Good morning, and welcome to the 30th meeting of the Economy, Jobs and Fair Work Committee. This morning, I have apologies from committee members, Richard Leonard and Alex Neil. May I remind everyone present to turn off any electrical devices that might interfere with the work of the committee? We have received apologies from Gordon MacDonald and we have two new committee members who replace Ash Denham and Gil Patterson. I would like to thank Ash Denham and Gil Patterson for their work whilst on the committee, and the two new committee members are Colin Beattie and Tom Arthur. I will ask each of them, starting with Colin Beattie, to make the usual declaration of interests. I am delighted to be on this committee. I would simply direct members to my register of interests. I would like to advise the committee that I am a member of the Musicians Union, and I was formally a company director. However, I no longer have any shares of interests in that company. The first item on the agenda is a decision by the committee to take items three and four in private. Are we agreed? I think that that is item eight. Wrong numbers here on the paper in front of me. Thank you to the deputy convener for keeping us right on that. Are we agreed then that item eight should be taken in private? Yes. Good. Since we agreed on that, we will now turn to Scotland's economic performance, our current inquiry, and welcome our guests. This morning, we have what is called a round table session. In the interests of hearing as much as possible from witnesses, I would ask my fellow committee members to limit the length of their questions. If anyone, including our guests, wants to come in, please indicate by raising your hand, and I can bring you in as the discussion moves along. There is no need to switch on microphones. The sound desk will look after that. First of all, I invite each of our guests—perhaps it would be easier if I just named them first of all. We have Professor Katia Montana, chair of economics at the University of Aberdeen with us. Welcome. Richard Marsh, who is director for consulting, who I think has been before the committee before. Dr Tanya Wilson of the University of Stirling, Dr Alexander Stangolidus. I am not sure if I have the pronunciation correct, but I know that you can correct that. Professor Julia Darby of the University of Strath Clyde. Perhaps I could start going from my left and ask each of you simply to give a very brief introduction from the point of view of the work that you do, your organisation does, and start with Katia Montana. I am a professor of economics at the University of Aberdeen. My work focuses on issues related to globalisation, international competitiveness, foreign direct investment, and I work with a team of people in Aberdeen who work on related areas, particularly on the interface between these issues and labour markets. As you said, I am a director of an independent economic consultancy based in Cacodi, and we work across a broad range of clients and sectors that are delivering research to help to inform public sector investment decisions and private sector strategy. I am Tanya Wilson and I am a lecturer at the University of Stirling. I am a labour economist. I specialise in the area of family economics and economics of the household, which includes how households make decisions as to when to participate in the labour market and how much labour market activity that they would like to go and do collectively. Alexandre Zangelidis from the University of Aberdeen, senior lecturer in economics. My research areas are in labour economics and health economics. Primarily, I worked on issues related to wage determination, labour supply and also issues related to economic inequality and issues related to socio-economic inequalities and the effect on health. I am Julia Darby. I am head of the Department of Economics at Strathclyde, which is the home of the Fraser-Rallander Institute. A lot of our work is connected with the Fraser-looking productivity performance, labour market performance and so on. Thank you very much. I will start with a general question to our guests. What would each of you say have been the main drivers of growth in the Scottish economy over the past 10 years and how do you see those developing as we move forward into the next 10 years? I do not know who wants to come in first on that. Richard Marsh. Come to the private sector, I'll just venture an opinion. What I think this inquiry would be helpful for it to do is rather than saying what's the one driver or what's the barriers that have been holding us back, is to really think of it as there is no one single driver of Scotland's economy or of any economy. It's dozens of different levers that we need to pull at different times in different ways and about projects and programmes delivered by a whole range of different actors at central local government, private sector, public sector, colleges, universities. If we look at what's helped driving the growth in Scotland's economy, our exports have performed reasonably well, investment is continuing, we're continuing to educate the workforce. There's a whole range of different things nudging the economy forward, so if we think about what could we do better, we're not going to come out of today or even the end of the inquiry saying it's just one, two or three things. It'll be a whole range of things that we need to tweak and adjust. Any other interested parties? No further comment on that. I'll probably move on to John Mason, I think, because another area he'd like to raise. A wide question, so maybe we can fork in some comments on that. The whole concept of how does Scotland's growth rate or how does Scotland compare with A, the UK as a whole, B, other regions of the UK, because I think we realise that London is a bit odd, and then other countries and other regions in the EU. Maybe you want to say which of those should we compare ourselves with or, as Richard has suggested, maybe we should just compare ourselves with everything or does that get too complicated? How are we doing and what should we compare ourselves with? I think that we are all a bit shy. I actually found it difficult looking at the questions to structure answers in the sense that all these questions are pretty much interconnected, so to talk about how we do in comparison to others and talk about how we measure success and what are the sectors or drivers of growth. All these things are very much related to an extent also to what are the reasons why growth has not been as good as it could have been. I think inevitably our answers will have to be cross-crossing the questions to some extent. I think one thing that to go back in part to what Richard was saying that we could say is that the Scottish economy has not performed as well in the last few years as it could have done or as we would have hoped it to do. The key issue therefore is to try to understand why that has been the case. In terms of relative performance it has performed probably in some dimensions better than the UK as a whole, in other dimensions worse than the UK as a whole. Recently there has been for example an increase in growth and catching up a little bit on productivity with respect to the UK as a whole, but we are choosing the point of reference is important here because the UK as a whole has not performed that well. So if you compare Scotland to countries of similar size, like for example the small European countries, Norway, Sweden, Finland, but also Eastern European countries, then you see that Scotland has not performed very well on many indicators. I think that this is where the attention perhaps of the committee should go to try to understand why there are these differences. In terms of inequality, productivity, I am sure that these are all the aspects that will come up through different headings. The performance of Scotland has not been particularly good. Can I just ask that? You see performance, are we thinking primarily of GDP and GDP growth or are you thinking of other things as well? Well GDP, GDP per capita for example in Scotland GDP per capita has been very stagnant. I think it has grown something in the region of 1% over 10 years. GDP is not the best indicator of performance and GDP per capita is certainly not the best indicator of income distribution for example, but a performance of this level is pretty bad even in the context of a financial crisis. I mean one thing which emerges by looking at the data is that there is a very strong correlation between the degree of inequality in a country and the ability of the country to recover from the recession. Countries which have done better in that sense are countries which have a much lower inequality as measured by the genicoefficient. The genicoefficient in Britain is very high compared to, I think it is the worst performer in this respect after Latvia in Europe. So all these things you know that's one of the one of the issue I think that we have to decide how do we measure performance, there are different dimensions to performance. GDP is important it's not the only measure inequality is another dimension but all these things need to be considered in a more you know connected way I guess. Gillian Martin wanted to come in and I think Professor Zyngelic Lydys as well. We were talking about Scotland in comparison to other similar sized countries. What is it about those countries, if they're performing better than Scotland? What mechanisms have they got in place that we don't, they're driving that improvement? Well answering the question I think requires answering an issue of causality. Answering the question requires analysis of the data and some of these countries have got very different labour market institutions and welfare state systems and I am a firm believer that these are policy dimensions which are very important in determining both the degree of equality within a country but also the ability of a country to adjust and respond to shocks to international shocks for example. So the provision of safety net helps smoothening out the response to shocks but it has also very big you know very big long term implications like for example the incentives underpinning the acquisition of skills. So there is work which shows that certain labour market institutions favour the acquisition of fair more industry specific skills which are important for productivity and the development of industry whereas a welfare state which we would call the liberal welfare state that the UK and other countries have favour the acquisition of generic skills. So the worker in the face of negative shocks feels you know needs to self-insure if you like and the best way to do so is to acquire skills which result in an easy you know you recycle yourself you move across jobs more easily than if you acquire industry specific skills but then industry specific skills are very important for example in manufacturing and underpin productivity in those sectors. So that's why I say you know it's important to take a multi-dimensional view of performance but also a multi-dimensional view of policy. I mean policy areas are very much interconnected and it is important to try to understand but in an evidence-based manner what these connections are. So certain policy decisions can be made in hollywood but certain policy decisions that have an impact on our economy are made elsewhere. Yes Professor. Just to highlight three points I would echo what my colleague Professor Montagna said before and I think it's important you know I think it's important to understand that there won't be a single answer in ideal world. Yes it would be nice to have one single answer to all those questions but the reality is that the situation is more complex. We need to understand the history what the economy the British economy and the Scottish economy went through the last 10 years in light of the great recession the vote for for Brexit and what in the implication that had for the overall economy consumer confidence the labour market. As my colleague also said we shouldn't be looking only at a single indicator when we talk about for instance productivity or inequality there are many things and also we need to be very cautious because behind single measures there