 Good morning, and welcome to the second meeting of 2021 of the Economy and Fair Work Committee. Apologies for being received this morning from Alexander Burnett. Can I also take the opportunity to congratulate Lorna Slater, who was a member of the committee, on her appointment as minister? I'm sure that we'll see Lorna on the other side of the table at some point during this session. I'd also like to welcome Maggie Chapman, MSP, who is not a full member of the committee, but is here to join us for this morning's session. Our first item of business is a decision to take items 4 and 5 in private. Are members content to take these items in private? Yes. Thank you. Our second item of business this morning is an evidence session on recovery for businesses. I thank all the panellists for joining us this morning. I'd like to welcome Caroline Currie, who is chief executive of Women's Enterprise Scotland. Rose Marley, who is chief executive of co-operatives UK. Barry McCulloch, who is head of policy for the federation of small businesses. Dave Moxen, deputy general secretary of the STUC. Charim Deep Singh, deputy chief executive of the Scottish Chamber of Commerce. The aim of today's evidence session is to consider Scottish businesses' economic recovery and to help inform the committee's input to the Scottish Government's budget for 2022-23. I would like to start with the questions. Can I direct the question to Barry McCulloch and to Charim Deep Singh in particular? We've obviously come through a very difficult time for Scotland's economy and for businesses. While the pandemic is easing and restrictions are easing, making it easier for some businesses to operate, there's an expectation that there's quite a long tail on the pandemic. There will be some sectors and regions in particular who are continuing to find it difficult and may be finding it difficult for the next length of time. Barry, would you like to come in first and give us an idea of which sectors and regions will need continuing prioritised support? I'm sorry, Barry, because we can't hear you in the committee room. Would you like to try again, Barry? We'll see if you can... No, we're still having problems. If we could move on to Charim Deep just now and see if we can hear... I'll come back to you, Barry, if there's an issue with all panellists, but we'll try. Yes. We can hear you fine. If you go ahead, thank you. Thank you, convener. This is a very important question and it's one that we've all been grating with for 12 months, since lockdown was put into place. What I can share from our perspective is that, as the Scottish Government has met the milestones that they put forward in terms of relaxing restrictions, removing legal restrictions, that has boosted business confidence across Scotland's major sectors. That's a good thing and it's good that we're continuing to meet those deadlines for easing restrictions, but there are still many restrictions in play and we shouldn't lose sight of that, particularly on aviation, tourism and our international connectivity with the rest of the world. That's a major sector that shouldn't be ignored and we should understand that if our local economy has started to open up it doesn't necessarily mean that all of Scotland's sectors are ready to trade again in the same way that they did before the pandemic or even in a restricted way. That is having serious implications. For example, air routes from Scotland have been cancelled and it would take years to get those routes back. People are choosing to holiday elsewhere. Those are serious considerations that we need to be aware of and we need a plan as to how we start these sectors and support them. In terms of support for sectors such as the international trade tourism exporting aviation sectors, there is always an element of grant support and financial support that is required with restrictions when they are put into place. That's not the end goal and that's not really the sole purpose. The goal needs to be how we can safely reopen these sectors. That should be the focus, not just simply the grant support. That's our focus and we would welcome the committee to delve into these areas in a bit more detail but also for the Government to be taking more practical steps to be working with industry for those sectors that are either restricted or continue to effectively remain closed, such as the tourism aviation sectors and exports in particular can continue to be hurt as well. Those are the areas that we would prioritise in terms of moving forward. Thank you, Mr Singh. Is Barry McCulloch able to hear from the Federation of Small Businesses? I hope so. Is that better? Yes, it is. Thank you. We can hear you now. Excellent, excellent. It was all good during the test and bought technology. Good morning and apologies for that disruption. Thank you, convener, for the opportunity to take part in this session and just building on what Charm Deep said. I think it's really important to reflect on what has gone on in the last year since the last session that we did on this in August 2020. It was at that point where the country was going through its first local lockdown in Aberdeen and that the Eat Out to Help Out scheme was live. When you fast-forward to now and pass the various lockdowns, restrictions and tough trading conditions, the vaccine programme, a lot has changed. As Charm Deep said, things are looking brighter and it's important to stress that, due in part to the extensive business support provided by Governments and the resilience and adaptability of the business community. I think that I have to stress that, like so many things with this pandemic, it has come at a cost and 17 months of restrictions have taken a huge toll from the business community. We have accumulated a massive amount of debt, as our submission stated, to around £4 billion from 100,000 loans. The impact of this debt on future growth and investment is unclear. I think that it's particularly unclear for sectors in tourism, hospitality and retail who have borne the brunt of this crisis in many ways. I think that looking forward and notwithstanding the fact that the economy is improving, I think that the future is highly, highly uncertain against a challenging public health backdrop and a challenging public finance backdrop. If you were to have asked me that question, convener, even three weeks ago, I would have probably given you a different answer, probably a bit more optimistic, but given the conversations over the last week or so in light of high-case numbers, I think that many small business owners are quite naturally concerned about the prospect of future restrictions and lockdowns. While that remains the case, it's really difficult for businesses to plan for or to consider the wider debate of economic recovery when they are in business survival mode. I think that it will be critically important for the Scottish Government and its wider support network to continue to help those who will face particular hardships as we move through what will probably be a difficult autumn and winter period. Thank you for the responses. That's very helpful and you've touched on many of the issues that the committee will want to ask further questions on this morning. Can I ask the furlough scheme is due to come to an end in September? What kind of impact does it likely to have? There are obviously issues that are very high-profile at the moment around labour shortages and there are some arguments that end in furlough might ease that situation, but what are the difficulties? Are we at the stage where we can end furlough and that businesses are able to redeploy people? Can I ask that question to Mr Singer and Mr McCulloch again? Thanks, convener. The furlough scheme has been an important intervention by the UK Government and there is no doubt about that whatsoever. We also know that many businesses have started to reopen so they are no longer using the furlough scheme. That is a good thing. We are also concerned that there may be a risk for restrictions in the future. It is important and we said this last year that where local restrictions might need to be put into play, there must be a furlough option for businesses to tap into, particularly where restrictions are being applied last minute. That should be applying across the whole of the UK, quite frankly, not just in Scotland. On the scale shortages point, the scale shortages issue was present in the economy even before Covid has been exacerbated and pronounced now even more so because of the pandemic. I do not think that we can say and certainly we would not subscribe to the view that once furlough comes to a complete end that will alleviate the scale shortages issues that we are seeing right now. I think that we need to separate those two points out. In terms of the actual scale shortages issues, that relates to everything from training of staff and new skills for key sectors, but also access to international talent, which continues to be a big issue in terms of it is not an accessible policy at the moment from the UK Government. That is a policy area that has been existing pre-pandemic. All those issues have exacerbated the scale shortages issues that we are seeing now. In terms of the furlough scheme as a concept, would you think that it should be available ready to deploy now and in the future should any restrictions be put into place against any sectors? Thank you. Mr McCulloch, do you have anything to add to that? I think that, as Charlie Deep said, the furlough scheme provided lifeline support for business owners and workers for a long period of time. If we cast them back to last year and the fears of very high levels of unemployment with some projections, I think that that might go up to 12 per cent, 13 per cent. We have not seen that partly as a result of the furlough scheme. As we move forward, it is about making the right call and trying to strike the right balance between providing support to cover what is one of the biggest overheads for business owners, whilst providing greater labour and skill shortage areas that Charlie Deep has stated. The truth is that we do not know what is going to happen when the furlough scheme comes to an end. In Scotland, there are more than 100,000 workers on furlough. Those tend to be concentrated in sectors such as the arts and the creative sector. It is wise to think quite clearly about what is going to happen in those particular parts of the economy, but we had this conversation with the assumption that public health picture will improve and the public health restrictions that have been a big part of our life for the last 17 months will no longer play such a prominent part. If that were to change, I think that the UK Government, as it is, will consider carefully what to do next. On the skill shortage issue, we published research a few months ago that showed that the labour and skill shortages tend to be concentrated in the retail, tourism and hospitality sectors, and that remote and rural communities are having particular challenges, where a par pre-pandemic continues to be a big factor as we move forward. It is difficult at this stage to pinpoint a method by which we could alleviate some of those problems. So much of it is tied up with nervousness about making long-term commitments in their staff footprint. Likewise, it is also important to acknowledge the challenge that is stated that not having access to international talent in the way that we once did is also a factor. I think that, in terms of what happens next, it is maybe going to watch us debate quite closely and I think that all Governments will be. Thank you. I would be quite keen to move on to the next questions, but I understand that Carline Curlie and Rose Marley would like to comment on this issue. If you could do so briefly, I will then bring in Michelle Thompson for the next questions. OK, shall I tip in first then? Just briefly talking about the long tail, I think that we would also point out that some of the sectors that were first to close and last to open, there are some serious concerns there about their ability to recover. Sharon Deeb rightly mentioned that the travel sector had also