story. That is great. Thank you very much. I wonder if you could say a little bit more, particularly looking at the tourism economy about some of the disruptive technologies, things like Airbnb and what opportunities or challenges that pose. How do we deal with the fact that there is evidence that the impact of tourism is costing Scotland? One thinks that, last summer on Sky, there is pretty good evidence that the infrastructure there is not capable of supporting the high-quality tourism offer that I am sure Scotland would like to offer. How do we better plan for investment and how can we deal with or indeed take advantage of disruptive technologies? Who would like to go first on that? Willie Macleod. I love to go then. Whether the disruptive technologies are not a matter of definition, but probably our industry over recent years has experienced, I will pick on maybe two, the online travel agents that we all use to increasingly book our holidays and our hotel accommodation, whether we are travelling for leisure or business purposes. I think that what we have is, in some respects, a grudging partnership, but I think that if one looks at it more objectively, a symbiotic relationship between hotel operators and online travel agents, 10 years ago we probably were not using them to any material extent. Now we are very dependent on them. There have been issues. I think that we are able to celebrate a deal of inventory through these third party sites. Correctly, they take a commission for delivering that service and delivering customers to us. Amongst the main issues that we have had and it is lessening us a problem, the online travel agents have rate parity clauses in their agreement with hotel companies, which effectively, in shorthand, mean that you cannot sell a room at a lower rate than you offer it on the third party site. Some of the restrictions there have eased considerably through negotiations between larger hotel companies and the third party sites that they use. Some of it is coming about by greater interest from the competition authorities in looking at the fairness of those contracts. Having had a session with the competition and markets authority in Edinburgh a couple of weeks ago, they are probably less concerned about the competitive issues to do between the businesses that are doing business that way and more concerned a bit with ensuring that the online travel agents are dealing fairly with consumers by being absolutely transparent with the way they offer product to consumers. That is one major disruptor that our industry has dealt with. It has had the side effect of making our businesses a lot sharper with their own booking engines, their property management systems, their websites in driving traffic direct to their own booking engines so that they are not paying commission. That has had the effect of a lot of investment in new technology. I will turn very briefly to not just Airbnb but home sharing sites. Airbnb is rapidly becoming the generic term for home sharing. Other products and services are available. However, as an industry, we are not unduly concerned about the competition that that offers. That is a new form of accommodation. In fact, many of that type of accommodation has always been available informally. Informal bed and breakfast, informal flats being let during the festival in Edinburgh. What we perceive is that technology, innovation and entrepreneurialism are moving faster than the regulatory regime can. Our view would be that home sharing is probably not as well-regulated, not as transparent as it could be. In some instances, the planning regime needs a bit of overhaul in terms of use classification to level out the playing field. One is about embracing technology. How do you utilise that for the greater good? I will turn to that particular issue. You look at examples in Amsterdam and Barcelona, where they worked with the protagonists and came to a conclusion that was beneficial to the overall industry and relieved some of the issues. The other aspect that you mentioned about overtourism is that we are not in a Venice-type situation. In many ways, it is a victim of success. We have certain pinch points at points in time. You referred to the sky, the fairy pools and the parking, albeit that the community, the local authority and the Highlands and Islands Enterprise have come up with a solution for that. The other area, which is another great success, is the North Coast 500, which was an industry-led initiative. It is on the back of that community that is now getting together to look at how to improve the infrastructure. Sometimes it is easy to plan ahead, but you can get taken by surprise just by how fast—because that is the kind of viral nature of the world that we live in—how quickly success can come. The point for me is to use the data that is available to plan ahead and invest as much as you can before it happens, but act agilely and fast when it does happen, because sure as eggs are eggs, you will never get it 100 per cent right. I think that the changing world of the traveller is much more experiential travel now. Living like a local and wanting to behave like a local has obviously risen, created the phenomenon of more people choosing to stay in that type of accommodation, self-catering accommodation. From a domestic front, we have seen with the UK market a lot of households being a bit more challenged with their own household budgets choosing to opt for the self-catering approach and do their own thing. As far as managing that, Malcolm is absolutely right when we get technology on the ground and we are able to communicate better and spread people around, then that will eliminate some of the pressure points that we have had and it is getting them to see more of Scotland. I was in Sky last week speaking at their