is a lot of hidden information so for instance if we look about if we look on unemployment unemployment admittedly the last years has improved but behind that there is the big issue of under employment so there are many people on part-time contracts temporary contracts on zero contract hours so so one could say that well actually the labour market the situation the labour market hasn't necessarily improved so we need to be very cautious about that and the last point going back to your question I think I totally agree with with Professor Montaigne's position again that one key part is the institutions the labour market institutions in operation but also the overall regulatory environment and whether there is scope for the government to intervene more to the markets the goods markets the labour market the financial market and have a more active approach to those John Mason did you want to come back on that at all or leave it just now and I'll come back in later maybe all right we can move on perhaps something Colin Beattie wanted to have a discussion about thank you very much I'd really like to ask a two-part question the population of Scotland has been increasing the population of the rest of the UK appears to be increasing a much higher rate partly driven by higher rates of immigration what impact does that have on gdp and calculation of gdp relative to each market just to make it simple but if you've got a growing population it's more likely your economy will grow more quickly because you'll need to spend more money on public services those people are more like to have jobs so they'll spend their money on the high street and that will create economic activity so countries where the population is growing more quickly tend to have a slightly higher rate of economic growth but I think as a number of people on the table have said already perhaps a slightly more important measure is kind of is it the level of wages the quality of life and the GDP per capita so if your population is growing you want the economy ideally to be growing slightly ahead of your population growth in order to make sure you can deliver a real growth in wages to the people living here so would it be correct to say that some of the gdp difference would be based really on population absolutely let me ask the second part the question which is really about future growth where do you see the future growth coming from in the economy in scotland is it going to be export driven is it going to be from any particular sector in the market who's the expert on this professor darby a lot of the growth in jobs has been around certain cities so we have quite big differentials in productivity between cities you talked about london being a bit different but both edinburgh and glasgo have better headline statistics on gva per head than many of the other than the other cities the other big cities in the UK but done dears right at the other end on having poor gva and a lower skilled labour force on average so at the moment it looks like there's job growth concentrated on the well-performing cities and the recovery of employment in glasgo has been quite big we don't know quite so much about the the nature of the jobs that have increased as we would like but around glasgo and edinburgh employment has been much stronger than around some other parts of scotland and if you go to north ashley you have a very different picture of a lack of recovery in jobs is that because of the nature of the economic activity within regions or is it some other factor it looks like the concentration of activity has become more city-centric what does that hold for the future well we need to know more about the types of jobs that are in there to some degree because i think one of the submissions was talking about mismatch and talking about people in graduates in non-graduate jobs and so on that kind of mismatch one thing that we don't know enough about at the moment is the extent to which the new jobs uh jobs which are not bringing out the efficiency of the workers as much as we would like so there is a possibility that we still need to have quite a shake out from some of the jobs that were the jobs available to the jobs that are going to be high growth jobs and that push needs more of a recovery does anyone else have a view on that i would say that talking about the future or you know guessing what may happen in the future requires solving a number of uncertainties that we are facing at the moment so there are there is a big uncertainty for example about the price of oil i mean one of the key sectors which has led growth in scotland in the last decade or beyond is the oil sector but we don't know because a lot of this uncertainty is political in nature so it's very difficult to to to guess that the other big issue of uncertainty is brexit so it's it's not easy to understand um i mean at the moment the the state of play is still very undetermined and it's not easy to to understand what the impact of brexit may be on sectors the other big factor determining the the future development of the economy is is actually investment and that in turn may depend on the outlook of firms which in turn depends on the state of the overall economy so at the moment what we have and somebody has mentioned it already what we have observed is a consumer led growth which which has been funded essentially by dissaving by consumers and the country has experienced one of the the biggest evaluations in history as a result of the referendum but it hasn't translated into an improvement of the trade balance or an increase in exports and certainly not there isn't any evidence of a rebalancing of the economy towards manufacturing and and the reason for that is well there may be many reasons but certainly one reason for that is the fact that investment is is very flat if not if not falling so again that requires you know going back to why this is so you know what is the what are the the drivers of of firms decision at the moment we've had you know a decade of very low interest rates fairly weak pound and therefore we should we should favour exports and the structure of the economy such that a very small percentage of firms export there are some sectors which are at the front at the technological frontier but the economy is characterized in scotland and in the uk by a high degree of dualism with um you know some small pockets of activity which are geographically concentrated and sectorally concentrated and which are at the frontier of the the technological frontier high productivity sectors but they employ a fairly small number of of people so the majority of labor creation employment creation is actually occurring in sectors which are low productivity sectors. I'd like to bring in angillides and dr wilson. I agree with both previous position I think position I think another issue that is not only which industry is going to bring growth for the for the scots economy but also what type of business will facilitate that I mean if we look at across the scots economy a large set of businesses are small medium enterprises so we need to think about that and if you think about also the geography of scotland how can how can we facilitate a sustainable growth for those small medium enterprises we need to support innovation entrepreneurship we need to think about the the type of ownership there were some interesting reports submitted for this committee related to cooperatives employee owned companies I think there is a lot of scope for for this committee to investigate further about that there is a lot of literature on cooperatives and the productivity effects they have the effects they have on employees behavior both in terms of productivity but productivity in terms in terms of turnover in terms of absenteism so there are many positive effects that those firms have so I think you know that could be one way forward for this committee to explore not only the particular sectors but also the business models that can facilitate future future growth not only as an avenue for growth but also as a way to alleviate inequalities in the labour market alleviate the or at least deal to some extent with the agenda pay gap providing opportunity for the younger people who are the younger people and female individuals who are more adverse affected by the recent recession to go back to the labour market and engage in more meaningful career pathways. Professor Darby's point so within my submission I did some analysis by employment shares across industries and my apologies it seems that the figures were very very small and may not have been discernible so within Scotland the most important sectors in terms of employment are wholesale and resale trade however this has been declining over time it's also been declining in the UK as a whole the rate of decline seems to be broadly similar between the UK and Scotland and the other very important sector that employs up to 15% of the total workforce is human health and social care and this is increasing over time and this is probably due to well I would imagine this is due to the demographics of Scotland we have an ageing population I cannot talk about regional differences that's not something that I looked at but a question that the committee might want to go and consider is if we look at the trends in employment by sector there's a question of do you want to focus efforts on declining sectors to perhaps rejuvenate sectors so for instance Professor Montaigne talked about manufacturing manufacturing has been declining it's been declining for far longer than the past decade is a focus needed on trying to rejuvenate manufacturing and to a certain extent construction or to focus on those sectors that are already increasing and already becoming more important over time thank you and I think Richard Marsh want to come in and Gillian Martin with a brief point Richard Marsh very briefly just to go back to I think the original question asked by Colin Beatty to say who's the expert on what the future sectors will be no one there there are no experts on what the future sectors are going to be the winning sectors for if anyone claims they are an expert and will tell you what the future sector will be hill them onto the streets and do not listen to them you know in Scotland we we have a mixed track record in picking the sectors of the future and we have a graveyard of silicon glen we have other sectors that we've said these the key sectors these are the growth sectors we chop and change them over time and they tend to not perform as well as we hope they might where is the economic growth going to come from take it wherever you can get it so just whatever growth comes our way welcome it let the businesses who decide to come into Scotland to grow their businesses in Scotland to invest in Scotland listen to what they want and let there be growth from from sources that maybe we're actually not even thinking about that haven't been talked about in public forms to date the comment about the non-existence of economic profits i think has raised a bit of interest so Gillian Martin, Professor Derby, then Dean Lockhart, Tom Arthur and John Mason all wanted to come in so perhaps in that roughly order we'll we'll move to Gillian Martin and Professor Derby. What's been brought up about business models is really important and it's sort of when the doctor is angli just mentioned that it informed my next question which is around policy decisions and i think i'm going to direct this to Dr Wilson because i know that you mentioned in your introduction you look at family economics and i would like to know just off the back of recent policy decisions both UK policy decisions and Scottish government policy decisions which have got the most potential to improve productivity and the family situation and which also conversely have got the potential to have a negative impact on the family so one of the policy decisions which i think is incredibly welcome in Scotland has been the increase in childcare provision for young families so we we we can see in the data that having young children in the household can impact that decision whether or not to be able to work or to be able to work the number of hours that someone wishes to work so this