mentioned the health, leisure and beauty sectors, which have really suffered quite significant impacts. In terms of what could be done, I would suggest that there is more that could be done with access to markets to be able to support greater access to other markets, and specifically with e-commerce and digital when we are looking internationally. I would also suggest that, in terms of markets here in the UK, procurement also offers an area of significant opportunity. On furlough, you have already heard the issue of serious uncertainty. I just think that timing-wise, it is important to look at that through the lens of seasonal opportunities for business. We are coming up to the Christmas period. That is crucial for so many. To have the uncertainty and the rising numbers at this point of time is a serious concern for many industry sectors that rely on seasonal turnover. In terms of skills, I would also highlight that we are seeing here with the businesses that we work with quite a bit of labour market realignment. We are specifically seeing women who are not returning to the jobs that they once held, and that gives us serious shortages in sectors such as hospitality, for example. Thank you, Caroline. Rose, would you like to make a brief comment for a move to Michelle? Yes, thank you convener. It is just the learning and the lessons and the resilience piece. I just wanted to highlight that the co-operative business model has been four times less likely to go under as businesses in the pandemic. I think that we need to learn from the lessons and looking forward, look at some of the things that we can be doing about workers. Is it when further lens might be taking over their own businesses and developing ideas around the need for people to want to take control and improve their lives in this difficult period and enabling that? Thank you very much, Rose. Michelle, I'll invite you in. Good morning. Nice to reacquait myself with some people I've known before. First of all, I wanted to ask Caroline some questions. You made a comment about the disaggregation of data and how important that is. Before I move on to Caroline, I want to ask all the other representatives. Do you disaggregate all your sample data by women-led businesses? That's a question to everybody, bar, Caroline. Thank you, Michelle. I'm just waiting for that microphone to be unmuted there. We have specific programmes for women in business, whether it's women's business mentoring or women that are searching for business. I'm asking about disaggregating all data in all of your surveys. Do you do that? No. Unless it's part of the specific programmes targeted to women, then there's no other surveys that are disaggregated by gender. Rose, Dave and Barry. It's the same as Sharon Deeke. We've got lots of evidence about how strong female leadership has been conflicted, but we don't disaggregate all our reports and all our data. We are carrying out a census in 2022 to look at some more of that information, but it's not done across every report at the moment, but we do consider all areas of diversity. Barry? Cancer is yes and no, which is imperfect, I would understand. We run a recent programme across the UK with a survey partner that data can be disaggregated by gender. I have to confess that we don't always look through the data and that lens, given sample sizes, and that stands true not just of gender, but also age of our characteristics in place. That ability is there and I'm happy to talk about how we can do that better moving forward. The data that we've been launching over the last six months or so, we've done a lot more snap polling ahead of key announcements that the Scottish Government has made. We have not been disaggregating by gender on that basis. The objective of those polls was something quite quick that members could intuitively tell us their sentiment and how they were feeling, but we should be disaggregating on that. Dave, I realise that it's a slightly different question for you. I'll carry on. I feel that they were illuminating responses and I have to say that I was extraordinarily struck by the dataset that you put forward, Caroline, in terms of that disaggregation of data and also the point that you made about necessity and opportunistic entrepreneurs, if you like. They have different needs, in other words, how they've arrived running their own businesses, but I'm particularly interested in following up in your comment about structural issues. I quote, you say, structural inequalities prevail. Perhaps we've had a slight example of that in that we are routinely not gathering disaggregated data, but understanding more about what specifically you mean by structural inequalities prevail. Okay, thank you. I think generally we tend to perceive that life is more equitable than it actually is and that is particularly the role of data is to shine a light into some of these issues as you've seen from the data that we have released. In terms of structural inequalities, these tend to be a lack of appreciation of the issues that impact women when we are undertaking day-to-day business, including, for example, the support that is being delivered to businesses. We actually issued a policy brief. We are Women's Enterprise Scotland as part of the Women's Enterprise policy group, which is a UK coalition. We issued a policy brief exactly on that topic about a year ago during the pandemic and in that we talked about the nature of many women-led businesses, for example, trading from home. In the context of the pandemic at that point in time, it meant that many were ineligible for grant support because they weren't operating from premises. There's one example of some of the issues. Other issues that we have highlighted at that time include the need for equality impact assessment. Again, a year ago we talked about the importance of monitoring the equity of grant and loan funding being available and asking that that be subjected to equality impact assessment to ensure that public monitoring is in place and that we have insight not just into gender disaggregated data, but also into intersectional data. We also pointed to the need to train decision makers on the cause and impact of gender bias and how to prevent it. Another example would be for example the impact in terms of hearing commitments of many women during the pandemic. I mentioned earlier that many women will not return to the jobs that they once held. The need for more flexible working as have juggled caring commitments has been a real factor in women's ability to work and to run their own businesses. Again, the access to affordable quality childcare is a key issue there. I have mentioned the impact on some of the sectors. For example the health and beauty sector was one of the first to close and one of the last to open, all of which impacts businesses' ability to regenerate. In the context of the data that we have released around the grant funding, I would emphasise the need to train business advisers in being gender aware. I understand that Dave you want to come in at this point as well. I was looking to respond to your previous question. You recognised that it is slightly different for the SDUC or trade unions with respect to the disaggregation of data. I just want to say that we do disaggregate our data so we are able to follow trends particularly with respect to gender in the labour market to identify that all of the sectors that we have touched on this morning are predominantly full of women workers and are predominantly low-pay sectors. We are able to follow with some clarity the fact that pay and working conditions and the gender inequalities within that are fundamental parts of what we have got to look forward to in the period ahead. Thank you for that. Going back to the general question about structural issues there is cause and effect which we will be very vexed with throughout the lifetime of this Parliament but in terms of effect we would all agree that much more needs to be done but in terms of cause going right back up to the top the law was developed by men for men banking regulation, we've got issues with artificial intelligence embedding some of the thinking and so on so I suppose my question to all of you given this is to what extent have you looked specifically rather than women designed programmes to what extent have you looked specifically at the nature of the business environment of which post Covid presents us all an opportunity as though it was entirely women led as a way of bringing out data do you plan any further research or have you undertaken any post Covid in the light of Caroline's data Rose? Research is specifically around the community shares option a way of raising funds for community benefits, societies and co-operatives and this 41% of those investments are led by women compared to 9% in angel investments so we've got quite strong evidence that the fairness and the equality really structurally it does tend to leave encourage women to take over businesses and to leave businesses Okay, thank you Caroline I'd just like to add that in terms of solutions we see a women's business centre model is being absolutely vital I started lobbying for that at the start of the previous parliament and I really do think there is a serious opportunity here to put that model into action and I would also really emphasise that there is a big difference between expert for being delivered to women and business support being delivered to a group of women at the moment the support that tends to be delivered in Scotland by most organisations is traditional business support which is delivered to a group in a population of women now that is I would suggest the lowest common denominator for women and our aspiration should be to deliver expert support for women which is directly aligned to their needs and pulls from research and years of knowledge I wanted to talk briefly about debt in small businesses and I am aware of time convener this has been frequently talked about indeed as being mentioned by many of the submissions I'd like to get your sense of the debt burden for small businesses and your thoughts as to how that can be supported so whoever wants to go first I'll jump in first look as you stated look the pandemics caused a high number of small businesses to take out debt finance principally through the boons back loan scheme half of our members who have taken out loans in that regard but also about another 10% who have sea bills and about another 10% who have taken out other bank finance that total of Government back debt does come to about £4 billion which is a lot of money especially in the context of a tradition of small businesses being permanent non-borrowers so we know that from our research and at the moment it's important to state that the majority are either not worried about these debt repayments or a little worried but we do have one in four small businesses who at this moment in time are worried about their ability to repay and it's also important to stress that so much of what business owners are thinking about in this regard is the assumption that they will be able to trade their way out of the crisis that there will be a buoyant recovery that will be disposable consumer spend that will be high levels of confidence and local economies and I think that if that isn't the case and I think that the debt problem will become more manageable not withstanding the help that will be out there to pay from the financial institutions so I think that in some we are slightly worried but the majority of our members and others are okay with that the banks have risen to the challenge but we do have concerns about the impact that this will have on long-term investment and plans and I think that's a particular concern for the Scottish Government as we move into that phase of economic transformation okay thank you Caroline hi, can I just have a quick addition in there I am a chartered banker and the former head of lending at a major bank so I would just tip in that I think behind the scenes concerns with businesses will continue to increase about the levels of borrowing they are exposed to it is quite unprecedented that the financial