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The Government Economic Strategy

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EXECUTIVE SUMMARY

The Purpose of the Scottish Government is to make Scotland a more successful country, with opportunities for all to flourish, through increasing sustainable economic growth.

By building a more dynamic and faster growing economy we will increase prosperity, be better placed to tackle Scotland's health and social challenges, and establish a fairer and more equal society. Sustainability is vital if we are to nurture our environment and ensure that future generations can enjoy a better quality of life.

Scotland is a country rich in economic potential. Our people are creative, ambitious and resilient and we are home to world class entrepreneurs, scientists and engineers. It is vital that we harvest the opportunities that this provides.

The update of our Government Economic Strategy continues the journey we started four years ago. We recognise the value of continuity so the fundamental principles of our approach, and our commitment to seeing it succeed, remain as strong as in 2007.

However economic conditions have changed markedly since then, following the deepest global recession in over 50 years. We also have a better understanding of the opportunities and challenges facing us as we move toward a low carbon economy. This is why we have taken this opportunity to sharpen our focus, enhance delivery and build for the future.

STRATEGIC PRIORITIES

This update to the Government Economic Strategy gives clear priority to accelerating economic recovery, with a range of measures to tackle unemployment and promote employability. We will focus our actions on six Strategic Priorities which will drive sustainable economic growth and develop a more resilient and adaptable economy.

Strategic Priorities

Supportive Business Environment;

Transition to a Low Carbon Economy;

Learning, Skills and Well-being;

Infrastructure Development and Place;

Effective Government; and

Equity.

Our ability to promote prosperity and jobs depends on the performance of our businesses - both large and small. This is why we are committed to maintaining and further investing in a Supportive Business Environment. Our approach will focus our efforts on growth companies, growth markets and growth sectors. Our key actions in this area include:

  • Establishing four Enterprise Areas in Scotland - including sites with a particular focus on low carbon manufacturing opportunities;
  • Providing advice and support to help SMEs grow, to hire staff and take on apprentices;
  • Promoting Scottish exports to capitalise on the significant opportunities in growth markets; with an ambitious target to deliver a 50% increase in exports by 2017;
  • Continuing to deliver the Small Business Bonus Scheme;
  • Strengthening levels of innovation and commercialisation, including improving the links between our universities and private sector companies; and
  • Using the Scottish Investment Bank to support early stage innovative technology based businesses, and growth and exporting companies.

The Government Economic Strategy establishes a new Strategic Priority - Transition to a Low Carbon Economy - to reflect the excellent opportunity we have to secure investment and jobs from this growing sector and ensure that the benefits of this transformational change are shared across the economy and our communities. Our key actions in this area include:

  • A £70 million National Renewables Infrastructure Fund to help leverage private sector investment to develop the infrastructure across the country to support offshore renewables and ensure that Scotland becomes Europe's green energy powerhouse;
  • Positioning Scotland as a world leader in low carbon activities - a sector which, with the right incentives, could support 130,000 jobs by 2020; and
  • Investing in further improving the quality of Scotland's housing stock, including initiatives to improve energy efficiency and tackle fuel poverty.

Delivering our growth strategy for business and supporting the transition to a low carbon economy requires a solid foundation of skills, infrastructure, effective government and equity.

Our Strategic Priority on Learning, Skills and Well-being acknowledges that a skilled, educated and creative workforce is essential to creating a more competitive and resilient economy. And in the face of the ongoing effects of the recession, it is vital that we develop the skills and employability of Scotland's workforce, and reduce the number of people who are out of work or underemployed - particularly amongst our young people. Our key actions in this area include:

  • Through Opportunities for All we will ensure every 16-19 year old in Scotland who is not in work, a Modern Apprenticeship or education will be offered a place in education or training;
  • A commitment to deliver 25,000 Modern Apprenticeship opportunities in each year of this Parliament and maintain bursary support to help young people remain engaged in college and training;
  • Reforming post-16 learning to deliver a system-wide focus on employability and growth; and
  • A commitment to investment in Higher Education so that Scotland remains an international centre of excellence for learning and creative thinking whilst ensuring that access is based upon ability to succeed rather than ability to pay.

Our focus on Infrastructure Development and Place will harness the strength and quality of Scotland's cities, towns and rural areas and promote the digital economy. Our focus on place is also about improving the overall quality of life in our neighbourhoods. Our key actions in this area include:

  • Despite massive cuts to the capital budget from Westminster we are committed to prioritising our spend on capital to maximise the impact on jobs and the economy, including the construction of the Forth Replacement Crossing - the largest civil engineering project in Scotland in a generation;
  • Boosting investment in Scotland's infrastructure by working with the highly successful Scottish Futures Trust to roll out a £2.5 billion programme of NPD investment, maximise investment from the Rail Regulatory Asset Base and leverage new investment from innovative measures such as Tax Incremental Financing, the National Housing Trust and the JESSICA Fund;
  • Setting out plans for a Next Generation Digital Fund to accelerate the delivery of superfast broadband across Scotland; and
  • Introducing a Cities Strategy to support cities and their regions maximise their potential as engines of growth in the Scottish economy.

Effective Government is fundamental to the successful implementation of the Government Economic Strategy, as it is only by the actions of the public sector being fully coordinated and aligned can we maximise Scotland's potential. Central to this will be nurturing and developing the talents and creativity of all our public servants. Our key actions in this area include:

  • Increasing the public sector's direct contribution to the economy through smart use of public procurement, in order to promote jobs and growth; encourage innovation; boost training and apprenticeship opportunities; and help Scottish firms, particularly SMEs, compete effectively for contracts;
  • Ensuring that Scotland's public services remain fit for purpose, and affordable, in these challenging times and into the future; and
  • A commitment to further improving the efficiency of the public sector, including a focus on better regulation.

As well as being a desirable outcome and characteristic of growth, Equity - social, regional, and inter-generational - is also a key driver of growth and jobs. Only by ensuring that everyone has an opportunity to succeed will we fully maximise the nation's potential. Our key actions against this Strategic Priority include:

  • A focus on preventative spend to tackle the social and health problems which prevent people from realising their potential;
  • Maintaining household incomes through freezing council tax and abolishing prescription charges to help families in tough times;
  • Delivering with key commitments including prioritising health budgets, abolishing tuition fees, and continuation of concessionary travel; and
  • Supporting the development of an enterprising third sector in Scotland.

SCOTLAND'S FUTURE

The Strategy sets out how we will make full use of the economic levers currently devolved to the Scottish Parliament, with the aim of improving Scotland's rate of sustainable economic growth.

But it is also important to reflect on the type of country and economy we want to be in the future. In May, the people of Scotland voted for change. While we are making progress with the levers that we currently have, an increasing number of Scottish businesses, entrepreneurs and workers are recognising the urgent need for Scotland to take greater responsibility for the decisions that affect our economy and our collective prosperity.

Many of the key job creating powers - particularly in relation to taxation and key elements of economic policy - lie outside the remit of the Scottish Government. Approximately 90% of Scotland's revenues are collected by Westminster and are not set with reference to economic circumstances here, or the preferences and needs of our businesses or households.

This limits our flexibility to respond to key challenges or to take advantage of strengths or new opportunities within Scotland's economy.

With greater responsibility we could do much more. Independence would provide the optimal degree of autonomy to capture the unique opportunities in Scotland's economy, to maximise our potential and fully determine our own economic future.