there is a gender divide this impact generally impacts women more than men but it's not that you know that it's across the board and i think the the fairly recent the fairly recent increase in the provision of childcare will allow those individuals who want to either return to the return to the workforce earlier than they previously would have done and also perhaps work longer than they previously would have been able to do so i think that's been a that's a welcome policy move bringing in business models we've mentioned business models have to be able to fit around that as well in order to increase project productivity in general so when you talk you mentioned business models it would be good to get an example of what you'd see a business model should be to encourage more people to enter the workforce so if i've understood your question correctly so a business model that is built around flexible working and allowing or facilitating a worker to go and juggle their many commitments again within the data it's see that there is a there is a proportion of people who say that they would like to go and work longer hours but they can't because of family commitments which would generally would be childcare commitments so having more flexible working practices in many businesses allowing individuals to go and work potentially starting earlier finishing earlier in order to go and be able to go and look look after the children may help there professor darby then professors angle ladies and then our my fellow committee members perhaps so i think we'd all agree with richard that it's damn difficult to sit here and try and pick where the growth is going to come from but we can get quite a lot by going back to the lse growth commission and its most recent recommendations and that they're talking about not concentrating so much on the frontier but looking beneath that at the productivity growth of the second third and fourth quartiles and if you can move those up you can do an awful lot to close the gap that's opened up to pass trends in productivity so they talk quite a bit about how you might go about that and they've done a lot of studies for a lot of countries on how efficiency improvements at the company level can make big gains and it's scratching definitely beneath the surface of the aggregate figures but the sort of work that they're talking about they talk about matching firms to higher productivity firms and sharing best practice and they talk about what might be in it for the best performing firms and what might be in it is that they get an improved supply chain but there might also be something government can do to incentivise that as well but by focusing on the frontier and trying to pick winners you're almost bound to spend a lot of money and get some of it wrong whereas if you look at beneath that and how you can move people up towards the frontier and what's stopping them getting up there then you can make bigger gains at the aggregate level. Professor Angillides. Yes, thank you. Just to add something to the points, the value points that Dr Tanja Wilson raised before regarding flexible working arrangements I think it's important to understand the complexities of trying to keep a work-life balance especially for the female individuals for the women so but what we also need to acknowledge here is that there is a bias towards these types of arrangements and they often the labour market you know individuals who are in part-time or temporary contracts especially part-time contracts are regarded as more inferior and they're not given the same opportunities in terms of their career development training a career progression so so there needs to be a change in the culture as well to accommodate that so it's not only about providing flexible working arrangements but it's also recognising how valid they are their contribution to the economy and providing the necessary if you want regulatory framework to support them and not treat them as as they are currently treated as something inferior. Thank you. We'll perhaps take points from Dean Lockhart and Tom Arthur and then discussion and then move on to other committee members. My question is about the role of policy specifically that the UK industrial strategy which the white paper will be published I believe quite shortly now I don't think it will look like the 1970s version of an industrial strategy which was about picking winners this is more about sector deals, collaboration, city deals, increasing innovation so I wonder if I could ask some of our guests when it comes to looking at Scotland and how that industrial strategy can help and it might cover things like business models because it's a very wide-ranging policy I wonder if you were to identify some priority areas for Scotland where the industrial strategy could could help boost the economy or productivity or innovation levels. Tom Arthur perhaps and then we'll throw it open to discussion for the panel members. Thank you convener it was actually a supplementary to a point raised by Richard March I think we probably all agreed that picking winners is a risky business but it does lead to corollary what about those sectors that are in decline what about those areas that perhaps are particularly exposed to innovation be it AI robotics what sectors do our panellists think we are perhaps overexposed to that we have to be on guard and we have to start planning ahead and thinking about reskilling and retilling and how do we quite keen to gauge members views on some of the existing forecasts which range from we will muddle along and be fine to fairly apocalyptic with 40% unemployment so I'm keen to get a sense of where people think a happy median is and equally how we work towards and how we accommodate the changes that will be brought on by innovation might not be winners but will be losers in the long term. Professor Montana again this would require having a crystal ball to some extent I think there are a number of issues but start from the beginning I think a key issue here is productivity okay and that that should be at the core of any industrial strategy and productivity you know it is very easy in abstract to think of what are the key factors determining productivity everybody can name them you know infrastructure skills and whatever but I think a deep understanding of productivity requires actually to be evidence-based because different sectors different regions different firms will have different reasons behind the poor or or a successful productivity performance now I go back to something that professor darbyd was talking earlier the the LSE productivity report that the core of that research is really the idea that the the profile the size and productivity distribution of industries is very important in determining aggregate productivity and this is something actually we discussed here in the context of the data inquiry now one interesting stylized facts is that it is true that Scotland is made up primarily of small and medium enterprises and and we know that there is a positive correlation between the size distribution and productivity distribution of firms and the aggregate productivity but um Scotland doesn't doesn't score badly with respect to the rest of the UK in that dimension so it has for example although 64 percent of firms in scott of new firms in scotland are zero employee firms this percentage is lower than in the rest of the UK the percentage of bigger firms uh as as in 250 employees and above is bigger in scotland than in the rest of the UK and yet the productivity performance in scotland has been worse so it's important to understand why this link which is there in the aggregate but it you know it kind kind of breaks down when you do a comparison between Scotland and the rest of the UK uh is breaking down so what is that makes the productivity profile of firms not translating to a better aggregate productivity performance similarly i'm doing some work with a PhD student and a colleague in Aberdeen about the effects of firm characteristics on mismatch we know that Scotland has a higher problem in skill mismatching you know firms in scotland have greater difficulty than in the rest of the UK in finding the right skills and yet you know the the profile of firms in scotland if anything is better than in the rest of the UK so that takes us you know to to to really i talked about productivity as a process akin to peeling an onion last time i mean this is this is the key issue we need to understand what lies at the core of the onion we need to understand what is the root cause of the productivity problems that that the country has and that requires evidence-based analysis uh personally i think that um there may well be a Scottish factor uh uh that is to say you know something which has to do with the the the region uh the characteristics of industries the the the fact that the industry in scotland may perhaps not be as large as in other parts of the UK so there could be a scale factor what Marshall called external economies no so the the productivity of individual firms depend on the productivity of the sector the existence or not of clusters uh industrial clusters which play a role uh as we know in facilitating growth of individual firms so these are all things which require a deep understanding of the issues and what i i think would be a good suggestion actually is to set up a productivity commission in scotland to try to look at at these things right dr Wilson and then Richard Marsh um so just to go in and pick up on the point of Mr Arthur about um the implications of of growth in different sectors um there's been a lot of talk recently about the impact of automation um and how this is expected to go and be be fantastic for productivity but may not actually be as fantastic for employment so there's some rumours that the chancellor will be talking about this and the budgeting in so far would of putting in investment into for instance driverless cars um and i was reading this week that by 2021 we're expecting that we'll be having our first driverless cars and that sounds in one way fantastic that we're moving forward but there's over a million individuals within the UK who are employed as drivers and if that change happens and that change happens incredibly quickly then the question is well um it's a question of reskilling the question of which sectors would they potentially potentially go into so there has been a wild claims on this so i've i've seen papers that have said that as much of 40 percent of jobs will disappear within the next 20 years um one recently said that four million jobs within the private sector in the UK will will go within the next 10 years um i think what's important to understand it that's it doesn't that may mean that four jobs that four million jobs that currently exist may be able to be done by robotics or by automation but history has told us that other jobs in other sectors will arise and become more important however it takes time and it takes time to reskill so for those individuals who are affected by automation it may be extremely difficult for them to acquire skills in different areas and which skills should they acquire in order to be able to to get these new jobs that we don't even know what they would be at this point Richard Marsh um it's hugely interesting that the topics that everyone's touched on today um i think the point raised by Tom Arthur's a fantastic one i'm just thinking it chimes with what professor W said at the beginning we've got parts of scotland um like the big cities Edinburgh and Glasgow that are doing quite well and we've got parts of scotland um like north i think you mentioned north aisha um that are doing not so well and that chimes back to i suppose any economics 101 textbook i'll put this to the academics here any economics 101 textbook in scotland we'll talk about in the first few pages the trade-off between efficiency and equity in scotland we currently have an economic strategy which talks about equality significantly and at the heart of it says if we improve equality we raise economic growth we raise economic growth in a specific way we help equality i think that what's a don't disagree with that it it almost tries to rewire that basic