The work of the Committee in 2024-25, and Industrial transition in Scotland

The Scottish Affairs Committee

1. Patricia Ferguson was elected Chair of the Scottish Affairs Committee on 12 September 2024, with the Committee membership being nominated on 21, 28 October and 4 November 2024.¹ The Committee met for the first time on 30 October 2024, two days after most of the membership was agreed. This report is the Committee’s first annual report of this Parliament, covering the period from nomination until the end of the 2025 calendar year.

2. The first chapter summarises the Committee’s activities in its first year, and sets out thematic focuses underpinning our work. The second chapter provides individual summaries of each ‘one-off’ evidence session and inquiry, with the exception of our inquiry into the industrial transition in Scotland. Rather than producing a standalone report for that inquiry, our conclusions - which are cross-cutting and relevant to much of our sector-specific work - are set out in chapter three of this report.

The work of the Committee in 2024–25

3. In our first year, we have undertaken five inquiries, covering GB Energy and the net zero transition, Scotland’s space launch sector, the operation of the Barnett formula, industrial transition in Scotland, and the opening of the UK’s first sanctioned safer drug consumption facility in Glasgow. These inquiries are summarised later in this report. One year on, we have concluded four of these inquiries and published four reports, including an interim report for our GB Energy inquiry, on the future of Scotland’s oil and gas industry.

4. Alongside our roster of headline inquiries, we have examined a range of topical developments in Scotland through ‘one-off’ evidence sessions. These are stand-alone evidence sessions which will not result in a report. They are often arranged in response to fast-moving or topical developments, and do not include public or wider stakeholder involvement through written submissions. These sessions have included the sustainability and economic contribution of salmon farming in Scotland, the impact of reforms to Royal Mail’s Universal Service Obligation in Scotland’s rural communities, support for veterans in Scotland, and proposed cuts to jobs and news programming at STV. We have also taken a keen interest in the work of the BBC in Scotland.

5. These one-off sessions are in addition to our regular evidence sessions scrutinising the work of the Secretary of State for Scotland, which take place three or four times per year. In these sessions we examine intergovernmental relations, delivery of the Secretary of State’s priorities, and topical issues affecting Scotland.

6. We are proud to have secured strong female representation amongst those we hear from in these hearings. At our very first meeting, we made a formal resolution to seek to ensure that at least 40% of the people we chose to hear from are female. One year on, approximately 45% of the people we chose to hear from have been female, exceeding the 40% best practice target.

7. We have also delivered a parliamentary ‘first’, in the form of a joint meeting with a committee of the House of Lords. As part of our inquiry into Scotland’s space launch sector, we held a concurrent meeting with the House of Lords’s UK Engagement with Space Committee. This enabled both Committees to share expertise, and improve our overall understanding of the issues in Scotland’s space launch sector.

8. Alongside our regular meetings and evidence sessions in Parliament, we have travelled extensively in Scotland. In our first year we have visited – amongst other places of interest to our inquiries – Scotland’s pioneering spaceport in Shetland, salmon farms and community energy projects in the Western Isles, and key parts of Scotland’s energy industry on the east coast. We also visited Norway and Portugal, in connection with our inquiries into the net zero transition, and safer drug consumption facilities. The opportunity to see infrastructure and operations first-hand, and engage with businesses, stakeholders, community leaders on the ground – including in overseas – has provided insights which we have taken back to Westminster and which have informed the findings of our reports.

9. We met in Glasgow on 20 October 2025, and held an oral evidence session on preparations for next year’s Commonwealth Games. We plan to continue meeting in Scotland once or twice per year over the course of this Parliament.

10. We have recently launched four new inquiries, which will become the mainstay of our work in 2026. These inquiries will examine the future of Scotland’s high streets, digital and fixed link connectivity, and skills and jobs in Scotland’s defence sector. We will also conclude the second part of our energy inquiry, focussing on the role of Great British Energy in the scale-up of clean energy sectors in Scotland.

11. While our work programme over the next year will continue to evolve in response to the issues of the day, six strategic themes have shaped our work to date, and we expect them to remain central to our scrutiny over the coming year.

