Scottish Government

Small Business Consultative Group (SBCG): Note of Twenty-Second Meeting - Monday 12 May 2008

Item 1: Introduction - Welcome/Apologies

1. List of Attendees

Jim Mather MSP (Chair), Minister for Enterprise, Energy and Tourism
Stephen Boyd, STUC
Liz Cameron, Scottish Chambers of Commerce
Jim Gorie, Forum for Private Business Scotland
Professor Russel Griggs, CBI UK SME Council
David Watt , Institute of Directors
Stuart Mackinnon, Federation of Small Businesses
Andy Willox, Federation of Small Businesses
Vicky Carlin, International Projects Division
Stewart Laing, Scottish Development International (SDI)
Alastair Mitchell, Transport Directorate
Jamie Hume, Enterprise and Industry Division
Peter Ford, Enterprise and Industry Division
Andrew Boney, SBCG Secretariat, Enterprise and Industry Division

2. Apologies

David Cairns MP, Minister of State, The Scotland Office
David Wilson, Director, Enterprise, Energy & Tourism Directorate
Item 2: Minutes of Meeting on 2nd October 2007

3. The minutes were accepted with no changes.

Item 3: Matters Arising

4. The Chair confirmed that the only matter arising from the last meeting was that an electronic copy of the Scottish Government's Skills Strategy would be circulated to Group members, which had been done.

Item 4: Update on Grangemouth Dispute

5. The Chair opened an update on the recent industrial action at the Grangemouth plant by stating that he was pleased that both parties now appeared to be focussed towards resolving the dispute. The dispute had been a difficult time for Scotland, in both the business and wider community, but the Government was pleased at the way a wide range of public sector organisations, companies and others worked together to deal with emerging issues. The Government had made every effort to keep business informed as the dispute progressed. Fuel supplies were now flowing out of the plant and were expected to reach 100% levels by 18th May.

6. An account was given of the work of the Government's Emergency Room team during the dispute. The function of the team was to fill the information gaps on tanker movements, fuel supplies and requirements around the country. Fuel shortages had tended to be localised in parts of Scotland - some media reports had exaggerated the extent of the fuel shortages. The focus was now on where the Government goes from here in addressing issues around Scotland's vulnerability during a critical situation. Lessons would be learnt on aspects of the operations, such as the needs of small, independent retailers, who had less security of fuel supply. A formal paper on the crisis from the team would be submitted to Ministers in due course. An invitation was extended to the business organisation members to visit the Emergency Room to see more about how it operates.

During discussion, the following points were made along with responses to some of them:

• The daily updates provided by the Government for the business organisations were very useful.
• The dispute had an immediate impact on the small business sector - some small businesses had been over-stocking on fuel, which caused panic in other businesses as they were anxious not to lose business.
• Some members of the public didn't realise the impact of their unnecessary panic on fuel supplies for other essential services, such as post offices or public transport. Stronger messages from the Government about how panic made the situation worse would have been helpful for business.
• The behaviour of sections of the public, in not listening to the messages stating that there were adequate fuel supplies, exacerbated the situation.
• Concern was expressed that increases in fuel prices were impacting on food prices.

- the Chair stated that the Government, trade unions and business needed to create more cohesion in looking at Scotland's future energy requirements.

• Energy and waste costs were continually increasing, with no end in sight. These increases were having an impact on small businesses.

- the Chair acknowledged that these were important issues although they resulted from general increases in global fuel costs.

• Opposition parties in Scotland had tended to use the crisis for political advantage, which had not helped the situation.
• A point was raised on what was the current status of Ineos and the trade unions in the dispute.

- talks between both sides were resuming in the next few days.

Item 5: International Marketing of Scotland

7. The Chair opened a discussion on the international image and marketing of Scotland. The Government had been putting in place ways of developing an understanding of Scotland's reputation internationally, including subscribing to the Anholt Nation Brands Index. The Government's International Projects Division have a team tasked with the Promotion of Scotland, who are made up of seconded marketing professionals. The Division worked closely with VisitScotland and SDI, together with the British Council Scotland and Creative Scotland/Scottish Arts Council, and have ongoing responsibility to build on Scotland's reputation and competitive identity.

