Jobs and training must be top priority for recovery - CBI urges First Minister

Dame Carolyn Fairbairn, CBI Director-General and the Tracy Black, the CBI’s Scotland Director, have today written to First Minister Nicola Sturgeon. They urge her to put jobs and training, especially for young people, at the heart of economic recovery plans.

Businesses recognise the need to prioritise health and adapt to new ways of working following the Covid-19 crisis. But that must not delay urgently implementing an ambitious recovery plan that responds to the scale of the economic challenge Scotland faces.

As people begin returning to work safely, two priorities stand out: jobs and investment. Unemployment is the biggest threat to livelihoods and must not be allowed to scar communities across the country. We know unemployment falls unevenly, so future policy must be geared towards reversing rather than entrenching inequality. Meanwhile, business investment must bounce back fast to create the jobs of the future and address Scotland’s poor productivity performance.

CBI Scotland has laid out an ambitious, health-first recovery plan that would help secure a jobs-rich, fair and sustainable future for the economy:

1. Make job creation, skills training and opportunities, especially for young people, the top priority.

• Specific proposals include: expanding existing upskilling and retraining initiatives such as the Transition Training Fund and the Flexible Workforce Development Fund and scaling up PACE to increase the speed at which people can move between roles and sectors to match demand.

2. Invest in the green economy to create new jobs, investment and a more sustainable future.

• Specific proposals include: retrofitting all homes with a high standard of energy efficiency and expanding and quickening the deployment of electric vehicle charging networks through fast-track planning and funding.

3. Kick-start demand and boost competitiveness.

• Specific proposals include: introducing a time-limited scrappage scheme to incentivise the take-up of electric vehicles, extending business rates relief to mid-sized businesses in all sectors to help them press ahead with paused innovation projects and accelerating shovel-ready construction projects.

Full recommendations are outlined in the letter copied below.

Commenting on the letter, Tracy Black, CBI Scotland Director, said:

“This unprecedented crisis demands an unprecedented response to get the economy back on track. The Scottish economy was already struggling before Covid-19 hit, and now every single bit of growth matters for people’s jobs and livelihoods.

“While we live with the virus, any recovery plan must continue to prioritise health as well as the impact on the economy. Urgent interventions are required to create jobs, especially for young people, and investment.

“Speed is of the essence – we know the dangers of long-term unemployment and the impact it has on individuals and communities. That’s why we’re calling for the recovery plan to prioritise jobs and training to support getting people back to work as quickly as possible.

“Ultimately, business and government must find new, innovative ways of working together to support the recovery in the short-term and lay the foundations for a more competitive and sustainable future for the Scottish economy.”

Full letter text

19 June 2020

Rt Hon Nicola Sturgeon MSP

First Minister of Scotland

St Andrew’s House

Regent Road

Edinburgh

EH1 3DG

Dear First Minister,

Build back better: CBI proposals for a jobs-rich economic recovery

The COVID-19 crisis has created an unprecedented challenge and rightly led to a relentless focus on health. Business recognises that will remain the case for some time and we will all need to adapt to new ways of living with Covid-19, at least until a vaccine is found. But this must not stop all of us from implementing an ambitious recovery plan for the Scottish economy.

Amidst all the uncertainty, one thing is clear: Scotland and the rest of the UK will only build back better through a market-driven plan that supports sustainable growth. Dynamic enterprise is the only way to fulfil our potential, deliver a return to growth and enable sustainable public spending. It is also our opportunity to get ahead in an increasingly competitive global economy.

While we live with the virus, any renewal plan must continue to prioritise health. The CBI has valued its partnership with both the Scottish and UK governments as well as other key stakeholders to ensure that the UK is safe to visit, safe to invest in, safe to work in, and safe to study in. These assurances are critical to the recovery of Scotland’s tourism, hospitality and higher education sectors, as well as many others.

But two other priorities stand out: jobs, especially for young people; and investment. Redundancies will rise fast over the autumn as support schemes, especially the JRS, wind down. Past recessions show the impact of joblessness is deeply uneven. Without immediate intervention, pre-crisis inequalities across regions, gender and race will worsen. Long term unemployment leaves generational scars. And investment will need to bounce back fast – business investment was weak before the pandemic and is now at historic lows – so needs stimulating to create the jobs of the future.

Time is of the essence. Dynamic markets will over time create new jobs, but smart, fast policy is needed now to accelerate the process and minimise the human cost. Together with our members and in consultation with stakeholders, the CBI has developed simple, implementable proposals that can be acted on now to help create the best possible recovery.

