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Economic Recovery Implementation Plan: Scottish Government response to the Advisory Group on Economic Recovery

The Scottish Government’s response to the Advisory Group on Economic Recovery report “Towards a Robust, Resilient Wellbeing Economy for Scotland: Report of the Advisory Group on Economic Recovery.”

Economic Recovery Implementation Plan: Scottish Government response to the Advisory Group on Economic Recovery
2. Our Response and Implementation Plan

2. Our Response and Implementation Plan

2.0 Introduction

25. The report by the Advisory Group on Economic Recovery validated our overall strategic approach to the economy while sending a strong message about pace and partnership. We accept its recommendations. In this response to the report, we set out how we will take forward its recommendations and how we will use these to strengthen what we are doing
to respond to the economic crisis. We are also committing to going further. The economic crisis provides an opportunity to re-imagine Scotland and to begin building a greener, fairer and more equal society: a wellbeing economy.

26. The Scottish economy is facing a number of significant challenges arising from the scale of the economic contraction and the ongoing uncertainty over the medium-term economic outlook. The end of the BREXIT transition period represents another major adverse shock to Scotland’s economy. The economy will be recovering from a low base with demand in many sectors remaining weak. Business models have changed and workforces have adapted significantly in order to operate in a safe manner as they resume operations. The scale of the losses in productive capacity, both jobs and businesses, is still emerging. The approach to the unwinding of policy support schemes, which have mitigated the economic impact, will be critical to the recovery.

27. To date, we have taken significant measures to support the economy. We have provided a £2.3 billion business support package, including specific schemes to support sectors like tourism, culture and the self-employed.

28. We have worked together – employers, workers, trade unions and regulatory bodies – to create safe workplaces for all. Our sectoral guidance, now published for around 30 sectors, provides assurance and confidence to workers, employers, customers and businesses that workplaces are safe to re-open. We will continue to provide further guidance as part of our phased approach to restarting the economy. In addition, we are working closely with key enforcement agencies such as the Health and Safety Executive, local authorities and Police Scotland – to ensure a joined-up approach to enforcement and monitoring, and one that will help us take swift action to respond to local outbreaks as we continue our efforts to suppress the virus.

29. Our actions now focus on the priorities to help business and industries recover and grow in a sustainable way to protect and create good quality jobs, as well as to ensure they are as prepared as they can be for the end of the EU Transition Period. We must invest in skills and training particularly for new technology and ‘green’ skills to ensure these opportunities exist across all parts of Scotland, including rural and island communities. At the same time, we are supporting people who are unemployed or may be at risk of unemployment, with the right skills, employment and training they need to access job opportunities.

30. We know we cannot do this alone. As part of our economic recovery, we commit to:

  • A partnership approach with business, trade unions, the third and voluntary sectors, local authorities and our enterprise and skills agencies, that is based on shared ambitions; and
  • Integrating an equality and human rights approach to our policy and decision-making processes to ensure our approach to recovery is fit for purpose (see Annex, new ‘recommendation’ 26).

31. Our response is structured into six key action themes where we know we must take action now to protect employment and people and support business to weather the most pressing economic challenges over the months ahead:

  • Protecting jobs by supporting business recovery and sustainable, green growth
  • Creating jobs through business engagement and a partnership approach
  • Supporting access to good quality jobs through employment, skills and training
  • Boosting local job creation through resilient people, communities and places
  • Creating jobs and a Just Transition through investment-led sustainable growth
  • Monitoring our progress and outcomes

Working collaboratively with business

Working collaboratively across business, government and employee interests has been at the heart of how we have worked with industries through COVID-19.

An example of this is the construction industry. Building on the work initiated in the Economic Action Plan of 2018, we quickly formed a collaborative working group that included voices from across industry and trade unions. Working closely with this group, and sharing knowledge, practice and understanding, the construction industry has been able to maintain work in critical infrastructure and effect a controlled return to work. We are now working with that same group to develop an industry recovery plan. This plan will outline immediate, short, medium and
long term priorities that will be focussed on delivering the wellbeing economy.

As we transition to recovery, that level of partnership working will continue and deepen. We will work with businesses from a range of sectors to co-produce and deliver a programme of collaborative and focused projects to be taken forward over the next 3-9 months.

32. Our response makes clear our commitment to business, including those in the third sector. It is businesses who will drive the economic recovery that is the foundation for our wider wellbeing ambitions.

