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The next item of business is a statement by Tom Arthur on community wealth building progress and future ambition. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.
14:43
I am pleased to have the opportunity to update the Parliament on the progress that is being made in advancing the community wealth building model of economic development across Scotland. I will also set out the Scottish Government’s future ambitions for CWB.
At the core of the intention of community wealth building is the desire to retain more wealth in local areas by creating and sustaining more jobs, growing local firms and enabling local communities to own more assets. I do not think that it is presumptuous on my part to assume that all members share those aims.
By working in partnership with businesses and communities, Scotland’s public sector can deliver CWB policies by enabling more small, medium-sized and third sector enterprises to win public sector contracts; encouraging the adoption of fair work practices by more employers; placing communities at the centre of dialogue about the ownership and use of public sector assets; supporting the growth of local businesses and new forms of inclusive and democratic business models; and attracting new ethical investment and encouraging growth in the lending market. The areas of impact that I have highlighted mirror the five pillars of the community wealth building model: spend, workforce, land and property, finance and inclusive business models.
I have travelled around Scotland to meet those who are involved in CWB activity across those five pillars. For example, I visited Mossgiel organic farm in East Ayrshire, which was awarded a contract by the local authority to supply milk to schools in the council area.
Public procurement in Scotland contributes hugely to community wealth building ambitions. The most recent figures, from the financial year 2021-22, indicate that, of £16 billion of public procurement spend, £8.9 billion was spent with businesses with a Scottish postcode, and a high proportion of that spend was with Scottish small and medium-sized enterprises. I know that the Federation of Small Businesses in Scotland is positive about the potential of CWB. Indeed, CWB is an example of the new deal for business in action.
Public procurement rules apply when the value of a contract exceeds a certain threshold. Respondents to the community wealth building bill consultation called for those thresholds to be reviewed. My colleague, the Minister for Public Finance, confirmed before Christmas that the Scottish Government will look again at those thresholds, and more detail on that will follow in due course.
On the workforce pillar, many construction firms, for example, are working to develop fair and sustainable job outcomes for local people. One example involves Balfour Beatty working in partnership with the Civil Engineering Contractors Association Scotland and the University of the Highlands and Islands to promote CECA’s academy programme, which offers local people the opportunity to upskill in civil engineering. Through our fair work first approach, the Scottish Government took action in 2023 by introducing a requirement for public sector grant recipients to pay at least the real living wage to all workers and to provide appropriate channels for an effective workers’ voice, such as trade union recognition.
Turning to the land and property pillar, the Community Empowerment (Scotland) Act 2015 provided a framework to promote and encourage community empowerment and participation. In July 2022, I launched a review of the act, which focused on legislation that enhances community participation, community control of public assets and community planning. The two-year review recently concluded and a main report will comment on the act as a whole, while two further reports will provide findings on participation requests, which enable a legal route for community organisations to be involved in local service delivery and community asset transfers. Those reports will be published in the early part of this year.
On supporting new inclusive business models to grow, Social Security Scotland is an active member of Dundee City Council’s public sector anchors network and has developed its corporate procurement strategy to reflect CWB principles. It has set out how it will actively build supply chain resilience by working with supported businesses, small and medium-sized enterprises and the third sector.
I have seen how CWB’s influence has shaped local health services in Dundee. Newfield medical centre is one of the first general practitioner practices—if not the first—to run as a co-op in the UK. The team there successfully took over the practice from the local health board in 2022 and it has seen significant growth since then, including profit that has been redistributed, leading to increased employment and the setting up of successful projects that benefit the community.
Finally, exciting new developments in finance are assisting new community wealth building projects to thrive. Linlithgow Community Development Trust works with local community sports and meeting facilities to support renewable energy. The trust used community bonds to secure the necessary finance for local people to undertake a pilot renewable energy project with a local golf club.
Communities are at the heart of the Scottish Government’s renewable energy ambitions, and we are committed to working with industry to ensure that the delivery of renewable energy comes with benefits for people in Scotland, including shared ownership and community benefit opportunities. Scotland has made good progress with that approach. Our national community benefits register indicates that more than £30 million-worth of benefits have been offered to communities across Scotland in the past 12 months alone.
