Q&A with economy secretary Fiona Hyslop

Apart from coronavirus, what is the most significant thing that has happened within your portfolio over the last year?

The coronavirus pandemic has had a profound impact on economies across the world and will continue to shape global economic policies for years to come. In Scotland we face a second major challenge – the end of the EU Exit transition period on 31 December.

With barely five months to go we still do not know what position we will be in on 1 January 2021. What we do know is that even if a deal is agreed it will not come close to replacing the economic benefits of being an EU member state.

This uncertainty is a significant challenge to businesses and communities across Scotland and I am taking every possible measure to ensure Scotland is as prepared as it can be for the challenges ahead, increase our resilience and strengthen the foundations of our economy.

With so many businesses having to close during the pandemic, are you worried that many hospitality, retail and tourism businesses may not survive the coming months?

Our hospitality, retail and tourism businesses are essential to the Scottish economy and we will do everything we can to support them. The coming months will be some of the most difficult these sectors have ever experienced, but we are determined that they will survive and be able to thrive again.

The Scottish Government has taken immediate steps to address the financial impact of COVID-19 – including a £320m support package specifically aimed at the tourism and hospitality sector – and I will continue to urge the UK Government to use their fiscal levers, such as significant borrowing powers, to back businesses with major investment.

Parts of the culture sector, such as theatre and live music venues, are going to be among the last to have lockdown lifted. What do you see as the long-term effect on the live arts sector in Scotland and what help can the Scottish Government give to revive it?

Physical distancing measures are vital to ensuring that we do not see a second wave of coronavirus infections, but we recognise the difficulties this presents for those in performing arts. That is why ambitious action to support the future of these organisations, as well as our wider cultural infrastructure, is key.

In Scotland we reacted quickly to help culture and the creative industries from the earliest days of this pandemic. The immediate COVID-19 crisis funding across culture for freelancers and organisations of almost £20m was followed by a further £10m fund to support Scotland’s performing arts venues and a £2.2m fund to support grassroots music venues. Once we have clarity on how UK-wide grants and loans will work, the Scottish Government will establish the best means to provide additional support to our theatres and performing arts venues and the talented freelancers who work with them.

Is a jobs guarantee for young people aged 16-25 actually possible in practice?

The idea of a Scottish Jobs Guarantee Scheme is an interesting one and forms part of the recommendations made by the Advisory Group on Economic Recovery in their report of 22 June.

We recognised the importance of this recommendation and acted quickly to ask Sandy Begby, chief transformation officer of Tesco Bank, to develop an industry led approach and to lead the development of a delivery plan. We expect Sandy to deliver an outline of that plan early in August and we will work with him and with local authorities to ensure that funding is aligned to deliver that plan.

What concrete steps is the Scottish Government taking to change from an economy that is based on GDP to a wellbeing economy and what will it look like to get there?

Scotland has had an ambition to create a strong, resilient wellbeing economy for some time. Indeed, and as reported in this magazine at the time, the First Minister set out her belief that wellbeing ‘is as fundamental as GDP’ at the Wellbeing Economic Alliance conference in January this year. 

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The economic landscape has since been severely affected by the COVID-19 outbreak meaning our focus has needed to change in these circumstances. Our approach began with responding to the immediate crisis, taking all necessary steps to protect lives, businesses, household incomes, as well as critical national infrastructure and services. We then started to help businesses reset to operate safely, before supporting them and their supply chains restart when deemed safe to do so in line with scientific and expert advice.

We established the Advisory Group on Economic Recovery to provide us with independent advice on effective economic return from the huge negative impact caused by the pandemic, ensuring that examining how Government policy can help the transition towards a greener, net-zero and wellbeing economy was at the heart of their remit.

Now we are in the process of examining all of the recommendations made in the Advisory report and will publish our response soon. This will set out the steps that we will be taking to drive forward our aim of embedding wellbeing at the centre of Scotland’s economy while continuing to work with and listen to the voices of businesses and stakeholders across the country.

Many of the green jobs that were predicted have not materialised and work has instead gone to companies abroad. How can we ensure that Scotland benefits from the move to a green economy?

We are doing everything within our existing, limited devolved powers to retain and boost job numbers and increase Scottish content in offshore wind projects, including efforts to support the local supply chain to improve its competitiveness in winning work for the construction phase of projects, in Scotland and elsewhere, and to maximise the economic impact of operations and maintenance activities over the lifetime of the project as well.

Ultimately, though, the key financial support mechanisms, such as the Contracts for Difference auction process, are controlled by UK ministers as they are overseen by powers currently reserved to the UK Government. It is the UK’s Contracts for Difference mechanism that is driving costs down, pushing risk down the supply chain and making it more difficult for domestic fabricators to compete against locations with much low labour costs and employment protection.

We will continue to call on the UK Government to amend the Contract for Difference auction process, currently solely awarded on price, to better reflect value added to the economy and the importance of supply chain sustainability.

Do you see the coronavirus epidemic as having exposed weaknesses in the Scottish economy, and if so, what needs to change?

There is little doubt the COVID-19 outbreak has had a huge negative impact on every aspect of the Scottish economy. It has, however, afforded us an opportunity to recover from this in a stronger, greener, smarter way. It has also demonstrated the strengths and versatility of Scottish businesses, from supporting some workforces to operating remotely to those businesses that repurposed their output to assist with the national effort against the pandemic.

The pandemic has highlighted the vital economic and social role performed by key workers but also exposed the unacceptable employment conditions suffered by too many. With employment law reserved there are obvious limits to Scottish Government action but we will continue to do everything within our power to embed fair work across the Scottish economy.

The Advisory Group on Economic Recovery report set out a range of findings about how all areas could work together to better effect. I am committed to working with businesses in this regard, developing a more action-focused and co-produced approach to economic recovery.

Although the group is only one of the mechanisms we are using to reshape our economy, our response to their report published in June – which looked at ways to create a robust, resilient wellbeing economy for Scotland – will set out how we intend to take action for economic reform.

Other than seeing friends and family, what did you miss most during lockdown?

Throughout lockdown the things I missed the most, other than seeing friends and families were being able to go out and watch live performances, whether that be dance, music or theatre!

If you had to spend lockdown with one other member of the cabinet, who would it be and why?

I can’t answer that, I’m far too diplomatic!