Seòmar agus comataidhean

Thanks for coming along this morning. It is probably true of any new organisation that you are basically asked to justify your existence. It is not unexpected; it is true of most such bodies. Given that Scottish taxpayers will be contributing to the cost of your organisation, it is legitimate that we ask such questions.

In a similar vein to the previous questions, there are things that concern me. First, I ask you to accept my assurance that, if you were a department of the Scottish Government, you would be frequently termed “the Scottish National Party OIM” or “a creature of the Scottish Government” and you would be derided regularly in the media for being such. That is just the nature of politics in Scotland. However, you are a department of the UK Government, and surely some people will raise questions about your independence and the nature of your advice. It is quite dispiriting to hear you say that you do not take sides—not that I am asking you to take my side, but, in some cases, surely there is a side to be taken, presumably on the basis of an open market.

Some of the background in relation to the DRS has been mentioned. If it seems as though the way in which the market operates is at the behest of one party to it, which is how it is perceived by many people, that hobbles that market. The DRS could be termed as being regulatory. Others could say that it is part of the market itself and that markets will have to adapt to climate change. However, that development was stymied because of the interests of one group, according to some people’s interpretations.

The extent to which you may be seen—I am sure wrongly—as being supportive of the UK Government, which you are a department of, perhaps undermines your purpose, as does the lack of powers. I appreciate the point that, if you got such powers, we would be duplicating powers that others already have, such as the CMA. How do you overcome that? That is one question.

Secondly, to go back to Alexander Stewart’s question, there is an appalling lack of proper data on economic and market conditions. That also undermines your powers. Even ONS-produced stuff is based on surveys; it is not based on data. Employment figures are based on surveys. Export figures are completely opaque in the UK. It is not possible to have a proper estimate of what exports go from Scotland or from other parts of the UK. Given how bad it is to hear of and read about the lack of data in England, I ask you to consider a situation whereby a future UK Government decided that it did not like something that a Scottish or Welsh Government did and was able to say, without any evidence, that that would affect the English market. If nobody knows the conditions of the English market, that cannot be tested.

There are three things that might undermine your role. The first is the lack of powers. The second is your attachment to the UK Government as a department of that Government. Presumably, the panel appointments were agreed by the UK Government, but I do not know that. The third is that you are being asked to work in an environment in which you have very poor data, which cannot be conducive to the efficient working of a market economy. What is your response to that?

Do you know whether there is a directive that says that those offices can only promote brand Scotland and cannot talk about global responsibility? Why are the two antithetical? Perhaps I am missing a directive that says that you can talk about one but not the other.

Good morning and happy Europe day. I should say that my view has always been that we should have stayed in the EU, as was true for the majority of people in Scotland. However, we are out now and the inquiry has heard from a number of witnesses about businesses in Scotland that have gone bust, ones which have stopped exporting altogether and ones which have been taken over—one example is a company that was taken over by a German company so that it could continue to export to the EU with slightly less friction. We have also heard that it is harder now for some companies in Scotland to export to the EU than it is for them to export to Turkey or Russia. Last week, we heard from a witness from Northern Ireland that the UK is rapidly becoming the most expensive place in the world in which to do business.

The work that you do in trying to boost exports brings benefits but, given all those points, it would be good to get an appreciation of what you think you can achieve. How much is structural and is not going to change? We have not seen a lot of the frictions bite yet, but we will do shortly. How much is structural and not susceptible to encouraging businesses to export more and will always mean that there is a competitive disadvantage? Conversely, how much of it is susceptible to doing things differently and improving what we do so that we can overcome those structural issues? I do not know whether that makes sense. I am just trying to get an idea of the extent of what is possible.

Thanks for that. Kate Foster, do you want to comment?

Was your point on expecting or looking forward to growth about growth in exporting to the EU, or just in general?

Before I turn to Mr Cameron, you made a point about capital investment. I imagine that is partly tied to the fact that previous exporters are now seeing diminishing returns because of the fall-off in trade with the EU and the willingness to invest more in capital is probably tied to their perception of what the returns might be.

You spoke about the growing trade with Indonesia and elsewhere. Is that happening because there used to be a differential between exporting to the EU and to those areas, which did not make it as attractive as just trading with the EU, but it has now become more attractive to trade with those countries, even if it has not become any cheaper?

I come to David—I will not try to pronounce your second name; I was not here when you were introduced and I will probably mispronounce it.

What is your perspective on what is now structural and built in, which companies from Scotland in particular will not overcome, and on what is susceptible to improvement through the work of some of the organisations that are here?

From what you said, the opportunities will, by and large, depend on how the EU defines what is in its interest. If it wants a particular sector or service, it might choose to make that easier because it is in its interest to do so. That seems to me to be logical. Is that right?

My earlier question was about what was structural and baked in, and what was susceptible to being changed. To my mind, we have to be a bit realistic about the labour market because it has never been tighter. Unemployment in Scotland is very low—below what economists call full employment, so it is even more full employment, if you like. It is also very low in the UK. We have to be frank about the fact that we do not have a big swathe of unfocused labour that can be deployed to those areas. The way to resolve it is to alleviate the pressures that have been brought in by Brexit, and allow more people to come in. Various organisations have made approaches to the UK Government to do that. In fact, we had that particular approach in Scotland before, under the fresh talent initiative, back in the 2000s, when there was a dispensation in Scotland in order to attract new talent.

Is there any sign of change? A report came out in the UK this week saying that, particularly in the care sector, and maybe in the agricultural sector, there are now chronic shortages. Are you aware of any sign of the UK Government changing its mind, for example, in relation to the wage barrier of £38,000 a year? Are you involved in lobbying for that?

I am conscious that, in the evidence that you have given us this morning, you have been consistent with each other and with what the committee has heard in this inquiry previously, except in one regard, which is the strength of feeling. In the past, we have heard from individual businesses that are said to have stopped exporting altogether to the EU. Some have gone bust—I am thinking particularly of a small business in Kintyre—and some have looked to be taken over. In one case, a business looked to be taken over by a German company, because that would make it easier to export to the EU. Businesses are pretty strident and negative about their experience. One company told us that it now finds it easier to export to Turkey, Russia and China than to the EU. That is an immediate drop-off. I think that the loss to the UK is meant to be at least £140 billion.

On the last point that Mr Williams raised about investment in the UK, we now hear that the City of London stock exchange has reduced in size significantly and that that is an on-going process.

I know that some of your organisations are the Scottish side of UK-wide organisations. I want to find out whether you have found a different experience in Scotland, or whether what you have just talked about is common throughout the UK. In Scotland, for many years, we have had a positive balance of payments—if there was such a thing—as we in Scotland export substantially more than the rest of the UK does, compared to what we import. I would be interested if you could say, from the point of view of your organisations, whether the things that we are experiencing, such as the mobility of labour, are common across the UK. Is that more pronounced in Scotland?

I will go to Mr Bain. Welcome, Mr Bain. I think that the last time we met was on “Newsnight” some years ago. It is nice to see you again. Would you like to come in on those points?