• Scotland’s economic and industrial transition. Our inquiry into Industrial transition in Scotland has explored the legacy of past deindustrialisation – including the decline of steel and heavy manufacturing industries. Throughout our work we see parallels between these historic industrial transitions, and the threats to contemporary industries, including oil and gas and shipbuilding. On the other hand, we have also heard about Scotland’s world-leading innovation potential, whether as a renewable energy powerhouse, a leading hub of advanced manufacturing, or pioneering entirely new industries in the UK, such as space launch. Looking ahead, we will maintain a strong focus on ensuring Scotland’s industries remain competitive and resilient, and that the lessons from past deindustrialisation are applied to today’s structural economic changes. The UK Industrial Strategy will be a key lens for this work, particularly in respect of unlocking the potential of key Scottish sectors such as clean energy, space, and high-value manufacturing.
• Skills and jobs. Across our inquiries to date, workforce sustainability and the skills pipeline have emerged as consistent themes. Skills are critical enablers of economic growth, and will be key to successfully addressing the biggest challenges the country faces. Indeed, our GB Energy and the net zero transition inquiry highlighted the need to reskill workers from traditional energy sectors, whilst our new inquiry into defence skills and jobs will examine how Scotland can maintain a skilled workforce in defence-related industries. Future-proofing employment and building robust skills pipelines to meet changing industrial needs will remain a priority in our work.
• Public health and community wellbeing. A shared interest in tackling Scotland’s social challenges has underpinned much of our work to date. For example, our inquiry following up on work of our predecessor Committee examined Glasgow’s safer drug consumption facility, ‘The Thistle’, and the wider debate on harm reduction. We will continue to monitor The Thistle’s progress over the coming years, particularly as discussions develop around potential further safer drug consumption facilities in other parts of Scotland. We have also considered the long-term social impact of deindustrialisation on coalfield communities, as well as the support available for Scotland’s veterans. This focus on community wellbeing and empowerment will also underpin our inquiry into the future of Scotland’s high streets, as we explore how local economies can adapt to changing consumer needs and sustain vibrant communities.
• Scotland’s rural, remote and island communities. Ensuring the voices and interests of Scotland’s rural, remote and island communities are heard in our work remains a core priority. So far, we have looked at the impact of changes to Royal Mail’s Universal Service Obligation on rural communities; the importance of a sustainable salmon farming industry in supporting well-paying jobs in Scotland’s coastal communities; and the impact of new energy infrastructure on rural and island communities. Looking ahead, our inquiries into digital and fixed-linked connectivity will build on these themes, focusing on social inclusion, economic resilience, and equitable access to services. We are also keen to ensure we visit all parts of Scotland in the course of our work. To date we have visited the Western Isles, Skye, and the Shetland Islands, amongst other rural areas; we will continue in this vein to ensure our scrutiny work is informed by first-hand, lived experience of those in rural, remote and island communities.
• Scotland’s creative talent and cultural capital. Scotland’s creative industries are a vital part of our economy and identity. Our recent work has considered the BBC’s role in supporting Scottish creative talent, the implications of proposed cuts at STV, and preparations for major events such as the 2026 Commonwealth Games. Looking ahead, we will maintain this interest in how Scotland can build on its global reputation in creative sectors, including television, film, and video games. We will also maintain a keen interest in how the BBC and BBC Alba nurtures Scotland’s creative talent, including through headline productions such as The Traitors.
• The constitution and intergovernmental relations. The constitution and the evolving nature of the devolution settlement has been an area of interest, particularly during our inquiry into whether the Barnett formula is still fit for purpose. Whilst we do not examine devolved policy, our inquiries and evidence taking from both the UK and Scottish Governments, consistently shows that effective intergovernmental collaboration and policy coordination is essential to the successful delivery of major projects and funding initiatives. We have heard this many times, whether in the context of the future of the Grangemouth and Mossmorran sites, or in delivering high skilled jobs in Scotland’s defence sector. Looking ahead, we will continue to monitor intergovernmental relations, particularly through our regular evidence sessions with the Secretary of State for Scotland.

12. We are also keen to strengthen engagement with our colleagues in the Scottish Parliament.  As a House of Commons committee, our remit covers the UK rather than Scottish Government. Nonetheless, we hope to be able to work with colleagues in the Scottish Parliament on areas of mutual interest, and where effective working between the two Governments is essential.

13. In closing, we would like to thank all those who have contributed to our work over the last year.

Inquiries

The financing of the Scottish Government

14. In January 2025 we launched our inquiry into The financing of the Scottish Government. The inquiry examined the framework for fiscal devolution in Scotland, by evaluating the effectiveness of the Barnett formula, Block Grant Adjustments, and the Fiscal Framework in calculating the amount of money available to provide devolved services in Scotland. As part of this, the inquiry considered the interaction between UK Government fiscal events and in-year budgetary changes, and the impact they can have on the funding of Scotland’s public services.

15. We held one evidence session for this inquiry and heard from expert commentators from the Institute for Fiscal Studies, Scottish Fiscal Commission and Fraser of Allander Institute. We received 11 written submissions from academics and other key stakeholders. We also took evidence from the then Secretary of State for Scotland, Ian Murray, on the UK Government’s views about the Barnett formula’s effectiveness.

16. We published our report of this inquiry on 16 July 2025. The report concluded that, whilst imperfect, the Barnett formula is fit for purpose and that there is not a clear need to reform it significantly.² Nonetheless, we recommended further steps the UK Government should take to improve the transparency of the operation of the Barnett formula, and emphasised the importance of regular communication between the two Governments. We made further recommendations regarding the Scotland Reserve cap and capital borrowing limits, to improve the Scottish Government’s fiscal flexibility.

17. The Government’s response to our report was published on 17 October 2025.³ In its response, the Government said it would consider the Scottish Government’s borrowing arrangements at the next Fiscal Framework review, which is due to take place in 2028. The response highlighted the intention to publish the block grant transparency report on an annual basis, which will result in more up to date data on changes to Scottish Government funding being regularly set out.

GB Energy and the net zero transition

18. We launched our inquiry into GB Energy and the net zero transition in November 2024, with the aim of exploring Scotland’s role in the UK’s energy transition.

19. The first phase of our inquiry focused on the future of Scotland’s oil and gas industry, including the closure of the Grangemouth oil refinery. During this part of the inquiry, we held six oral evidence sessions with representatives from industry, academia, sector bodies, trade unions and the UK Government. We received more than 50 written submissions for this inquiry. We have also undertaken a number of visits, including to Aberdeenshire in November 2024; Norway in March 2025; Shetland in May 2025; and Loch Sloy in August 2025.

20. We published our interim report on the future of Scotland’s oil and gas industry on 24 October 2025.⁴ In our report, we expressed concern that clean energy jobs are not being created at the scale or pace required to match the job losses arising from the decline of the North Sea oil and gas industry. The report indicates that the UK Government should avoid accelerating the decline of oil and gas production through its policy environment while this remains the case, and emphasises the urgent need for a coherent transition plan.

21. The Government’s response to our report was published on 16 January 2026. In its response, the Government accepted several of our recommendations, including recognising the need for a pragmatic approach to continued North Sea production. This was reflected in the Government’s decision to permit additional oil and gas extraction in areas adjacent to existing licensed fields. The Government also highlighted the publication of its North Sea Future Plan, intended to serve as a “global blueprint for a fair, managed and prosperous transition” for the sector. In response to our concerns about a potential employment gap for oil and gas workers, the Government stated that it has set a pathway for the clean energy workforce to nearly double by 2030. We will continue to monitor progress closely to assess how effectively the North Sea Future Plan delivers for Scotland’s oil and gas industry.