lesson of economics to say there are significant trade-offs in identifying who are the losers from the trends that are unfolding in scotland identifying the big winners like Edinburgh and Glasgow and those that are struggling like north aisha and putting a very stark choice in front of us to say if we want to focus our resources where we'll generate more growth it could well be we focus on the cities of Edinburgh and Glasgow it could be if we want to try and mitigate some of the negative consequence of these trends we focus a bit more on north aisha or we actually as you suggested identify some of those that might lose from some of the trends are unfolding and say well what support mechanisms can we put in place you try and do both you try and generate economic growth you try and mitigate some of the negative consequences from the trends unfolding in scotland but there are choices to be made to say we have limited resources and we need to try and focus best where we can generate growth and focus resources we can try and help improve equality but i think it makes me slightly nervous if we say we're going down a track to say by doing all of these things we will naturally raise economic growth we have to make quite stark choices about where we put the resources and third when we're dealing with issues like our enterprise agencies sometimes their mission of raising economic growth has sometimes been muddled muddled in what way muddled in the way i think there's a there was a very good paper produced by professor richard harris i think it was evaluating regional selective assistance i think it was regional selective assistance but it said it was it was a good tool for safeguarding employment but it was less of an effective tool in terms of raising productivity i think that comes back to the point you're making we know there will be certain parts of scotland certain sectors within scotland that will be struggling in the face of global movements that we might want to say we need to safeguard jobs or we need to move jobs into areas in scotland that are more deprived now that might come at a slightly higher cost if we wanted to put them into more affluent parts of scotland and that's a choice we have to think very carefully about um professors angle out is i think i can't stand word where richards is uh is coming from and you know the points that he raised but i think it's important that you know we're talking about sustainable growth and balanced growth uh because you know focusing again on single indicators and looking at the average what's happening at the average of scotland hides or potentially can hide a lot of heterogeneity and i think we should we should be very cautious and i would adopt a different approach of a more balanced growth there are definitely areas that can drive growth we've seen that before but i think we should be very careful and that shouldn't be done at the expense of more remote areas or urban areas because you need to think about we need to think about how scotland will evolve given the geography and the socioeconomic composition and the demograph composition in the next 10 15 20 years and what we want to happen so we need to be my my my view would be we need to be very cautious not look at single indicators or what happens on average we need to look at you know different segments of the society in different areas and how sustainable growth will be for them as well i think committee members andy whiteman and jamie halkor johnson had questions that relate to the areas that some of our witnesses have just covered so perhaps andy whiteman and then jamie halkor johnson yeah just sort of three questions to throw into the mix there's been some talk about not picking winners and broadly i think most politicians agree that that's not a valid strategy but would would our friends here agree that i mean there are sectors that we will always need we need food we need health we need shelter we need warmth we need energy and that there are broad sectors where we need to move away from like fossil fuels we need to decarbonise the economy so there are clear drivers to the sectors that we need to at least make sure are going to be in in a good place in future that's our first point the second question is how important is savings and debt ratios i mean britain at the moment has got very very high levels of personal debt and a lot of that personal debt goes into consumption and is in fact behind a lot of the gdp growth so what's the importance of that i'll come back to the third one later because it's maybe a bit different perhaps i think john mason wants to add a top-up to that if he might and we'll we'll perhaps throw this open to the panel before we come to james yes i think i'll top up to what andy white was just said and what mr marsh said earlier on about you know we seem to be accepting that we can't pick winners and yet andy's just made the point that there are certain sectors and i mean i'm looking at back then at something like decommissioning but now we appear to have missed the boat or at least we're behind the curve on decommissioning oil rigs and such like compared to other countries now surely that was something that we should have seen coming and i don't know why we didn't see it coming or maybe i'm misunderstanding maybe we did but all these oil rigs seem to be going somewhere else so i mean taking an example like that you know are we just not good at picking winners because surely we have that was something that was predictable and we could have picked it professor mondana on the on the picking the winners i think in a knowledge economy increasingly comparative advantage is something which is man-made it doesn't necessarily only rely on natural resources so you know the the the role of policy in facilitating the emergence of industry and new sectors is actually very very much a possibility and so certainly i would agree that the all the clean energy sector is one where a lot can be done and scottland is already in a good position there but it could be you know it could be better yeah it could it could do better the issue of saving and that is a big issue because um the the you know the country essentially the financial crisis has resulted in an aggregate demand efficiency and and what has led growth the little growth that we have had in the uk in the last 10 years is is consumption and and and that is a problem and and i think i go back to the big issue of productivity i think what needs to what needs to be addressed is the investment side which in turn would would facilitate a more export oriented type of growth which we we are not having because of lack of productivity so yeah i lost track of what i wanted to add it i stop here now thank you perhaps richard marsh wants to pick up there it was just to pick up on the specific point that john mason and andrew whiteman raised about decommissioning and and the renewables industry and so on i actually think that's probably right where we've been lousy in the past it's about making specific projections about where we're going to be in 2030 as time we're not terribly great at that but no one is but yeah i fully agree with you we can make broad assumptions about where things are going think well what if household debt evolves in the following ways or what if we move more quickly away from fossil fuels absolutely we can do those kind of broad projections we're talking so far in quite an abstract way about some of these issues with the issue around decommissioner i think i can assure some of your concerns around kind of have we kind of missed the boat a bit and you think about the resources we had of our command the assets we had we probably should have been better positioned than we were thinking about the recent issues around bifab which is fairly close to to to my base of operations so i'm reasonably familiar with it we've got a situation where we have a company that's involved in the kind of industries we've just been talking about and within around an hour's drive of burnt island we have uh there's five docks the tape land sets out that dundee and montrose harbors will be invested in to take advantage of the renewables industry and decommissioning city of enbridge council's economic strategy says they're going to develop leaf docks taken to count renewables five council developed the energy park at methyl to deal with renewables and we have a company that's actually involved in it who's struggling um in burnt island in the renewables industry we're not so great at the execution of these plans particularly when it comes to local areas within an hour's drive for that company that that has been struggling we have five locations all trying to do the same thing all supported by public money we have too much of this going on a local level where we're not actually really competing internationally they're competing with one another and we often talk within the enterprise networks in the local level of how we come together a scotland plc there is no scotland plc in that sense if there were and this were an arm of a company and we had five sites all doing similar things and a struggling arm at that it would be well which do we close where do we concentrate our resources how do we collaborate more and bring up draw ourselves in but we don't have that conversation so part of this has to be about taking these quite sensible assumptions about where we're going to be going but implementing that in a far more focused way at a local level dr wilson if i can return to a specific point that mr whiteman made so as I understand it mr whiteman was making the point that we may gaze into our crystal balls and try and look at those sectors that will be become more important in the future but we already know that there are going to be sectors that are always going to be important such as food health and shelter as he was saying so something that I do feel that we can learn something from the international contacts so I was reading recently that the Netherlands has overtaken Spain as the largest producer of tomatoes in the EU and the user technology whereby what's important is is having energy in order to go and create artificial sunlight and a lot of water now so something that I think Scotland has is a lot of water and we have the ability to go and generate fossil fuel free types of energy I mean this I mean look I don't know enough about the case of the Netherlands but like you know this is the type of industry that you think okay well that's actually potentially one way that that's Scotland through our geography and through our have we have a comparative advantage in compared to other countries and this could be a type of sector and then you you also raised another point regarding the importance of savings and debts and the extent to which demand is driven by consumer choices and if this is driven by debts and that of course is a very very important important question we saw you know if if consumption is driven by by through debts rather than through incomes then it means that the the economy is obviously open to more adverse shocks if if there's a global shock it means that people are going to go and tighten their belts stop spending which is exactly what happened in in the last recession so really a movement towards increased growth through increased incomes and spending rather than through increased debt correction thank you just to follow up yes I mean my third question was going to be about in terms of household income which is important in the economy with historically in Britain you know very high house prices very high housing costs both in debt and rent what what role does reducing household costs play in improving the performance of an economy or is it really just swings around about so if for example housing costs as a target are kept down to 20 percent of average incomes is that good for the economy or is it not because obviously those people that are receiving those flows of funds from high levels of housing costs are no longer receiving them so so what role does reducing household costs play in increasing disposable income play in improving economic performance I guess in a situation where household incomes have been falling then reducing household