I turn to the Scottish Government’s future ambitions for CWB in Scotland. In order to learn from international experience, I was given the privilege of visiting Cleveland, Ohio, where CWB has its roots. Cleveland, like Preston in the north of England, where CWB was adopted early in the UK context, suffered from rapid deindustrialisation and its aftermath of high levels of unemployment, depopulation, poverty and deprivation. I witnessed a form of economically-driven rebirth in Cleveland through the formation of new co-operative businesses contracting with large local anchor organisations in the health sector and other areas. Cleveland and Preston continue to experience similar problems, as do many Scottish towns and cities.
This Government is ambitious for all of Scotland’s communities. We will continue to invest heavily to strengthen the hand of our villages, towns, cities and regions, while acting to ensure that the social security system provides a robust safety net for those who experience poverty and hardship.
In particular, the Government is focused on ridding Scotland of child poverty and all the harm that it can cause throughout a person’s life. Community wealth building, as both a strategic and practical model of economic development, provides a new opportunity for us to create a space between a supportive and progressive welfare state and a thriving new economy, spearheaded by innovative new sectors and growth clusters developing across Scotland.
Some proponents of community wealth building use the phrase “Free distribution, not redistribution”—meaning achievement of an increase in assets owned or income earned by communities or local businesses and households, respectively. If that can be achieved, it could lead to a reduction in our reliance on social security. However, change like that will always take time. While we must invest in a person-centred social security system now and seek to grow the dynamic and progressive economy of the future, the community wealth building model can help to knit together opportunity and need by forming part of the necessary connection between economic development, led by the public sector, and those communities where people are looking for new opportunities to build and maintain household and collective wealth.
The CWB approach offers something new in the Scottish context: a space for strategic and place-focused brokerage and a conversation focused squarely on economic development and fair and responsible growth.
Given the long history of relevant contributory work in Scotland, I can accept that there will be different views of what community wealth building is or should be. It is a clear economic policy. Public sector investment in health, housing, energy and many other areas is relevant. However, the aim of CWB is to ensure maximisation of the economic agency of all investment power together. Not all of the examples that I mentioned earlier are born of discrete community wealth building policies or actions plans; rather, they are clearly relevant activity to achieving community wealth building ambitions.
People who ask what community wealth building is will get two answers from me. The first is that it is an operable place-focused model of economic development, the pillars of which can guide the use of all of the money at the disposal of the public sector. The second answer is that, in activity terms, relevant actions are wide and varied. However, at CWB’s core is the idea that every public pound spent has the potential to drive economic growth and to realise fairness and prosperity.
The current programme for government includes a commitment to introduce primary legislation on community wealth building in this parliamentary year. Work on that is in train, informed by a public consultation conducted in 2023. The programme for government also noted that a local government-led community wealth building “practice network” should be created. That network is now in place, and is proving effective in facilitating engagement. Among its key roles will be working with the Scottish Government on how we can better measure the practical impact of community wealth building across Scotland.
Members will understand that parliamentary process must be respected, and I cannot answer questions today on potential provisions in the forthcoming legislation. However, I look forward to working with colleagues when the legislation is introduced. My door will always be open for discussions on how we can make community wealth building as impactful as possible in driving economic growth that is fair, environmentally responsible and sustainable.
Community wealth building has a long history of work aimed at ensuring that as much wealth as possible can be retained in communities and that the damage caused by rapid removal of economic activity in many of our industrial communities is addressed. In community wealth building, we have a very practical policy approach for all of Scotland’s public sector to pursue in partnership with business, the third sector and communities—an approach that can, in a more consistent way, bring all relevant activity together to revitalise an approach to local and regional economic development that is focused on real places and on delivering for people and communities.
I thank the minister for advance sight of his statement.
The concept of community wealth building is widely supported in relation to its potential benefits to local economies. A bit like the term “wellbeing economy”, however, “community wealth building” means different things to different people. We might, therefore, have hoped for more clarity from the Government today as to what exactly it is planning to do in this space. Instead, we have heard a statement that was very long on words but woefully short on any practical proposals or detail.
In an effort to get some detail, I will ask three specific questions. First, the minister said in his statement that this
“is a clear economic policy”,
but he went on to say that people who asked what community wealth building is would “get two answers from” him. Well, what is the answer? Will economic growth be at the heart of what the Government is trying to do through community wealth building?
Secondly, ever since the programme for government was published, in September, we have been waiting for details of what the forthcoming CWB bill will say. We have heard no more information today about what will be in the bill. We are waiting, and stakeholders are waiting. Time is running out in the current parliamentary year, so when will we learn that?
Thirdly, in relation to public procurement, we are—again—waiting to hear from the Government when it will decide on the review of thresholds, which businesses are also waiting for—in particular, small businesses that want to win public sector contracts. When will that happen?