22. The second phase of our inquiry began in January 2026. It focuses on the scale-up of renewable and clean energy in Scotland and, in particular, the role of Great British Energy during this transition. In this part of the inquiry, the topics we aim to examine include the renewable power sector in Scotland; the impact of new energy and network infrastructure on communities; and the effects of energy transition on consumer energy bills.

Problem drug use in Scotland follow-up: Glasgow’s Safer Drug Consumption Facility

23. In January 2025 we launched our inquiry into Problem drug use in Scotland follow-up: Glasgow’s Safer Drug Consumption Facility. The Thistle, on Hunter Street in Glasgow’s East End, is the UK’s first sanctioned safer drug consumption facility. It is a pilot service, which is due to run for three years.

24. The inquiry explored the legal and policy context underpinning the facility’s operation, including that it has been established under prosecutorial discretion rather than through formal legislative change. We also looked at The Thistle’s potential to reduce drug-related harm, including overdose deaths and the transmission of blood-borne viruses, while also addressing public injecting and improving access to support services. Our inquiry also considered the cost of The Thistle.

25. We held four evidence sessions for this inquiry, and heard from public health experts, addiction specialists, the Lord Advocate and representatives from law enforcement, as well as the Scottish and UK Governments. We received 12 written submissions.

26. In February 2025, we visited The Thistle and saw the facility for ourselves. We also travelled to Lisbon, where we met with city officials, health experts, and NGOs involved in Portugal’s harm reduction strategy. We learned about the country’s long-standing approach to drug decriminalisation as well as the funding and coordination of fixed and mobile consumption facilities. In Norway, we travelled to Oslo and Bergen to see how such facilities can be integrated into local communities alongside healthcare and social support systems.

27. We published our report for this inquiry on 16 September 2025.⁵ Our report highlighted the need for a clearer legal framework, should the pilot be proved effective and made permanent. We concluded that the Lord Advocate’s prosecutorial discretion is not a substitute for a considered legal framework to enable and regulate safer drug consumption facilities. We also conclude that, without an inhalation room, The Thistle will not be able to meet the needs of the population it is trying to help. We recommended that any application for a legal exemption to enable an inhalation room to open must be considered on their merits. We also stressed that local support will be critical to the pilot’s success, and that the concerns of the local community must be taken seriously.

28. The Chair made a statement in the House of Commons following the report’s publication, and questioned the Prime Minister on the issues we raised during an evidence session at the Liaison Committee.⁶

29. The Government’s response to our report was published on 20 November 2025. In its response, the Government said it is committed to taking an evidence-based approach towards drugs policy within the law. The Government reiterated its view that it has no plans to amend the Misuse of Drugs Act to enable the operation of safer drug consumption facilities anywhere in the UK.

30. The Chair led a Westminster Hall debate on the report, and the Government’s response, on Thursday 8 January 2026.⁷

Scotland’s space sector follow-up: launch

31. In March 2025 we launched an inquiry into Scotland’s space launch sector. This followed up on work begun by our predecessor Committee, but which was cut short by the dissolution of Parliament due to the 2024 General Election.

32. Our inquiry examined the progress and challenges facing Scotland’s emerging space launch sector, particularly considering its strategic potential for the UK’s space ambitions. During our inquiry we heard that, despite strong geographic and industrial advantages, the UK has yet to achieve a vertical orbital launch, risking its competitive edge to European rivals. We also identified several barriers to progress, including limited long-term investment, fragmented government coordination, and over-reliance on foreign partners.

33. We held two evidence sessions for this inquiry, and heard oral evidence from launch companies, launch providers, regulators, and academics, as well as UK Government Ministers and officials. We received six written submissions. We also took into consideration evidence received by our predecessor Committee.

34. As part of this inquiry, we visited SaxaVord Spaceport in Shetland in May 2025. We met with representatives of the spaceport and were given a tour of the facilities. We also visited Norway in March 2025. While being hosted by HM Ambassador to Norway, we met with representatives of Norwegian Spaceport company, Andøya Space.

35. We published our report on 10 September 2025.⁸ The report called on the Government to commit to long-term sustained investment in the sector, to act as a reliable customer for domestic launch services, and to improve cross-departmental collaboration to ensure the sector’s commercial viability and strategic resilience.

36. The Government’s response to our report was published on 1 December 2025.⁹ In its response, the Government recognised the Committee’s call for a sustained, strategic commitment to Scotland’s space launch sector. The response highlights the Government’s intention to set out a strategic approach to supporting the sector in a cross-Government publication in 2026. We will maintain a watching brief on these developments, and look forward to examining the cross-Government publication when it is released.

‘One-off’ evidence sessions

The work of the BBC in Scotland

37. On 8 January 2025, we heard from senior BBC Scotland executives about the BBC’s work in Scotland. Our predecessor Committees took an ongoing interest in the work of BBC Scotland across multiple Parliaments, having previously held evidence sessions with BBC Scotland in 2018 and in 2021 and publishing a report on Public Broadcasting in Scotland in 2023.¹⁰

38. The session provided an opportunity to ask the then newly appointed Director of BBC Scotland, Hayley Valentine, about her priorities and ambitions in the role, and we were pleased to host Ms Valentine’s first appearance in front of a UK or Scottish Parliamentary Committee since taking up the post. Following our meeting with MG ALBA during our visit to Stornoway in December 2024, we also considered the BBC’s provision of Gaelic language content and the funding available to support production of this content.

39. A significant issue that arose during the session concerned the BBC’s record on producing network programming in Scotland and using local creative talent in Scotland-based productions like The Traitors. Following the session, we sought further information from BBC Scotland on these points, and we will continue to monitor relevant developments.

Salmon farming: growth and sustainability

40. On 4 December 2024, we held an evidence session exploring issues relating to salmon farming in Scotland. The industry is an important contributor to Scotland’s economy (especially in remote and rural communities), but concerns have been raised about its sustainability and the desirability of any further expansion.