costs is is helpful but but the key point about the you know the the saving issue is is not simply that people are spending money because you know they want to they are they're dissaving because they do not have income so they're you know they are increasingly there are people finding a job is not necessarily a way out of poverty right and this and we go back to the point that we discussed earlier about the great degree of economic insecurity which characterizes current labour markets so the the majority of the jobs which have been created in the last few years are either self-employed job and they are not talking about Rockefeller self-employed we are talking about zero employee firms we are talking about you know people really not necessarily making much of their of their enterprise we are talking about temporary jobs it's true that some people opt for a temporary job because it gives them flexibility but there is also evidence which suggested about 30 percent of those who are on a temporary job would like to work longer so these are you know technically underemployed and then those who are maybe working full-time are working on on very uncertain terms so this links up again to the issue of automation automation is often used as an excuse to justify this type of contracts but I think it is important that we understand that you know at the end of the day we need to take a kind of general equilibrium view of the economy you know if incomes are too low there isn't enough aggregate demand there isn't a market for firms so nobody wins and that's why it is important to address the problem of the way in which the labour market works flexible labour markets don't necessarily lead to a better allocation of resources if they underpin a deficiency in aggregate demand and that's where then institutional arrangements are important and perhaps even business models or like the cooperatives I mean what we are observing now is a situation where as never before in the modern capitalist history of the capitalist world we have had a reallocation of risk away from firms towards workers and I think that this is a key point which needs to be addressed. Professor Darbyn, Professor Zangalladis? I think the increase in work poverty means that housing affordability is a huge issue for some part the population I think there's also an element that there's a generational thing going on here that we've had a decade now of slow income growth and the ability for people entering the labour market during that period to save to have the income to save to build up wealth has just not been there the way it has in the past and the optimism about where your future earnings are going to go for the people that haven't experienced that kind of growth in the past is very different so the increase in unsecured consumer credit that's concentrated around the relatively young and those in work in poverty is a worrying feature and action that can help them is very worthwhile on affordability of housing and so on but it's it's a very mixed picture there are people that are doing okay and there are people that are really struggling. Yes I would agree with both previous speakers I think they highlight some important issues reducing housing cost definitely would help but I would I would say that also increasing household income would help even more and what we've seen the last 10 years is as the previous speaker said increasing work poverty flexible contracts that involuntary flexible contracts and part-time arrangements we have seen a reduction in real wages household income has has been reduced and what we've also seen which is related to the evidence that I submitted the returns to education education still pays a premium but that premium has almost half if you look at the year there it tends to years of education and if you look at the same goes if you look at qualifications the qualification premium the premium of having a university degree has reduced in the last 10 years and that goes back to it has implications for household income it has implications about the future in terms of growth how competitive the scottish labor market will be in the years to come especially in light of the labor market uncertainties that the great recession has created the prospect of of brexit and what would be the new working arrangements so so we need to look at those issues and we need to see how it has affected income inequality how is it it has affected the average household but also what could be the projections to the future and how competitive the scottish economy is going to be but also how equitable the distribution of income will be in scotland i just follow up on the some of the points you made there if 30 years ago only five percent of the scottish population went to university and had a university degree and that is now increased exponentially so that i don't know what the the current precise scottish figures but supposing it went from five to say 50 percent for argument sake simply having a university degree doesn't mean someone is guaranteed a higher income surely in the real economy so i'm just wondering is there been the wrong approach to education technical training over the past 30 years in scotland which i think is also a common theme with other countries as well so it's not a development purely limited to scott by any means but what what comment would you have on that i think i think it's an interesting and it's a valid point but the point i would the the counter argument to that would be that also the the distribution of occupations and the type of jobs has changed in the last 20 30 years as well so now we move on to from an industrial to a more knowledge economy so the figures that i have in my report suggest that you know the the number of the percent of the share of managerial and sorry for professional occupations so the set of professional occupations has almost double in the last 10 years so for from 14 it went close to 25 so then the so the occupations the distribution of occupations in the scott's economy has changed as well so uh so we we shouldn't necessarily expect that because you have more higher educated individuals the returns will go down because there are many people the the requirement has changed as well the nature of jobs has changed as well right well perhaps i think richard marshland to come in but perhaps before we come to that uh jimmy hulkward johnson had another issue i think he wanted to come in on well thank you come in on one of the things i was going to talk about with the skills which some of that's been covered um i actually just wanted to go back very briefly to the comments that richard marsh made on identifying new sectors obviously one of the key things in the highlands and islands region which i represent has been renewables and the opportunities that that's placed and you talked about bird island fabrications and the number of ports and harbours you know looking to that sector in that area and obviously in the highlands and islands that's magnified again i just wondered whether you know over the last number of years there's been a lack of perhaps focus or co-ordination by government and by the agencies of government in terms of where um you know the investment's been being made within particular sectors how other organizations how other countries co-ordinate or focus their efforts better perhaps identifying one or two um kind of key areas of expertise and and also how we can obviously looking forward maybe do this this better i know that some of this has been covered but it just be interesting just right i go into that it was that the point i was going to make earlier was the question raised by andrew whiteman which is um how would housing costs affect that kind of growth i should have thought it was a trick question so i let the other macroeconomist answer first but if you lower housing costs it would the economy have grown more quickly simply because people have more money to spend i mean the only way the only i mean if you put 20 economists in this room 1920 them would would say the same thing i think we all agreed broadly on that point the only people that talk about a healthy housing marker with prices going on would be estate agents and particularly for poor people where housing costs have risen more quickly they the poorest section of Scottish society tends to spend all the money they get so actually they're kind of they multiply they knock on effect and generating further economic activity if they're able to spend more would be greater so i think everyone here said pretty much the same thing um in terms of your points the i think since since devolution we've had eight different economic strategies plans and frameworks we've almost had a different economic plan every other year since devolution we've had more economic plans than we have had scotland managers since since devolution um if we if we we've talked about um different focusing our efforts on different sectors we've talked about someone mentioned earlier clusters the cluster approach used to be really popular in scotland that was what we used to base a lot of scotland enterprise activities around and we decided simply to move away from it's not that clusters have actually gone away they're still there but that's just not how we've chosen to approach it if we think about the kind of changes that most of us have suggested here today in terms of additional childcare in terms of having a look at city structures and so on these are things that take 10 20 30 years to come through we can't be in a position where we're changing the direction of travel for the strategic direction of economic development every second or third year we have to kind of pick a way to go keep it broad and talk about the broad trends that we've highlighted earlier but put our shoulder behind something and move forward and the Highlands and Islands is probably an interesting area where you do have that kind of concertive effort so you do have a collective ambition to develop things more collaboratively so i think probably things have done slightly better there than they are at the parts of scotland but again in terms of the renewables you have sites in the Highlands that will be competing with a number of different locations across scotland and there needs to be a choice there to say where do we focus our efforts i mean i think i think i think obviously with the Highlands you will have parts of the Highlands competing with other parts of the Highlands which is obviously again part of the issue and i think interesting when we talked about decommissioning because obviously there's a huge a huge opportunity there but there are very few facilities in in the Highlands and Islands and in scotland that are capable of dealing that why are we why have we been bad at identifying or at least taking opportunities some of the things that would seem very obvious would seem something that we could actually we could almost timescale in does everyone agree on the housing point and i saw some reaction to that from some of our guests sorry and we'll take a point with Gillian Martin at this point i really feel as as one of the conveners of the all-in-gas cross-party group i should point out that the majority of decommissioning actually happens offshore and we have not missed the boat on that we've actually been very active in that and actually the break-up of of installations on shores a very small part of decommissioning so i wouldn't lose too much faith right and on on the if we have cheaper housing the economy will grow point does anyone have any further comment to make on that from experts dr wilson and professor darby so i would say the having keep we've talked a couple of times about the fact that if you look at the average figure that can go and hide what's happening through through the entire distribution and i think the the issue that is coming up and has been brought up a few times is that there is a particular sector in the in of or in the economy that are being very adversely affected so in terms of of of making keep a housing available for low income individuals seems to be an absolute priority because their their their a large proportion of their income will be going on housing costs