I thank Mr Fraser for his questions and his interest in the topic.
On the timeline for the bill, it is a matter of respecting parliamentary protocol and procedure. The commitment in the PFG was to introduce the bill in this parliamentary year, which is what we intend to achieve. Again, due to protocol and procedure, I cannot divulge the contents of the bill, but I refer Murdo Fraser to the consultation and to the analysis that was published, which set out very clearly the Government’s thinking on the bill at the time when the consultation was run.
I referred to economic growth in my speech, and it is fundamental. We want to see more of the wealth that is generated in communities being retained in communities.
To define what community wealth building is, I note that it is about greater retention of wealth in local communities and greater local control being exercised over that wealth. That supports resilience, which, fundamentally, is what we seek to achieve through community wealth building.
The work builds on a lot of existing work, including in public procurement. As my colleague Ivan McKee said before Christmas, and as I alluded, Government ministers will shortly set out what the process will be for consideration of the existing thresholds under procurement legislation. The Parliament will be kept up to date on that. Once the bill is before Parliament, I will be more than happy to engage with members on the detail.
I thank the minister for prior sight of the statement.
Although I found the statement to be interesting in terms of context and examples, it is short of practical steps on how the Scottish Government will seek to implement community wealth building.
I agree with him about public sector procurement and SMEs. However, the reality is that, since 2016-17, the proportion of Scottish public sector spending with micro-operators has fallen from 7 per cent to 4.7 per cent. What practical assistance will be provided to SMEs to bid for public contracts and ensure that they win them? Likewise, what capital will be made available to grow the sorts of organisations that the minister is talking about? Will that become a core mission of Scottish Enterprise and the Scottish National Investment Bank?
I agree that growing the number of successful microbusinesses is vital. Such businesses are exactly the type that we want to thrive in our local communities, because they tend to be rooted in their communities, procure goods and services from other businesses in their communities and recruit from within their communities. That is how public sector procurement can drive local growth and retention of local wealth. Local businesses result in local control being exercised over those things.
In the context of public procurement, we have existing frameworks of support, whether through the supplier development programme, the regular engagement that takes place or the procurement centres of excellence. Those all contribute to facilitating participation by an ever-increasing range of suppliers in procurement. However, I recognise that there is more that we can do, and we have an opportunity to consider that specifically through the work of the review of thresholds.
More broadly, a lot of positive work is going on in our enterprise agencies to support community wealth building, whether that be the work of Co-operative Development Scotland—which is part of Scottish Enterprise—of Highlands and Islands Enterprise or of South of Scotland Enterprise. I would be more than happy to share with Daniel Johnson the excellent work that South of Scotland Enterprise is doing around community wealth building, which I think he would find quite interesting.
How is the Scottish Government supporting local areas to use community wealth building as a golden thread that runs through everything, including planning, economic development, procurement, further education, local development and community place plans?
How is it ensuring that community wealth building is a practical place-focused model that sees a shift in the balance of power to communities, thereby enabling a greater stake for how local economies function for the benefit of all?
I thank the minister for highlighting the excellent example of partnership working between Mossgiel farm and East Ayrshire Council in my constituency, which demonstrates what is possible when we look at public procurement in a different way. That has been operating for a long time in East Ayrshire, where local procurement for school meals proves what is the art of the possible. I thank the minister for highlighting that.
Before I call the minister, I remind members that there is a lot of interest in the subject and that we need slightly briefer questions.
There was a huge amount in Elena Whitham’s question. I thank her for what she has set out and I recognise her long-standing interest in the subject, particularly in respect of her constituency.
Regarding some of the work that has been undertaken, the member will be familiar with the £3 million that was allocated as part of the Ayrshire growth deal. Five pilot areas across Scotland were also supported, a practitioners network was set up and funding was provided to support the development of best practice guidance. The Scottish Government has undertaken a range of activity, in partnership with other organisations and local government, to increase awareness and understanding of community wealth building and to help practitioners to identify opportunities to implement that. We will seek to build on and accelerate that work, and have committed to bringing forward legislation that will have a role to play.
Ms Whitham’s key point is the need for community wealth building to be seen as a golden thread that runs through all our work. It builds on a lot of mature work across a number of discrete areas, bringing a strategic coherence that can really help to effect economic change at local and regional levels.
We also need a little more brevity in responses.