destination conference, and there is a lot of really good work being done by the industry group Sky Connect with Highlands and Islands Enterprise and Visit Scotland to overcome some of the learning that they have had to take on board in this summer. However, a victim of our own success, a cruise tourism is probably another one where we have a huge volume of possibly a million people coming ashore of cruise ships this summer if you include the crew. When you have that volume of people coming into our ports and harbours, how do we make sure that they get that quality experience of moving around the destinations that they disembark in? Colin Beattie. Scotland's economic strategy identifies six key growth sectors, which includes obviously the sectors that you represent. From your perspective, having these designated growth sectors and the growth sector policy around that, how useful is that? How is it benefiting you? I am happy to answer that first. Our view on the advantage of being identified as a growth sector is influenced by the fact that we have been identified as one. I imagine that there are many sectors out there that would say that they should be a growth sector and they are not in there. When we looked at the UK Government's industrial strategy when it first came out, it picked what it saw as some winners, such as aviation, automotive and food and drink. We felt that it was a real oversight. We were not going to be a growth sector. Back in 2007, we got a very clear steer from Government and the enterprise agencies that our growth was static. We were not really clear what the size of the prize was, so we were going to back other horses. Unless we, as an industry, could collaborate more and be very clear on what the opportunities were and what the priorities were. The biggest advantage that initial identification of growth sectors had was to kick our sector up the backside, to be honest, and to work much more collaboratively, work much more closely and consider much more the long-term opportunities versus some of the short-term challenges that we have had. The initial process of identifying growth sectors has, in hindsight, been a huge catalyst for what has then happened in terms of us working collectively. My thought about the next phase of that process and Scotland's economic opportunities is much more about how sectors work collectively, how we can certainly build Scotland's business proposition and Scotland's brand. Our future in food and drink is completely interlinked with the future of tourism. One in every £5 a tourist spends when they come to Scotland or visit Scotland is on food and drink. The same markets that we want to sell products to are exactly the same markets that we want to attract visitors from. The next phase should be about thinking how we can get our key sectors to collaborate and work much more closely. However, the process of identifying growth sectors was a huge catalyst for action for our industry. The support that we have had from the public sector has been hugely valuable over that piece because it has been willing to give us the space to write the strategy and then align the activity behind it. That is a really good model and, in my experience, quite unusual. In this particular sector, you are giving a very optimistic view, but I am looking at some figures that show that in the food and drink sector jobs are actually down by something like £4,000 and the gross value added is down by 2.6 per cent. This is between 2015 and 2016 figures. How does that equate with your optimism and the expansion of exports and all the rest of it? We have had real fluctuations over time. GVA has risen from something like £3.83 billion up to £5.2 billion. There was a slight drop in 2016 compared to 2015. From a jobs point of view, we are employing £120,000. Again, there are fluctuations from year to year, but we have identified with Skills Development Scotland 27,000 new roles that need filled between now and 2022. There are absolutely fluctuations from year to year. Huge pressure has been put on our pelagic sector when we had Russian import embargoes. Various volatility sits out, particularly in global markets, that have affected from year to year. Our view is that the underlying long-term proposition looks good. Indeed, over that 10-year framework, which the original question was asked, the GVA has been upwards, but absolutely will be year to year fluctuations. The designation of tourism as one of the key sectors of the Scottish economy has had a very significant impact in what we have heard earlier, the coming together of public and private and voluntary sectors to support our industry. We have benefited greatly from the clear support for tourism that the Government has given us as an industry. I know that my colleagues in London and, for that matter, in Cardiff would be looking very enviously at the fact that tourism is regarded as a key sector in Scotland. In Westminster, tourism is not that well regarded and probably should be. In Scotland, we benefit from the fact that it is regarded. It has been very good for supporting and encouraging investment in giving confidence to businesses. In 2016, Scotland had 2.75 million overseas visitors, and Ireland had 10 million in the same period. It seems a bit of a disparity. The Irish statistics take into account the whole of the UK. If you were to look at those coming from south of the border as being separate, the figures would not look so distorted, because the domestic market in Ireland is very small, whereas we have a very large domestic market, which is why the percentage of UK visitors is so strong in terms of Scottish tourism. It is not quite comparing apples and apples. Just to be clear, the 2.75 million that Scotland welcomes are external to the UK. Absolutely. That makes sense. I