The main aspects of the Government's agenda on marketing Scotland overseas was outlined. The International Framework had been published in April and this had detailed four approaches:

- clarity on Scotland's reputation was to be promoted;

- information and mechanisms were to be put in place to improve the Nation Brand;

- working with partners, in both business and the public sector, to ensure that there was consistency in presentation and message;

- ensuring that partners work was not being duplicated and filling in the gaps in partners work, e.g. in the staging of Scotland Week

The role of SDI in the marketing of Scotland overseas was also outlined. SDI had 2 main functions: (i.) to encourage overseas companies to invest in Scotland; (ii.) to help Scottish companies do more business overseas and to promote Scotland as a good place to do business. This is delivered through the team in Scotland and the 21 SDI offices around the World.

SDI's marketing objectives are:

- increasing awareness of the Scottish proposition in key industries for prospective investors;

- generating leads for the sales team to follow up.

There was a need to identify the key decision makers in overseas companies, particularly at Chief Executive level. There was a good knowledge abroad of Scotland's heritage, but SDI needed to show Scotland as an innovative country. There was an ongoing PR focus to help reinforce the key messages of Scotland being a good place in which to do business. The success of SDI's activities had been demonstrated in a number of ways, in particular, that Scotland was now the most successful part of the UK outside London and the South East for inward investment.

8. The following points were made in discussion, along with responses to some of them:

• The current focus on Scotland's output and economic development was the right way forward and the main business organisations would continue to work with SDI on this;
• A concern was expressed that the links between the Scottish Government and SDI were vague.

- the success of Scotland Week was highlighted where the Government, SDI and VisitScotland had worked together well.

• A point was raised about whether a strategic framework document for marketing Scotland was planned.

- the International Framework provided the strategic context for activities relating to the promotion of Scotland and for the operational plans of the partners involved in this work..

• There was a need to measure the impact of marketing activity against the global index.

- SDI conduct global bench marking against their sales and marketing activity through GDP.

- SDI marketing activity has a number of metrics including: leads, meetings delivered, response levels to campaigns and web site metrics. But the most important measure is achievement of SDI inward investment targets.

• There was a need to get new SMEs into the market place. More business partnerships were needed as was an improvement in relations between SDI and the business organisations.

- there was strength in the Scottish business community but there was a need for the Government, SDI and business to discuss how to work together more effectively.

• There was a lot of interest in Scotland's government in the USA and other parts of the World. Scotland's government was often not sold abroad effectively and some business people were not good at selling Scotland. There was a need to use Scotland's government as the nation's biggest asset.

- the production of better data from the Anholt Nation Brands Index was helping in improving this process.

• Proper measurement of the strong and weak points in selling Scotland abroad would be helpful for business.
• STUC had their international contacts which they would be happy to share with SDI.

Action Point: SDI to arrange a meeting with STUC to discuss and share their international contacts.

• In Ireland, the key messages used in marketing overseas were the quality of the Irish workforce and dynamic workplaces - this should feature more in SDI's messages.
• There was a need for SDI to work in partnership with the UK Government in marketing Scotland.

- SDI liaise with UKTI, and are focused on developing the relationship to ensure they benefit from the resources UKTI have available.

• A National Identity was needed as was a bigger SDI office in New York.

The Chair concluded the discussion by noting that SDI were aligning with the Government's agenda in marketing Scotland. The dialogue that he had been having with various sectors had been helpful, but there was a need for IT and life science firms to become more self-sufficient. Measuring the outcomes of marketing was most important.

Item 6: Future of Regional Transport Partnerships

9. The Government's policy on Regional Transport Partnerships (RTP's) was outlined. RTP's were set up in April 2006 all over Scotland to lead on regional transport strategy and delivery. The membership of RTP's is composed mainly of council representatives, with other members drawn from Scottish Enterprise; Highlands & Islands Enterprise; Health boards; business: academia; voluntary and user groups. RTP's were established partly because transport does not fit in well with the local government map and in order to influence strategic planning and delivery and to allow more joined up working between roads and public transport. The funding regime for RTP's had changed in November 2007 following the signing of the Concordat between the Government and CoSLA and and changes announced in the Scottish Budget with RTP budgets now determined by constituent Councils. There was consequently a need for RTP's to work more closely with local government and CoSLA strongly supported this approach.

10. During discussion, the following points were made, along with responses to some of them:

• A point was raised as to who was in charge of funding, with particular reference to Dumfries & Galloway region and the issues over the A77 extension and Stena Line's ferry services.