services industry looks at the opportunities in terms of structuring that debt in particular longer term repayment options and also the ability for businesses to have conversations proactive conversations about managing that debt is absolutely vital thank you Caroline just picking up on that because I'm quite aware of time before I go to Sharon Deet but given your experience or outline to what extent does the structural management of debt exclude gender considerations given your background how banking is currently run at the moment in the light of what you say the nature of women's businesses at the minute most bank lending runs from behind the scenes under writing algorithms and programmes they tend not to take into account gender so for example if you are a woman business owner you go on to maternity leave you have a period of absence from your business that is not regarded as maternity leave and looked at through that particular lens it will just be coded as time out from the business so there are some structural issues in those lending algorithms that do not take into account gender at this point in time I think that's what I was alluding to about structural issues earlier, endemic in our financial system so just going back because I'm keen that before we finish up that everyone has the chance to put on the record their findings about debt but I am aware of time so if you could be brief before the chair calls me to order Thank you Michelle just a couple of quick points and echo points made by Barry and Caroline there we have put forward some specific recommendations in terms of the ability of our businesses to repay what are effectively mountains of loans that we've taken on during the pandemic so specifically extending the term of repayment from six to ten years but also looking at additional options almost like a student loan style option where businesses pay back once they reach a certain level of profitability in which sector a what point they were able to reopen and a what ability they've got to actually openly trade again I would also like to note that just because the debt pile is a big number billions of pounds that doesn't necessarily mean that the ability of businesses to acquire that debt has been equal so different customer groups or business groups for example black and minority ethnic businesses that access the grant schemes rather than the loan schemes so it's certainly not an equitable distribution of the debt that we're talking about it's certainly concentrated in specific sectors and specific leaders that are running businesses there was an elo point about research which I didn't quite get a chance to speak to but I think it's an important point in terms of research it's needed that we're working on specifically around how we're gathering data and how we report that data so I think as that conversation develops I'm more than happy to come back to the committee and share how those conversations are going and what classical steps we're putting in to gather that OK, thank you Michelle I'll now move on to Colin Beattie Thank you convener there's a couple of areas I would like to focus on the first one is in connection with supply chains we've all seen these sort of apocalyptic pictures of supermarkets with empty shelves and so forth we also know, and I know personally from my own area that supply of building materials is at a premium I've seen cement being rationed councils unable to carry out repairs to their tenants premises because they can't access things like plasterboard and so forth and I just wondered how they're impacting on the Scottish economy and your cell and your own businesses I won't pick out a particular name here because I think it affects everybody but maybe Barry could start Sorry about that Can I just say to members I know it can be frustrating when you're trying to put the question to the panel but for broadcasting can you name a member of the panel who you would wish to direct the question to Thank you, go ahead Mr McCullough I think that as you stated Colin, we've been hearing everything that you mentioned about supply chain problems whether it's building materials for the construction sector or indeed goods for food retailers and it does give considerable cause for concern and it is coming at a time when firms are finding it difficult to hire staff we're trying to plan for an uncertain future and the combination of these uncertainties trains confidence from the economy and you see that from our data even in terms of the confidence levels and capacity to invest in the manufacturing sector they're also hit by the supply chain issues and I think at the moment what we're trying to do at IFSP is just trying to practically understand what's going on and help our members where we can source the goods and services to offset some of these issues and our small business recovery plan will be publishing in the next week or so and we do highlight the work that Mr McKee and the Scottish Government have been doing to try and encourage more Scottish firms to provide key components for manufacturing and construction sectors we think there is a lot more we can do in that space to connect the supply of great stuff that's out there within the small business community with the key elements of the production sectors that we have and in some ways the issues that we're seeing are in a sense a lack of resilience within those supply chains and over the lines and what will be important of where we are just now we are going to have to do more as a country to produce internally and try and connect what businesses have what consumers want I think that's going to be incredibly difficult replete with mistakes but I think that where there's FSB or other trade bodies we'll be working closely with the Scottish Government and the UK Government on those issues Thank you Maybe Chandreep Singh could comment on that and I'm particularly interested in other sectors other than just construction food and so on that are being impacted if you've had feedback from your members Thank you, Deputy convener so this is a really important issue and I think one of the reasons that this has probably been in the media so much is that the businesses that are faced with supply chain issues or materials issues are also dealing with staff shortages so it's actually a double hit that these sectors are having to manage so we are looking at how we can potentially get local supply chains and actually build a resilience around that and build a development on that but it's a globalised economy so we're not going to be removing international supply chains so I think we do need to give serious consideration as to how are our transport sectors meeting the needs of what we need in terms of supply chain and exporting and equally making sure that we've got the staff on the ground so that when those materials or supply materials that we're ordering hit Scotland that we've got the people to actually use those materials that are being delivered but I think it's an important point that we've got a manufacturing construction food sectors are probably facing isn't the most and there's no doubt about that but of course there are other sectors that are being faced with supply chain issues but through our surveys of our majority all that feedback is from manufacturing construction and food and drink hospitality so I'm more than happy to look at additional sectors that are facing supply chain issues, perhaps on the smaller ones and come back to you with some additional information on that but I think the important point that we're picking up is that it's not a supply chain issues in isolation it's also the skill shortage that's not our impact on that to me That would be very helpful your offer there it's true, the second item I was going to talk about was labour shortages and perhaps the really part and parcel of the supply chain difficulties and so on as well we've all seen these media reports of about 100,000 truck drivers short there's 2,000 leaving the trade every week and only 1,000 getting recruited I can't guarantee these figures they're from the media but maybe Dave Moxham might have something to say about that Yeah thanks very much indeed I've got a couple of observations on that I mean the first is a general one and you know apologies if this sounds slightly critical but we have to be quite clear that a skill shortage and a labour market shortage isn't necessarily the same thing and it's quite dangerous I think sometimes to merge the two as if for instance we've got tens of thousands of people ready to work in the hospitality sector who simply don't have the skills we have a sector which is very low page generally unattractive and I think it's really important that we make the distinction now when we come to talking about I guess the immediacy of the supply chain issues that we have obviously a lot of those are Covid related so we don't have a date that we can mark in the calendar when Covid recovery says that all of the supply chain issues which are a consequence of Covid although obviously in some cases also a consequence of Brexit will play themselves out that clearly argues for on-going soft and flexible support for businesses and for workers as those problems work their way through but I'd also like that really briefly to talk about some of the opportunities and this was touched upon by the FSB one of our recent reports shows that there is the potential in the medium term to look at how we develop our own local supply chain so I think the committee in a sense needs to have an eye on what needs to be done to mitigate the supply chain impact of Covid but also to look at some of the opportunities as the FSB said to strengthen our local supply chains in the period ahead just while you're on there could I ask is that anything that the Scottish Government can do to improve the supply chain improve the availability of labour I mean the first thing to say it's limited I mean many of the regulatory powers exist at a UK level it won't be a surprise to anyone for us to be exposed to some support in greater employment protections greater minimum wage positions which would make employment in the sectors more attractive there are things that the Scottish Government through fair work it can do through its own procurement it can do through conditionality on grant support to ensure that not just good work is being produced but that local work is being produced too so there are what we would describe as generally soft but important levers and that the Scottish Government can use to ensure that that much needed business support goes hand in hand with some organisations to produce quality jobs and referring back to the discussion that we were in earlier jobs which are more equally distributed with relation to gender race and other equality characteristics thank you maybe I could ask Rose Marley about the trade environment and how these skills shortages and the supply chain difficulties are impacting yeah I think the other panel members have touched on it this is about fundamentally we've got some issues with our worker conditions actually in our supply chain and some of the work that Scottish Development has been doing around worker co-ops and identifying the opportunity for people to have a stake and have a say in where they work and that gives greater empowerment so I think there's no quick fixes here that we've got not least with the pandemic as well in terms of the supply chain we've got loads of examples like the open food network which is bunch of local farmers working together for example to supply food and the community wealth building we've again panellists have touched on the idea of keeping that work and opportunity in the locality and building on that but it's not a quick fix and it's fundamental we need to develop more resilient ways of working going forward so that our future is sort of future proofed in the crisis that the ripple effects of this pandemic are going to keep hitting us and we need to build resilience against it and that looks at our worker conditions and maybe Carline Currie could comment on the supply chains and the skill shortages thank you yes