will touch on one other thing. In your individual sectors, do you feel that there is sufficient confidence and support for goods and services to be exported, that the companies are focused on this, that they are keen to do this to get involved in international markets? I think that we are an unrecognised export sector. The fact that tourism, hotels and restaurants are providing services to foreign visitors is that we are an unseen, unrecognised export sector. In fact, you gave me a wonderful entree with your comparison with the Republic of Ireland, where one of the only export sectors that charges our customers is VAT. One of the reasons for growth in numbers in the Republic of Ireland is that they charge 9 per cent VAT in a hotel room in Scotland. We charge 20 per cent. One of our major campaigns as an industry is to get parity of VAT treatment with our European competitors. We are one of only three countries in the EU that does not have a reduced rate of VAT on hotel and tourism services. We are about twice the average rate. The average rate in the EU is 10 per cent. There is the UK, Denmark and Slovakia, Slovakia and Vega. We are the only three countries that do not have a reduced rate of VAT on tourism services. It makes us uncompetitive in price terms with some of our close competitors. On exports, we have a strong story to tell in the order of £12 billion a year of exports from our supply chain companies. It is an area of significant upside potential for the future. There are a lot of expertise here in Scotland in subsea engineering, in oil field services and related disciplines, which are highly exportable, as well as some manufacturing. That is a key part of the vision 2035 that the industry is setting about doing. There could be up to £500 billion to be gone after in the period between now and 2035. There is a huge opportunity, and that comes from diversification into other forms of energy—renewables in particular, obviously—but also just taking the oil expertise into other basins around the world. The follow-up from Jamie Halcro Johnston. William McLeod mentioned VAT. I was just interested on the tax side. Whether it is VAT or there have also been changes to income tax in Scotland or there will be fuel duty for the oil and gas sector and even proposed tourism tax in certain areas, whether perhaps as pressure or need for infrastructure, I was just wondering if you could very briefly outline the kind of relationship between your sectors and tax increases, reductions? I will go first since I have been quiet for a while. For us, it is all about the locus with our consumers. It is particularly about the impact probably on consumers on average and lower earnings, where we see a particular impact. That is relevant, obviously, for income tax. We know at the moment that, obviously, consumer household disposable income is pretty flat anyway. Last year, we saw the consumer price index sharing inflation. We specifically saw food inflation. We track it at about 2 per cent, and that actually led to a big shift in spending patterns. We know households are absolutely on the edge of their spending. I think that probably the broad point that we would make is that, ultimately, if there are increases on income off our consumers, they are going to have less money to be sending in our shops. If we are honest, we would probably rather buy things from us than it was necessarily going directly in taxation, particularly for those two guided groups to work, as I particularly addressed that. I would echo that point. In terms of the differential rates of income tax in Scotland compared to the rest of the UK, as with the military, I have spoken to the managing director recently of a large Scottish-based hotel company that operates throughout the UK. They have some concern about the impact of the differential rates of income tax on bringing people from England to positions in Scotland and looking at how they reward them appropriately when they relocate and encourage them to relocate. I am just conscious that we have spent the last wee while listening to men talk about the economy. Can I ask you to give us your understanding of the role of tackling gender inequality within your sectors and industries in order to drive Scotland's economic performance? I lead an organisation and I am the only man in it. First and foremost, which is good, we have a huge number of successful women working in our industry. Speaking earlier about talking to the colleges and going out, it was very encouraging to see a number—probably the majority—of younger women coming into the industry or looking to come into the industry. We have a very strong voice now in women and tourism who have established themselves and are at the forefront of most of the conversations that we have. We are a sector that offers a huge diverse range of employment, and certainly there is no reason for any of us to choose to shut out that opportunity and create the variety of some of our probably finest hotel managers in Scotland—our leading lights. We celebrated the first women and tourism awards dinner this year, about 300 ladies attended, and our cabinet secretary was a woman who was there to present the awards. We are a career of choice for everybody. That is a very clear message that we put out to all. That is clearly a comment about the representation of women within your sector, but I am asking more generally about the opportunities for women that are linked to Scotland's economic progress. Do you feel that you have peaked? You can do everything you can to help women to access the women market? What else would you like to do? It is the future that I am inviting colleagues to comment on. We can always do more. We have a number of opportunities and they are in abundance, and it is highlighting those opportunities