Written evidence submitted by the Scottish Government (PSI0003)

 

Cabinet Secretary for the Constitution, External Affairs and Culture

Angus Robertson MSP

 

T: 0300 244 4000

E: scottish.ministers@gov.scot

 

Pete Wishart MP

Chair - Scottish Affairs Committee House of Commons

London

SW1A 0AA

 

By email scotaffcom@parliament.uk

 

21 September 2022

 

 

Dear Mr Wishart,

 

Scottish Affairs Committee Inquiry into Promoting Scotland Internationally

 

I welcome the Committee’s inquiry examining how Scotland is promoted internationally by the UK Government and I am pleased to provide a written submission to help inform the Committee’s work. I understand that the Committee will also receive evidence from Scottish Development International (SDI) - the trade and inward investment agency arm of Scottish Enterprise (SE) – another crucial part of the Scottish Government’s support to international engagement.

 

As part of the launch of this inquiry you personally said “is there more we can do, and can we attract even more investment to Scotland?”. The answer is, and should always be, yes. Scotland has many world class strengths and although we enjoy an enviable global reputation, we must never take it for granted.

 

I have provided an overview of Scotland’s international network at Annex A.

This network of international offices and the colleagues who support them are all UK civil servants or staff recruited in-country and employed by the local mission. They are committed to core civil service values, including the duty of impartiality. They are a highly motivated and talented group who work incredibly hard to promote Scotland and Scottish interests on devolved matters. They have served and been supported by Ministers from a range of administrations for decades.

 

Most of our international offices work from the Foreign, Commonwealth and Development Office (FCDO) overseas platform often alongside international offices of the other Devolved Governments and staff from UK Government Departments and agencies. There is, as should be expected, strong co-operation between Scottish Government and UK Government staff in embassies and high commissions.

 

             


We have seen this very clearly over the past fortnight during a time of profound sorrow for the whole country following the passing of Her Majesty The Queen and I wish to place on record my recognition and thanks for the way in which the Scottish Government and UK Government have worked in partnership on a number of areas both at home and overseas.

 

Noting the Committee’s focus includes looking at issues such as the extent to which the UK Government has been successful in promoting investment in Scotland and Scottish products, and the role of the UK Government in promoting Scottish trade and exports internationally, I have provided at Annex B information on the trade and investment priorities and associated activities of the Scottish Government. This will be complemented by further information submitted by SDI.

 

It is, however, essential to consider the bigger picture, in particular how the impact of the policies and approaches taken by the UK Government impact on the UK’s ability to promote Scotland’s interests, including investment in Scotland and Scottish products internationally.

 

As the Scottish Government has repeatedly warned, Brexit and in particular the hard Brexit this Government has chosen to pursue, including the threat to breach international law in relation to the Northern Ireland Protocol, is doing huge and irrevocable damage to the UK’s international reputation and to trade and investment in the UK. Inevitably, Scotland and Scottish businesses are suffering as a consequence. Scotland’s total trade with the European Union was 16 per cent lower in 2021 than it was in 2019, while Scotland’s trade with non-EU countries fell by only 4 per cent over the same period. The single most effective thing the UK Government could do to support trade and investment in Scotland would be to end its confrontation with the EU and negotiate improvements in the Trade and Cooperation agreement, such as a veterinary agreement to facilitate agricultural exports and frictionless access to the single market for Scottish exporters.

 

Instead Scottish businesses in multiple sectors of our economy are having to manage the consequences of the loss of unfettered access to the European Union’s single market and staff shortages caused by the ending of free movement caused by the UK Government’s hard Brexit.

 

Scotland’s food exports to the EU in 2021 were down by £70 million (-6.0%) compared to 2019 – including a 53.3% fall in exports of fruit and vegetables, and a 32.5% fall in exports of dairy and eggs.

 

Similarly, food imports from the EU into Scotland have slowed significantly compared to 2019 – down £220 million (-17.9%). This slowdown is particularly acute for fruit and vegetables, down £121 million (-38.1%), and for fish and seafood, down £46 million

(-28.6%).