I'd just like to add in a couple of comments certainly on supply chains I would really make the point on procurement that gender disaggregated data would be incredibly insightful in terms of women's access because diversity of course is a driver of resilience and that's what we're wanting to see in our supply chains at the moment and certainly we have heard of instances where women are not being successful in terms of procurement in terms of tendering in terms of our own experiences as an organisation even when we've been tendering or trying to get into supply chains for the delivery of expert women's services those opportunities have gone to male-led organisations thank you I'd like to just ask is there anything that the Scottish Government can do either immediately or in the long term to create better resilience in the supply chains is it completely outside our control is there nothing we can do is it all in the hands of the UK Government to leave us to make these decisions maybe I can bring Barry back in thank you so I think you need to in some ways distinguish between short term solutions and as Dave mentioned more medium to longer term interventions so I think if we combine both the labour shortages and indeed the supply chain issues because they're quite related points so I think that on the labour side short term measures to look at would be to alleviate some of the immediate burden particularly regarding HGP drivers or looking at temporary EU workers feeding up training backlogs longer term I think there's a whole discussion as committee members will probably acknowledge about the role of the education and skill system in this mix you know we spend over £3 billion every year on this and I think we can better connect the supply of labour and skills coming into the labour market with the demand that's there and I think on the local supply chain I think there's a lot of things being discussed at the moment about how we build up these local suppliers because as you touched on there's a variety of issues a variety of shortages from glass bottles to glucose you know what's across a wide range of industries you know whether it's your whiskey food and drink hospitality or construction I think it is I think that the Scottish Government's are ministers are in some ways in a tough spot but we would encourage them to think quite seriously about how we build these local supply chains back how we make them much more effective I think that this does tie in to conversations we may move on to regarding procurement and how we can provide more economic opportunities and contract opportunities to local businesses because I think his issue probably heard us say before we're a track record in this regard in terms of record businesses and the awarding of public contracts is not really good enough I apologise at Mr Beattie we do have a number of members who are interested in this subject area if you mind I'll move on and if panellists have a response to Mr Beattie's final question if they can wrap it up in their next response I'm going to hand over to Jamie Halcro Johnston Thank you very much good morning to the panel I'm going to give a heads up and I'm going to come to Charin Deep first and then to Barry McCulloch it was on this supply chain issue and I just wanted to clarify that it's one kind of all encompassing thing and of course some of the shortages that we're seeing are shortages of manufacturing or production at source or lack of production as I say wherever some of these products are created so I wanted to kind of split the two and actually look at the supply infrastructure coming through now there are a number of issues that I think have been brought up today in terms of Covid the impact of perhaps Brexit on these things but some of the problems that we've seen aren't just related to a lack of drivers in this country I saw that there is a shortage of HGV drivers across Europe so the idea of opening up access to the market and hoping that we'll be able to attract people to this country isn't just as simple as that I'm wondering first if I get the points of people on that area so labour shortages is one issue but also there are other issues within what we call the supply infrastructure such as the issue around summer holidays people are away there's been mentioned before people are forced to isolate and not able to therefore go to work the questions being asked repeatedly about what can be done by a Scottish Parliament committee so the Scottish Government can do and I think we're going to come on to procurement and business support but I did want to ask is the real aim here to make our supply infrastructure more localised be able to produce more where we can in Scotland and could part of that be creating an environment of business support to encourage more Scottish businesses markets if I can go to Chandy first and then to Barry McCulloch thank you Jamie there's a lot in your points there that I think are exceptionally sensible but also valid in terms of your interpretation of what's happening in the economy I think from the outset we should be investing in and supporting in local supply chain development and then the resilience of that moving forward I think the Scottish Government has got a role to play which they're starting to do via Ivan McKee's portfolio and involving the private sector and that we need to learn from how the private sector have been dealing with these issues and in the government need to see where they can perhaps alleviate some of these issues as well but also use the private sector's infrastructure locally and internationally to try and provide because that's what this particular issue is it's a shared problem I need to work on it together on the point around the issue of e-drivers as an example and that's another issue which has been hit not just by the pandemic because tests et cetera have been cancelled or delayed but then that's also had the Brexit impact as well and I think you're right to point out the fact that the EU has also got issues as well around availability and whether they're skilled or not, whether they've passed a test et cetera but I think from a business perspective we need options to recruit so the fewer options we've got to access that individual or that talent pipeline or that skills it's creating more pressure on businesses it's increasing the stress factor for those managers or those business owners so I think our job is to make sure that businesses have got options and that can be from any country don't have to be from the EU that's one route of course because we've had that route for many years but I think as a practical solution for us because this is not just a Scottish Government focus it's a UK-wide issue so we would like to see a joint forum established between the appropriate UK Government ministers and the appropriate Scottish Government ministers so that there's a joint up approach on this and the reason for that is because businesses are doing this collaboratively so businesses in Scotland are talking to businesses in the rest of the UK and vice versa the business associations are talking to each other across the UK so why not governments so that would be our suggestion for how we think that this can be taken forward so that governments have an opportunity to provide solutions so that businesses are currently largely dealing with on their own Thanks, Gerry and Barry Thanks very much I agreed with a lot with what you said and just to take it point by point more diverse local supply chains creating more resilient local economies that's absolutely the case for at least five six years because in doing that and adopting this approach to provide more economic opportunities for local businesses more wealth is retained within communities we become a much more wellbeing economy we know it ticks so many boxes the crisis as you mentioned is a bit of a wake-up call and that we haven't been doing a lot of this we've been going for scale we've been cooling contracts and big lots and on the public procurement side there's a lot to do and a lot to catch up on quite frankly on the labour market side and taking cognisance of the fact at the moment about a third of employers are experiencing shortages then there's a lot more that the Scottish Government and its agencies do that they have control over something that we will provide more detail to the committee on in the context of our recovery plan so to take it step by step there's the ability to make schemes like the young persons guarantee work more effectively as we stand just now we're not really connecting the ability of local employers to create jobs with the wage subsidies that are already in the system the wage subsidies that I would add up to £8,000 so we're not doing that it's something that we've been talking to the Scottish Government about for some time and there's some really practical steps that we could take to better connect us I think secondly and this will be something that you're very aware of there's more structural issues particularly within the motor and rural parts that prevent employers most notably the lack of staff accommodation again this is an issue that we've been talking about for some time there may be the demand for staff to relocate and people to move up to the Highlands and Islands but there's nowhere for them to stay and so in our paper we will put forward the idea that we really do need to fast-track support for the construction of employee accommodation in rural and remote areas to try to knock off one of the structural issues that prevent our members and other employers from creating good local jobs and I think I'll leave that there I think we could talk at some length about the role of skills agencies the investments that we make and the effectiveness of those measures Thanks very much I mean as a Highlands and Islands MSP and somebody from Albany I could talk about rural housing and local infrastructure all day long I'm very conscious of time and other people wanting to come in on this subject so I just wanted to ask again to Chairman Deep and Barry on this one but the cost of the supply infrastructure as well I spoke to one importer who had been paying around about just under £1,000 for a container in the middle of the pandemic it went up to around £18,000 and it's down now to around about £5,000 or £6,000 so could you give me an idea of the impact of that cost and also perhaps Caroline if you could come in after them as well that would be very helpful too Thank you We'll of course any increase in costs but it's supply to an infrastructure or elsewhere we'll have an impact on the business so either it has to be passed on to the consumer or the buyer or it's absorbed into the business and it reduces profits elsewhere but I think that an example because last year we were faced with the economy trying to function as much as possible in the midst of restrictions but we also had a one-of-a-kind demand from the public sector which also required storage facilities it required transportation and logistics given the pandemic requirements in terms of testing infrastructure, vaccines etc so we would assume that that would start to ease in the coming months and years but that doesn't negate the fact that supply chain infrastructure logistics this whole issue has shone a light on the importance of that sector so I think it is from our perspective it's paramount that those particular lifeline infrastructures, so if we don't have storage facilities, if we don't have the right roads for the weight of HGV trucks and lorries then we're going to be stuck but I think it's important that those areas are invested in so I think in the upcoming Scottish budget that this area is really taken in terms of serious consideration there may be issues in now and also in the short term potentially with the prices of some of the supply chain infrastructures going up but as containers for example there is a risk that SMEs could be priced out of this in the future we certainly have examples of that during the pandemic so there are real issues that we've experienced during the pandemic some of them we will see easing as we come out of it others