05/06/2013 Newsnight Scotland

Business hates uncertainty and constitutional upheaval. Right?

Wrong. Look at this lot - just some of the foreign companies which have

invested in Scotland in recent years. They don't seem to care

whether we'll be independent or not. And I'll be speaking to the woman

who leads the organisation that's brought them here. What's the secret

of her success? Good evening. This wasn't supposed to happen, was it?

But Scotland is proving to be an extremely attractive destination for

foreign investors, even though we could be independent in a few years'

time. Today's report from Ernst & Young says that prospect isn't

deterring investors. If anything, the reverse appears to be true. On

the other hand, maybe it's proof that devolution is working? Andrew

Black reports. For the last 30 years, this global engineering

company has been making equipment for the off shore industry from this

base in Aberdeen. Half of what it makes is sold to foreign countries.

It reckons having an operation in Scotland gives is a competitive

edge. We now have nearly 3,000 people in the Aberdeen area alone

and that scope and that breadth allows us to tap into a pool of

engineering talent. That talent is resourceful and knowledgeable and

has all the experience of 30 years of working in this industry. When it

comes to Scotland attracting investment, a new report said the

nation is punching above its weight. The number of projects involving

direct foreign investment rose by almost half. And it compared to a 3%

rise in projects coming into the UK as a whole. So what is behind it?

The international competition for that investment is increasing

significantly, even as we speak. Therefore, it is important that

Scotland maintains its readiness and its energy around attracting that

investment. Amazon, Del and glabgs are all -- GlaxoSmithKline are all

companies that have committed to Scotland. Proof say the SNP that

firms would be put off is scaremongering. It highlights the

number of projects is at a 15-year high. That shows investor confidence

and that some of the scare er we heard about the independence debate

undermining investment is not the case and the reverse is true. So

what this report indicates is that Scotland remains a very strong and

positive destination for investment and the evidence speaks for itself.

What we are seeing is a big vote of confidence for Scotland within the

United Kingdom. A commitment to the UK's regulatory environment, support

for the UK's low tax environment and a determination that we will

continue to use all the international offices we have to

promote Scottish business. That is good news for everyone. But both men

will be aware of the challenges which the report points to. For

every �100 invested in Scotland, 42 comes from America. For the UK it is

39. But look at who we aren't attracting. Indian companies account

for less than 3% of investment, but for the UK as a whole it is more

than 5%. China accounts for about 3% of inward investment, but Chinese

investment in Scotland so Is low it -- is so low it didn't register in

the survey. These are high quality jobs. We are not getting the low

grade call centre investment. Peopled that complaints about that.

The a lot of the investment is hi-tech and FMC technology and a lot

of the investment in the North East of Scotland that is the oil related.

So perhaps it is a more sophisticated, more skilled form of

investment. And of course these inward investments create indirectly

jobs for companies who service the new companies coming in one way or

the other. This report measures attractiveness and there is no doubt

that foreign companies do see Scotland as an attractive place to

come, regardless of the debate raging over Scotland's future.

Andrew Black reporting there. We'll get to the heated political debate

in a moment. But first I'm now joined here in the studio by Anne

MacColl, the Chief Executive of Scottish Development International.

So what is the secret of Scotland's success, you have been working hard

to get these figures up to a 15-year high? Yes we have. There is a couple

of thins that stand out as being the things that are the most important

things for Scotland being successful. The first is the quality

and the nature of the integrated support that the public services

wrap around inward investors. If I give you some figures. 76 projects

that we attracted into Scotland last year, almost half of them came from

inward investors who already have a base in Scotland. That Thames us

something about the support we have. They're coming to Scotland and

developing their operations here and the third thing that stands out is

the quality of the workforce in Scotland. We have world class

universities and research institutions and many of our skilled

workforce come from those universities. And quality of life

has been cited as part of that? so if you look at companies from the

US who is set up a new operation in Inverness, 126 high quality new jobs

and are attracting fantastic high skilled people into that part of

Scotland. That is great news for the Highlands and Islands as well.