1. Make jobs, skill-building and opportunities for young people the top priority

A fast, inclusive and agile approach to connecting new jobs with the newly unemployed will be essential and should build on existing structures. To accelerate the path to work and training, government should work with business to:

• Scale-up existing upskilling and retraining initiatives: Expanding the Transition Training Fund, which has previously proved successful in the oil and gas sector, would support redundant workers to get back to work as quickly as possible, while scaling up the Flexible Workforce Development Fund would increase collaboration between industry and the college sector and support employers to invest in their workforce.
• Prioritise apprentices and trainees: Introducing a temporary wage subsidy to support employers across Scotland to retain their apprenticeship or trainee programmes would maximise the chances of school and college leavers entering the workforce. Levelling up the funding provided for apprenticeships to make it the same regardless of an individual’s age would also support apprenticeships as a route to new employment for all age groups.
• Scale-up the Partnership Action for Continuing Employment (PACE): Increasing the advice and support available to those being made redundant will be crucial in supporting people back to work. A key focus of PACE should be on early intervention to connect businesses looking to hire new people with those making redundancies to increase the speed at which people can move between roles and sectors to match demand. The success of the Michelin Action Group – the task force established to protect jobs in Dundee following the announcement of the Michelin factory closure in 2018 – also provides a model that could be replicated in the future.
• Refocus further and higher education provision: Placing greater emphasis on short, sharp, industry-led courses will support redundant workers to rapidly reskill and return to the labour market as quickly as possible.

2. Invest in the green economy to create new jobs, investment and a more sustainable future

Now is the time to fast forward progress on delivering Scotland’s world leading net zero target and provide global leadership at next year’s COP Summit. By investing in green growth – through both proven and new technologies – government can create jobs now and build a sustainable future. Scotland can use this moment to identify its areas of global competitive advantage and enable investment behind them. With a world leading oil and gas sector committing to a net zero target by 2050, now is the time to utilise the sector’s skills and infrastructure to develop critical carbon cutting solutions such as industrial scale Carbon Capture Usage and Storage, and the use of hydrogen for heating and heavy transport. We ask government to work with business to:

• Make every home a green home: Accelerate the existing energy efficiency commitment through the Energy Efficient Scotland programme and route map, retrofitting all homes with a high standard of energy efficiency and lay the foundations for low-carbon heat.
• Accelerate the next generation of green infrastructure: Build on existing pilots and partnerships with the private sector to expand the electric vehicle charging network and speed up its deployment through fast-track planning and funding. Support further business investment in low carbon infrastructure projects such as renewables, including wind power and energy from waste sites. Work with the UK Government to secure funding in nascent technology, for example in the delivery of a CCS infrastructure hub in Scotland and develop together a regulatory framework for clean hydrogen production. Develop the Scottish National Investment Bank to crowd in private sector investment in green infrastructure.
• Supercharge gigabit broadband roll-out: Progress the R100 roll-out with added urgency as strong digital infrastructure is vital to the recovery. Use the UK Government’s commitment to a £5bn gigabit investment programme to supercharge the roll-out of digital connectivity in Scotland. Ensure voucher schemes to increase business take-up of gigabit connectivity are promoted through business support channels in Scotland.

3. Kick-start demand and boost competitiveness

Alongside targeted action to set the country on the path to a brighter, more prosperous future, immediate stimulus will also be needed to kick-start the recovery. To do this, government should:

• Target support at those sectors and places hardest hit by the crisis: Introduce a time-limited scrappage scheme to incentivise the take up of electric vehicles. Extend business rates relief to mid-sized businesses in all sectors to reduce fixed costs. Provide a more extensive system of grants for SMEs to weather the crisis, help businesses to press ahead with paused innovation projects, and support sectors vital to future productive capacity, such as higher education. Accelerate shovel-ready construction projects, including across housebuilding, renewables infrastructure and local road and rail networks.
• Enhance competitiveness in the key growth industries of the future: Provide a competitiveness boost by using the net zero momentum to roll out low carbon solutions, accelerate the pace of digital transformation of user-friendly public services directed at businesses, continue long-term reform of business rates and learn lessons on agile public procurement from this crisis to drive forward innovation.
• Capitalise on recent increases in appetite for technology: Leverage the uplift in R&D funding announced in the UK Budget to make sure Scotland is an ideal place to test, develop and bring to market the new products and technologies of the future, with a strong research-base from Scotland’s higher education sector and a range of cutting-edge companies, including across manufacturing and engineering.
• Support dynamic scale-ups: Encourage economic dynamism and create a culture of growth investment by using the role of the Scottish National Investment Bank (SNIB) and the British Business Bank to their full potential in Scotland to back scale-up businesses, which will be vital for future job creation. SNIB should be flexible and agile in its operation.

Taken together, this plan will support the recovery in the short-term and lay the foundations for a more competitive and sustainable future for the Scottish economy. Above all, the plan outlines a new, collaborative and innovative way of working between business and government to ensure that Scotland truly builds back better.

I would welcome the chance to discuss our proposals and continue to build the partnership between business

and your government to deliver them.

All best wishes,

Dame Carolyn Fairbairn, Director-General

Tracy Black, Scotland Director