41. We heard from representatives of NGOs and the salmon farming industry including the RSPCA, Mowi Scotland, and industry trade body Salmon Scotland. The session examined a range of issues including: the impact of fish farming on Scotland’s marine ecosystems; farmed salmon welfare; action to reduce both the industry’s environmental impact and mortality among farmed salmon; and opportunities to promote exports of Scottish salmon amid international competition.

42. Following the session, and recognising the aquaculture sector’s importance as an employer in Scotland’s island communities, we visited Mowi Scotland’s salmon farm at Loch Erisort as part of our December 2024 visit to the Isle of Lewis. During our visit we learned more about the challenges and opportunities for the sustainable growth of salmon farming.

Universal postal service: Impact on remote, rural and island communities

43. On 11 June 2025 we held a one-off evidence session to examine the universal postal service obligation and its impact on remote, rural and island communities.

44. Following Ofcom’s consultation on proposed changes to the Universal Service Obligation (USO) (which closed in April 2025), we sought to understand the challenges geographically isolated communities face in accessing reliable and affordable postal services, and the potential consequences of these proposed reforms. We explored Royal Mail’s ability to meet its Quality of Service targets in rural areas, the financial sustainability of the USO, and the implementation of the NHS barcode agreement in Scotland to fast-track health-related letters.

45. Witnesses included representatives from Consumer Scotland and the Federation of Small Businesses. The Committee also heard from Ofcom, the service regulator, and Royal Mail, the service provider.

Support for veterans

46. On 2 July 2025 we examined the support available for military veterans in Scotland with the Scottish Veterans Commissioner, Lieutenant Commander (retired) Susie Hamilton and Emma Watson Mack, Executive Chair at Veterans Scotland.

47. The session covered a broad range of topics, and witnesses highlighted housing and implementation of the homelessness prevention pathway as a major issue, with affordable options scarce. We heard that access to mental health services is inconsistent and the system is not easily navigable. In addition, problems persist with the transfer of medical records from the MOD to NHS Scotland, and veterans experience cultural barriers to accessing support such as the stigma around seeking help. Witnesses said that employment prospects are improving, aided by efforts to translate military qualifications into the Scottish skills frameworks, but that gaps persist for early service leavers and women veterans, who often experience lower earnings and limited tailored support.

48. The session identified areas of progress, including the Armed Forces Covenant and new initiatives like the VALOUR service, intended to provide a “no wrong door” approach when veterans seek support. However, systemic pressures on public services and fragmented signposting remain problematic. Witnesses stressed the need for early transition planning, life skills training, and better coordination between statutory and third-sector organisations. Exploring the justice system, we identified areas of inconsistency between component parts of the UK. Veterans in England who interact with the justice system are automatically referred for specialist support, but the absence of statutory funding in Scotland means that equivalent services in Scotland are not positioned to reach all veterans.

Glasgow’s Commonwealth Games 2026

49. On 20 October 2025, we held a formal meeting in Glasgow to explore the preparations being made for the 2026 Commonwealth Games, which will be held in the city in July and August this year. We took evidence from representatives of Commonwealth Games Scotland and Glasgow 2026 Limited, as well as from Glasgow City Council and Glasgow Life.

50. During the session, we explored topics including what factors had allowed Glasgow to step in to host the Games at short notice - including how next year’s event will benefit from investments made ahead of the 2014 Games - and the relative merits and drawbacks of the new format for the Games which next year’s event is due to pioneer. We also considered the potential social and economic benefits the Games could bring for people living in and around Glasgow, and across Scotland more widely. Finally, we examined to what extent the Games might help boost the international reputation and visitor economy of Glasgow and Scotland, and how to make the most of the opportunity the Games may offer in this respect.

51. A further point we raised during the session, and in subsequent correspondence with Glasgow City Council, was how to use the Games and the associated Games Festival programme to create a legacy from next year’s event and to deliver long-term benefits to the city’s residents. This will continue to be an area of interest for us, in the lead-up to and following the Games’ delivery.

Proposed STV cuts

52. On 28 October, we examined the reasons for, and impact of, STV’s cost savings plan and the challenges facing the wider public service broadcasting sector. Evidence was taken from representatives from the Broadcasting, Entertainment, Cinematographic and Theatre Union (Bectu), the National Union of Journalists and STV.

53. During the session, we looked at the drivers behind STV’s cost savings plan, the health of the wider public service broadcasting sector, and the impact of changing audience trends. The importance of local news coverage was emphasised, as was the potentially detrimental impact STV’s proposals could have on that coverage in the north of Scotland. The Committee explored how the closure of the Aberdeen studio could impact local journalism, in particular the long-term implications for both current and future jobs, skills and career development pathways. We considered STV’s current service licence obligations, how these may be impacted by proposed changes and what precedent may be set if STV were granted the necessary permissions by Ofcom to change their licence. Additionally, the committee looked at the impact STV’s plans would have in terms of redundancies, how those plans had been communicated to staff and the unions, and what support mechanisms had been put in place.

Scotland’s wood panelling industry

54. On 3 December, we examined issues relating to the wood panel industry in Scotland. We took evidence from representatives of the Wood Panel Industries Federation and Wood Panel Industry Working Group.

55. The session explored topics including the industry’s economic contribution to Scotland and its environmental impact. We covered the sustainability of wood supply for the sector including both forestry and the use of recycled waste wood, as well as the sector’s capacity to scale up to meet future demand. Finally, we addressed the industry’s exclusion from the UK Government’s Industrial Strategy and examined the impact of the Governments plywood tariff suspensions in April 2025 on Scotland’s domestic wood panel industry.

Closure of Mossmorran ethylene plant

56. On 17 December 2025, we held an evidence session on the announced closure of ExxonMobil’s ethylene plant - Mossmorran - in Fife. We heard from representatives of Unite the Union, Fife Council, and the Chemical Industries Association, as well as the UK Chair of ExxonMobil. We explored the reasons behind the plant’s closure, the impact on the workforce and wider community and the broader implications for Scotland’s industrial base. This session picked up on many of the themes explored in our inquiries into GB Energy and the net zero transition, and Industrial transition in Scotland.