 

Due to the hard Brexit chosen by the UK Government, certain products such as seed potatoes and chilled meats can no longer be exported to the EU at all – cutting high quality Scottish produce off from this important market entirely.

 

On top of this, the UK Government’s belligerent stance on the Northern Ireland Protocol risks a trade war with our European neighbours and most important market in the middle of a cost of living crisis, with potentially disastrous consequences for people and businesses in Scotland. The Scottish Government is deeply concerned about the UK Government’s

 

 

             


announcement of its intention to override it unilaterally. This adds to the impression being given to our international partners that the UK can no longer be trusted to honour its international commitments.

These decisions and approaches taken and reinforced by successive UK administrations are damaging the UK’s reputation and Scotland’s interests. No amount of promotional activity by the UK Government can compensate for the damage Brexit is causing, however well- intentioned staff working within UK embassies and diplomatic missions around the world may be.

 

Beyond the question of relations with the European Union, UK Government efforts should focus on promoting Scotland and finding ways in which it can support delivery of the Scottish Government’s trade and investment strategies, as set out in Scotland: A Trading Nation

Shaping Scotland’s Economy: Inward Investment Plan and Investing with Purpose: Global Capital Investment Plan. These evidence-based strategies identify Scotland’s strengths and prioritised opportunities for economic development. They are the basis on which SDI assigns staff to markets and are an important factor informing decisions on where the Scottish Government has international offices.

 

Across the countries and regions on which we focus and the policy issues for which the Scottish Government has responsibility – including trade and investment, the net zero transition, higher education, tourism, culture and people to people links - there is much Scotland can share with others in respect of ideas, interests, concerns, expectations and solutions.

 

In all of these areas sustained, long-term engagement by our network opens doors for future opportunities. Having people working for the Scottish Government and SDI in place in a country or region to understand the opportunities that exist is hugely beneficial to Scotland.

 

Examples of this in practice include: -

 

instrumental in the negotiating a range of MoUs and Statements of intent with German states to secure partnership in this valuable area.

 

 

 

             


we work in collaboration with the universities across Scotland to support continued demand and partnership.

 

Scotland’s culture, as well as wider interests for Scotland. The inherent strength of

Scotland’s brand abroad is something we work hard to capitalise with all of our offices committed to demonstrating that Scotland is a great place to live, work, study, visit and do business with.

 

As the Committee may be aware the Scottish Parliament’s Constitution, Europe, External Affairs and Culture Committee recently undertook an inquiry looking at how the Scottish Government engages internationally and what it aims to achieve from this important area of work. The Committee’s report made a number of helpful recommendations and underlined the cross party ambition, enthusiasm and consensus throughout the Scottish Parliament for the Scottish Government to make the most of our international activity. I would encourage you to consider the report in the course of your own inquiry.

 

I will be interested to learn more from your Committee’s inquiry about how the UK Government, in particular FCDO and DIT, intend to consult the Scottish Government and work in partnership with us to deliver for Scotland, its businesses and ultimately its people and communities. I would be very happy to answer any questions the Committee may wish to put to me.

 

Yours sincerely,


 

ANGUS ROBERTSON

Cabinet Secretary for Constitution, External Affairs and Culture

 

 

 

 

 

 

 

 

 

 

 

 

 

Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot

 

             


ANNEX A

 

Scotland’s international network – background

 

Scotland’s international network comprises offices from the Scottish Government and Scottish Enterprise (SE) through the latter’s international trade and investment delivery arm, Scottish Development International (SDI). Collectively this network supports activity by the Scottish Government, its agencies and public and private sector partners, in strategic locations outside Scotland. The network supports international collaboration to deliver economic benefits for Scotland and to promote policy dialogue in areas of devolved responsibility. It also helps address societal and global challenges.

 

The aims of our international network are grounded in Scotland’s National Performance Framework, in particular:

 

 

The values and principles which underpin all of the Scottish Government’s international activity and the basis on which we prioritise our work are outlined in the Global Affairs Framework, published in May.