might exist for some time so I think it's an issue that will and should deserve additional scrutiny in the coming months and years sorry, thank you and Barry yes, thank you you make a really astute observation because it's not just about getting materials into the country it's getting them around the country as you know all too well and there are big big problems there both in terms of our transport infrastructure but just the availability of staff to do that it also follows logically from that that you know if costs are going up that could choke off recovery we already know that two thirds of small businesses of salt costs go up in the last quarter where that's to continue then you would have to absorb those cost increases pass them on to customers or our CE either and profit levels which is something that we don't want to see and I think we do have to keep that in mind as we move forward towards the economic recovery transformation project that the Scottish Government are undertaking and the budget because given the trading conditions that we're in given everything that you've pointed out it's going to be important for the Scottish Government to control the costs they pass on whether in the context of non-domestic rates and so I think it's going to be really important for the Scottish Government to identify ways in which they support businesses through controlling costs and that may be schemes that they've got and process that could increase the cost of doing business or indeed trying to help them establish more locals by chains or indeed to recruit more people locally. Thank you. I think already some really good points have been made my first point would be just in terms of the supply chain do we actually understand what our current risk is within the supply chain and do we understand what our risk appetite is those points aren't particularly clear to me so I've just asked those questions I think in terms of in terms of the market and the opportunity I think Barry's made some really impactful points around the double benefit from the SME community you know if you can get more SMEs into the supply chain that helps with supply chain diversity so that's one benefit but the other benefit you know exactly as Barry has outlined is the economic opportunity within those communities that is critically important for us as a nation but especially so I would say in our more rural areas which will be close to your heart in terms of the housing issue what we've heard is we all know housing is an issue in terms of particularly the rural economy and we've been hearing stories of even when that housing is in place and that accommodation is there for workers they are not returning to the jobs that they once held and that goes back to the points that Dave has made already about low-paid sector you know unsocial hours people are choosing not to go back to those types of jobs which of course is creating issues for businesses businesses who are actually trying to address those issues and it's important to say that and the other point I would just like to make just in terms of rural areas often in these areas there is a lack of higher paid higher value paid sectoral jobs and what we have seen as one of the solutions is running programmes to engage people in business startups we have run at the start of this year programmes to engage women in creating businesses now these are women who would never have thought about starting up a business before you know had it not been for this programme these have been really successful in engaging people who were at a distance from the economy to getting them economically active the data shows a high engagement in terms of participants starting up businesses but what I really want to press here is business programmes are not just about starting up a business they offer people the opportunity to gain skills and to keep vital existing skills alive and potentially to go back into employment when these opportunities come up so I would urge the committee to look at business startup and business support as one of the key tools and levers to help our economic recovery going forward business support is coming up so I will pass back to the convener I am now going to move over to Gordon MacDonald I would say that I have four members who wish to ask questions this morning so I do appreciate it's a wide raging conversation but if people could be concise questions and answers that would be appreciated Gordon Thank you very much convener we've talked a lot this morning about supply chain and that really covers the import side of things but of course many SMEs in Scotland export predominantly to the EU at 83% and we know about the issues of HGV drivers but what are the other issues facing exporters and is there anything within the Scottish Government's remit that we can do to ease that situation because clearly we've seen Scottish food and drink predominantly exports raised substantially in recent years and in general terms there was a British Chamber of Commerce survey second quarter of 2021 that said 73% of exporters saw no export growth and 28% had reduced export sales so there's clearly a problem there yes it's some of it that relates to HGV but what else is there that's blocking the system can I ask Sharon Deeb first and then Zabibari and then move on to the other panellists please Thank you Gordon this is a critical area for us as James the Commerce it's a area that we've prioritised many years in terms of boosting Scotland's exports out of Scotland to markets across the world and actually you'll be interested to know Gordon because it's important to talk about some of the opportunities but also positives before I get into some of the challenges but we run in partnership with the Scottish Government the international trade partnership programme which focuses on supporting small businesses and also new to export companies to look up markets across the world and we run an annual programme of trade missions through the international chains of commerce network and actually through the pandemic year we switched all of our trade missions to virtual missions which was something new we've never done that before but during the pandemic we ran over 20 trade missions with over 500 Scottish businesses that were looking to export and wanted to continue on the exporting journey and in fact in that pandemic year we have signed nearly £10 million worth of deals for those Scottish businesses with a further £10 million in the pipeline and the purpose of sharing that is because there are opportunities out there we need to make sure that those businesses that are ready and willing and want to access those new markets are supported through that journey speaking directly to international buyers of their products and services and perhaps that's one of the issues that has come out of the pandemic and all that is that many companies that are looking to export are not speaking to the right people they're potentially going to the wrong market they're potentially not speaking to the right buyer that they can connect with so I think that's what we need to see more of in the future is the ability for business to have direct contact with the right market with their product and services and that's something that I think Scottish Government, SDI and others do but also we need to involve others including chambers and other associations to make sure that we are targeting as many markets as possible because that will be an important lever for economic recovery and I think that's an important point that exporting international markets must underpin our economic recovery moving forward and also it features heavily as an economic growth lever in terms of future economic and business resilience and there's plenty of stats to show that any business that exports is much more resilient in times of crisis whether it's a health crisis or a financial crisis so we need to be doing more on that and we're certainly playing our part to make sure that that happens that around there certainly through the pandemic travel was a big problem and continues to be so I think as travel continues to be restricted in terms of international travel I think we will see issues around exports so we're now able to get to markets in person many of the markets that have potential the cultural approach to exporting and business deals is very much in person so I think that's an area that we will want to address quickly but also safely we are in a pandemic and a health crisis but we need to make sure that it is picking up pace and then of course in addition to that the cost of exporting so before the deal is signed they can be quite a costly process so initiatives like how the chambers of commerce are doing it so a virtual need the buyer approach and then in person to seal the deal I think those concepts should be much more widely used and it supports and reduces the initial cost that could be incurred for exporting and then also think that additional policies related to exporting should be addressed as well so where there's things like air departure tax bringing that back on the table and having a serious conversation around our tax policies and the role they can play to enable exporting so I think those are some of the key areas that we need to be looking at in terms of exporting OK, thanks very much for that Barry looking at specifics is there anything we'll see in the increase of minimum carriage paid orders etc signed health certificates is there anything within the Scottish Government's dream that we can do to open up the export market? Yeah, I won't say too much I think I'm deep, eloquently made a series of really good points I think that all I would say from a SME side is that firstly the majority of small businesses don't export in the first place, you're talking around maybe 15 to 20 per cent who are doing that but what we've been concerned about going back some years now is that we have been seeing the economic value of small business exports decrease for some time we have been seeing frictions increase even during the transition period and beyond there's definitely something to look at in terms of export health certificates FSP colleagues and I have been dealing with this particularly in the context of local authorities and their role in this it may seem a slightly banal point but in terms of what is within our control standardise those costs for a start and make sure that they are focused on cost recovery likewise I think there's a policy discussion to be had about how we can get more smaller businesses to export and take advantage of the opportunities that will come up in the future Okay, thanks very much Dave Moxham, I was wanting to ask you we've talked about HGV drivers today and I noticed that I think it was John Lewis' partnership has increased HGV drivers £5,000 a year to its 900 drivers we're also seeing sign-on bonuses for British gas engineers of £3,000 in G4S, £500 for security officers and while we have to improve the salaries of a lot of individuals how do we do it in such a way that we don't get inflationary increases that then an impact on the economic recovery I'm not absolutely convinced that some level of inflation particularly in the short and medium term is in any way the major issue that we're facing just now I mean obviously there are times in an economic cycle where one has to be particularly concerned about that but if we have a period of some inflation of course we have some significant return to growth that wouldn't be an enormous problem it's kind of difficult for us Gordon because we're told that when the economy is beginning to do well we have to worry about pay because of inflation and when it's doing badly we have to be worried about pay for other reasons I mean the truth of the matter is that at this point for workers wages to rise is entirely what we need to boost spending power in the economy particularly where that boost spending power in local economies so we haven't really even touched upon yet the kind of local retail sector and some of the other parts of the foundational economies that are there to keep our towns going so you know obviously there's always