Industrial transition in Scotland

57. Scotland has seen a dramatic change in its industrial landscape over the past four decades. Historically an industrial powerhouse renowned for its coalmining, steel, shipbuilding, motor vehicles, textile and manufacturing industries, deindustrialisation since the 1980s has seen major job losses and closures among these sectors.¹¹ While Scotland boasts competitive advantage in many sectors today — such as financial services, creative industries, life sciences and clean energy — the scars of deindustrialisation are still felt by communities, particularly those in the central belt of Scotland, including Ayrshire, Lanarkshire and Lothian.¹²

58. Scotland is currently undergoing major industrial transition. For example, its oil and gas sector currently supports 66,000 direct and indirect jobs in Scotland, but with the North Sea basin geologically mature and a focus on clean energy among governments, the industry is at a critical juncture.¹³ Given Scotland’s history of industrial transition, we launched our inquiry Industrial transition in Scotland in February 2025 to understand the consequences of poorly managed transitions on communities, and whether any lessons could be learned for the ongoing energy transition.

59. We held five evidence sessions between April and October 2025. The first session looked at the legacy of former coalfield communities where we spoke to representatives from the Coalfields Regeneration Trust; the Industrial Communities Alliance; and community leaders and representatives from Inverclyde (which has a history of shipbuilding), and East Lothian (a former coalfield community). Our second and third sessions looked at the state of shipbuilding — both defence and civil — where we heard from BAE Systems, Babcock, Ferguson Marine and the Society of Maritime Industries. For our fourth session we heard from Community Union and the Warwick Manufacturing Group about the state of the Scottish steel industry. Our final session looked at the UK’s industrial strategy and how it serves — or falls short of serving — Scotland’s industrial future. Witnesses for this session were representatives from Prosper and Scottish Trades Union Congress, as well as the Deputy Chair of the Industrial Strategy Advisory Council, Dame Nancy Rothwell.

60. Alongside our formal evidence sessions, we hosted a roundtable engagement activity with local businesses, unions and the local community in Ochiltree, Ayrshire — a former coalfield area — to understand the issues and challenges facing their community today. We also received 29 written submissions, offering valuable insights into both historical experiences and current challenges.¹⁴ We thank all those who took the time to engage with this inquiry.

61. The aim of this inquiry was to provide a high-level, thematic overview of Scotland’s experience of industrial transition, rather than detailed examination of policy responses. Sector-specific issues and recommendations are made elsewhere in our work, including our ongoing industry-focused inquiries GB Energy and the net zero transition, and Securing Scotland’s Future: Defence, Skills and Jobs. We expect to continue picking up on many of the themes identified in the discussion below, throughout the course of our work in this Parliament.

Part one: Scotland’s industrial past

62. Scotland’s industrial areas account for a significant proportion of the Scottish population, with former coalfield communities alone making up around 10%.¹⁵ Historically, industry closures caused high unemployment rates in these areas. While unemployment rates have since recovered — for example, the unemployment rate in Scottish coalfield areas now aligns with Scottish and GB averages¹⁶ — the Coalfields Regeneration Trust notes that the loss of industry is now felt across generations, not just by the workers originally affected.¹⁷ The Trust’s State of the Scottish Coalfields 2024 report found that:

• Job availability as a percentage of the population is lower among coalfield communities than the GB average. As a result, many locals commute elsewhere for work, with net commuting equivalent to one in six residents in work.¹⁸ There is also a consistent trend of young and working-age people leaving in search of employment and education.¹⁹
• While the unemployment rate is in line with national averages, employment rates remain lower. This is because unemployment figures measure economically active 16–64-year-olds, whereas the employment rate is the share of all adults of working age in employment. For example, in Ayrshire, Lanarkshire and Fife, the employment rate is four per cent below the Scottish average and seven per cent below that of South-East England. The economic inactivity rate in coalfield communities is also higher than the GB and Scottish averages, with the Ayrshire, Lanarkshire and Fife coalfield being five per cent higher than the GB average.²⁰
• Many communities experience poorer health and higher claimant rates.²¹ This is also the case in other former industrial communities. For example, Inverclyde economic inactivity stands at 27.5%, almost one-third of the local population.²²

63. Participants at our engagement event in Ochiltree, Ayrshire described the impact of worklessness and depopulation on their community. For example, participants noted that areas such as New Cumnock, Dalmellington and Bellsbank face high levels of deprivation, low employment, lower incomes and shorter life expectancy compared to national averages. They also noted that depopulation in the area has resulted in reduced public transport, making it harder for locals to travel to larger towns for work and education. There has also been a decline in local assets, such as social clubs, gyms and swimming pools.²³

64. Altany Craik, a Fife Councillor and representative for the Industrial Communities Alliance, also told the Committee of the impact of worklessness on the community:

People have poorer health outcomes, […] their life expectancy is lower, but their good health expectancy is much lower. Diet is poorer, the impact of eating ultra-processed food and all sorts of things. These things are symptomatic of not having jobs and having communities that are left behind. Essentially if you do not have opportunity and you do not have people in better jobs, they will have poorer outcomes and you will have more people unable to work.²⁴

The UK’s track record on managing industrial transition

65. During our inquiry, we heard that the UK’s track record on managing industrial transitions has been poor. In written evidence, the Coalfields Regeneration Trust noted that, although some financial support was provided following industry closures, it often did not meet the needs of the workers and their families. Furthermore, where community engagement was limited, regeneration was limited.²⁵

66. Angela Carrigan, a technologist at Liberty Steel Dalzell, voiced her concerns on “how badly we have done” with previous transitions, and that past experience had not been taken into account as the UK enters a transition for oil and gas.²⁶

67. Our engagement event in Ochiltree underlined the consequences of past failings. Participants described how skilled industrial jobs have been replaced by lower-paid work on poorer terms and conditions. They also highlighted the irony that many of the skills lost during deindustrialisation are now urgently required.²⁷ This is evident in defence shipbuilding, where skills shortages have become acute. For example, The Times reported that Babcock hired 300 welders from the Philippines to work at Rosyth due to a lack of skilled applicants from the UK.²⁸