 

Although the scale, scope and focus of our international network vary depending on location, each of the Scottish Government’s international offices are focused on

improving Scotland’s international profile, attracting investment, helping businesses to trade internationally, promoting policy exchange, facilitating research and innovation capability, partnerships and funding, fostering cultural exchanges and events, and protecting and enhancing Scotland’s interests in the EU and beyond.

The Scottish Government has nine international offices located in: - Europe

Brussels, Berlin, Copenhagen, Dublin, Paris, and London.

 

Asia Beijing

 

North America

Ottawa, Washington D.C.

 

Two of these offices - in Brussels and London - operate from standalone offices.

 

Scotland House London is a collaboration between the Scottish Government, SE (including SDI), VisitScotland and Highlands and Islands Enterprise. It helps to build relationships and strengthen Scotland’s links both within the UK and internationally.              It provides a platform to develop trade and investment links, strengthen government to government relations and facilitate collaboration on economic, academic and innovation projects. Scotland House London operates a membership model which provides access to office,

co-working, boardroom and events spaces, as well as networking opportunities for Scottish businesses, public sector organisations and academic institutions in London.


Scotland House Brussels is home to the Scottish Government and Scotland Europa, a membership based organisation which is part of Scottish Enterprise and collaborates across a range of sectors. Through thematic teams joint working on events, engagement via networks, and supporting engagement by Scottish stakeholders with EU counterparts, Scotland House Brussels provides a platform and physical space to bring stakeholders together across a range of business, cultural and networking topics, enabling dialogue and connections between Scottish and EU interests. Hot-desking and meeting rooms in Scotland House Brussels are available to Scotland House Brussels members, with conference and events spaces available to be booked on a pay for basis by external organisations.

 

The seven Scottish Government offices in Beijing, Berlin, Copenhagen, Dublin, Ottawa, Paris and Washington DC operate from the FCDO platform.

 

The Programme for Government, published in September 2021 following the Cooperation Agreement with the Scottish Green Party, is clear in its commitment to internationalism and to Scotland continuing to work with friends and partners in Europe and beyond to reaffirm diplomatic ties, improve our global networks, enhance international collaboration, and unlock new economic and trading opportunities

 

As part of this commitment, on 26 August 2022 the First Minister opened the Scottish Government’s new Nordic Office based in the British Embassy in Copenhagen. This will increase Scotland’s economic and cultural connections and cooperation across the whole Nordic region. The Scottish Government has also committed to open an office Warsaw in this parliamentary session as part of our continued commitment to enhancing our external reach and voice.

 

Alongside this international presence and SDI’s international offices is a wider range of external partners who support our efforts across trade, investment, education and people-to- people links. This includes GlobalScots, an international business network which connects Scottish businesses with a community of internationally based business ambassadors, and ministerially appointed Trade Envoys, who provide strategic business insights and connections, promote international trade and investment interests and strengthen local market knowledge in the countries and sectors they represent.              Our international network also works with alumni and diaspora groups as well as public and private sector bodies such as Creative Scotland, Scottish Chamber of Commerce and Universities Scotland which all have their own international connections.


ANNEX B

 

 

Trade and Investment

 

Export performance

In May 2019 The Scottish Government published, A Trading Nation1, our 10 year plan for growing Scotland’s exports. This identifyied and focused on priority countries and sectors and targeting support for on businesses with the greatest potential to export more and in more markets internationally.

 

The last three years have seen unprecedented challenges to and impacts on Scotland’s trading environment from the Covid-19 pandemic and the UK’s exit from the European Union (EU). By design A Trading Nation is dynamic and flexible and has helped to ensure we can respond to and mitigate economic shocks such as those experienced as a result of Covid and the change in our terms of trade with the EU. Recent data shows that Scotland is the only part of the UK with a positive trade balance in goods with the Rest of the World, exporting £2.2bn more goods than it imported in 2021.

