Tech the High Road: Ivan McKee on Scotland's digital future

When the name “Silicon Glen” was coined in the 1980s it denoted a tech sector heralded as the future of the Scottish economy, a transatlantic twin to its sunnier – and far more successful – Californian counterpart.

Yet by the mid-2000s, many of the multinationals which first made up the burgeoning scene were beginning to flit, taking thousands of jobs with them, despite an abundance of indigenous talent and the global success achieved by some high-profile Scottish startups.

It’s a situation which Ivan McKee, the enterprise and business minister, is keen to avoid repeating. McKee is charged with helping pilot Scotland’s digital strategy, a somewhat inchoate plan to boost the economy and develop a “tech ecosystem”. The job of that ecosystem, at least in part, is to ensure that – to borrow Samuel Beckett’s famous idea – fledging firms can learn to “fail better”.

“It’s about having enough activity in the tech sector so that when businesses fail – for the right reasons – it’s a good thing,” McKee says, “because the entrepreneur recycles themself, their money gets recycled, they start up a new business and the whole system learns from it.

“If you’ve got a lot of isolated businesses that start up and then fail with nowhere to go, then that’s not the ideal scenario. If you’ve got enough critical mass…then it gives you a real strength.”  

Published last year, the digital strategy, A Changing Nation, is designed to put Scotland at the forefront of global technological change. It seeks to make all businesses digital businesses while increasing the digital offering of government. 

At the same time, the strategy promotes the rollout of ethical digital transformation and the idea that no one is “left behind” in the move away from the analogue world. 

The idea of a technology ecosystem was put forward by Mark Logan, a professor of computer science, who produced a report for the Scottish Government in 2020. Logan is also a former executive with Skyscanner, the online travel business which was Scotland’s first “unicorn” – the industry term for a tech company valued at more than $1 billion. 

McKee says the government’s strategy is predicated on creating Scotland’s own “unicorns” rather than simply using tax breaks to entice those from elsewhere.

“You have that in parallel with big businesses coming in and you need to get the balance right,” he says. “The Irish model was much more built on bringing big businesses in and hoping that would create an atmosphere where small businesses start up. We’re approaching it from both directions.” 

The Scottish Government has been criticised in the past for courting firms such as Amazon, the tech giant which pays limited amounts of corporation tax in the UK.

And yet there’s much to be proud of domestically, with global firms such as Skyscanner, Rockstar North (makers of the hugely successful Grand Theft Auto video game series) and a growing FinTech (financial technology) sector. 

McKee knows the danger of relying too heavily on inward investment and those huge global players who can cut and run on a whim.

“I worked in Silicon Glen – as it then was – for years. A lot of those businesses came here in the 50s and 60s because Scotland was one of the cheapest places in Europe and then when eastern Europe opened up, they all moved there… It was all about lower labour costs.”
McKee says the new strategy is about “stickability”.

“The strategy is very much about what our universities are good at because they’re here forever and we’re building on top of that so that businesses want to be here… It gives you much more longevity.

“[Silicon Glen] was of its time and was done for the right reasons. The Scottish economy got a huge boost from it at the time…but we didn’t have that stickability, that longevity that’s meant that ultimately, most of it has moved on.” 

McKee is far from being one of the Scottish Government’s most high-profile members, but recently found himself thrust into the media spotlight to answer questions on the ongoing ferry fiasco and the buyout of the Ferguson Marine shipyard. 

During an update given to Holyrood, opposition MSPs accused ministers of “institutional corruption on a grand scale” amid an apparent absence of a paper trail relating to the contracts. 

Unlike most of his Cabinet colleagues, however, McKee had a successful career in the private sector before entering politics. Over the years, he worked for various manufacturing businesses in different roles, from engineering to more client-facing and sales positions.

In an interview with Holyrood last year, he spoke about how he had bought and sold a number of businesses in deals which he described as “some more successful than others”.
Is he concerned about the reputational damage being caused to the government and the wider impact that could have on attracting investment?

“We would like to be in a better place on Ferguson’s – there have been challenges there and that’s no secret. I think we’re on a good track now, both to get the ferries delivered and to get the business competitive to compete and win new business.

“It’s the last commercial shipyard in Scotland. It’s a sector that has really taken some big knocks over decades. We took the step to make sure it was kept going – that was the right thing to do but it was never going to be an easy road.” 

Amid the ferry fiasco and the ongoing industrial dispute at ScotRail, is he worried about the knock-on impact for another sector of the Scottish economy he’s responsible for – tourism?
“The sector has had a tough old time, and I engage with them regularly. They were hardest hit by Covid restrictions, and international travel is only now getting back to where it was before. 

“This is clearly another situation which doesn’t help the sector. I’m very aware of it and we’re working with the sector to see what we can do to help, working in partnership with them to address some of those challenges.”

McKee knows that for Scotland’s digital strategy to succeed, the country needs a skilled and flexible workforce ready to meet the challenges of tomorrow. Since the start of the pandemic, that flexibility has increasingly meant remote and hybrid working, with many of the Scottish Government’s own civil servants still not back in the office more than two years on from the first appearance of Covid-19.

Yet unlike south of the border, where we are led to believe there is considerable unease in government about the numbers of people continuing to work remotely, McKee is relaxed about what the future might hold. 

“If you think back to the early days of Covid – only two years ago – you wouldn’t have predicted all the things that have happened since,” he says. “Trying to predict where remote working is going to go is hard, but I’ve got to believe that it’s here to stay. It’s really hard to see people going back to being in an office all the time when they don’t have to. 

“Businesses get that for a whole number of reasons. Frankly, there are some sectors where, for young people in particular, if the job advert says you’ve got to be in the office five days a week, they’re not applying for the job. Why would you?”

McKee says there are also other benefits, such as reduced emissions associated with fewer commuters and local economies benefiting as former officer workers spend more money closer to where they live.

So, has he not been lobbied by business about a return to the office in the way some of his Westminster counterparts seem to have been?

“There are some sectors and some types of businesses who have clearly found it difficult not having the type of footfall they used to have,” he says. “You need to look at the economy as a whole. In a cost-of-living crisis, you don’t want to be forcing people to spend money on transport when they don’t have to. You need to look at things in the round.”

McKee says the trends on working from home are “heartening” and are bring driven by businesses themselves.

“Frankly, whatever government does is going to be marginal in the long-term.”
On the subject of skills more generally, McKee says it’s important that everyone leaving school is equipped for the challenges of the new digital economy. 

Much has been made of the Scottish Government’s failure to tackle the educational attainment gap, the difference in literacy and numeracy standards between those from the most and least well-off backgrounds. 

Is he worried about the creation of a new attainment gap – a digital divide?

“Absolutely. It’s always a risk, and I think we’re very conscious of that. Digital exclusion is one of the central parts of the digital strategy and understanding how we go about dealing with that.

“There are big challenges there – there’s the potential for regional challenges and for people who can’t afford the hardware for getting connected. For the whole economy, we need everyone to be digitally connected and aware.”