however if you're saying okay well all houses housing costs should be reduced 20 percent across the board people at the top end of the income distribution well that's just going to that's not going to going to have that that effect on them so you know targeting low income you know low income individuals this will have an incredibly important impact on their lives but um there are many individuals where um if you make the you know if it were the case that household costs were reduced by you know even up to 20 percent it's not going to go i mean that they'll just have higher savings or their fines of it's my point and professor darby i certainly agree with richard that the people who have leased income will benefit having more disposable income from lower house housing costs and they are bound to spend more of that they have very little ability to save on low incomes it will get spent so it will flee through to the economy the people at the top end who benefit from higher house prices benefit through their wealth their propensity to spend out of their wealth is much smaller than the low income people's propensity to spend out of their income so absolutely a macro every macro economist would agree that there's going to be a spending effect from that it might be low income people it might be people in key jobs that you need to bring into places where accommodation is expensive so the kind of key jobs arguments for subsidising housing for particular groups also is relevant but high housing costs can certainly be a drag on growth Jackie Baillie I would simply observe that housing itself is a sector that contributes to the overall economy so that there is probably a balance in there I wonder whether I could take a step back and just focus on something Richard Marr said because I'm not sure there's maybe been eight strategies but I defer to his ability to count but but would it not be true to say that actually in all of those strategies in all of those plans they are largely the same at a high level they are saying roughly the same thing you know we want the economy to grow we want it to be inclusive you know and and if you strip it apart there is broad agreement on what we need to do but actually the bit that lies beneath it the flexibility to spot opportunities and go after them and to do consistent things is maybe where we struggle so my question is this but in two parts right does the our economic strategy need to line up absolutely with other government policies and here are the two examples I would give you if we go for astonishing increases in productivity that's often at the expense of jobs and therefore we ignore inclusive growth so is the ambition to get productivity up in and of itself the right one and the second thing is we've signed up to a fiscal framework that actually focuses entirely on economic growth by way of increasing taxation as the fiscal measure it doesn't look at inclusive growth so so are we pulling into very different directions which at a strategic level is important for us if we're going to get this next piece of work right that'd be my first question convener professor montana the trade off that you seem to suggest between productivity and jobs I would tend to disagree in the sense that productivity is an unnecessary condition for growth and growth is an accessory condition for the creation of jobs now what may be happening is that if productivity growth is driven by new technology adoption for example there may be some displacement of work but again I would be careful there in in thinking that all technology adoption is necessarily bad for jobs because first of all there is what is known as technology and skill complementarity so a development in a certain direction may generate different jobs okay but then we go back to the issue of fairness in the in the model of you know distribution that we have in society because clearly you know 10 years ago everybody was talking about globalization now we talk about the fourth industrial revolution the point is the same there are dislocations which are happening which are bound to happen with respect to certain segments of the labour markets the only way to deal with those is to realise that they are happening and not to shift all the risk on those on those the economic risk on those segments of the labour market so that's why it is important again to use a kind of holistic approach to policy I don't think that productivity should be afraid of stimulating productivity in the fear that it may damage jobs I think we should go for it but then be aware that there are um you know transitional periods which may require retraining support I don't know I mean the debate is open as to what you know some people talk about the universal basic income some some people talk about public job being jobs being guaranteed jobs or something I mean these are all things which need to be explored um there aren't easy answers there they are certainly very complex issues which require a joint thinking from all the stakeholders in society with um Professor Montaigne that uh there isn't necessarily a trade-off and there is no there are no clear winners or losers in this case because you know as as Katja said there's going to be there's bound to be some reallocation of of of the workforce which is expected but exactly because it's expected the question then is what do we do to facilitate that transition from one job to another uh what are the mechanisms we put in place what are the safety networks in terms of welfare but also what are the uh the proactive policies we can adopt in order to train them to make sure that you know there's going to be a smooth transition to a new career pathway because there are uh alternative career pathways the question is how efficient the labor market is in identifying those uh alternatives and making those transitions as smooth as possible and this is related back to the issue of mismatch that sometimes it's been overlooked from the in the policy agenda there is significant mismatch in the labor market and that's you know mismatch is or how good how well jobs are matched with the individuals with the portfolio of skills that individuals have is a key metric for how efficiently the labor market is operating and goes back to the issue of productivity so again there can be policies in relation to that so we can identify what are the issues in the labor market how can we make the matching the pairing between the worker and the job as efficient as possible and make that match good because in scotland there is around 55 56 percent of uh job mismatch skills mismatch so that's and that which we mean if a lot of them are actually people who are over educated so that you know the the investment in education that we have had hasn't translated into an increase in productivity we need to understand why that is the case is it the case that people are acquiring their own type of skills or is it the case that firms are not making the most of the skills that potentially they have at their disposal and actually the split there is you know around by by under investing there are more over educating scotland than under educated and of course that has implications for productivity it has implications about um uh it has weights implications there is a weights penalty it has implications about uh job turnover so it has lots of implications both for the overall economy but also for the movement of of the labor force across jobs Richard mart yes i was just uh clarifying that there have been eight strategies frameworks and plans so going back to the framework for economic development in scotland part one part two recovery plans government i come with strategies and strategies for scotland um so i suppose the point jackie bellie's made it is probably right in the sense that there is a core theme running through all the um through all the strategies it places a lot of the heavy lifting on scotland enterprise and the enterprise agencies highlands islands as well um but are they different i think i think they matter because we've had on a regular basis a shift in emphasis so if you talk to public sector agencies in scotland at the time that the government economic she government economic strategy came out they talked about gasifying their strategies so they would take the government economic strategy gas and say what are the buzzwords in it what's it saying simply go right that's our strategy done so in some senses how these things do matter because they come out and they say we want to be like the arc of prosperity countries and here are the kind of characteristics displayed by those countries and you put that out to the enterprise agencies and to the local authorities and to the other agencies across scotland and they listen they take it on board and they think well what does that mean for us now if suddenly we say actually we didn't mean that we're going in a different direction that puts them in a quite an awkward position because you're marching your men at the top of the hill and tell them to go down the other side quite quickly and it means you don't have that those policies in place for that period of time over 10 20 years broadly to make sure we're doing the right things for a long period of time so we know they work and work well or they don't work and we move on to something else the point you made about the trade-off i think i get what most of the other witnesses have said that one thing we tend to fall down and scotland is is that we tend to look at policies quite narrowly so we tend to look at them in terms of will they grow the economy will they improve productivity will they tackle inequality will they help the environment the the the discussion about them where to with air passenger duty is is a is a good example to say the Scottish government every year produces a carbon budget which shows of all the different things that spend its money on what's the impact on the economy and how much pollution is produced those figures clearly show that aviation outside of coal mining is possibly the worst trade-off you could ask for in terms of GDP per unit of pollution when we have here debated here in the parliament what what do we do it's important to consider if you cut air passenger duty would it boost the economy yes would it increase pollution yes the spending on airplane tickets account is it probably to the benefit of more affluent households probably so it's important to say i wouldn't put it as as boldly as is it jobs or productivity so on but it's real choices to be made about the policies in front of us that might do some of the things that we want but have quite significant side effects that that we don't want and we need a more open evidence-based debate around that thank you well we're coming to the end of our time pardon me in this session so i don't know was there a final follow-up Jackie Bailey that you wanted to i'm happy to leave it there there are points of detail but i'm happy to leave it right all right well thank you very much then to all of our witnesses for coming in today and i'll suspend the session at this stage thank you we'll resume session and may i welcome Keith Brown cabinet secretary for the economy jobs and fair work and also the those with them Graham Fisher Stephanie Brown and Chris Kerr we're considering the statutory instrument registers of Scotland let me get this one right we are considering first the land registration etc Scotland act 2012 amendment order 2017 and thereafter moving on to the registers of Scotland digital registration etc regulations 2017 so we'll turn first of all to the land registration instrument and i'll invite the minister if he wishes to make a statement on this to start with that i will be very brief convener and if i can refer to both instruments at the same time if that's okay first of all to thank the committee for the chance to appear today and to answer questions about the instruments members will be aware that the shorter order we'll be discussing makes two minor procedural amendments to the 2012 land registration act these amendments are procedural and intended to improve the process for registration of title of land the Scottish Government's vision for delivering user focus collaborative