Seòmar agus comataidhean

Maggie Chapman is right. We need to dig a bit deeper and understand what is going on.

For example, energy is not a scenario where you have fossil-fuel production on one side and renewables on the other and where the two are completely different things that are completely divorced from one another. They are not. The businesses that are involved in one side are almost always involved in both. The newer businesses in renewables that are specifically focused on new technologies are not, but the legacy businesses that are in fossil fuels are transitioning. Pretty much every business in that sector is on that journey and is reskilling its workforce as it makes that move. A lot of the skills are transferable, and that can be done quickly. For example, a lot of the offshore and deep-water skills are transferable from oil and gas platforms to floating offshore wind. A lot of that will happen on the opportunities side as we move the production over to renewable energy.

There are other areas where there is a bigger gap in relation to the skills that you need to acquire to transfer. It is fair to say that this has got a huge profile. You turn the television or radio on and we are talking about those issues, particularly off the back of the 26th United Nations climate change conference of the parties—COP 26. People are aware of that when they are making decisions on where they want to have their career.

Ironically, one of the comments that you get from oil and gas production is that younger people in particular do not want to go and work for them anymore, which is perfectly understandable. They are focused on net zero, understand the climate emergency and want to be in the sectors of the future. There is that pull from the technology as things move over and that push from people at all stages in their careers who want to be in the sectors of the future.

Our job is to provide the bridge that allows them to have those training opportunities. However, it is not only us—the private sector businesses are also hugely invested in that. We work closely with them and they are doing a lot of the heavy lifting. Obviously, it is in their interests; however, from our point of view, it is also the right thing for them to do. Have we got everything absolutely perfect? Of course not. However, an awful lot is happening that is moving us increasingly in the right direction.

The whole construction sector works like that, so I do not think that there is anything specifically different about public sector procurement in that regard. Clearly, we must understand what the market price is when spending public money. That must be done as efficiently as possible. However, there are some very practical things that we can do and that we do do to break up large contracts into smaller buckets, and we should look for opportunities to do that. I am very supportive of allowing smaller businesses to bid for and win smaller pieces of work, rather than facing into bigger contracts that make it difficult for them.

There are other things that we can do and that we are very supportive of, including smaller businesses working together to bid for some of the larger contracts that cannot be broken up into smaller chunks.

I think that we agree on where we want to get to; it is a question of working through the details. It is not that we are saying price, price, price—far from it. As I have said, we are moving away from that, and I am keen to work with businesses to look for opportunities to move further in that direction.

That is a leading question. We are on a journey and significant progress has been made in a number of areas, which I will talk through. However, I recognise that there is more that we can do. I am relentless in my engagement with procurement officials in the Scottish Government and more widely across the public sector, and I am looking for every opportunity to move forward in all those areas.

The sustainable procurement requirements in legislation are important. They focus on making sure that there are community benefits and local aspects to procurement requirements. The situation is far from being that we will only go on price; a whole range of factors are considered. In fact, choosing a provider based only on price is not an option. In public sector procurement, you need to look at a wider range of factors including local issues, sustainability, small and medium-sized enterprises and other factors as part of the decision-making process. We have moved a long way from choosing only on price, but there is more to do.

You also need to remember that we do not have free rein in that area, for good reasons. We are part of the World Trade Organization’s agreement on Government procurement. When Scottish businesses try to export, they expect the deck not to be stacked against them in international markets and there are requirements for that. Likewise, we have to have an open, fair and transparent process for competition in procurement in Scotland. What we can do is set the criteria as best we can within the international rules that are available to support that.

Looking at the results, the percentage of public sector business that is won by SMEs in Scotland is far higher than that in the rest of the UK, and it is way in excess of the targets that are set by the European Union. SMEs in Scotland win a higher percentage of public sector contracts than their share of turnover in the whole economy. That is positive and we have managed to deliver on that in recent years. We keep a focus on that because we recognise how important it is.

The other aspect concerns the innovation side. We have done a lot of good work there, although we have a bit more to do. That involves ensuring that Scottish businesses that come forward with innovative products, they can present them, and they can get a market for them in the public sector in Scotland, with £13 billion of procurement spend being leveraged in to the health sector, digital solutions and elsewhere.

The work of CivTech has been phenomenal, and we have significantly upscaled its capacity. CivTech is an international exemplar of how to do things and is leading a lot of international work and showing people how to do this stuff. It has done that primarily in the areas of digital and tech, but it is expanding its capability much more broadly.

SHIP, the Scottish health and industry partnership group, is exploring innovative solutions from Scottish businesses, normally SMEs, for how we give market opportunities in the NHS that are more flexible in their purchasing requirements and specifications, so that something that is innovative and does not exactly fit our purchasing requirements still has a route to market.

The supply chain development programmes are focused on where we have significant public sector spend, where we can build strong indigenous supply chains and how we put both of those together and make things happen. It is not a matter of flicking a switch and stuff just happening; there is a huge amount of detailed work involving different sectors, businesses and opportunities, navigating the rules and ensuring that we are focused on delivering what we can.

