It's a pleasure to come back to Gateshead and to the north east.
As many of you will know, the north east of England is an area which is very dear to my heart.
My grandmother was born in Ryehope, a coastal village just outside Sunderland. I enjoyed many, many childhood holidays there and this is a part of England that I have great affinity with and it's always a real pleasure to be back here.
I'm of course just one of the many, many Scots who have a great affection for the north east of England – not simply because it's a beautiful and welcoming part of these islands – although it most certainly is – but because of the enduring ties of family and friendship that we share.
Those ties are of course reflected in the many cultural, educational and economic links that we also share.
Scotland's universities collaborate with north eastern universities in fields as varied as, biotechnology, subsea energy and medical research.
The offshore renewable energy catapult has its headquarters in Glasgow, and has an offshore wind demonstrator base at Blyth. It's a really good example of the significant capability we both have in energy technology.
And of course many significant companies - the financial services sector provides some good examples – have major offices both in the north east and in Scotland.
And I suppose the main message I want to take the opportunity to put across today is one which applies regardless of what Scotland's constitutional future might be – and that is that these are connections that we value very highly; we know how much they enrich and enhance the lives of people across Scotland and also the north east; and we want to work with you to strengthen and deepen those bonds between us.
That is not simply a message from the Scottish Government. It is also, as you would expect, a sentiment that is shared by people across Scotland and by the Scottish business community.
I'm delighted that Liz Cameron and Tim Allan from the Scottish Chambers of Commerce are both here today. I know that the North East Chambers has developed a very good working relationship in recent years with the Scottish Chambers. I hope that that relationship continues and strengthens in the years to come.
There are certainly, in my view, important new opportunities and needs for further co-operation. For example Scotland is currently committed to establishing a South of Scotland Enterprise Agency, focussed on the specific needs of the Scottish Borders and Dumfries and Galloway. That body will, inevitably, be strongly aware of the potential gains for us all in developing cross-border connections.
In addition, recent years have seen the growth of the Borderlands initiative, something which is enthusiastically supported by the Scottish Government. An initiative which brings together the five local authorities with boundaries on the Scotland-England border – the Scottish borders, Dumfries and Galloway, Carlisle, Cumbria and Northumberland.
Those authorities are working to develop proposals for a Borderlands Inclusive Growth Deal. It's been inspired in part by City Deals, and is a potentially valuable way of encouraging stronger growth and closer co-operation across the north of England and the south of Scotland.
But the issue I want to touch on in a bit more detail about today is transport. After all, it matters to every person in this room, to every person in this region and to people in Scotland as well.
More than 50,000 vehicles cross the border each day and more than 15,000 people a week travel by train between Scotland and the north east of England. Those links provide vital connections for families, visitors, businesses and freight. For example access to the Port of Tyne is crucial for Scotland's exports to Europe and the wider world.
So reducing journey times, and making it easier for people and goods to travel across the border, will bring big benefits for all of us.
Last year, the Scottish Government signed a memorandum of understanding between Transport Scotland and Transport for the North.
Officials now meet regularly to discuss progress and to share information. It's a simple way of ensuring that our key transport agencies work in partnership rather than in isolation.
And alongside that, the Scottish Government is looking at projects which could bring significant benefits to the south of Scotland and also to the north of England. For example Transport Scotland is currently examining the business case for – among other projects – improving the A68 and the A1.
We are also working closely with the UK Government to improve cross-border rail links. In 2016, we jointly commissioned work to identify options for improving the east and west coast lines, so as to deliver three hour journey times between London and central Scotland.
The first phase of that work has been completed. I can confirm today that we are commissioning two studies to investigate the requirements, costs and benefits for the potential improvements which were highlighted by the first phase.
The east coast study will focus on the line south of Dunbar towards Newcastle. It is expected to confirm that these improvements could reduce the journey time between Edinburgh and Newcastle by a third. So instead of being approximately an hour and a half, the journey time could be reduced to just one hour.
Now, it's important to be clear v what we are doing today is commissioning a technical analysis; we're not making a firm commitment to invest. But I hope, that by doing this, we are sending a very clear signal of seriousness and intent, and underlining the determination that we have to further improve cross-border rail links.
To achieve that, we're not simply waiting for high speed rail to come from the south – we're working constructively with partners like Transport for the North and the UK Government, so that everybody can benefit.