digital first public services is a key enabler to how government will provide wide-ranging easily accessible digital public services for the people of Scotland so registers of Scotland are developing a range of digital services that will provide online delivery of land registration in a way that meets the needs of their customers and provides value to the people of Scotland the draft regulations are designed to facilitate these new digital services and they signal another important step in registers of Scotland digital transformation and it's aimed to become a fully digital business by 2020 the draft regulations provide a framework to support the eventual mandatory use of these digital services with a minimum six month notice period applying and consultation with Scottish ministers being first required before such mandatory use can come into effect and that will ensure and assist in ensuring that the register of Scotland are delivering the most efficient and effective land registration services to the wider Scottish economy they give effective proposals set out in registers of Scotland's consultation digital transformation next steps which sets out detailed proposals for changes to the land registration requirements to facilitate the introduction of new digital registration services including a fully digital transfer of title service the reaction to that consultation was very positive and respondents expressed strong support for the proposal to streamline and simplify the existing paper registration services it's worth noting that the r.o.s digital discharge service launched earlier this year has already proved popular with solicitors and lenders and has also considerably reduced the processing time for dealing with applications for discharges and given that I'm confident in the extension of these digital services will provide value for the people of Scotland as the convener mentioned I'm joined by Stephanie Brown Christopher Kerr and Graham Fisher Graham Fisher from the Scottish Government legal directorate and we're happy to try and answer any questions from the committee thank you thank you perhaps I could start with a couple of questions and this relates to the land registration order and I think if just a cut to the chase the digital registration order if I may refer to it as that has the effects you talk about but regulation 8 relates back to the land registration order so in the sense of regulation 8 relates to altering the land register rules to reflect what will be in the land registration order I think I think people are nodding in agreement now sorry Graham Fisher convener I was just going to make the point that the regulation you refer to makes the change together with the change in the order but one in relation to notification by the applicant for a prescriptive claimant and one by the by the keeper notification by the keeper so there are two slightly different things but they certainly work together yes well thank you thank you for that clarification the first question the particular issue that i'm interested in with regard to land registration orders the 60 day period being reduced to the seven day period and am I correct that there hasn't been consultation on that aspect of things no there's not and the reason for that is that we think the change is a minor and procedural one as I mentioned and I think there's also substantial safeguards in place in addition to that so the 60 day period can be far longer than is necessary if those that have been given notice have already responded to say they have no objection it's also true that further into the process both the keeper and the queen's qltr if I can refer to that acronym also are able to make checks on an application so we think there are sufficient safeguards and the change is efficiently minor and procedural not to have had a consultation on that specific issue might I I just refer back to when there was a consultation on the land registration Scotland act 2012 and I think those with you will be familiar with this the compilation of responses to that was issued in march 2014 and just looking at that consultation report on the 2012 act and looking at questions 42 and 43 and what that says about them and this related to the prescriptive claimant in the 60 day notice period what is said there is the period should be 60 days and it says respondents to that consultation so this is in 2013-2014 including the qltr the council of mortgage lenders faculty of advocates overwhelmingly agreed with the proposal that 60 days is an appropriate period the keeper will therefore include policy to this effect and draft regulations to be considered by the Scottish ministers so clearly when it was consulted on the 60 day period was considered by the consultees to be the appropriate period of time so do you understand that certainly I and I think other members of the committee of concern about that period being altered now without consultation I think I do understand that convener I would say that first of all this is a much reduced with the digitisation of the records which are there a much reduced number that's involved and as I understand it there is substantial support from the legal fraternity for the change but perhaps those that were actually involved in 2012 might want to comment on that. The reason for the 60 day period was really to give people who were notified by a potential prescriptive claimant sufficient time to check their title deeds to take legal advice before responding the change which is being proposed is only applicable in cases where the party has already done that and has responded to the prescriptive claimant to say that they have no objection and you think that I think in this new scenario 14 day turn around period would be what could potentially apply to dealing with these issues do you think that is sufficient to allow people to respond react deal with these issues? I think if they need longer the 60 day period still is there so they can take 60 days if they feel that they need 60 days the period will be shortened where they have reached a conclusion within that 60 day period and responded to say that they don't have any objections and what about others who might be affected by this who are not aware of what is going on who haven't been notified? So again our view on that is that there are three levels of check on that if you like so the first is that the applicant must satisfy that they have notified everyone who appears to have an interest under paragraph A and B paragraph C where the notification to the QLTR takes place in cases where notification does go to the QLTR the QLTR must also satisfy themselves that the applicant hasn't missed anyone and in the third stage the keeper does the same so the keeper will check that no one who should have been notified has failed to be notified in cases where anyone who appears from the history of the title should have been notified has not been notified and the application would be rejected and it would be back to the start of the process and in the cases where multiple parties are notified each one of them would have to say that they were content or object before the 60 day period would be reduced. Perhaps Andy Wightman would like to come in at this point. A few questions on this order. The prescriptive elements of it, the changes are contained in both orders that we're considering today. I'm just wondering why. I mean I understand that in the digital one that is about applications and therefore the changes to prescriptive claimants at the application stage could probably more logically be in there whereas the keeper's job in this could be another one but it makes it a little bit difficult to consider because basically they're both dealing with the same policy questions. I'm just wondering why they were put in two different orders. It's purely for technical reasons that it's not possible unfortunately to combine orders and regulations just purely in terms of the interpretation and legislative reform act. It doesn't accommodate that unfortunately or we would certainly have done it that way. That's a fantastic answer, thank you very much. I've precisely answered my question. Where did, on the prescriptive claimants question, the initiative come from this to make this change? Who thought it was a good idea? Where did this start? If I may, convener, it was first observed by Registrar Scotland operational staff dealing with these applications in conjunction with the parties making the application. The parties making the application found it difficult to understand why there was a standstill period when everyone who had an interest indicated that there was no objection. Since then they have been discussed with the Lost Society of Scotland who also had no objection to the change proposed. It's also true that they have, Registrar Scotland, of an obligation under the previous act to maintain a constant review of the services that he provided to improve them so it would have been under that kind of standing in junction at their delete to this. On the substantive policy question, the 2012 act makes changes to prescription, which I think are broadly welcomed in terms of tightening everything up. Nevertheless, it's still an area of contention in terms of policy. One of the problems in all of this is that the applicant and the keeper both have responsibilities to make reasonable inquiries—let's put it that way—within timescales. However, anyone who has not been asked by either of those parties may have an interest in this. There is no guarantee that either the applicant or the keeper will have a full knowledge of the potential parties that may have a claim to the land. One of the reasons for having a 60-day period, albeit on the back of a year's uncontested possession, is to allow other voices to come out of the woodwork. In that regard, I'm a little bit unclear about why one would want to reduce this period given that that was part of the original safeguards. I take the point that Chris Kerr made in response to the convener's question that this is just in those uncontested cases, but part of that period of time is for people who haven't been consulted at all to, as a last gasp option, put their hand up and say, well, what about me? I think that, as we said earlier, there are further checks through the QLTR and through the keeper subsequently to try to make sure that everybody that should have been notified was notified. Of course, you're right to say that you have the years period beforehand. There's also a further 10-year period after that, when objections can come forward, challenges can come forward to that. I also make the point that this refers to reducing number. It's only those who have been notified have raised no objection, too, but it's a reducing number of those cases in the first place. We think that that's a proportionate response to that. If, over the course of that 10-year period, as I say, somebody feels that they should have been consulted or notified that it wasn't, they do have the chance to come forward. It's not a done deal as soon as this is carried out. We don't be right. But anyone coming forward in that 10-year period is coming forward afresh with a title that's already been recorded and has precedence over their title if there's broad equivalence in the claim? If it's, I understand that ownership is not achieved until that 10-year period is passed, so it can still be challenged. I think that we think that it's proportionate. With those checks and given the number of cases there are, the different levels of checks, we think that that's a proportionate position to take in relation to the risk. So the motivation for this change in the prescriptive provisions, which are contained in the two bits of legislation, came from a relatively small number of people who said, why do we have to wait another 40 or 50 days? It did come from a relatively small number of people, but those applications themselves are relatively small. Since the 2012 act came into force in December 2014, there have been 17 successful applications for prescriptive claimants, so the headline numbers are small, therefore the number of people affected are also small. That's a relatively small number of people who are the