NEF - Dumfries

First Minister's speech at the National Economic Forum

It’s fantastic to be here in Dumfries today. It’s really important that forums like this one don’t just take place in Edinburgh or Glasgow or elsewhere in the central belt – it’s really important they get out and about around the country.  

It is important for organisations or individuals who are based in the central belt to discuss issues in a different setting and hear a different perspective. And of course it’s also hugely important that local organisations and businesses have a chance to contribute your views, experiences and perspectives. 

The theme for today’s forum is “driving forward the rural economy”. It’s a topic which is of immense significance – not just to rural communities, but to the whole of the country.

97% of all of Scotland’s land is classified as rural.

And we know many of the key economic sectors on which our economic future depends, are ones where rural communities are making a massive contribution already but there are settings where our rural communities have the potential to make an even bigger contribution in the future.

Rural communities are fundamental to our tourism industry, which has been a huge success story in recent years. Rural communities are also vital to the success of the food and drink sector – which has been our fastest growing major export sector, and which has plans to double in size by 2030.

Rural Scotland is home to most of our renewable energy generation – whether though onshore wind, hydro, solar,  or – increasingly – offshore wind, wave and tidal. 

And in many other areas – from financial services to creative industries to life sciences – rural towns and communities contribute to, and can benefit from, the success of vitally important economic sectors.

So ensuring that rural Scotland thrives is a fundamental part of ensuring that Scotland overall succeeds and thrives. That’s why today’s forum is so important; it’s why seven other ministers are here for all or part of the day.

I don’t want to speak for too long – but I do want to give a brief overview of some of this Government’s key priorities in promoting economic growth across the country. As you might expect, I’ll emphasise rural issues as we do that. And I’ll conclude by talking about the specific opportunities that arise as a result of the new South of Scotland Economic Partnership.

But first, I want to say a few words about Brexit – particularly given the decision of the Scottish Parliament’s last night to, at this stage, withhold consent for the UK Government’s EU Withdrawal Bill.

Most people realised almost immediately after the EU referendum result, there are serious implications that arise from Brexit for the whole country, but particularly for Scotland’s rural economy.

In fact, some of those consequences were highlighted again on Monday – in a report published by the Highlands and Islands Agricultural Support group. It showed that Brexit is likely to harm the profitability of our farmers; that it could therefore affect related industries such as tourism and food and drink; and that overall it is a real threat to the sustainability of some rural communities.

That’s probably not a surprise when you consider the consequences of Brexit. There’s a potential impact on funding – we could lose almost half a billion pounds a year of funding which supports farms, crofts, woodlands and rural businesses.

There’s also a potential impact on trade – Europe is of course a major market for our food and drink industry. This area – as a major producer of Scotch beef, Scotch lamb, free range eggs, cheese and milk – could be seriously affected.

There’s also an impact on people. Rural and coastal communities have welcomed thousands of people from all over the EU who have come to Scotland to contribute and to work.  Many of them have subsequently made their lives here. They’re contributing to the prosperity, sustainability and wellbeing of villages and towns across the country.

And there’s a potential impact on the devolution settlement itself. The UK Government at the moment proposes to take powers in areas – such as farming, fishing and environment – which are devolved to the Scottish parliament. 

That’s what yesterday’s vote over legislative consent for the EU Withdrawal Bill was about. Four out of five parties in the Scottish Parliament agree that Scotland must retain the ability to ensure that policies and frameworks in those areas meet the needs of people across Scotland.

The threat posed by Brexit is one of the reasons why the Scottish Government has appointed a Council of Rural Advisers – whose final report is due soon. We want to ensure that the very specific consequences of Brexit for rural communities are identified and addressed.

It’s also why we will shortly be publishing a paper setting out our proposals – and seeking views – on ensuring a smooth transition in farming support as the UK leaves the EU.

And it’s the threat of Brexit why – more generally – the Scottish Government is arguing for the UK as a whole to remain in the single market and the customs union. It is the obvious democratic compromise, following a very narrow referendum result. And all of the modelling shows it is the least damaging outcome for communities across the country.

However, the other point I want to make about Brexit – and this is the main theme of my speech as a whole – is that in many ways it simply emphasises the importance of everything we are doing to promote economic growth. Scotland – including rural Scotland – has huge economic strengths and even greater economic potential. Brexit makes it even more important than ever that we build on those strengths and realise that potential.

In the last year the Scottish Government has set out repeatedly our belief and ambition that Scotland should position itself at the forefront of economic progress and technological change; we should aspire as a country to be the inventor, designer and manufacturer of the technologies and products that will shape the world in the future – not just a country which uses these products that are designed elsewhere.

That’s a vision which is as relevant to rural Scotland as it is to our city centres. I suspect you will get a sense of that from the OECD presentation later on today – the OECD’s work has highlighted how developments such as driverless cars, decentralised energy systems and cloud computing will in time have a huge impact on rural areas.

But you can also get a sense of it just from looking around this campus, and thinking about the work led by universities and colleges here –  for example the dairy research and innovation centre conducts work of international importance; the carbon research centre focusses on issues such as sustainable development in rural areas, and new forms of renewable energy.

There are centres of excellence like this in every part of Scotland. So we want to enhance this country’s – already pretty extraordinary – capabilities for innovation in the future.

