SCOTLAND'S economy could be seriously undermined if statistics on exports are inaccurate, MSP Gil Paterson has warned.
The Clydebank and Milngavie MSP was taking part in a debate about the effect of Brexit on Scotland’s economy when he told how some top business leaders believe exporting figures under-value the reality of what Scotland is exporting.
He cited experts' views from an evidence-giving session at the Economy, Jobs and Fair Work Committee last year, including representatives from the Scottish Whisky Association, Scottish Engineering and Scotland Food and Drink Ltd.
Mr Paterson has said if the claims are true it could have a serious effect on business confidence and economic growth in Scotland.
At the committee, David Williamson, public affairs and communications director of the Scottish Whisky Association, said: “On the question of export statistics we could not agree more with the point that Gil Paterson made.”
On November 9, Mr Williamson also insisted obtaining detailed Scottish export statistics have been a “challenge” and the Scottish Government’s figures do not tally up with figures from HMRC.
“[This] makes it difficult to get a clear picture of what our export offering to the world is,” he added.
Port of departure was given as a reason why some Scottish exports may not be counted, despite official rules being in place to ensure all Scottish goods going through ports are counted correctly.
James Withers, the chief executive of Scotland Food and Drink, said: “I am almost certain that the £1.1 billion of food exports undervalues what we export for precisely the reason that Gil Paterson gave in talking about the port of departure.”
The export value of Scottish salmon is undervalued he told the committee.
He added: “It seems crazy to me that if someone buys a Scottish steak in Shanghai, we can tell them the farm it came from but we cannot track whether it is a Scottish export… The system needs to be fixed.”
The chief executive of Scottish Engineering, Bryan Buchan, outlined how some companies are labelled as non-exporters and sell goods to companies that do export them.
He told the committee: “I give the example of an Aberdeen manufacturer of flotation devices and umbilicals, which are used for deep-sea extraction. … All of them were going to the likes of West Africa and South America for deep see extraction. Nevertheless, the Office of National Statistics categorised the manufacturer as a non-exporter because it was selling its components to major extractors including the likes of Shell and BP.”
Mr Paterson has spoken out about the implications of the potential inaccuracy in Scottish exports.
He said: “The statements of these business leaders to the economy committee are incredibly worrying, and we need to find a way to measure for sure what we are exporting from Scotland. It seems the current system is not adequate enough.
“During my speech, I highlighted the statements from these top business leaders – and they are incredibly worrying. We must find a means of ensuring Scotland’s export power is accurately reported.
“If export figures are undervalued, it is very bad news for the health and reputation of Scotland’s economy.
“Exports are an indicator of the clout an economy has, and if the figures are wrong it will almost certainly have an impact in the optimism businesses have about the prospects for their companies.
“As a result of this pessimism in Scotland’s economy, we could see businesses avoiding Scotland all together, or holding back on expansion plans.
“Around 80 per cent of jobs in Scotland are in the private sector, so it is extraordinarily important we ensure we maintain business confidence in what has been a dark decade for finances for many businesses.
“If companies are pessimistic due to under-reported success in Scotland, it will have a knock-on effect on how many jobs they provide and thus people’s disposable income and spending habits – which is essential to growing Scotland’s economy and making a more prosperous society.”
Comments were made to the Scottish Parliament’s Economy, Jobs and Fair Work Committee on November 8 2016.
Full speech to the Scottish Parliament during the Brexit economy debate on Tuesday February 28 2017:
Thank you very much Presiding Officer.
Can I first declare an interest that I own a business which relies heavily on exports/imports from the EU.
Ever since the Economy Committee was formed in this session there has been concerns over the statistics, particularly in regards to the Scottish economy, that they are not peculiar or dependable to adequately assess Scotland’s economic output.
Leaving the European Union has raised enormous questions over how Scotland will trade with the EU. Even currently there is questions over what value Scotland exports to other countries and I can only imagine how much worse this will get causing further exports from Scotland to go unreported.
During one committee session we had the pleasure of having representatives from the Scotch Whisky Association, Scottish Engineering and Scotland Food and Drink Limited.
All of which highlighted problems with statistics, showing Scotland’s export power.
The Scotch Whisky Association highlighted that the figures in the Scottish Government’s global connection survey do not always tally with the figures of HMRC.
Scottish Engineering gave the example of a North East manufacturer of flotation devices and umbilicals which were going to the likes of West Africa and South America. Nevertheless, the Office of National Statistics categorised the manufacturer as a non-exporter because it was selling its components to major extractors including the likes of Shell and BP and through intermediaries.
Scotland Food and Drink Limited gave a stark comment saying that although the figures are flawed, provided they are consistently flawed they will still get a sense of direction. However they do take the figures with a huge “pinch of salt” and if I can quote James Withers of Scotland Food and Drink Limited directly
“it seems crazy to me that if someone buys a Scottish steak in a supermarket in Shanghai, we can tell them what farm it came from but we cannot track whether it is a Scottish export using our way of measuring that in the UK.”
Scotland Food and Drink are almost certain that the £1.1 billion of food exports undervalues what we export for precisely. They believe that we are also undervaluing our export salmon, which is our number 1 food export and the UK’s number 2 food export.
This is simply not acceptable.
I fear Scotland’s situation is becoming very similar to the Rotterdam effect - where trade in goods with the Netherlands is artificially inflated by those goods dispatched from or arriving in Rotterdam despite the ultimate destination or country of origin being located elsewhere.
In our case it would be the likes of Felixstowe and trade in goods for England is artificially inflated with Scottish products.
This uncertainty is both damaging to individual companies but also to those industries who benefit from their skills.
I own a business that my son runs which has millions of pounds in turnover of highly specialist coatings for the industrial and automotive industry. Just about 100% is produced in the EU all of which comes via an English port and a substantial amount is stored then shipped from England from holding companies.
Therefore I’m not at all sure if any of this produce is registered as a Scottish import from the EU.
Or is it considered as a UK import from the EU.
Or is it classed as a UK export to Scotland. I have no idea what the definition is.
In normal circumstances, none of this would matter. However, when day after day; week after week figures are being bandied about that potentially is damaging to the Scottish economy then clearly something needs to be done.
No business no matter their size would be without the vital numbers for their performance, never mind a country.
With all the statistics collected by the ONS I find it hard to believe the figures for different parts of the UK are not able to be assembled with confidence. Rather than surveys as it is in Scotland at the moment.
With Brexit its vital the stats are spot on.
Presiding Officer, I commend the committee’s report to Parliament.
Press releases prepared by Alan Ferguson, Gil Paterson MSP's communications manager, who can be contacted at firstname.lastname@example.org or 07342 061722..