a limit to how much workers wages will rise and there will always be impacts but at this point in time particularly workers wages rise and boost local economies is the opposite of a problem it's actually exactly what we need just now, Gordon Anybody else want to come in on either of those two points? I've understand Caroline I'll just be quick I would point to structural inequalities in terms of women's access international trade in the first place that's a serious issue women tend to be smaller businesses you've seen the grant data they tend to lack access to finance and of course you need that structural capital in order to be able to trade internationally in the first place and you need to have the networks in place in order to get the insight and expert information on the opportunities open to you as a business in terms of opportunities to do the opportunity to operate dedicated women's trade missions I've talked already about our vision for a women's business centre model of operation my colleagues who are operating those centres internationally already would be interested to trade with us on that basis there are huge untapped opportunities for some of our SME businesses in that area and I really urge you to look at those opportunities and those levers that could be activated I turn to an issue that we've briefly touched on and that's around business support which I suspect all the panel might have views on so I'll simply choose you in the order of agenda kicking off with Barry but it's really just to ask the panel first of all what your thoughts specifically are on how the economic development agencies have performed over the past 12 months so that's obviously Scottish Enterprise and also Highlands and Islands Enterprise and the South of Scotland Enterprise Agency now I know much of their work has been around administering a lot of the grant support but apart from that has their response met the needs of agencies and of workers and has that response told us anything about changes we might need to make to the way our agencies function and as I said I'll kick off with Barry Thanks Colin First let's just reflect on the fact that there has been an extensive range of business support measures over the last 17 months and in Scotland alone there have been 2.8 billion in grants not saying anything about the rate relief packages so there has been a lot of business support available for the sectors hardest as our submission stated it's not been perfect I think there's lots of lessons to learn for future business support that we mustn't lose sight of as we move into this new phase I think in terms of the enterprise agencies I think what we want to see is a real commitment to continuous improvement there are things that went well in the crisis and there are things that showed up the deficiencies within our business support structures things like using the non-domestic retro as a proxy for businesses trying to identify where businesses are and what they do and specifically regarding Scottish Enterprise I think that we've had numerous conversations with colleagues at Scottish Enterprise they know that they weren't visible enough that they were in enough direct contact with trade body leaders and in some ways we were in the middle of the crisis and Scottish Enterprise wasn't there but I think it's important that we think about what we're going to do about that what would we do different as a result of this massive investment and for us it's about encouraging more businesses to use our great public support it couldn't be that simple making it more accessible, more user focus going back to some of the points that we raised in the context of the enterprise and skills review of 2016 which we haven't delivered the system is still too complex it's still prone to duplication and I think there's a real opportunity particularly on the digital side to streamline a lot of that and I know that what the Scottish Government are looking at in terms of how do we digitise this because we also know to touch on your point Colin that one of the real success stories of the crisis has been the ability of small bins to use digital technologies to adapt to new markets and deliver new products and services and with the recent launches of Digibus there's a lot of room for optimism there as we bring together both our digital initiatives our traditional enterprise initiatives and our skills initiatives and I think that if we look to try and bring that together in one place focused on the needs of local businesses I think that we could do a lot of good Just following up on that point Barry many of your members I don't want to put in the spot because you may not have spoken to all your members across the country but any of your members notice any difference in approach between say you talked about Scottish Enterprise was there a difference of approach say in Highlands and Islands and the South of Scotland Enterprise agencies from Scottish Enterprise when it come to that support for small businesses It wasn't really something that came to our best Colin I think what is also important in this context it was local authorities who were there for the majority of businesses it was the councils who were delivering over at least dozens of business support schemes that let notice again it wasn't perfect but let's remember there was over 100 business support schemes in total there was 2.8 billion pounds spent and likewise it was local authorities who were actively and practically delivering that support and partnership with FSB and other trade bodies but to answer your point it wasn't something that came up Can I ask the same question to Charin Deeb as well Thank you Yes, I think it's important for us to share that the Enterprise agencies pivoted very quickly to administering grant support and being a point of contact for businesses through the pandemic that was the establishment of the business support helpline as well so I think there was lots of touch points for businesses to use when it came to the Enterprise agencies themselves we do have some data around the three separate agencies so Scottish Enterprise, Highlands and Islands in south of Scotland I don't have that information to hand right now because it's up to the act of the meeting and we got that data through the chambers in those regions in terms of their membership engagement I think one of the areas that I would like to add though is it's important that we understand that businesses have a preference of how they access information and who they go to in terms of crisis or what they need to unlock a problem chambers sometimes might be directly with an enterprise agency or other trade associations and I think that's one thing that we certainly uncovered during the pandemic is many of our members were going to chambers or trade bodies that are members of directly not going to the enterprise agencies so I think that's probably an opportunity for development made in terms of making sure that the enterprise agencies are involving including and partnering to do so with trade bodies and associations particularly if that's where businesses are going to first to seek information or to unlock issues certainly from our experience when we did have businesses or sectors struggling to access grant support all the enterprise agencies were very responsive to dealing with those issues so I can only commend those efforts particularly in the initial months of lockdown and the support was through the initial days of development and that included local authorities and consular but I think that moving forward we need to understand that many of the individuals and colleagues and the enterprise agencies that were dealing with immediate responses were deployed from other departments and units so how will that be administered moving forward will those departments be closed in terms of grant support in terms of the helplines will we be hiding more people to be pivoting the support that businesses need in terms of restart reopening and recovery so those are the areas that we are looking at but certainly we would welcome more interactions in a formal way with enterprise agencies particularly as businesses tend to come to trade associations as a first point and go to that as well I think that that data on the different agencies would be really helpful next on my agenda is carlin is this an issue that members of report to you in terms of their views on the role of the enterprise agencies I think we need to ask ourselves what our vision is for women owned business in Scotland and what is the role of the enterprise agencies in that particular arena I think the data we have published gives you one insight into the grant support and I do want to emphasise that this data should be regarded as a tool for change it gives us some insight in terms of where support is needed and it should be used to inform the development of our enterprise agency and support services going forward and it is important to say that what we see and hear from our members is continual reference to what is a pretty leaky pipeline of support particularly around growth businesses so gaining access to Scottish Enterprise services particularly for women owned businesses is quite a serious concern there are structural inequalities in that system and the pandemic has simply highlighted and exacerbated those so for example women tend to set up businesses in sectors that do not directly align to the enterprise agencies appetite for sectoral support so for example the agencies will look at key growth sectors such as technology low carbon etc women for example are setting up businesses in areas such as the beauty sector now that is a multi-billion pound industry we are seeing businesses setting up in that sector who have serious growth opportunities and who are trying to realise those growth opportunities but all too often without the key support that potentially could be made available from the agencies there are issues to be addressed in there I would absolutely echo Sharon Deep's call on how we work together with those agencies I would potentially maybe even raise that slightly and say it is really vital in terms of our economic recovery and our economic ambitions that we have strong relationships with the enterprise agencies going forward organisations like ourselves, like chambers etc and also with the civil servants I would say as well it is important that we are in close contact and regular dialogue and that is simply not happening at all at the moment in our case and that results in missed economic opportunities it results in us potentially not investing as wisely as we could in the initiatives that are going to transform our economy going forward and I would also just call again and highlight the need to train advisers in the provision of gender-aware support we need to have trained professionals that understand how women's businesses operate in order to provide the best quality of support available and connecting us all up is vital otherwise we will simply leak out some of the support that we could otherwise be providing when we are better connected together Thank you Can I ask the same question to Rose I recall when the South Scotland Enterprise agency legislation was being passed through Parliament moving amendments to try to get specific commitments towards supporting corporatives as one of their aims or declaring an interest now as a cooperative party MSP, what is the view or review of co-ops in terms of the support that is coming from our enterprise agencies during the pandemic as well? Thank you Colin and this is a really important point because there is a major opportunity for Scotland to build back better through that circular economy investment in its local communities and some brilliant examples Scottish Enterprise has been one of the best in the UK understanding but there have been some technical difficulties in things like eligibility for grants and the criteria for loans that reflect a general lack of understanding across all business about the co-operative model and this is really pertinent in Scotland when there is just not 0.2% of businesses that are co-operatives but