It's something that I'm very passionate about and believe very strongly in – that often we should try and make these benefits go from north to south, rather than wait on them coming from south to north.
The last area for co-operation I want to highlight is that there will be many occasions when businesses in Scotland and businesses in the north east of England can find a common cause - supported where appropriate by the Scottish Government – in seeking to influence UK Government policy.
The UK Government's proposed Industrial Strategy is a good example. Scotland and North East England were both disproportionately affected by the deindustrialisation of the 1970s and 1980s, but we both retain great strengths, and even greater potential, in areas like advanced manufacturing. So making sure that a UK industrial strategy benefits every part of the UK is really important for all of us.
More broadly, the Scottish Government will always, as you might expect, be on the side of further decentralisation and greater devolution of powers.
I know that some of you might have concerns that the Scottish Government could use our powers to give ourselves a competitive edge over other parts of the UK. In my view, the solution to that doesn't lie in removing powers or not giving additional powers to Scotland. The solution to that lies in greater devolution of powers and greater flexibility to other regions across the UK, including the north east.
The detail of how that is done is of course mainly a matter for you and for the UK Government – I know that different councils in the north east have taken different stances on whether, for example, to have an elected mayor.
But the fundamental principle is an important one. The level of centralisation in the UK's economy and in Westminster politics is not helpful to any of us – so in Scotland, you will have, where you want it, an ally, and possibly sometimes a useful example, in promoting change that could benefit the north east of England.
And in my view, Scotland and the north east will also over the months and perhaps years to come, share many common interests and concerns in relation to the Brexit process. I understand that that's an issue Vince Cable also raised when he addressed your annual dinner last week.
Now, I understand and respect the fact that the majority of regions in the North East voted last year to leave the EU. However it is clearly essential that – even as the UK leaves the European Union – we strive to do so in a way that will be least damaging to business interests and interests more generally.
Businesses in Scotland have significant concerns that I would imagine will be shared by many of you. Businesses in Scotland want to continue to be able to hire and retain EU workers; they want to continue to benefit from trade without tariffs or regulatory barriers; they want our universities to continue to flourish through international collaboration.
To my mind the best way of achieving these outcomes is for the UK to remain a member of the single market and the customs union. That perhaps is also, democratically, the obvious compromise solution for a state which only narrowly voted in favour of Brexit, and where two out of four nations of the UK voted to stay.
So that is what the Scottish Government is arguing for.
We have significant concerns, not just about the Brexit principle, but about the process and how that process is being taken forward, and we think that the current approach has the potential, which may quickly turn into the reality, of doing real damage to businesses and others right across the UK.
One final point about Brexit, is that the potential harm it will cause to international ties – indeed to the UK's international reputation – and that has for us in Scotland provided an added impetus, to remain outward looking and internationalist.
A good example of that is our decision recently to expand Scotland's representation in key European cities and markets. For example we recently opened a new office in Dublin; we will shortly open one in Berlin.
And of course a crucial part of looking outwards, is that we don't just look to other EU countries and the wider world – a key part of looking outwards is making sure we are strengthening the links with our very closest neighbours, partners, friends and family across these islands.
That, of course, includes the north east of England. The prosperity of the north of England will always matter deeply to Scotland; and the prosperity of Scotland will always matter deeply to the north of England, such are the interconnections between us.
There will of course be times when Scotland and the north east are in competition – when it comes to attracting inward investment, for example.
But I believe there will be many, many more occasions when it makes sense for us to work together and to collaborate.
And when you look at how much we have in common – not simply our geographic proximity, and our ties of family and friendship, but also our common strengths in sectors like energy and advanced manufacturing, tourism, financial services and education – the obvious solution and conclusion is that we both have a huge amount to gain from creating even deeper and stronger links.
That is why I am delighted to have had the opportunity to be here today – to return to my roots as was suggested earlier on – and it's fantastic to see so many of you here. My hope and expectation is that by working more closely together, we can deliver real, practical, tangible benefits for Scotland, for the North East, and indeed for all of the nations of these islands.
So I wish you all the best, and I look forward to many more years of friendship and partnership between Scotland and the north east of England.
Central Enquiry Unit
Phone: 0300 244 4000
The Scottish Government
St Andrew's House