68. These shortages exist despite industry acknowledging the importance of maintaining a strong domestic skills base. Sir Simon Lister of BAE Systems told us that Scotland’s long heritage of shipbuilding underpins the quality of its workforce, describing how “four or five generations of shipbuilding” contributes to an “innate” understanding of building a ship. He emphasised the value of clustering skills and retaining local expertise.²⁹

Part two: The UK’s Modern Industrial Strategy

72. During our inquiry, we also looked at the UK Government’s industrial strategy to assess how well it serves Scotland’s future industries. The UK’s Modern Industrial Strategy, published in June 2025, is the Government’s roadmap for boosting investment, productivity and resilience across the economy.³⁰ The Strategy commits to:

• improving the business environment by aiming to reduce electricity costs, planning delays and regulatory burdens and by expanding access to finance and skills;
• supporting regional growth through closer partnerships with devolved administrations;
• strengthening economic resilience by supporting “foundational” industries, such as steel, chemicals and ports; and
• establishing a permanent Industrial Strategy Council to monitor, deliver and track progress on the effectiveness of the strategy.³¹

73. The Government has already identified eight “growth” sectors, named the IS-8, each of which has a specific sector plan with funding and policy commitments:

• Advanced manufacturing;
• Creative industries;
• Clean energy industries;
• Digital and technologies;
• Financial services;
• Defence;
• Life science; and
• Professional and business services.³²

High value Scottish sectors

74. Many of Scotland’s key sectors are covered under the Industrial Strategy’s IS-8, including:

• Financial services, which employs 145,000 people in Scotland and contributes £14.3 billion GVA.³³
• Energy transition, which employs 42,000 workers and contributes £9.1 billion GVA.³⁴
• Digital and technology, employing 76,000 people and contributing £6.8 billion GVA.³⁵
• Creative industries and gaming, employing 114,500 people and contributing £5.7 billion GVA.³⁶
• Health and life sciences, employing 42,500 people and contributing £4.6 billion GVA.³⁷
• Aerospace and space, employing 11,000 people and contributing £300 million GVA. ³⁸
• Chemical sciences (listed in the industrial strategy as a foundational sector), employing 11,000 people and contributing £2.14 billion.³⁹
• The Defence sector, employing 16,250 people and contributing £1.3 billion GVA.⁴⁰

75. While this is encouraging to see, there are some high-value Scottish sectors not included in the strategy:

• Food and drink employs 122,000 people in Scotland and contributes £5.4 billion GVA.⁴¹
• Tourism employs 245,000 people and contributes £4.96 billion GVA.⁴²
• The oil and gas sector supports 66,000 direct and indirect jobs in Scotland.⁴³ In 2023 it contributed £25 billion GVA, although the sector is in decline due to the energy transition.⁴⁴

76. While stakeholders largely welcome the strategy and note its alignment with the Scottish economy, criticism has been raised that the Scottish spirits sector has not been identified as a growth sector, despite its significant contribution to both the Scottish and UK economy. Sara Thiam, Chief Executive of Prosper, the Scottish Council for Development and Industry, pointed to Scotch Whisky being a high priority for the UK when negotiating trade deals, as well as having high levels of productivity. She notes that Scotch Whisky manufacturing is second only to energy in productivity.⁴⁵

Industrial Strategy Advisory Council

78. The Industrial Strategy Advisory Council (ISAC) is an independent, non-statutory committee responsible for advising government on the development and delivery of the industrial strategy and monitoring progress on its objectives.⁴⁶

79. The UK Government says it will set up a permanent Industrial Strategy Council (ISC), which will be established in law when parliamentary time allows.⁴⁷ It will have clear responsibilities and access to government data to ensure the 10-year strategy is delivered and is stable over time.⁴⁸ Currently, the Industrial Strategy Advisory Council provides independent oversight.

80. The Council tracks progress against six key measures:

• business investment;
• gross value added;
• productivity growth;
• exports;
• labour market outcomes; and
• the number of new large UK-based businesses.⁴⁹

81. In written evidence to this inquiry, the Scotland Office said that the Council is engaging “widely” to consider views from businesses, trade unions, devolved administrations, regional leaders and other stakeholders across the UK.⁵⁰ They outlined the following engagement between the Council and Scottish stakeholders as evidence of the council considering the economic interests of Scotland:

• The Chair, Clare Barclay, had met with the then-Scotland Secretary, Ian Murray, and Deputy First Minister of Scotland.
• The Industrial Strategy Unit and Industrial Strategy Advisory Council Secretariat had also met with Scottish Business Chambers, City Regions, FSB, IOD, CBI, Prosper and its membership, which includes SMEs, larger businesses, social enterprises, trade unions and voluntary and public sector organisations.⁵¹

82. In oral evidence, Sara Thiam, Chief Executive of Prosper, noted that while Proposer has engaged with the industrial strategy advisory council, there was “more to be done”.⁵² Prosper has called on the Government to instate a member of the Scottish economy on the council, arguing that a lack of Scottish representation “severely limits” the ability of the Council to reflect Scottish interests.⁵³

83. We questioned Dame Nancy Rothwell, Deputy Chair of the Industrial Strategy Advisory Council, about the merits of a Scottish representative. She noted that — while it is the Government’s decision as to who is a member of the Council — several council members have experience in Scotland.⁵⁴ However, Prosper pointed out that a lack of Scottish representative potentially risks the Council being unable to understand the intricacies of the Scottish economy that will enable growth, such as the interactions between devolved and reserved policy. She gave an example of electricity reform to demonstrate her point:

the Industrial Strategy Advisory Council took an early interest in the review of electricity market arrangements, and it was not clear to us that the council understood the potential for zonal pricing to deter investment in Scotland. There was no grasp of the impact that was having on the floating offshore wind sector.⁵⁵