there are some really brilliant examples. I have been less vocal earlier because on things like imports and exports, co-operatives are not experiencing anything different to what the other panellists have outlined actually we have been faring quite a bit better because we have got that resilience and international export and import relationships because of the way that the models work in terms of working together in terms of federal co-operatives as well. In terms of the business support what the absolute request would be but the business support that is assigned to this model that is proven to deliver on fair tax, gender equality fair wages, resilience in the pandemic, the effort to put into that that is reflective of the general budget so if you take Lash's last budget, if you put £1 million into the Scottish Development Agency and the Scottish National Investment Bank you will reap the rewards in long-term resilience of business conditions of workers and generally that is the request that we would make for Scotland and that is why we worked with the Greens actually because we know that this is £40 billion into the economy in the UK and it is just £1.5 billion in Scotland but in the places like the islands for example you have the highest number of co-ops per capita because it is really resilient way to build a community so this is a real opportunity for Scotland to address and invest in the long-term of what businesses can do to build back better. Just on that point has the prevalence of co-ops in the Highlands and Islands specifically related in any way to any work that the Highlands and Islands enterprises are doing or are there other factors that have contributed to that? Sorry Cully, you broke up slightly can you just repeat the question? I was just wondering, you mentioned the prevalence of co-operatives in the Highlands and Islands and I just wondered if there is anything specific that the agency there can do from Scottish Enterprise for that to happen or are there other factors that have contributed to that? Yes, it is all those factors working together and it is up to percent in terms of the development in the Highlands and Islands but a lot to do with this is community shares as well and the growth of community shares as a way to raise funds so if you look at the island of egg the brewery there that raised their funding for setting up the brewery through community shares and just general growing awareness that they have created employment on the island of egg so it is quite small relatively but then you look at you know co-op flights that are turning over £490 million a year and you look at what is happening in agriculture again in terms of the supply chains and the resilience of the likes of green city wholefield and what is happening in the high streets so it has been a general growing awareness concept and actually it is what people want now that is what the pandemic has done it has really highlighted the inequality and people do want a way to say they do want to address that if you look at Hart's FC there is just up again its fan-led its community owned this is something that people are demonstrating with their football that they want to see more of but there isn't the business support in equal terms for this type of model there are some issues around understanding them with some of the enterprise agencies that is very helpful can I ask the same question to Dave but can I ask Dave if you can also cover my second question which is around I suppose conditionality of that business support that's been happening obviously I think previously business support in general focus very much on number of jobs created turn over so I was struck during the pandemic about how little conditionality that there was to some of that grants support, specifically around jobs if you removed the furlough scheme but is there a need for us to look at increased conditionality when it comes to business support in general and not just jobs in turn over but fair work, inclusive growth, net zero transition among the issues that we need to start to bring more for when it comes to that support that we give to our business sector Thanks very much Colin you gave so much detail in your question that I'm tempted just to answer yes because I agree with most of that but just to unpick that a little bit I think it's fair to say that in the last period we did press with government on a number of occasions to ensure the maximum possible conditionality with grants and we weren't always successful I'm going to be slightly caveated by saying that we also recognised that it was a fast changing situation there was uncertainties in terms of what the UK government was doing and there was an understandable imperative to some degree to get the money out of the door because of the fast changing situation having said that the big lesson to learn is the one I think that you allude to which is that the enterprise agencies should look at what happened over the last year look at what's kind of still unfolding because there's still going to be business grants and then look to the future and say what are those factors many of those factors that we want to be taken into account already exist in terms of the Scottish Government's wellbeing agenda their commitment to community wealth building their commitment to the living wage et cetera et cetera but these things I'm not sure are quite locked together in terms of the enterprise agencies mission and what the government also says is part of its mission so some of that I think comes down to identifying more clearly what the levers are some of that comes down to more monitoring some of that I think comes down to if you like business education we're not arguing that the sectors that have been supported in the past periods have been in all cases and for all employers not trying to do the best some have actually been gaining unfair competitive advantage over other businesses who are trying to do if you like the right thing so we do need a clearer understanding of what the expectations of businesses who receive support are from enterprise agencies and other government supports you're correct to identify frankly the growing number of factors including local supply chain including critically just transition and meeting climate change targets and I can understand that there will be many people in business who will say that sounds like an awful lot of red tape but we do need to find some way to link together what the Scottish Government's high level ambitions are stated to be in terms of a wellbeing economy and what that actually looks like when it comes to spending its own money Thanks very much for that David it wasn't a lean question because I knew you would be very balanced in talking about the practicalities and the challenges of that and I don't know if maybe Barry and Jim Deep have got any particular views on Excuse me Mr Smith we are a bit push for time that relates to the next questions that are coming from Fiona Hyslop so I'll hand over to Fiona Hyslop who I'm sure will cover the area you were about to address Thanks Colin for taking us up Hello everybody and by necessity is the first evidence session of this committee is quite in the realm of I suppose scoping and scene setting and this committee will be interested in the transition to net zero and the development of the wellbeing economy so essentially it will have to be at this stage top line from you in terms of your response and your focus on these areas but I'm very struck that we've heard that many businesses are still in survival mode we also have a planet that has to survive and a time where we heard from Michelle Thomson's question the debt issues that many small businesses are facing all come at a time when in order to achieve net zero they'll have to be investment in terms of whether it's heat transport and the demands that consumers have for net zero delivery of services so from your point of view what practically can be done how do we commit ourselves to that bigger overarching Scottish agenda of that transition and wellbeing and what would your messages to this committee be at be in order for us to focus in on what can make a material change obviously Dave Moxman has just spoken about some of that wider agenda so perhaps I'll come to him at the end to pick on some of the issues he hadn't covered in his answer to that last question but perhaps particularly in terms of businesses investing doing in mind the game they will have in terms of reduced costs in the long term might lend itself to interesting models of finance to help small businesses but how can they do that at the same time as they're trying to survive and they're carrying a lot of debt so maybe come to Sharon Deep first on that maybe if that's okay and then to Barry and then Carlin Thank you Fiona Yes, you're absolutely right and you'll recall the many conversations that we had during the pandemic, pre-pandemic on all of these matters particularly around business support and economic growth and obviously most recently in terms of the net zero agenda I think the important thing to note and you've captured it very well that you're right businesses are in survival mode still and the messages that we're getting from not just Scottish Government but from various Governments around the world is around the potential continued impact of the pandemic and what that might mean for economies and local communities in terms of restrictions and how we operate so we are still in that mode and we've not quite moved away from it I think as quickly as we would like but we need to be mindful of that from our perspective there's really a fundamental support mechanism that businesses need companies are embracing this agenda before the rise there's great examples of businesses that are embracing the net zero agenda particularly ahead of COP26 but what we need to see is that embracing of net zero and the excitement towards COP26 apply to the wider Scottish business base which we're not seeing at the moment so we do need much more practical support from Scottish Government and UK Government particularly in the lead up to COP26 and after COP26 what they can say will be to make sure that businesses are on that agenda that businesses have the opportunity to collaborate on these targets there's the danger that these targets are being done to business rather than with business so I do think that we need to balance that in terms of the survival mode that businesses are in right now as well as the long-term goals and ambitions that the Government set out at the moment I would say that we're quite far from that partnership journey with the wider Scottish business base but it's still not too late to rectify that and make sure that they have the ability to do that some of that is on resources and a whole host of areas that need to be explored in detail to make sure that businesses have that ability at the moment I would say that there's aspirations and ambitions but not enough on the practical steps that we can take forward to help meet those ambitious targets for Scotland and I guess the wider UK agenda on climate change I'm conscious this is a massive area so I suspect, convener, we might, if people want to follow up on that, that might be required but Barry, and then Mr Caroline To address your question directly I'm not sure that businesses can be both in survival mode and substantially decarbonise and make that transition I just don't think they can do it or if they can do it they're going to need extensive public support I think that goes without saying circling back to both Michelle Thompson's points and others about how do we learn the lessons of the last 17 months we've seen the small business community at its best in many ways it's been highly resilient but it's exposed some fragilities identifying those fragilities and cash flow issues we're going to need to think quite seriously about how we make the transition to a net zero economy just for local businesses because there are there are going to be some really big decisions for Scottish Government to make in that context and I think that it's about making it practical we know 75% of our