figures for Scotland are in contrast to the English regions which have

done badly. Wales and Northern Ireland also compare well with us

too and is that the devolution dividend do you think? They can

attract foreign investors? It is about the quality of what it is we

provide in terms of support. I think the joined up nature of what we

provide as well is important. So if I look at Highlands and Islands

enterprise, Scottish Enterprise, it is an integral part of it. But we

have 30 overseas offices with people out there who are close to global

investors and to corporate HQs, so we are getting the different

business angles that these investors need and they need us to understand

where their business is going and I think we can do that by looking at

it from Scotland and the overseas angle. As you work to attract

investors, you're having to compete with London and the south-east of

England, as the English regions have to do. One Sunday newspaper had a

stark headline how London is bleeding Scotland dry. How can you

compete with London and on those terms? I think we are clear where

our competitive propositions are on a sector by sector basis. We know

that we are strong in energy. Both renewable energy and oil and gas. We

know that we are strong in life sciences. We know that we are strong

in business services. What I see is that projects who come to Scotland

rather than London look at Scotland as having fantastic quality

workforce, very low attrition rates, good quality of life and that makes

for an interesting financial and stable business package for these

companies. You mentioned the overseas offices, as you speak to

investors, does the independence referendum come in in these

discussion and do you get asked about it and have to reassure people

about it? What happens is our people out there, many of whom are locally

hired in areas such as India, such China, they are there to know and

understand what the global headquarters of our offices are

looking for in Scotland. And what we see is the interest in those inward

investors into the business environment that Scotland has to

offer. It is, it is beyond... You know anything other than referendum

questions. What we are looking at is the economic benefits of investing

in Scotland. So they see a stable business environment, they see a

clear strategy for developing inward investment and we see, they see

Scotland, a small country, but with some attractive propositions that

can and does compete in a confident way on the world stage. That is

important, that confident message is important. For them, politics

doesn't come into it? Well we see that the Ernst & Young survey

demonstrated why companies continue to come to Scotland and that is

about the quality of the support that we provide and the skilled

workforce and the follow on investment that comes from the

number of investors who continue to invest and to develop their

operations in Scotland. It speaks for itself. Where can we do better,

perhaps a lack of investment in China, India, Russia and interesting

that China doesn't invest, when you think of the links that have been

going between Scotland and China in the past couple of years? The limps

go -- links go from strength to strength. We are strengthening our

team there and we have opened a new office in southern China and we have

across Asia a 25% increase in the number of people working for

Scottish development international and the agencies here. With the

other side of investment is trade and we have seen the number of

Scottish companies trading out to China growing and those, that

increase in exports has been to almost 9% by the end of last year.

So the trade and the investment, we are continuing to reinforce our

efforts into China and I think we will see some good results over the

next few years. Thank you. In a moment we'll be joined here in

the studio by Scottish Labour's finance spokesman, Ken Macintosh.

In our Edinburgh studio is the convener of the Finance Committee at

Holyrood, SNP MSP Kenneth Gibson. Good evening. It's very positive

news for Scotland, the referendum may not hinder investment, but

perhaps being part of the UK is actually helping investment too?

Well, I think it's an absolutely outstanding report. What it talks

about is Scotland's sparkling performance, it's robust

performance. It talks about the fact that Scotland is doing well right

across the board. In many sectors, manufacturing, investment, we are

attracting twice the proportion the rest of the UK is. We are doing

exceptionally well. The document points out the fact that the

scaremongering campaign of the Better Together, the "no" campaign

is having no effect. The report makes clear, if anything, the

independence referendum is actually helping to focus people on Scotland

and, therefore, make it more likely to be a place were people want to

think about investing. Do you think you are out of the woods yet though?