Conclusions and recommendations

Industrial transition in Scotland

1. Scotland’s experience of deindustrialisation over the past four decades demonstrates the profound and lasting consequences of industrial transition when communities are not properly supported. The loss of major industries has left a legacy of worklessness and health inequalities. Despite Scotland’s proud industrial heritage, the erosion of key industrial skills has meant that employers may look overseas to fill shortages, leaving former industrial communities at risk of being left behind once again. (Conclusion, Paragraph 69)

2. As Scotland undergoes another major transition — this time in the oil and gas sector — there is an urgent need to avoid repeating past mistakes. Future industrial transitions must be a practical, deliverable commitment that supports communities, retains skills and ensures that no community pays the price of industrial change. (Conclusion, Paragraph 70)

3. We have identified two transitions Scotland is currently undergoing, and have launched specific inquiries into these areas to ensure the UK Government is managing these transitions effectively:

• GB Energy and the net zero transition, which examines the shift away from oil and gas to clean energy; and
• Securing Scotland’s future: Defence skills and jobs, which looks at how Scotland’s economy and labour market — including the shipbuilding sector — can benefit from the UK Government’s commitment to increase defence spending.

We will be monitoring these areas closely to ensure that future transitions are managed in a way that avoids repeating the mistakes of the past and delivers real benefits for Scottish communities. (Conclusion, Paragraph 71)

4. While the Government Industrial Strategy’s IS-8 broadly reflects Scotland’s economic strengths, the omission of key high-value Scottish sectors such as spirits suggests the strategy does not fully capture the breadth of Scotland’s economic contribution. Scotland’s whisky industry alone is globally competitive, highly productive and central to the UK’s export performance. Overlooking it risks limiting growth opportunities for one of the nation’s most successful and internationally recognised sectors. We will continue to monitor how the Industrial Strategy evolves to ensure Scotland’s diverse economic strengths are fully recognised. (Conclusion, Paragraph 77)

5. We welcome the establishment of a permanent Industrial Strategy Council when parliamentary time allows. However, while we acknowledge that there has been engagement between the council and Scottish stakeholders, we are concerned that the absence of a dedicated Scottish representative limits the Council’s ability to understand Scotland’s distinct economic and constitutional landscape. When legislation to create a permanent Industrial Strategy Council is introduced in Parliament, we expect a requirement to include a dedicated Scotland representative on the Council will be included on the face of the bill. (Conclusion, Paragraph 84)

Formal minutes

Wednesday 21 January 2026

Members present

Patricia Ferguson, in the Chair

Lillian Jones

Mr Angus MacDonald

Douglas McAllister

Susan Murray

Kirsteen Sullivan

The work of the Committee in 2024–25, and Industrial transition in Scotland

Draft Report (The work of the Committee in 2024–25, and Industrial transition in Scotland), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 84 read and agreed to.

Resolved, That the Report be the Fifth Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available (Standing Order No. 134).

Adjournment

Adjourned till Monday 26 January at 9.00 am, in Glasgow.

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Wednesday 21 May 2025

Pauline Grandison, Head of Operations Scotland, Coalfields Regeneration Trust; Councillor Debbi McCall, Councillor, Provost of Midlothian; Councillor Altany Craik, Chair, The Industrial Communities Alliance (Scotland)Q1–35

Councillor Norman Hampshire, Councillor, East Lothian Council; Councillor Stephen McCabe, Councillor, Inverclyde Council; Corey Beaton, Business Development and Membership Executive, Inverclyde Chamber of CommerceQ36–49

Wednesday 18 June 2025

Sir Simon Lister, Managing Director, BAE Systems Naval Ships; John Howie MBE, Chief Corporate Affairs Officer, Babcock InternationalQ50–95

Wednesday 16 July 2025

Tom Chant MBE, Chief Executive, Society of Maritime IndustriesQ96–127

Graeme Thomson, Chief Executive, Ferguson MarineQ128–171

Wednesday 10 September 2025

Jacqui Murray, Innovation Manager, Warwick Manufacturing Group; Angela Carrigan, Member, Community Union NEC, Technologist, Liberty Steel Dalzell ScotlandQ172–238

Wednesday 29 October 2025

Sara Thiam, Chief Executive, Prosper; Dave Moxham, Deputy General Secretary, Scottish Trades Union Congress (STUC)Q239–266

Dame Nancy Rothwell, Deputy Chair, Industrial Strategy Advisory Council; Leonie Lambert, Director, Industrial Strategy Advisory CouncilQ267–280

Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

ITS numbers are generated by the evidence processing system and so may not be complete.

1 ADS Group ITS0018

2 British Standards Institution ITS0021

3 Built Environment Forum Scotland ITS0012

4 CPI (Centre for Process Innovation) ITS0013

5 Coalfields Regeneration Trust ITS0010

6 Construction Industry Training Board (CITB) ITS0001

7 Diageo ITS0007

8 East Ayrshire Council ITS0027

9 Gibbs, Dr Ewan (Senior Lecturer in Economic and Social History, University of Glasgow); Shibe, Riyoko (Researcher and PhD Student in Economic and Social History, University of Glasgow); and Phillips, Professor Jim (Professor in Economic and Social History, University of Glasgow) ITS0004

10 Inverclyde Chamber of Commerce ITS0002

11 Mineral Products Association Scotland ITS0014

12 NECCUS ITS0016

13 Octopus Energy ITS0024

14 Offshore Renewable Energy Catapult ITS0020

15 Prosper (SCDI) ITS0017

16 Recruitment and Employment Confederation ITS0005

17 Scotland Office ITS0026

18 ScottishPower ITS0006

19 Society of Maritime Industries (SMI) ITS0029

20 Storegga ITS0028

21 The Carbon Capture and Storage Association ITS0015

22 The Industrial Communities Alliance (Scotland) ITS0023

23 The Open Seas Trust ITS0025

24 UK Energy Research Centre ITS0008

25 Universities Scotland ITS0009

26 University of the West of Scotland ITS0011

27 Uplift ITS0022

28 Wincanton Scotland ITS0003

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.