Local businesses are vital to generating community wealth. Unfortunately, confidence among Scotland’s small businesses has fallen to its lowest level since the height of the pandemic. Both the UK Labour Government and the Scottish National Party Scottish Government have presided over high-tax regimes by, respectively, imposing hikes in national insurance and by refusing to fully pass on business rates relief.
I remind the minister that Governments do not create growth, which comes from businesses. The latest double whammy of high taxes—
Please ask a question.
—from the Scottish and UK Governments means that the pillars mentioned by the minister are already crumbling.
Please ask a question.
Does the minister agree that his Government has stifled Scotland’s economic growth?
Growth comes from business but also from social and sectoral partnership and from the widest possible engagement. The 1980s’ hyperlibertarian approach that was implicit in the member’s comments is completely out of date and misses the point. We are talking about a constructive partnership between business, the third sector and Government. That is what will drive and sustain the local and regional economic growth from which everyone can benefit.
One of the organisations that the minister has engaged with in recent years is the north Edinburgh response and recovery—or R2—group, in my constituency, which is a remarkable coalition that was originally established to respond to the pandemic, but has since been engaged in sharing knowledge and in generating lasting and positive change. I highlighted that group to the minister and, through that engagement, secured two paid staff members to help the organisation with community wealth building in north Edinburgh.
Will the minister say what reflections he and his officials have on the almost organic community wealth building that is happening in north Edinburgh, and will he explain how local representatives can engage constructively with the Government to achieve practical change and investment in their communities?
Before I call the minister, I remind members that I have now made three appeals for brief questions. We need a bit more brevity, or members who want to ask questions will not have an opportunity to do so.
In the interest of brevity, I thank Mr Macpherson for his previous engagement and recognise the sterling work that has taken place in north Edinburgh. His key point is that some activity is developing organically, so one of the key roles of Government is to support and facilitate that activity. We recognise the need to drive forward national implementation while also allowing for local flexibility.
The minister did not mention social housing in his statement. It is important to note that this year marks half a century of community-based housing associations in Scotland. Just last year, one of the first of those, Reidvale Housing Association, had to fight off a takeover. Will the minister reflect on how we can strengthen the role of community-based housing associations as generators and agents of community wealth building in Scotland, perhaps by making amendments to the Housing (Scotland) Bill?
Mr Sweeney makes an excellent point. I had a very constructive exchange on that during a visit in recent years to New Gorbals Housing Association. I think that my schedule includes some engagements to mark that 50th anniversary this year.
I absolutely recognise the crucial role that community-based housing associations have played and will continue to play in promoting community wealth building. I am happy to engage with the member on that.
Building capacity at the local level often presents a challenge as enterprises struggle to meet the scale that is required for larger contracts. Can the minister say more about how the Scottish Government is continuing to encourage and create opportunities for local procurement in a way that is achievable for local businesses, social enterprises and community groups?
Yes. We work very closely with our partners in procurement across the public sector. Local authorities are centres of expertise for procurement and we have a strong legislative framework for procurement. As I touched on in my statement, we will be looking at the thresholds for regulated procurement as well.
Much of what is needed to grow community wealth and make sure that people have a stake in Scotland’s prosperity does not require primary legislation, so much action is needed alongside the proposed bill. How and when will the minister enact the recommendations in the report “Developing Scotland’s Economy: Increasing The Role Of Inclusive And Democratic Business Models”? How will he ensure that communities that provide the land and coastline where wind turbines, pylons and other pieces of green infrastructure are installed see material benefit from that, including lower energy bills?
On the point about renewable energy and ensuring that our communities can benefit fully from that revolution, the member will be aware of the work on the review of the good practice guidelines. She will understand the reservations to the UK Government in that policy area, but we want to work constructively to maximise opportunities for community benefit.
On non-legislative interventions, she is absolutely correct. This involves policy and practice as well as legislative aspects.
On the inclusive and democratic business models review, we have already committed to taking forward action for the economic democracy group, and I hope to be in a position to update Parliament shortly on how we are taking that work forward.
The community benefit from the energy infrastructure developments that will come in the next few years could be significant for local communities, particularly in the Highlands. I favour investment in housing, roads and infrastructure rather than just in community facilities, because that could leave a lasting legacy for those areas. Does the minister agree with that approach?