and making them visible to everybody. I go back to writing the early stages of education. We need to make sure that those opportunities are spelt out to all genders that those career opportunities exist, and it is not a stereotypical sector. Chefs are coming in all shapes and sizes, and there are great options there. We will continue to fly the flag. Without the diverse workforce that we have, or having created a diverse workforce, we will be on the back foot, and that is where he pointed out that it is not just a Scottish challenge, it is a UK-wide and probably a global challenge as well. If I go back to my anecdote about the Scottish apprenticeship and hospitality last week, I did not do an actual head count, but I am pretty sure that the young women matched the young men one-for-one. In fact, the hotelier who is chairing the Scottish Apprenticeship and Hospitality, Rose Bristow, she and her husband jointly run the Torridon hotel in Wester Ross. There is no barrier. I think that our industry has a very good track record of having women rising to the top. I do not want to name names, but not terribly far from where we are sitting at the moment, but there are hotel companies that are being run by very capable women. First of all, I declare that the chief executive of the British Retail Consortium is female, so we are trying to lead the way on behalf of our industry. There are probably two specific points on that. Historically, it has been quite a challenge getting female progression in retail, because for an awful lot of female workers, they have taken on retail roles as a secondary job. Consequently, the priority for them has been flexibility rather than necessarily progression. We are trying to change that, because the reality is that we are losing a huge number of very talented people who have not wanted to do that. In terms of the future, flexible job design is a huge part of that, encouraging people into more senior positions, but doing it in a way that lets them balance other commitments that they might have, because there is that kind of on-going challenge. We are making better progress on it, to be honest. There is a lot to do, but we are absolutely committed to improving it, and it is a huge challenge. Is it an interesting comment to suggest that women have commitments that men do not have? Yes, it is a historic imbalance generally. I completely agree that it is a huge problem that, historically, what we have seen is that more female employees in retail have also had more caregiving responsibilities. That is probably a historic and slightly broader point, that even, I would like to say, we can address. You are right, and it is something that we certainly do not want to see happening. We want to get it, particularly some of the very, very talented female colleagues, to get them progressed and to get them to go further. Can I jump in for our industry? It still is not properly balanced, but it is getting better. The challenge comes relatively early in the education process. We touched on it a little bit in the last session, but we need more earlier interventions in the education process to get more girls studying STEM subjects, so that the pool of talented people is bigger to choose from in the technical disciplines that our industry needs. There are good networks out there campaigning to try to help us to improve the balance, and pretty much all of our member companies are very active in that space trying to do what they can, but we have a way to get it. As you probably know, our organisation is led by a woman, and she is personally very active in helping to keep a focus on that, so that we remove the barriers to making sure that there are the flexible working arrangements and, to your point, actually the flexible working arrangements need to apply just as much to the men as to the women, because if the women are going to be able to take their place in the workplace, if there are children involved or homes to be run, someone has got to do that, so that has got to be shared, and that means that the flexibility has to go to both genders. Thanks. I might have received my power to Julian Martin's call. Well, I think that Julian Martin is next up to ask questions, so I'll pass it over to her now. Kezia Duggan, when we saw me scribbling away, it's very interesting point that the flexibility instead of progression was used there, given that one of the reasons that my questioning is around inclusive growth, and many of the people who have been in front of us talking about inclusive growth has said that flexibility should be something that, in order to encourage inclusive growth and to have better economic performance, it should apply to people who want to actually progress as well, and not just the people who are in part-time work, for example. I'm going to ask all of you, what are the links between business growth and inclusive growth? Is there a trade-off there, or do you feel that there's actually opportunity in business growth? I'm conscious that hospitality and food and drink have been criticised in the past and the present for precarious work, and can I ask you what you're doing to address precarious work and the gig economy? That's perhaps, and gig economy is probably much less relevant towards us. Just on the flexibility versus progression trade-off, you're quite rightly hired up. That came from a poll that we did into the attitudes of workers a couple of years ago, so it's the thought feedback that we got from people that some people wanted to make that trade-off. I completely agree that we don't want that trade-off, that's the wrong thing to be happening. We don't want people to be in that position, but their priority was that just to be clear. In terms of point on inclusive growth in the economy, I think there's a huge value to it from