Scotland is at the sharp edge of a no deal Brexit

Addressing hundreds of business leaders at the Glasgow Hilton Hotel, CBI President John Allan highlighted the importance of an orderly Brexit to politicians on all sides, saying: “Come together, compromise, get a deal. Your entrenchment is folly at the expense of people’s livelihoods.”

He argued Scotland would be particularly hard hit by the end to freedom of movement from the EU. 

But he also celebrated Scottish business success, and encouraged firms to play their part in alleviating poverty by encouraging greater engagement with schools.

Transcript

Thank you. A very warm welcome to you all.

It’s great to be back in Scotland. It was the French enlightenment philosopher, Voltaire, who said: ‘We look to Scotland for all our ideas of civilisation’. I can’t help but agree.

Some of you know that I studied here – first at school, in Kirkcaldy. And later, at the University of Edinburgh. It’s a place I am very fond of.

And when it comes to Scottish business, there’s a lot I could say. I could talk about your brilliance on the world stage: FinTech, offshore wind, Atlantic salmon, space satellites and of course – our favourite at the CBI – Scotch whisky. In fact, scotch sales have thrived for the past few years up 10% since 2016.[1] Perhaps it’s one upside to drowning our Brexit sorrows. The ‘dram half full’ for distillers.

I could also talk about your appetite for innovation. As the number of patents filed by Scottish businesses continues to rise year on year.[2] Every patent – a new technology, a new idea, a new scientific invention.

But actually, today I want to talk about something different. And I’m afraid I will briefly mention Brexit. But what I really want to talk about is the purpose of business.

Because there are some who say the purpose of business is simply to make profit. Or to provide goods & services. Or just – to pay tax.

And it’s true, we do all those things. But I think, together, we can also do something more.

Scottish business success

Here in Scotland, business has a great story to tell. This summer, I’m sure many of you, like me celebrated the 50^th anniversary of the Apollo 11 moon landing. A remarkable human achievement. If not the human achievement.

But a less widely-known story is that of Scotland’s part in the mission. Some of the cables used by the lunar lander, for example were made by a Scottish-based company. A firm called Gore Technologies.[3] And actually, the cables were so robust, and so resilient, they are still made, almost identical, to this day – in Dundee.

Of course, it won’t come as a surprise to those in Glasgow that Dundee was involved in the space race. You’ve been saying for decades that Dundonians are from another planet.

Today, as a society, we face different challenges. But ones that Scottish companies are still rising to meet.

This morning, for example, I met a brilliant CBI member, Scottish Power. They are investing billions of pounds in wind energy, helping to lead Scotland’s transition to a zero-carbon economy.

Or take our sponsors this evening, Spirit AeroSystems. They are about to launch a new R&D centre. Just down the road – in Prestwick. To innovate, invent, and explore the future of flight.

For me, it just shows there has never been a more exciting time to be in business.

And around us this evening are some of the leading companies – not just in the UK – but in the world. The phrase ‘made in Scotland’ is a badge of honour.

So when people ask me about the purpose of business, I tell them all of this, and more. And I tell them about the unmatched power of business, not just to drive growth – but to drive progress.

The challenge

But this progress is not inevitable. It is a product of the right conditions. And businesses can only thrive, invent, and disrupt as they do if they exist in an environment that lets them. It’s a simple truth.

But for the past 3 years, the political environment has been paralysed. By one thing: the absolute chaos and uncertainty of Brexit.

Brexit

We are 56 days from the October deadline. With as few as 16 sitting days of Parliament. And business has been clear: no-deal would do serious harm to our economy.

We’ve heard it from thousands of businesses. In every sector – manufacturing, services, education, tech. Each one facing uncertainty. Risks to supply chains. Yet-to-be-taken decisions on data. Concerns about tariffs, or loss of talent.

And the reality is – the people most affected by an economic shock, or a recession, will be those who are already struggling. Whose jobs and livelihoods are being recklessly overlooked.

So as October approaches, we will be talking to policymakers, and meeting politicians on all sides.

With a clear message: Come together. Compromise. Get a deal. Your entrenchment is folly at the expense of people’s lives.

And if it comes to extension, the business message is just as clear: Any delay must make a difference.