 

Networks

Through A Trading Nation we have developed and enhanced Scotland’s wider international networks, maximising their impact and increasing support for our exporters in overseas markets. We have scaled up our GlobalScots and Trade Envoy networks both of which are key components in supporting Scotland’s international business network.

 

Alongside the Scottish government offices abroad, our enterprise agency, Scottish Development International (SDI), provides specialist trade and inward investment support through its network of overseas in-market specialists across the top 15 markets identified as priorities. This enables us to provide consistent access to support and resources that can help businesses to understand and exploit emerging trade opportunities in international markets.

 

We have deepened our relationship with the Department of International Trade (DIT) and strengthened our links with HM Trade Commissioners to maximise awareness of Scotland’s export priorities and the provision of support for in-market visits. In collaboration with SDI, we work closely with the UK Government around the Export Support Service, the UK Export Academy and the UK Tradeshow Programme, which complement the support offer in Scotland.

 

Our Trade and Investment support is a “Team Scotland” effort, with our staff abroad, be they employed by SDI or Scottish Government, working closely with head quartered teams in Edinburgh and Glasgow to deliver business wins. These staff support investment and trade in our priority markest and countries, as well as at global events such as EXPO 2020 Dubai or closer to home with COP26, and the World Forum for FDI in 2022 in Edinburgh.

 

 

 

 

 

 

 

 


1 https://www.gov.scot/publications/scotland-a-trading-nation/


Inward Investment

Attracting investment to Scotland is key to our long-term plans for economic transformation [link to NSET]. In implementing our Inward Investment Plan2 we focus on Scotland’s international comparative advantages and support the ambition for Scotland to be a leading inward investment destination by identifying Scotland’s strengths aligned with current and projected global investment flows.

 

Scotland’s Enterprise Agencies - Scottish Enterprise (SE), Highlands and Islands Enterprise (HIE) and South of Scotland Enterprise (SoSE) - have helped to attract 113 inward investment projects for 2021-22, with 39 new investors choosing to locate in Scotland. In addition more than 7,500 direct jobs were created or safeguarded through inward investment through the work of the enterprise agenices.

 

EY’s Annual Attractiveness Survey 2022 showed that Scotland once again leads the UK in attracting inward investment, maintaining our position as the top performing FDI destination outside London and outperforming the rest of the UK and Europe on terms of growth in the number of FDI projects attracted - up by 14% from 2020, compared to a 5.4% increase in Europe and a 1.8% increase in UK. This was achieved despite the significant economic challenges of Covid and especially the UK’s exit from the EU.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


2 Shaping Scotland's economy: inward investment plan - gov.scot (www.gov.scot)


EXPORTS

 

Context

Scotland has an ambitious target of increasing international exports from 20% to 25% of GDP over the next 10 years. A Trading Nation (ATN) sets out the evidence based actions that we are taking and how we will best use and enhance our resources and interventions to more effectively target priority markets and take advantage of opportunities that can drive up the overall value of Scotland’s international exports.

 

Outcomes

Over the first three years of delivery 85% of ATN actions are underway with around 43% now judged complete or operating a business as usual. As a result we are already delivering a range of positive outcomes:

 


INWARD INVESTMENT

 

Context

Action 9 of the IIP states (We will align and galvanise Scotland’s international network behind the Plan, giving them the tools to promote Scotland effectively). In delivering this the outcomes to date are:

 

 

Scotland’s FDI Performance

Scotland’s FDI performance results provide a good indicator of how international businesses and investors perceive Scotland as a location for investment. Despite global headwinds, and the impacts of Brexit and Covid, in the last 2 years, Scotland has continued to attract inward investment at a rate better than rest of the UK and Europe.

 

 

 


3 Trade and investment envoys - International trade and investment - gov.scot (www.gov.scot)

4 As of May 2022

5 Scotland leads the way for FDI investment | EY UK


 

 

 

 

September 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


6 World Form 2022 - The World Forum For FDI

7 Inward investment drives jobs and economic growth in Scotland (sdi.co.uk)