people that are involved in this, most involved in this process, but it has been something that's been supported by others that are involved, not from register Scotland, but that interact with the process, save supported it. The idea of having to wait that extra 40 or 50 days when they know that everyone that's been notified has already said they have no objection, it makes it more efficient. With the safeguards that I've mentioned, we think that that's a proportionate way to do it. We are trying through digitisation to improve and make more efficient the service. I think that there's a quote on me that says that nothing is removed faster in these things than we've ever done before, and we're going to move slowly again. It is a progression to try not just for the sake of it, but it seems to me to be an efficient way to go about doing this. If there's a 50-day period that's not being used when everybody that's been notified has said they have no objection, it seems to me an efficient way to go about things. It would naturally occur, I would imagine, to those most involved in the process to see the need for a change. Are there any other questions? Jackie Baillie? I understand that correctly. If a relevant person is notified and they say they don't object, the keeper then notifies them because it's uncontested and they then have seven days. They could change their mind. Is seven days enough for them to then instruct somebody, a lawyer or whatever to do this? We think that it is. The process is no more than saying to the keeper that they object. They don't have to justify it, they don't have to go into detail. When they've taken the decision in the first place, they've at that stage already taken sufficient legal advice. They know the title position. If they change their mind in response to the keeper's notification, all they have to do is say, I now object, and it's a very straightforward process that shouldn't require any additional legal advice at that stage if they've just come to a different conclusion. In a situation where there are perhaps rival prescriptive claimants, the local community might have an interest, obviously that period of seven days is very short in which to be able to both notify people and allow them to come back in and lodge an alternative claim. I would suggest that there can really only be one prescriptive application at a time because of the year's possession requirement, so that you can have multiple parties in possession at the same time, unless they are looking to take title jointly between them in common. You can't really have competing applications in that way. It was a slightly different issue on the more digital regulations. The convener wrote to you on 7 November and you replied on the 10th. That was particularly about the trial that's been going on up until October 2017, and it's said that almost 8% of all discharges received by Registrar Scotland were submitted via the service. You go on to say that 81 per cent of respondents rating it as satisfactory or very satisfactory, which raises the question as to what did the other 19 per cent think. Were there any particular concerns that the other 19 per cent had? The 19 per cent responded to saying that they were neither satisfied nor dissatisfied with the service. Within the survey, we had two further functions that were dissatisfied and very dissatisfied, neither of which were selected by any of the respondents. That feedback forms one element of the activity and engagement that we undertake with our customers. We also have direct engagement as well. Since our service has gone live, we've attended 57 events, spoken at 14 of those, had stands at 21 events, all with the aim of reaching as many of our users as possible to try and find the types of service that would be of value to them. For this one in particular, we've recently introduced some additional functionality, and we actually have a change that takes effect on Thursday of this week. That's in direct response to customers' feedback that they would like a dashboard function, so that they can control their work from within the service, and the latest feature of that dashboard will be available to them on Thursday. The registers that we are expecting them to do quite a lot at the moment, because the idea of the land register by 2024 is obviously a major target. We're not overloading them at all, are we? Given that this initiative has come, as we've heard in response to the questions from Andy Wightman, as an initiative of registers, I don't think so when having visited the office. It's a big challenge, as you say, to land registration by 2024, but I think that it would help with a workload rather than hinder it. If there are no more questions, I'll move to the formal debate on the motion. Does any member wish to speak in the debate? Andy Wightman. To my mind, the burden of proof on changing the law is always with those making this suggestion. There's been no consultation on the prescriptive claimants' provisions, and given the controversial nature of prescriptive claimants in any event, I'm nervous that there may be unforeseen consequences here. I'm not entirely sat happy with the notion of changing the law relating to timeframes on the basis of a very small number of cases. I don't doubt that this may be a valid change through the timetable. I don't doubt that that may be the case. I just don't think that the case has been made in a wider context as to the potential risks that this throws up. I think that the prescriptive provisions that were put in the 2012 act are a significant enhancement on what went before. I have absolutely no doubt about that, but I am nervous about interfering with them at this stage on the back of what appears to be comments from people who just want things to go a little bit faster. I am not minded to support those provisions. Because, as Mr Fisher identified, the prescriptive position provisions are contained within both bits of legislation that we are considering today for legal reasons, that means that I am not minded to support either instrument. However, I have to say that the other measures in the land registration amendment order are not objectionable and the whole of the rest of the digital one is not objectionable either. I could go back a stage because, in fact, my mistake, cabinet secretary, I should have asked if you wish to move the motion before then inviting Mr Whiteman or anyone else to speak in the debate. So I suppose the first question is whether you wish to move the motion. I would formally move the motion, convener. Well, we'll take Andy Whiteman's comments as being in the debate. Does anyone else wish to speak in the debate? John Mason. I mean, I do have some sympathy with what Andy Whiteman is saying and I mean, especially if there was going to be any disadvantage for the community who might take a bit of time to get moving and seven days just seems on the surface to be quite tight. On the other hand, I think I'm reassured that if it's 17 applications since 2014, we are talking a pretty tiny number of issues and if there's not been a lot of problems since 2014 and that if these 60 days haven't really been required on a regular basis, I think I'm a bit more relaxed about it, but maybe the cabinet secretary could just reassure us about that the communities are not going to be disadvantaged. Can then, before I give the cabinet secretary a chance to respond, I think having heard what has been said, my concern would remain that 60 days being reduced to seven reduces this to a short period, which I think those with experience of dealing with the registers or for the registers themselves is an extremely tight turnaround time. I'm not sure that I've been persuaded by what has been put forward in terms of this being put forward in terms of efficiency because I don't see when we're talking about 10-year prescriptive periods and so forth that the difference between 60 days and seven is that material when it comes to efficiencies, but I'll allow the cabinet secretary to respond. On the point about seven days, I should say that seven day period only kicks in after people have had the chance to object, but I've said that they'd have no objection to this, so that seven days is an additional protection in relation to that, which I think would meet some of the concerns expressed by at least Mr Mason. I think also the points I've made about the protections that are in place. First of all, this will go through often the QLTR, it will go through the keeper who's an objective judge of whether the right people have been notified at that stage. In addition to that, you have the subsequent 10-year period where, of course, it can become evident if that was the case that somebody who wasn't notified hadn't been notified. I think that those layers of protection for what are not just a very small number but a receding number as digitisation progresses, this number becomes less and less. I think that it's a very proportionate way in which to try and ensure that there is increased efficiency. We are regularly and rightly enjoined to increase efficiency in public services, not at the expense of people's rights and I don't believe that that does in front of people's rights. For those reasons, the protections that are in place, in fact, nobody is going to be confronted with a seven-day period in isolation, only those who have already made known their views already. I think that this is a proportionate way to go about improving and making more efficient public services. Thank you very much. We'll simply move to the vote then on the question that is that motion S5M-08842 be agreed to. Are we all agreed? Yes. We'll have a division then. All those in favour, please raise their hand. All those against, please raise their hand. The result is four votes in favour and five votes not in favour. There were no abstentions, the motion is therefore disagreed to. We'll move on then to the cabinet secretary. Apologies, I keep calling you the minister. The cabinet secretary has already spoken on the second order that we were considering here. Does the cabinet secretary intend to move that motion on that order? Yes, it formally moved. Are we agreed to that order? I'll put the technical terms of the motion. The question is that motion S5M-08844 be agreed to. Mr Wightman has correctly pointed out that the motion has been moved. Therefore, we move to the debate. Does anyone wish to speak in the debate? Mr Wightman. Thank you very much, convener. I very much welcome the regulations. Digitisation is the future, notwithstanding some of the problems that have been in the public sector with digital projects, it helps to speed things up and provides better quality information to everybody who uses public sources of information such as the registers of Scotland. I am very content with the new regulations. My problem is that, for legal drafting reasons, there is section 8 relating to the prescriptive claimants, which, as I indicated in the previous debate on the previous order, I am not convinced that a sufficient case has been made to change the law. Again, it may be perfectly innocent, but I do not see that case. I am concerned about unforeseen consequences, so I am minded not to support this, but only because of section 8. Yes, I could perhaps add that that is my only concern as well. Perhaps a further concern is that I think that, as has been indicated, the reason that has been put in the same instrument is for technical reasons, rather than one being able to separate the things out, which would have resulted in a perhaps a different approach to matters. Does the cabinet secretary wish to respond to that? No, I think that I made the argument, so I'll let it on. Yes, thank you very much. In that case, the question is that motion S5M-08844 be agreed to. Are we all agreed? Yes. Yes. There is a division, so we will move to vote. Can all those in favour raise their hands? And all those not in favour raise their hand? The result, again, is four votes in favour, five votes not in favour, and there are zero abstentions. The motion is therefore disagreed to. Accordingly, I thank the cabinet secretary and those who have come with him and suspended the meeting and moved to private session.