We are making progress, but there is, absolutely, more to do, and I am always delighted to talk to businesses that have innovative products and services to understand how, in working with them, we can give them a foothold in Scottish public sector procurement.

As you will be aware, there are international rules around this stuff, such as the WTO’s bidding rules in the GPA. We cannot just make things up. We have done as much as we can within those rules to move things forward. We made a huge commitment with the supply chain development statements to ensure that the bidders that came forward made it very clear how they would use supply chains, and, as I have said and as I am sure Colin Smyth is aware, we have pushed the scoring criteria to the limit with regard to what we are able to do within international rules.

We can put in place requirements as best we can within the rules that sustainability, net zero and carbon footprint aspects are factored in, and we look to do so where possible. Increasingly, that is an area of focus, because it encourages local production and innovation. The construction sector is a prime example of that. The Construction Scotland Innovation Centre had worked on putting forward innovative solutions to the net zero-carbon challenges, and we want to use the levers of public sector procurement to facilitate such solutions as best we can.

Absolutely. That will happen as soon as we can do it. There are two partners involved. We have been keen to make progress on that for more than a year—we are not the ones who are taking time to get our ducks in a row. We are waiting for our partner to finalise the things that they need to finalise internally. As you will understand, they are slightly distracted by other matters at the moment.

Lots of bits of that need to be joined up. You will have heard from witnesses in some of your previous sessions that this is a moving target. It is notoriously difficult to predict skills shortages years in advance. We need closer alignment between the skills system and businesses.

The approach must be about having the right mix of practical skills that we know will be required and ensuring that young people go right through their whole careers with the ability to reskill and to understand the opportunities that are available and the support that they can get. As I said, we are spending more than £1 billion to support the skills system and an extra £500 million on top of that over the course of the session of Parliament to focus on that issue. I talk to businesses every day and skills is the number 1 issue, notwithstanding everything else that is going on.

We are hugely seized of the need to focus on that. As I said, it is about ensuring that the skills system is increasingly aligned with the needs of business. We have those clear routes of communication so that we can ensure that there is an understanding of what is required, but as I said, the system also needs to be very agile, because it is aiming at a moving target.

It is hugely concerning or, at least, unhelpful that we have those additional constraints. As you heard from wholesalers and retailers, they have worked hard to mitigate them and keep the shelves fully stocked. The sector and industry have absolutely done what they can to keep products flowing. We have worked with them on HGV driver issues and other matters to help support that.

There is a longer-term resilience issue and there is more that we can do to grow more food in Scotland to support that. Scotland is a world leader in technology such as vertical farming and exporting it at scale. That is an area of opportunity for us.

We are focused on joining all that up to build more resilience in the Scottish supply chain.

On the question whether there has been a shift towards more of this stuff happening with larger contractors, I do not have the evidence to hand to confirm whether that is accurate. However, if you look over the whole piece, you will see that, as I said earlier, the proportion of contracts going to SMEs in Scotland is far in excess of what it is in the rest of the UK or, indeed, the European targets in that respect, and SMEs get a higher percentage of their work through public sector procurement than larger businesses. That is the reality of the situation with regard to the numbers; from memory, I think that the figure is 46.5 or 47 per cent.

There will always be anecdotal stuff about this or that happening with a particular contract, and I am always keen to hear about those specific examples, because it helps to inform the overall picture. However, it is clear from the data that we in Scotland do much more of our procurement through SMEs than elsewhere, and that is increasingly the case.

The requirements that are in place ensure that purchasing is not done on price alone. A range of other factors such as local benefits, equality and sustainability is factored in. We can debate whether the balance is right, but this is not a black and white issue. Those factors are already in play and are part of the criteria.

As for the size of the contracts, we are, as I have said, looking for every opportunity to break the lots into smaller buckets to allow smaller businesses to bid for them. That is what we have been and are doing proactively. Sustainable procurement legislation is in place and has been for a number of years, and the annual report that comes out is very transparent about what we are doing, how we are doing it, whom we are working with and what is happening right across the public sector on this. The data are moving in the right direction, given the proportion of SMEs that are winning those contracts.

We have the intent, the actions and the results. Is there more that we can do? Absolutely. Are there anecdotal examples of things that can be improved? Yes, and there always will be. However, we are keen to address all that so that we continue to move in the right direction.

The pipeline aspect is hugely important in construction, and the sector has made great progress with it. I chair the construction leadership forum, and it has been a huge area of focus there. The Scottish Futures Trust has also been working hard on the matter with the Government. We have the pipeline in place that allows public sector organisations to put their future plans for construction work on the pipeline tool, and everybody can have a look to see what is coming up.

Stability of demand is very important in the construction sector. It allows contractors to know what work is there and plan accordingly, which means that the whole sector is not being moved from feast to famine, year on year, in terms of the work. The tool has come online in the past few months. It has been really effective and is making a huge difference. We are also working with leadership groups in other industries, which are looking at and learning from what the construction sector has done in order to do something similar. That is a great example of the initiatives that are being taken.

Was your other point around sustainability?