- Under the Concordat, and new funding arrangements, decisions on funding local roads would continue to lie with the appropriate council, in this case, Dumfries & Galloway Council. For trunk roads such as the A77, the matter rested with Transport Scotland.

• A further concern was how larger projects were supported that could not be met by local government alone?

- The funding of local and 'regional' transport projects are a matter for local councils and RTPs. The Strategic Transport Projects Review (STPR) can, however, give such projects more significance.

• With reference to NE Scotland, who was now in charge of funding over the conditions of roads?

- Responsibility for local roads lies, as before, with the local authority - Single Outcome Agreements may include indicators of local road condition. Any trunk roads in the area remain a matter for Transport Scotland.

• Concerns were expressed about local authorities not being joined up in funding RTP's.

- Funding was a matter for local determination.

• Concerns were also expressed at the decision to build a shopping centre in Aberdeen city centre where a transport interchange would have been beneficial, and at the decision to build council offices on the Waverley Station car-park.

- These were matters for local authority determination.

• Were the RTP's in dialogue with the NHS, particularly over the building of the new Southern General Hospital?

- Yes, SPT were engaged on the transport implications of the project. In addition, the Health board was represented on the RTP.

• The Chair referred to the increased joining up of businesses and voluntary organisations in the Argyll & Bute region which was of economic importance and was a model which should be adopted throughout Scotland.

Item 7: Economic Situation - for information

11. The Scottish economy update paper had been circulated before the meeting. The Chair invited comments from the Group on the paper and any other points that they wished to make on the economy.

The following points were made in discussion:

• The paper contained some encouraging news about the Scottish economy, but there were concerns over the slowdown in the housing market.
• Finance was becoming harder to obtain for business and industry - this could impact on the wider economy in the long term. The banks needed to release money more readily to business.
• Demand was holding up well, but other economic issues were causing concern.
• There were concerns over increasing fuel, transport and waste costs. Business costs were going up with no end in sight. Regulation and pension issues were also causing concern.
• The Government had set the process of generating sustainable economic growth in motion. The Council of Economic Advisers and the National Economic Forum were both important groups, but there was a need for the Government to have more active dialogue with business and industry on renewable energy opportunities, regulation and manufacturing.
• The Chair mentioned a recent presentation that he had had from OCEA (Office of the Chief Economic Adviser) officials and indicated that he wished to hold a similar event with key business stakeholders to discuss the implications for Scotland of the international financial crisis and global economic slowdown.

The Chair closed the discussion by acknowledging that there were wider economic issues affecting Scotland's economy and that the Government needed to keep its finger on the pulse.

Item 8: Any Other Business

12. The Chair opened a discussion to invite views on the future role and objectives of the SBCG, following on from the discussion at the last meeting. The Chair stressed that there was a need for the Group to have a purpose in helping to achieve the Government's key objective of generating sustainable economic growth. The meetings should have a more purposeful discussion, with less items on the agenda. The Chair reminded members that he had been engaged in a number of sessions with various sectoral groups and suggested that the SBCG could act as a means of drawing together the outputs from these meetings.

The following points were made in discussion, along with one response:

• The Chair's attendance at the meetings was appreciated by the business organisations represented on the Group.
• There was a need for a more focused agenda to allow more in-depth discussion. There was a risk of over-duplication of issues on the agenda, as members may already have discussed the same issues at other separate meetings with the Chair or other Government Ministers.
• Issues that were not normally discussed with the Chair at other meetings could be focused on at the SBCG.
• The Group was a forum for free discussion and should continue to be a forum for a discussion of issues of concern to small businesses.
• Concern was expressed over the lack of coordination of the outcomes of the Chair's meetings with sectoral groups.
• Enterprise and Industry Division were a repository of contact information for the main business organisations - there was a need to look at how to mainstream business awareness across the Scottish Government.

- if the Government better understood how the business organisations could help to develop particular policy areas, then this would in turn improve business awareness.

The Chair welcomed the points that had been made and confirmed that he would consider further the issues raised, focussing on the purpose and value of the Group and how to measure any future contribution that it made towards Government policy.

There being no other formal business, the meeting was closed with thanks from the Chair.

EET: EI: B&TUL Branch

May 2008