Another extension can’t be solely for the UK to debate with itself. But for the UK – and the EU – to come together. To work on solutions, instead of looking inwards. Because until a deal is agreed – the world is watching. Contracts are being lost to overseas competitors. Uncertainty is weighing on the economy. And companies are diverting billions of pounds from productive investment to no deal preparations.

Immigration

Business has been clear about these issues for 3 years. But here in Scotland, a no-deal Brexit feels particularly sharp-edged. Because Brexit isn’t just about trade, or tariffs, or regulation. It’s about people. As our country faces the biggest shake-up to its immigration system for generations.

Earlier this year, CBI Director-General – Carolyn Fairbairn made a landmark speech in Edinburgh. Calling for an immigration system that works – not just for London, or the South East, but for the whole of the UK.

We know that here in Scotland, there’s a demographic challenge. A skills shortage before free movement has even ended. Meaning many companies simply can’t find the people they need. At all skill levels.

As one housebuilder told us, the sector needs architects, for initial designs. Labourers, to dig the foundations of homes. And electricians to finish the job.

We’ve been making the case to government for 3 years. So have we made progress?

Last month, the government announced that freedom of movement would end immediately in the event of a no-deal Brexit. A worrying U-turn for business, after months of progress.

But even more so for EU nationals – many who have spent their lives living and working here – faced with fresh uncertainty.

We know that every word matters when people’s futures are at stake. But yesterday, amidst the sound and fury of Westminster, we saw a big win for business.

An announcement that the government would revert to earlier no deal proposals – EU nationals can continue to come here after a no deal, with a gradual transition to a new, points-based system. It is hard won progress. After frank conversations with the new government. And will be reassuring for businesses – particularly here in Scotland – where overseas workers have contributed so much. But more importantly – it should be a sigh of relief for EU nationals, who have long needed this clarity.

So what does business want next. First – we will be working with the government’s Migration Advisory Committee to look at other countries’ points-based systems. And in the longer term – putting forward the evidence for a system that supports Scotland’s strong economy. A system that welcomes international students, allowing them time to find work after graduating. And above all – a system that is flexible, that builds public trust, and that values contribution over salary.

We have an historic chance to get this right. Let’s not waste it.

Business as a force for good

But let me end by saying this. Yes, there are things the government can do to strengthen our economy – and support business. But business, too, must play its part. Because in the modern world, the purpose of business can no longer be growth, and growth alone.

The challenge now is how we make this growth truly inclusive. We know that here in Scotland, over the past few years, the gap between rich and poor has been growing.[4] And in some places – is the widest it has been for decades. Holding back many who might otherwise be great entrepreneurs, pioneers, or innovators.

It’s a challenge for businesses. Who can only thrive, invent, and disrupt as they do, if they have the right people. Now more than ever, we cannot afford to miss out on talent.

But it’s also a challenge for Scotland. Where economic exclusion means that many young people are held back in life.

It’s why we are so pleased to support Barnardo’s this evening. And the work they are doing to help those from disadvantaged backgrounds into employment.

But business also has an important part to play. We know that there is no better route out of a bad start than a good job. But we also know that change has to start early.

Evidence suggests that if a young person has 4 interactions with business at school they are 5 times less likely to be unemployed as adults. It’s a brilliant stat.

So at the CBI, we’re leading a campaign. To help more schools connect with businesses and vice versa. And I want every single business to get involved. It can be as simple as offering work experience. Taking to the stage at an assembly. Becoming a mentor. Or organising a school visit to your site.

This isn’t an exercise in CSR. It’s a question of fairness. Because where you are born should not dictate where you end up. And business cannot be a bystander in the society that sustains it.

We won’t stop until every business and every school is involved. And I urge all of you in this room to join us.

Conclusion

So that’s our plan going forward:

• Keep talking about that all-important Brexit deal.
• Provide the evidence on immigration – to build a system that is open and
• And seize this opportunity – a chance for business to lead, to show the difference we can make.

And show that the purpose of business is about so much more than profit. By not merely creating prosperity for a very few at the top. But shared prosperity. That gives people of all backgrounds, all walks of life, opportunities, a stake in society. And that supports generations to come.

Thank you.

[1] Scotch Whisky Association, 2019

[2] Data from European Patent Office

[3] Reported in the Scotsman July 2019

[4] BBC March 2019