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Employability and Skills: Taking forward our National Conversation

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1 Introduction

1.1. Choosing Scotland's Future1 is the basis for a National Conversation on the type of society and governance which will best equip Scotland for the future. The aim of the National Conversation is to promote an inclusive, open and full debate about available constitutional options. This report is part of the ongoing debate 2. It is the Scottish Government's belief, however, that independence is the natural state for nations like Scotland and that only with full responsibility for its own affairs and fiscal framework can Scotland reach its full potential as a truly successful nation in a global economy. As the culmination of this debate, the Scottish Government will publish a White Paper on St Andrew's Day 2009. The Scottish Government will then introduce a Referendum Bill to Parliament in 2010 so that a referendum can be held on Scotland's constitutional future.

1.2. This report is part of that conversation, focusing particularly on the case for changing the current framework for employment support for Scotland including benefits and tax credits. These responsibilities are largely reserved 3 to the UK Parliament.

1.3. The report also considers the recommendations of the Commission on Scottish Devolution on employment related benefits. The Commission recommendations are essentially that, with a few minor adjustments, responsibility for decisions on social security in Scotland should remain reserved to the UK. The Commission did not consider independence. The National Conversation allows the opportunity to consider and to debate every option.

1.4. The Scottish Government is clear that economic growth is about releasing Scotland's entrepreneurial and creative talents and sharing the increased prosperity to ensure that all citizens can flourish. That is why the Government identified Participation as a driver of growth in the Government Economic Strategy and set Solidarity and Cohesion as two of the Golden Rules of future growth. Annex C provides more details of the Scottish Government's purpose. The focus on employment and skills reflects their importance to the life chances and outcomes of people in Scotland as well as to our future collective economic wellbeing. Scotland can only prosper as a nation if the structural barriers that prevent so many people from contributing as effectively as possible are removed.

1.5. Successive Scottish Governments have worked within their devolved responsibilities to tackle long term unemployment, poverty and skills under-utilisation in Scotland. This Government has, however, set out ambitious frameworks to tackle these issues. These are Skills for Scotland, Achieving our Potential, the Early Years Framework and Equally Well. These have been developed in partnership with Scotland's local authorities and lifelong learning partners. In addition, Curriculum for Excellence will drive forward improvements in teaching and learning to ensure young people have the skills and knowledge they need for learning, life and work.

1.6. Well paid and sustained employment is by far the most frequent route out of poverty for those able to work and for their families. The Scottish Council of Economic Advisors ( CEA) 4 considered "Addressing Economic Inactivity in Scotland" in their First Annual Report 5. In this report, the CEA recognise that several factors have a major effect on Scotland's overall employment performance. These are:

  • Factors affecting the ability and willingness of individuals to get sustainable employment (the "benefits trap 6"), the pension regime (as it relates to the participation of older age groups in the labour market); skills 7 (both job-related and basic literacy and numeracy); available and affordable childcare 8; health (particularly for those with drug and alcohol dependency and mental health problems);
  • Specific challenges faced by some groups, including: carers, lone parents; looked after children; 16-19 year olds who need more choices and chances as they are currently not in employment education or training; individuals with drug or alcohol problems; individuals with disabilities and individuals with long-term health problems. These issues are particularly acute where individuals experience multiple disadvantages;
  • Issues relating to employer demand for labour. This is largely driven by overall economic growth, the impact of growth on different parts of the economy and new business formation rates;
  • Factors affecting the value and effectiveness of training and education organisations.

1.7. Skills for Scotland makes it clear that Scotland's greatest asset is our people. We want to generate opportunities for everyone to contribute and benefit and make a positive contribution to Scotland's prosperity. We believe that ensuring skills contribute as much as possible to sustainable economic growth, is central to unlocking our potential.

1.8. Skills for Scotland set out our vision for a smarter Scotland with a globally competitive economy based on high value jobs, with progressive and innovative business leadership:

  • Where people can work in teams, are creative and enterprising and hungry to continually learn new skills. They expect to realise their aspirations and are equipped to achieve their potential in a constantly changing world. People are motivated to contribute to Scotland's future and are confident that they can do so.
  • Where people are entrepreneurial and innovative; small businesses are encouraged to grow and there is strong, coherent support for businesses of all sizes. Overseas students play a valuable role in an expanded workforce and economy.
  • Where employers improve productivity by investing in their own staff and are able to access a skilled workforce that is increasingly literate and numerate with good ICT and problem solving skills.
  • Where learning and training providers work as one system and thanks to wider use of technology and e-learning, barriers of geography and rurality have been reduced.
  • Where the funding support available to individuals - at every age and in every type of learning - is coherent and encourages participation in learning and work.

1.9. These reports should not be viewed in isolation - they are part of a wider case for a new and better way of governing Scotland. It is the Scottish Government's belief that independence is the natural state for nations like Scotland and that with greater responsibility for its own affairs and fiscal framework, Scotland could move from a position of relative underperformance and instead match, and even surpass, the higher levels of long-term growth experienced by other, similar nations.

1.10. While the current global economic downturn increases the challenges we face, we believe it strengthens the argument for responsibility for the full range of financial and economic levers to be put in the hands of the people of Scotland.

1.11. The Scottish Government believes that independence is the best way forward for Scotland and that only independence will provide the freedom and flexibility needed to increase sustainable economic growth, tackle poverty and income inequality and help those who can work to achieve their potential through employment.

1.12. While making clear the Scottish Government's preferred position of an independent Scotland, the National Conversation is inclusive of all opinions on the best way forward for Scotland and welcomes further contributions to the debate.

1.13. The structure of the report is as follows:

  • Chapter 2 examines the implications of the current devolution settlement
  • Chapter 3 - considers the potential impacts of the Commission on Scottish Devolution's recommendations
  • Chapter 4 - examines what the future could look like under more extensive devolution or complete independence.

The report is supported by a number of Annexes:

A: Employability and Skills in Scotland, UK and International Comparisons

B: UK Benefits, Tax Credits and Employment Support

C: The Government's Purpose

D: The UK Welfare model in the context of other Welfare models