Session 2024–26

Number	Title	Reference
6th	Draft Scotland Act 1998 (Modification of Schedule 5) Order 2026	HC 1652
4th	The future of Scotland’s oil and gas industry	HC 459
3rd	3rd report - Problem drug use in Scotland follow-up: Glasgow’s Safer Drug Consumption Facility	HC 630
2nd	Scotland’s space sector follow-up: launch	HC 671
1st	1st report – The financing of the Scottish Government	HC 456
6th Special	The future of Scotland’s oil and gas industry: Government Response	HC 1603
5th Special	Scotland’s space sector follow-up: launch: Government Response	HC 1495
4th Special	Problem drug use in Scotland follow-up: Glasgow’s Safer Drug Consumption Facility: Government Response	HC 1485
3rd Special	The Financing of the Scottish Government: Government response	HC 1357
2nd Special	Scotland’s space sector: Government response	HC 801
1st Special	Science and Scotland: Government response	HC 800

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Footnotes

1 Votes and Proceedings, 12 September 2024; Votes and Proceedings, 21 October 2024; Votes and Proceedings, 28 October 2024; Votes and Proceedings, 4 November 2024.

2 Scottish Affairs Committee, First report of session 2024–25, The financing of the Scottish Government, HC 456.

3 Scottish Affairs Committee, Third special report of session 2024–26, The financing of the Scottish Government: Government response, HC 1357.

4 Scottish Affairs Committee, Fourth report of session 2024–26, The future of Scotland’s oil and gas industry, HC 459.

5 Scottish Affairs Committee, Third report of session 2024–25, Problem drug use in Scotland follow-up: Glasgow’s Safer Drug Consumption Facility, HC 630

6 House of Commons, Hansard, Glasgow Safer Drug Consumption Facility, Monday 13 October 2025, Vol 773, col 108–114; House of Commons Liaison Committee, The work of the Prime Minister, HC 1557, 15 December 2025.

7 House of Commons, Westminster Hall, Glasgow Safer Drug Consumption Facility, Thursday 8 January 2026, Vol 778.

8 Scottish Affairs Committee, Second report of session 2024–25, Scotland’s space sector follow-up: launch, HC 671

9 Scottish Affairs Committee, Fifth special report of session 2024–26, Scotland’s space sector follow-up: launch: Government response, HC 1495

10 Scottish Affairs Committee, BBC Scotland inquiry, 12 December 2018; Scottish Affairs Committee, Public Broadcasting in Scotland, 20 July 2021; Scottish Affairs Committee, Fifth Report of Session 2022–23, Public Broadcasting in Scotland,
HC 1048 (Session 2022–23), 2 March 2023

11 House of Lords Library, Regeneration of former industrial areas in the UK, 29 February 2024; Centre for Social Justice, The future of work: Regional revolution – part II: Rebalancing growth and opportunity in post-industrial Britain, September 2018, pp 31–4

12 Scottish Development International, Business in Scotland, accessed 12 January 2026

13 Scottish Affairs Committee, Fourth report of session 2024–26, The future of Scotland’s oil and gas industry, HC 459, paras 9–10.

14 Scottish Affairs Committee, Industrial transition in Scotland, opened 13 February 2025.

15 Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, p 3.

16 Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, p 4.

17 Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, p 30.

18 Net commuting is the balance between commuters to the area and out-commuters. The outflow of coalfield residents is likely to be higher although the data available does not allow this figure to be calculated. See: Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, p 17.

19 Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, pp 10–11.

20 Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, pp 20–22.

21 Coalfields Regeneration Trust and Sheffield Hallam University, State of the Scottish Coalfields 2024, November 2024, pp 23–24.

22 ONS, Employment, unemployment and economic inactivity in Inverclyde, accessed 12 January 2026.

23 Scottish Affairs Committee, Summary note from industrial transition roundtable event in Ochiltree, Ayrshire, January 2026, p 3.

24 Q22

25 Coalfields Regeneration Trust (ITS0010), p 2.

26 Q180

27 Scottish Affairs Committee, Summary note from industrial transition roundtable event in Ochiltree, Ayrshire, January 2026, p 3.

28 The Times, Babcock hires 300 foreign welders because Scots lack the skills, 23 October 2025.

29 Q61

30 House of Commons Library, Industrial strategy in the UK, 3 October 2025, p 4.

31 House of Commons Library, Industrial strategy in the UK, 3 October 2025, p 4.

32 House of Commons Library, Industrial strategy in the UK, 3 October 2025, p 8.

33 Scottish Development International, Key sectors, accessed 12 January 2026

34 Scottish Development International, Key sectors, accessed 12 January 2026

35 Scottish Development International, Key sectors, accessed 12 January 2026

36 Scottish Development International, Key sectors, accessed 12 January 2026

37 Scottish Development International, Key sectors, accessed 12 January 2026

38 Scottish Development International, Key sectors, accessed 12 January 2026

39 Scottish Development International, Key sectors, accessed 12 January 2026

40 ADS, Scotland Facts and Figures 2025, 2025, pp 4–6.

41 Scottish Development International, Key sectors, accessed 12 January 2026

42 Scottish Development International, Key sectors, accessed 12 January 2026

43 Energy Transition Institute, Striking the balance: Building a sustainable UK offshore energy workforce, June 2025, p 22.

44 Offshore Energies UK, Economy and people report 2024, 2024, pp 22–23.

45 Q247

46 Industrial Strategy Advisory Council, About Us, accessed 12 January 2026.

47 Scotland Office (ITS0026), p 8.

48 House of Commons Library, Industrial strategy in the UK, 3 October 2025, p 10.

49 House of Commons Library, Industrial strategy in the UK, 3 October 2025, p 10.

50 Scotland Office (ITS0026), p 9.

51 Scotland Office (ITS0026), p 9.

52 Q262

53 Prosper, (ITS0017), p 11.

54 Q278

55 Q260