the retail industry. Ultimately, if people are bringing home higher wages, that's likely to translate into higher consumer spending, and just to nail down the point on our perspective on this, we try and track the manner in which our members do their remuneration. They tend to use a total reward package rather than just pay rates, and that total reward package last year was £9.34. That includes holiday pay, pension contributions and so forth. The average wage incidentally across the UK is £8.36, and there's a parallel of other non-financial benefits too. We absolutely get the point about wages. We've seen wages going up that went up 2.9 per cent in the industry last year, so we suddenly see that we need to pay workers more. We think that there's huge benefits for the broader economy if you're seeing greater translation into that. I think that our sense as an industry is the attitudes to issues around inclusive growth are changing quite rapidly. I would probably draw a parallel maybe with attitudes towards environmental performance. Maybe 15 years ago, the environmental strategy of a company was the responsibility of the CSR department of corporate affairs. It was seen as something that you had to do as opposed to being a core part of good business activity and a core part of business success. That's changed rapidly over the past 10 to 15 years. Inclusive growth and wider commitments to workforce were again seen a few years ago, and perhaps still by some as an act of CSR and good citizenship. Increasingly now, it's seen as absolutely integral to business success. In the food and drink industry, tourism and others will say, how do we attract the future workforce? The reality has to be about a much broader set of commitments that you make to that workforce. For us, that's about health and wellbeing as well. It's about gender equality, LGBT rights, about career progression and commitment to that progression. Our sense is that if we're going to attract that or fill that 27,000 job gap that we think will last five years, we're going to have to make a broader commitment to that. What we've said as an industry strategy, we haven't used the word inclusive, we've used the word responsible, so we've said we want to be a world leader in responsible profitable growth. I think that there's a lot more thinking that we need to do as a sector into what that actually means and how we translate that into practice. But a huge part of it will be about, I think, a broader set of commitments to our workforce beyond just good pay, sensible contracts and appropriate terms. Willie Macleod. As an industry, particularly, hotels operating 24, 7, 365 days a year, we have to be flexible. If we have unduly rigid shift patterns, for example, and we're not flexible taking into account people's family and other commitments, we probably can't operate. Over recent years, I think that we've seen businesses becoming a lot more flexible about how they respond to the demands on male and female employees outwith work. I think that there's more incidence of job sharing. Obviously, we're operating at weekends, we're operating on public holidays, so we have to have a degree of flexibility to bring the labour in when we need it, and it's not just at service level, it's at all roles in the organisation. We have to run our businesses 24, 7 and we only do that with flexibility. Some innovative ways of looking at shift patterns, we're seeing some restaurants, for example, changing to a four-day operation or a five-day operation or moving away from being open all day to open during the evening, really in many respects to respond to labour market issues but also to respond to individuals' needs and give them a better work-life balance. I get your point. You're making, you have to work with demand and have a flexibility around the work patterns that people have, but can you say that there's maybe some instances of job security not being something that is offered as a result of that? That's possibly leading people to not want to go into your industry because they see it as precarious. That's a possibility, and I guess you're maybe referring to things like zero-hours contracts there. I have to come back to the demands of our customers for the services that we deliver. In order to respond to customer demands, we have to have flexibility of labour. Exclusivity clauses in zero-hours contracts were banned and we supported that. I think that the issue is that full-time working doesn't suit everybody. There are people who want, who have two jobs, who have varying demands on their time, and some flexibility of shift pattern will suit them. It also suits our businesses in the dark ages when I was running hotels. We didn't have zero-hours contracts, but I had a little black book of casual staff because I knew when demand was variable and we were busy unexpectedly. I had to be able to call on casual staff to be able to fill those gaps. That's not necessarily a replacement for career progression. What I'm saying is that a contract like that or a part-time contract or a seasonal contract can suit the individual who agrees to that. I think that Gareth Winn wanted to come in. I just wanted to throw something in on the gig economy, because although a lot of the focus and discussion around gig economy is on lower-paid workers within our industry, there are a substantial number of people who are working, who are self-employed, but who are well paid and do it by choice and make good livings out of it. I sound a note of caution and we have some concerns about the tightening of rules around people who are self-employed. The IR35 regulations, for example, are going to cause some pain for some of our members. I don't have all of the details here today, but I could follow them up with you if you want more. However, I think