Jim Bishop from Ernst & Young says the referendum hasn't acted as a

barrier to investment so far, that may change as the discussion

intensifies? The Government is called No Room For Placent Sid,

no-one is placent. We see no evidence what so ever so far that

the referendum will have any adverse effect on inward investment in

Scotland. The document says quite the reverse. If we think about what

the Prime Minister and Alastair Darling and what the Labour Party in

Holyrood have been saying. Macintosh you are with me in the

studio. Thank you for joining us. Looking at the report, unusual words

for accountants it talks about a "sparkling performance" for

Scotland. It says the possibility of independence seems to have little

effect on decisions. If anything, the reverse appears to be true. So,

Labour's warnings are not justified? It's great news, isn't it? Great

news for Scotland the economy is doing well we are attracting inward

investment. Scotland has always had a pretty good record. It would

appear under devolution our record is getting better. It's a great

testimony to devolution. Great news that uncertainty of the referendum

is not putting people off. That is good news. We don't want people to

be put off. Consistently you have said that constitutional change and

uncertainty caused by that would put people off investing in Scotland. An

argument that turns out to be completely untrue when you look at

the figures in this document. very... There is no doubt there is a

question mark over Scotland's future. We don't know, it has an

uncertain future until the referendum is out of the way. What

we don't know is, for example, would the figures have been even better

without the referendum? The second conclusion the report makes is that

it points to the fact that all the devolve devolved region, all those

parts of Britain with devolved parliament's have done well, not

just Scotland, Northern Ireland and Wales. That speaks a world for the

powers of devolution. Don't admit to scaremongering then? Absolutely not.

I want... I have always wanted Scotland to do well under any

circumstances. Kenny Gibson always thinks, like the Scottish

Government, to fall flat on it is face. Far from it, I want it to be

successful as possible. I want devolution to be a success. I want

this country to be a success. I don't think the referendum would be

beneficial to us. I point out to Kenny what has happened is that

Scotland have prosper prospered as being part of the UK. People come

here because we are part of the UK, part of this huge market and part of

Europe. Do you make of his point, it could have been even better if

wasn't for the referendum? The UK offers one currency, regulatory

framework and so on, lots of stability. Could things be even

better, do you think? I mean Ken is talking nonsense there, he knows it.

The UK had a 3% increase increase inward investment, we had 49%

increase in Scotland. That will be difficult to beat. What is important

is that the report make it is clear whether Scotland is or isn't

independent there are strong foundations to build on. We think a

Scottish economy, Tynely tuned would do better on the world stage. If we

can do well with devolution we could do well with decisions made in

Scotland than decisions made in London. Why? There is not

uncertainty because of the referendum. If there is

independence, that we wouldn't, perhaps, know about the currency, we

wouldn't perhaps have this single market, we wouldn't have embassies

abroad perhaps it would be worse under independence? Clearly we will

embassies abroad and we will have a currency which will be sterling. I

don't think anyone investing in Scotland who make long term

decisions are taken in by these stories from the "no" campaign. They

make decisions that will last for many years. If they thought

independence would be the disaster that the "no" campaign keeps trying

to frighten people about they wouldn't invest so much money at

this time. One thing I would say, the Finance Committee, which took

evidence on this, and Lloyds Bank, Scottish Enterprise, say the

independence referendum made more people talk about Scotland more

people focus on Scotland. It is giving us a boost and helping

contribute to the result we see at the moment. You see London's

dominance. I mentioned the Sunday Herald, is London bleeding Scotland

dry? How can Scotland continue to compete against London? If we had

independence we could compete more successfully against London? I don't

follow the latter point. I don't think there is logic there. The

report shows that Scotland can compete. This is the point, Scotland

is doing well despite the huge attractions of London as an inward

investment place vehicle. Investing in Scotland gives you access to that

market. Kenny says the success of Scotland as a devolved nation means

we will be more successful as an independent nation. There is no

logic to that what so ever. I can't see anybody this report, who is

investing in Scotland, thinking it is because we will become

independent. They come here, look at the opinion polls and see that...

will have to leave it there. Thank you very much. Kenny Gibson in

Edinburgh thank you very much for joining us. A quick look at

joining us. A quick look at tomorrow's front pages: donor's gift

to Labour avoided a tax bill of �1. 5 million. In the Independent, news

flash, ex-Murdoch chief pleads not flash, ex-Murdoch chief pleads not