That’s why the Scottish Government took the decision to substantially increase the support for business research and development – we know how fundamental that is for companies to innovate.

We are supporting sectors of the economy where Scotland has major opportunities – for example by establishing a national manufacturing institute, investing in sectors such as the creative industries; and by setting up innovation centres in areas such as aquaculture, biotechnology and data analysis. And we are committed to establishing a new national investment bank to support ambitious companies and to invest in important infrastructure projects.

We’re supporting businesses in other ways, too. For example we are capping business rate increases at the level of the consumer price index, rather than the retail price index. That sounds technical, but it has a real impact – this year, it will save businesses a total of £24 million.

We’ve reformed the planning system. Now, planning always involves a balance between environmental concerns and economic development. Our planning bill aims to strike that balance, and to ensure that decisions are made quickly and efficiently.  That’s important everywhere, but it’s maybe especially important for rural areas – where enabling sustainable development is such a crucial consideration. 

We’re also reforming the Enterprise and Skills support system – one outcome of that is the new south of Scotland agency. It’s maybe also worth saying that as part of our approach to actively supporting businesses, we do what we can when firms and factories get into difficulty – you saw that recently in relation to BiFab in Fife.

As you know, there is currently a consultation about the proposed closure of the Pinneys plant down in Annan. I cannot guarantee a successful resolution there – what I can guarantee, is that the Scottish government will work as closely as we can with the company, the unions and the workforce to find a solution that protects the workforce and protects the local communities.

And we are investing in Scotland’s connectivity – our transport links and digital infrastructure. Again, that brings benefits to all parts of the country, but is maybe especially important in rural communities, where the distance to your major markets can be a barrier to success.

In the north of the country, the dualling of the A9 is the biggest road project of this generation. We are also committed to dualling the A96 between Inverness and Aberdeen.

Here in the south of Scotland, we have made significant improvements to the A75 and A77 over the last decade. We are currently investing £35 million in the Maybole bypass – which is a really important improvement to the road between Stranraer and Ayr.

Humza Yousaf – the Minister for Transport and the Islands – convened a transport summit for the south west earlier this year. A study will begin soon on further improvements for the region. And I know that Transport Scotland held a workshop in Dumfries a couple of weeks ago, about their capital investment strategy for the railways.

And of course, as well as good transport infrastructure, good digital infrastructure is also becoming a necessity for businesses and households.

I remember being in this hall for a public discussion with the Cabinet just over three years ago. And just about the last question of the night referred to the inequality between cities and rural areas when it comes to broadband access.

Things are still not perfect but in the period since then, we have made progress in closing that divide between rural and urban areas. The Digital Scotland Superfast Broadband scheme means that more than 95% of properties in Scotland now have access to fibre broadband.

You can see some of the outcomes here in Dumfries. In 2014, 22% of premises in Dumfries and Galloway had access to fibre broadband. That figure today is 93%. That is significant progress but in our view 93% still isn’t enough. We also know that for some people at present, access to fibre doesn’t necessarily mean that they are getting superfast speeds.

That’s why we are committing £600 million to the R100 programme – ensuring that by the end of 2021, every property, whether a business or household in Scotland, has access to broadband at speeds of at least 30 megabits per second. It’s a commitment that goes far beyond any other part of the UK. And it is an essential part of our commitment to supporting economic growth in rural and remote areas as well as the central belt of the country.

The final point I want to make is that in doing this, we want to ensure that we work with rural communities – that your views and perspectives directly shape national policy.

That’s why this National Economic Forum now meets in different parts of the country.

It is also why the Scottish Government established a rural parliament, which meets every two years.  After previous gatherings in Oban and Brechin, it’s appropriate that this year’s parliament – which will probably be attended by more than 400 people – is coming to the south west. It will be held in Stranraer in November.

And the importance of recognising rural needs is also why we are establishing a new south of Scotland development agency. The agency should be in place by 2020.

Before then – while we wait for the legislation establishing it to be passed – we have set up the South of Scotland Economic Partnership. The partnership is being backed by £10 million of additional funding. I am delighted that Russell Griggs, the partnership’s chair, is here today.

Russell is I know half way through a tour of communities in the south of Scotland, hearing views on exactly how the partnership should work. There are 11 more events to go – the next one is in Newton Stewart this evening. He is also receiving written submissions – I know he’s been struck by the thoughtfulness and detail of many of the contributions, not solely by organisations and businesses, but by individuals as well.

And two things already seem clear. The first is that there’s a real desire for the new agency to be planned, designed and delivered here in the south of Scotland. It must be an agency of the south of Scotland, as well as being an agency for the south of Scotland.

And the second thing is that the new partnership is a major opportunity. If we get it right – and I am determined we will – then it will make an important contribution to growth in the south of Scotland, and to securing the sustainability of rural communities.

As I said at the start of my remarks, that is something which is important – not just to the rural parts of our country, but to everyone in Scotland. We will not succeed as a nation unless our rural communities can also succeed and flourish. By driving the rural economy forward, we will drive the whole of Scotland forward.

By investing in innovation and infrastructure; by building on the strengths our rural communities already possess; and by providing the right forms of support for business; we can help rural communities – not simply to overcome challenges such as Brexit, but to seize new opportunities as well.

If today’s discussions can play even a small part in helping us to do that, they will be highly worthwhile. So thanks to all of you for being here and being part of this discussion.

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