I heard Willie Rennie make that point just before the recess. The point about a lasting legacy is important. Current spend can, of course, be beneficial, but if, as a legacy, communities have assets and control of wealth and capital that they can then grow to generate revenue, that will create real community empowerment. Rather than just having the opportunity to engage or be consulted, they will have economic empowerment through the control of assets that can generate revenue, and they, as a community, can then determine how best to use that. That is the real long-term vision and hope that community wealth building, as a model, offers. I absolutely agree with Willie Rennie on the need to ensure that community benefits ensure a lasting legacy.
The Scottish Government has made strides in promoting and increasing fair work employment across Scotland, and it is vital that we keep up momentum and ensure that those who are seeking fulfilling and fair work in Scottish communities can find it. Will the minister elaborate on how the community wealth building approach can feed into the development of fair and resilient local labour markets?
Fair work is one of the pillars of community wealth building. Although employment law is reserved, we have sought over a number of years to use our convening power and indeed conditionality around public sector grants to drive fair work forward. With regard to the current UK Government’s agenda of making work pay and, specifically, the Employment Rights Bill, we have been engaging closely with the UK Government and see this as an opportunity to put a lot of fair work first principles on a statutory footing.
The real opportunity that community wealth building allows for is the creation of more resilient, successful and prosperous local labour markets, which creates more opportunities for high-paid jobs. The other aspect is that increasing the share of the economy that is characterised by inclusive and demographic business models such as social enterprises, co-ops and employee-owned businesses creates a significant opportunity for worker empowerment as well.
In 2015, Strathclyde Pension Fund invested £15 million in an investment vehicle aimed at growing the Scottish life sciences sector. Given the huge wealth that is held in Scottish local government pension funds, will the Government work with SNIB, the enterprise agencies and local authority pension fund trustees to see how they can invest in emerging Scottish industries and still deliver a positive return for their pension fund members?
That is an excellent question on a substantive issue, and we absolutely want to ensure that all our streams of financing are aligned with community wealth building principles. That will be about the significant amount of capital required for some of the cutting-edge industries, but it will also be an opportunity to ensure that, when assets are created, local ownership and local control can be exercised. That can empower communities and give them a revenue-generating asset that allows them to invest in projects that are important for their particular area.
It is important that everyone in society benefits from economic growth, and I welcome the Scottish Government’s commitment to a sustainable and inclusive economic model. Can the minister say any more about how community wealth building initiatives will work to address regional wealth inequalities, including rural wealth inequalities, in areas such as Dumfries and Galloway?
I draw the member’s attention to the work of South of Scotland Enterprise on community wealth building. Community wealth building has seen some of its most enthusiastic adoption in our rural communities, including in the south of Scotland and in the west Highlands. That can partly be explained by the long legacy of land reform, which has created a visceral cultural memory of the vital importance of the question of ownership in relation to the economic resilience and economic equity of a particular area. That is what community wealth building is about, fundamentally—the question of ownership, equity, control and fairness—so it is an absolutely vital policy intervention in promoting resilient regional economies and a more equitable and fairer Scotland.
South of Scotland Enterprise, HIE, Scottish Enterprise and the Scottish National Investment Bank—will the minister place a statutory duty on them and not simply on local councils to support co-operatives, worker-owned businesses and other democratic business models so that they can flourish in the Scottish economy?
I will not risk the wrath of the Presiding Officer—or the Minister for Parliamentary Business, for that matter—by getting into any matters pertaining to the legislation, but I advise the member to engage with the documentation that was published in relation to the consultation process. Subsequent to the bill being introduced in Parliament, I will be more than happy to engage with him on any specific interests that he has.
Community benefit at £5,000 per megawatt is all very well, and it is a benefit, but it is nowhere near as good as a share of community ownership.
When I was minister, we had a community ownership scheme that was supported by Local Energy Scotland, the community and renewable energy scheme—CARES—that empowered communities. Why is the Scottish Government, along with the UK Government—which has some of the requisite legislative powers—Great British Energy and SNIB, not developing a community ownership scheme?
I put it to the minister that, if the Scottish Government does not do that, the objections to wind farm applications in which communities have no stake of ownership might be overwhelming in the future.
The member raises the question of ownership in relation to community benefit. Community benefit of course brings considerable value and, by definition, benefit, but community ownership is a game changer for areas. I agree that, in relation to ensuring public consent for projects, it can have an important role to play, but fundamentally it can be game changing in regard to the economic power that becomes available for communities. I assure the member that I am engaging closely with my ministerial counterparts who lead on energy policy to ensure that we can work constructively to maximise opportunities for ownership as we progress through the renewable energy revolution.
That concludes this item of business.
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