that there is that other end of it, which is important too. Yes, we have people who work in an oil and gas for 30 years on a contract basis, suddenly getting a phone call and saying that they're not asked back. That's a protection that they've not had as a result of that, and I'm speaking from personal experience of people I know. Well, yes, I accept that that may well be the case. However, there are also many thousands of people who have chosen to be in that circumstance and have made a very good living out of doing so. So I recognise that there are pros and cons to these things, and if you make that choice, it's important to understand that you are effectively accepting some extra risk for it, and I've been in a similar situation myself. So I recognise the point that you're making, but there is a substantial chunk of people making good money out of it as well, and who do it by choice. I'll just broaden it slightly. One of our definitions about inclusive growth is also about making sure that everyone has access to a holiday who's got the ability to get out and about and enjoy what Scotland's got to offer. And there are two areas in particular that we've been working on with the industry. One is accessible tourism, so people with disabilities etc are not excluded from the tourism industry. Quite apart from the fact that it's the right thing to do, there's also an economic case behind that, that's about £900 million of expenditure goes missing, because people are not sure if their particular infirmative couldn't be catered for. And then there's the other side of that, which is again something that with the industry we've been delivering with the Family Holiday Association, which has taken children in particular from areas of social deprivation and given them a break from the circumstances that they live in. And I think that's important to remember as well, is the social good that tourism can do. Would you say that inclusive growth is potentially something that you've all mentioned issues about recruitment and skills and training for your future? Would you say that inclusive growth is not just a nice to have but is actually probably in terms of attracting people in your industry as a priority? Absolutely. And you're all working towards that. I think that attraction and retention of your workforce is huge and obviously that comes at the cost if you have to churn your workforce, particularly in the rural parts as well, and from a pay point of view, a lot of the hoteliers and the operators there are paying premium aid to attract and engage the right people, but it's making sure that they get home, it's making sure that they have that flexibility and keeping them available to you is vitally important now and probably even more so than it ever has been. Seasonality, if we can get our industry trading more of the industry trading all year round to provide a longer term continuity, that's obviously good for us. It also alleviates some of the pressure points as well and that's part of the wider marketing agenda and the approach that we're looking to achieve. I just have one final question. Some of our panellists from a couple of weeks ago mentioned that industry in general is not doing enough in terms of in-work training and relying quite a lot on the university and education sector to pick that up. Do you see your industries as providing enough in-work training in order to retain people and progress them? We conducted a confidence survey about nine months ago. It was not 500 plus businesses completed it from across all sectors of the industry and, if my memory serves me correctly, it was as high as 85 per cent and was committed to investing in training in their people. It sort of took us by surprise, but I think the recognition that workforce is in retaining a workforce and investing in your people is absolutely key. The example that Willie gave with the apprentice programme that's being run by the hotels is there. I've yet to come across a colleague who would say that we don't train and I think Linda Johnson was originally on this panel. We're an invitee from Ocarani and there's a great example of a hotel organisation on an island in a struggling part of a community where you'd struggle to attract a workforce possibly of investing in their people. Figured that there are about 3,000 hospitality and tourism apprentices in Scotland at the moment and we could probably do with more. I think that the example that I gave of the apprenticeship and hospitality is just one example of a group of companies coming together to do that. We have some great examples of companies that are training, bringing young people on, not necessarily on apprenticeships but giving them on-job training and supporting them as they go through their career. Our industry's always historically taken quite a lot of school leavers or entry-level workers and trained them ourselves, particularly in larger retailers. That's tended to be the approach and I won't bore you with the litany of chief execs who started pushing supermarket trollies. I think what has been a big change for our industries is the introduction to the apprenticeship levy a couple of years ago and particularly the way in which the apprenticeship levy has been transferred into Scotland. To be really candid about this, my members are paying about £12 million to £15 million this year. They will pay a similar or greater amount next year and they have seen very little extra benefit from that spending. So they were previously running apprenticeships, running programmes, they are still running many of those but they are facing an additional burden and cost on that. I think reforming and looking again at the apprenticeship levy, particularly the flexible workplace development fund in a way that businesses paying into it can access these