members due to climate change is an important issue where it gets less clear is around so what do they do I don't think that road map I don't think that the support is at a targeted practical level that we need at that so to talk small business owners through whether they're de-carbonising their heat looking at making their buildings more energy efficient looking at their transport looking at their skill side and I think that given given the transition will cause substantial change in disruption in the economy depending on the opportunities we're going to need to think really really clearly because previously before the pandemic we relied on loan schemes and I don't censor their being an appetite moving forward for debt finance to do this I think that we're going to need to have a serious look at what grants can be provided to help business owners I think that as they make that journey I think that there's also ways that can be made whilst we're upgrading business premises we can do homes at the same time and take a real neighbourhood approach to making our buildings more energy efficient but I think that our key point at this stage is that small businesses are bought into it they understand it in a strategic sense but they are unclear as to the steps that they need to take and perhaps don't sense the urgency and the progress in the next 20s to make our 2045 target a realistic proposition Thank you and then is it okay to go through the other contributors if we can? Yes, if the responses could be concise that would be helpful Caroline then Rose Okay thanks, I'll be brief What I would say is in terms of net zero women represent a highly motivated community so women tend to take a holistic approach to business success men tend to focus more on transactional profit and traditional business measures so net zero falls right into that wider viewpoint of what success and what good looks like there are some tools I think that you can use that are not just related to funding access although funding access inevitably is key here but some of these other tools for example role models role models who can talk about the practical approaches they have already made to their businesses now we have used a role model approach to women's entrepreneurship and that has really helped businesses at the early stage of starting up I would say it's exactly the same here and in fact out with my wedge role I chair the board of the new Productivity Institute in Scotland our first event tomorrow is on practical productivity and that's because productivity is a big hairy complex area we know businesses look at it like that we know they find it's too complex too big, too difficult to even engage with so we're trying to break it down and I think there are many parallels here with net zero if we try to break it down if we focus on the role models who are already making these changes now they're already making changes because cops coming up we're working with businesses that already have implemented quite simple to do changes in their everyday business operations these are the stories that we need to get out there at the moment to get businesses to engage now and to try to break through at a time where various spot on they are really have absorbability issues because of everything that has gone on now but there are opportunities to try to break through and in fact we are working with STV to try to get more of these businesses who have taken these practical steps more women of course onto the television to broadcast some of those successes and the other point just very briefly because you did touch on wellbeing and I really want to make the point that I think wellbeing is a key issue for businesses going forward absolutely critical we're only seeing the top of the iceberg at the moment in terms of businesses and their mental health and all the wellbeing issues that go with that this has been an incredibly tough time and many businesses themselves haven't stopped yet long enough to feel the full impact and that is really coming and it is imperative that we get lined up to have some wellbeing and mental health support in place we will do our best to help businesses and organisations that we really need help on that Rose if there's any top lines from you and then finally Dave if there's anything you didn't cover in his answer to Colin Smyth Yeah, so the top line on net data would be that obviously the Scottish Government's been a leader in this energy opportunity and community shares to touch on your investment point worked really well in this arena and the national investment bank address encouraged some of this through booster shares that in England we do have community booster shares pound for pound match for those types of programmes and retrofitting businesses as well in co-operatives really strong and to Caroline's point about wellbeing and investment as well there's a lot of work being done in employee ownership conversions when businesses are being done at the moment and employer want the workers to take on more of the business that's an area that again the Scottish Government development could do a lot more in And Dave Oxham Yeah, 30 seconds only for me you'll be glad to know I mean just two headline two headline areas I mean the first or the general one is I mean and I know that you all know this Fiona we need to not take our eye off the ball of the potential benefits that we have in the journey ahead on net zero we may not always hit our targets in the past but there are still first mover opportunities for us in a whole range of technologies they may not be tomorrow's recovery technologies but we can't afford to simply look at this as a question of what happens in the next couple of years so certainly in renewables in energy generally a whole range of opportunities for small and larger businesses that we need to keep some focus on as well as some immediate opportunities in terms of job creation around retrofit and in transport we need to try and tell a positive story about some of those opportunities for businesses as well as some of the difficulties which will inevitably be faced Okay, thank you I will bring Maggie Chapman in to the closed session Thanks very much Claire Thank you to the panel for your comments so far and this builds on Fiona's question I'm interested in how we look at economic recovery in the context of our broader and wider economic strategy with a view to that wellbeing focus that Fiona has mentioned and the intersections of worker wellbeing in all of this because we can't have a resilient economy that is not fit and able to do the work that they need to do Rose, you mentioned that in your opening remarks that co-operatives have fared much better generally than other forms of business and I wonder whether you can say something a little bit more about that and how it relates particularly to employee wellbeing, employee mental health those kinds of things and I'd be interested in hearing from Dave and possibly Caroline as well Yes, thank you The idea of a co-operative having one member, one vote means that people have a stake in where they work where they live, where they consume and that naturally improves employer and worker employee and worker wellbeing just by default of the fact that they can have a say on their conditions for example in a worker co-operative so this idea is kind of touched on about wellbeing directly related to potentially business development is really strong in the co-operative sector and that's why we are looking towards this government to say why is it only 0.2% of the business model across Scotland when we can see things like the gender equality, the diversity which all contributes to greater wellbeing and there's a piece about long termism because the way co-ops are structured and the way that they are funded you've not got a venture capital trying to pull money out and make short decisions and that's where that resilience piece has come in from the pandemic because people are in it for the long term as members of a co-operative they've got more than a greater opportunity to make a difference and to create that resilience to make decisions for the long term of the business and themselves as employees whatever that might be there's something inherent in the model that we believe Scotland has a real opportunity to invest in to build that better Thank you Rose Dave, do you want to come in on this and maybe speak particularly around what we as a committee and as a parliament need to be thinking about in terms of that intersection around wellbeing, labour force wellbeing and economic resilience Dave has vanished It appears that Dave Mockson's possibly had an issue that he's had to leave the committee early. I think you'd suggested that you'd like to hear from Carly on this question and then if this is the last response we'll close the session. Okay, thanks. You'll not be surprised to hear this is high on our agenda. I think the fact will start. First of all with my productivity institute hat on because our first event is tomorrow we have asked businesses what are their key productivity issues. I understand that the most common issue that is coming up is the question of flexible working and what is the balance of working from home and working in the office. Now we are hearing that from workers and we're also hearing from that from employers. We don't yet know clearly what the solution is to different groups of people I think have different references for work patterns so splitting out young people for example splitting out women as key demographics in that critical mass of workers. What I would say is we have a huge opportunity to improve worker wellbeing and the economy if we can get this transition right. If we can find a way to better be able to meet the needs of women in terms of how and where they work. I'll just flag that up and then in terms of women's enterprise Scotland and what we're seeing I mean I've already alluded to the conversations we are having with women business owners where... We appear to have another technical issue I'm afraid and we... Well being an up-to-post business I'm sorry I imagined that that was We didn't quite catch the end Caroline but if you would like to wind up we'll hear your final comments Sorry that's already hitting a proportion of businesses and I would just say that after the financial crash there was a huge increase in women turning to self-employment simply because they could not get employment elsewhere and there are issues there for financial wellbeing there has been a good deal of research done in terms of women's financial health with this move out from employment into self-employment and I can send that in afterwards I'm conscious of your time Thank you Caroline that brings us to the end of the evidence session I would like to thank all panellists for their contribution this morning and answering questions and it has been a wide range of discussion so sending a written supplementary evidence to the committee would be pleased to receive that so thank you for your contribution this morning We now move on to agenda item 3 which is consideration of a Scottish Government consent notification to a UK statutory instrument The committee is invited to consider the consent notification for the public procurement agreement on government procurement amendment number 2 regulations 2021 The Scottish Government gave consent during the campaign recess At the end of the last session it was agreed that during the campaign period the Scottish Government would give its consent to UK statutory instruments and then notify the Parliament at the start of session 6 For those SIs the Parliament consent is not sought but it still was an opportunity to hold the Scottish Government to account for its decision to consent so the purpose of the instrument is to make technical changes to domestic UK and Scottish procurement legislation to ensure that those reflect the UK's ascension to the World Trade Organization Government procurement agreement or GPA in its own right Are the members content to note the consent notification? Thank you We will now move into the private session for the remaining agenda items