things is important. But I have one Scottish member who will spend, I think it's £300,000 or £400,000 on the levy this year. It's a Scottish business. They will receive de facto no benefit from doing that. That's a huge challenge when we want to do all these things about and training our workers and making them more productive. That was a point that Gareth Lynn made earlier and I would like to ask Gareth specifically. Oil and gas puts a tremendous amount of money into UK treasury. Would you like to see some of that money come back to Scotland in order to help you train for the next generation of people working in energy, not just oil and gas but the diversification that you mentioned? I think that the issue for us is a UK-wide one. I think that the industry as a whole has even during the downturn managed to keep up the commitment to apprentices and bringing in new talent. However, we have a similar concern on the apprenticeship levy that the bigger issue for our members is not so much the money that's available. They don't mind paying that. They're happy to do it, but I think that they would like to see the mechanisms improved so that the training bodies that they find most useful—Opito, for example—who don't qualify, who are not a recognised provider. Therefore, it gets in the way of our members being able to really get something back for the money that they put in on the apprenticeship levy. The precious levy aside, you don't see a need for more money to come from oil and gas, tax receipts coming back into protecting the industry for the future. Is the straightforward answer? However, it doesn't take away the fact that we need to do all the things that I mentioned in the previous session, which is the early interventions to increase the pool of qualified, STEM-educated young people that we can encourage into the industry. It's then very significantly up to the industry to set out its stall and to provide attractive jobs for people to come into, and then the in-job training that you referred to a moment ago. I think that there is as much onus on the industry to make itself attractive for young people coming through now as there is on government to fund it. You don't want more funding for that? Of course, we need funding. To be honest, I don't know the numbers well enough here in Scotland to say whether that's the right way to go or what specifically is needed and what it should be for. I'm happy to write to you afterwards, if you like. I should say to all the members of the panel, feel free to write in to add to your evidence if there's something that you haven't been able to answer here today, but you'd like to put something further in writing. We'll come finally to questions from Dean Lockhart. Thanks very much. I'd like to continue this concept or theme of the impact of policy on your sectors, because we've heard quite a bit about the apprenticeship levy and how that may or may not be working. We've heard in other sessions that economic developments, not just about public sector intervention and picking winners, is about creating an environment that is conducive to business development and overall economic development. Just looking at recent policy developments, I'd be good to get your views on the impact of your sectors. I'm just going to throw out a couple of examples that might be relevant to you. Business rates, the large business supplement, excise duty on whisky, might be relevant. Fiscal incentives in the oil and gas sector are increasing income tax in Scotland, having a tax differential in Scotland compared to the rest of the UK. Obviously, I'd open it up to any other policies that you think may have had either a positive or an adverse impact on your sector, if I could ask that. If I could start off with business rates, we have an on-going concern about the way that hospitality and licence businesses are valued for non-domestic rates. We think that that issue, although not wholly recognised by the Barclay review, has been recognised by the finance secretary in applying a cap on business rates payable last financial year and the current financial year. The issue for us is that the valuations that were reached in April 2017 stand until the next revaluation. We will continue to press the case for the cap being continued through to the next revaluation. We are in dialogue with specialist rating surveyors and with the Scottish Assessors Association about presenting evidence to them about the way in which our businesses are valued. We think that it is flawed and arcane, and we really need to get to a more competitive basis for rating our businesses. Turning to the large business supplement, we think that it is a bit unfair on our larger businesses. A hotel with a rateable value of £51,000 or more is not a large business yet that pays the supplement of £2.6 to meet the cost of the small business bonus scheme. During our submission to the Barclay review, we put forward the view that all businesses should pay something towards local services and that would remain our view. The Scottish retail consortium said quite a lot about business rates over last year and a half. I will try to summarise briefly. There are probably some very good things. The move and the budget to link the rise this year to CPI was very positive. That saved our industry £5 million. We would like to see that as a permanent arrangement, as the UK Government has done. Much of the reviews in Barclay were really good. The move to three-year evaluations we called for was very supportive, just as important as the year to the one-year antecedent. That is good. We are interested to know if the Scottish Government is going to set that to match what the UK Government has done. I think that it is 2021 that is coming in. Obviously, the large business supplement is a burden. It means that the overall rates bill for some Scottish shops will be higher than the comparative shop in England. That is unhelpful when we are trying to make decisions. I would say that, obviously, the Barclay suggested that we should be brought back into parity. It would be good to get clarity at some point on when that is going to happen. It is something that we are very, very interested in. Two other areas, particularly one thing about rates, I would say, is that overall we do have a challenge where business rates are becoming a bigger and bigger tax. As I said earlier, affecting a smaller and smaller number of properties. Eventually, that is going to have impacts on how much of a return you get or on being put on to higher number one. I think that there is still a wider question about, is this actual metric competitive enough? Two other brief points. I have mentioned personal taxation as a Government intervention that has a huge impact on our industry. If people have more money and brief leaks, it is not really coming elsewhere, but looming over the public policy environment for all our members is what is the final Brexit settlement going to look like. A transition deal is obviously a good thing, but we do need to see a tariff and friction-free relationship if consumers are going to maintain the current benefits that they receive. From a food and drink perspective, business rates are of course from real concern. Certainly, if you look at the likes of the seafood sector in the northeast, it is more the sudden scale of rise and hitting pretty quickly. I won't talk about exercise, duty and whisky, but the SWA will have taught you at length about that over time, I'm sure, and I would echo their views on it. Those are the big headline tax issues, and then levy issues like friendship levy. There are also small and nitty-gritty issues on the ground, often at local authority, that it's worth looking at as well. We've had concerns expressed, I don't know about food and drink companies, about the rising costs of export health certificates, an example. To use one example, and this is correspondence that I've seen, Argyll and Islands Council have told some of their food and drink companies that the cost of an export health certificate, which every single batch of product needs to go abroad, is rising from £17 per certificate to £91. Some single deliveries will require three different certificates. One seafood business, a well-known export, is written to us. They have about 25 consignments a week. The cost of that small administrative change will be about £100,000 per year. That's where we're trying to nationally talk about exporting and promoting that and put all those resources in market and here to build capability, but then you have a potential real barrier happening because of a resource issue at local authorities. Small little things like that, it's not a little thing. Small administrative charges like that, a sudden hike in that, with that increase of 400 per cent, is a huge, huge barrier to encouraging more export growth, or frankly even holding on to what we've got. I mean, I think obviously picking up on what Willie was saying going back to the survey we did on the confidence piece around the costs of doing business, just generally rising. It's this compound of costs that continuing to cause, I suppose, a lot of businesses' hesitation to invest and innovate around their products. We've got a very fast-changing world and the tourist expectation is that much greater technology investment as well as for a lot of businesses needing to adapt the product as well. That uncertainty of where business rates might go is preventing some from investing and not just in their product but in possibly restraining investment in their people. It is, again, in consistencies of planning in certain authorities as well that's been highlighted to allow, create a much better consistency across Scotland would be better and more efficient to allow that confidence to invest in the asset and, importantly, remain competitive. I think that that comes back to our competitiveness as a destination. It's not just about being price competitive, it's being competitive in the quality of the offer in the people and the product that we produce. Any further comment? If I may, a final word to you. I mean, we are watching a number of policy issues as they develop at the moment. For example, the deposit return scheme on single-use drinks containers is a concern for the retail sector as well as it is for hospitality and licensed businesses. In fact, we are participating in workshops yesterday and tomorrow with Zero Waste Scotland and that's it. There's more to unravel there but there is concern about how that might operate. Good things looking at how we look at diet, nutrition and obesity in Scotland, some of the proposals to regulate are going to be very difficult to deal with and to monitor and enforce if they go through. Again, we are participating in discussions with Government and Food Standards Scotland on those issues. The final thing is the vexatious issue of the possible introduction of a tourist tax. While we welcome the Scottish Government's stated position on that, we are very concerned about the impact of an additional tax on our consumers, which will make us even less price competitive than we are. Last year, the World Economic Forum produced a league table of the price competitiveness of tourism destinations internationally and the UK comes 135th out of 136 countries. Adding costs to our consumers is going to make us less competitive. Let's not forget that price is a determinant on people's decisions and our consumers in tourism terms are not without choice of destination. Thank you very much. I would like to thank all of the panel for coming in today and I'll now suspend this meeting.