33. The nature of our growth, and economic recovery, also presents an opportunity to accelerate the just transition to a circular, net zero economy by 2045.

34. Being at the forefront of a global transition will stimulate investment and innovation and enable Scottish businesses to better compete internationally. This is also a huge opportunity to grow Scottish businesses, supply chains and good, sustainable jobs. Setting green recovery at the heart of our social and economic renewal plans can ensure that environmental sustainability and ending Scotland’s contribution to climate change are central to our wellbeing economy.

35. The remaining sections in this report set out the actions we are taking, priorities for the immediate term and policies that we wish to develop further. These take into account the work and conclusions of the Advisory Group on Economic Recovery with our formal response to each of the recommendations in the Annex to this report.

2.1 Business Recovery and Sustainable, Green Growth

36. The Scottish Government’s COVID-19 economic response and recovery programme has initially focused on protecting the economy, sectors, business and households from the worst, and most immediate impacts of COVID‑19. We have provided a unique package of business support, totalling over £2.3 billion, to protect business.

37. This support has reached those who need it. The package of support to business comprises four elements: £972 million package of rates relief and other Non-Domestic Rates Income measures; our Small Business and Retail, Hospitality and Leisure Grant Schemes, which are worth over £1 billion; £185 million additional support fund; a package of seafood/fisheries measures worth over £18 million; together with an additional £10 million for the theatre venues fund. Additionally we made available a £230 million economic stimulus package that included funding for construction, low carbon initiatives, digitisation and business support, creating jobs by providing a pipeline of work for businesses.

38. Additionally, Scottish legislation has been amended to support businesses to remain in their property if they are unable to pay rent temporarily, allowing them to return to making positive contributions to the economy once restrictions are lifted.

Transport

Scotland’s transport sector is a key enabler of the Scottish economy. The measures taken in response to the pandemic has had a significant impact upon the entire sector. The Transport Transition Plan[6] sets out the actions taken by Transport Scotland to support Scotland’s transport system during the crisis. The sectoral support provided by the Scottish Government has included £46.7 million to support bus operators to increase services, £10 million to support the rapid deployment of bus priority infrastructure by local authorities, and an £8.8 million Bus Emissions Abatement Retrofit scheme. Additionally we have provided £9 million of emergency funding for Glasgow Subway and Edinburgh Trams and a £30 million Spaces for People initiative, setting up temporary walking and cycling routes to enable social distancing during the crisis.

Moreover, the sector’s success is critical for our recovery, and the National Transport Strategy – published in February 2020 – sets out our ambitious vision for Scotland’s transport system for the next 20 years. The vision is underpinned by four priorities: reduce inequality, take climate action, help deliver inclusive economic growth and improve our health and wellbeing. Investment in transport infrastructure (including maintenance of existing assets) to support economic recovery is important. Such projects are labour intensive and yield large ripple effects throughout the economy boosting growth and employment.

39. The Advisory Group report proposed a number of actions to support a return of economic activity that is more aligned with a wellbeing and green recovery. Our response as set out here includes our priority actions, with a stronger focus on enabling recovery through procurement, better planning and regulation and digital transformation. Crucially, we recognise the importance of supporting our small and medium sized enterprises, and early stage companies.

2.1.1. Supporting recovery through procurement

40. Procurement spending across the public sector in Scotland presents a vital opportunity to maximise the impact of our investment to boost economic recovery and deliver sustainable and inclusive economic wellbeing. The annual report on procurement activity in Scotland, published in 2019, estimated that procurement spending by the Scottish public sector generates around £10 billion of economic activity in the wider Scottish economy, contributing £6 billion to Scottish Gross Domestic Product, supporting around 100,000 Full-Time Equivalent jobs.

41. Importantly we must harness the opportunity to learn from our response to this crisis, taking an even more ambitious approach and building on steps taken to make it easier for small businesses to access and compete for public sector contracts: 79% of suppliers awarded contracts in 2019-20 were SMEs, and 63% were SMEs located in Scotland. Maximising public money; driving access to contracts for business; jobs and training; and reflecting climate change goals, will ensure procurement activity increasingly reflects the needs of local communities in-line with the Place Principle.

42. Over the next year, we will maximise the economic impact of public procurement by:

  • Leveraging the full procurement rules to exploit opportunities that will support economic recovery;
  • Strengthening our partnership working and engagement with stakeholders (buyers and suppliers);
  • Promoting and delivering scaled and market-friendly approaches to procurement that consider the capacity of sectors restarting post-COVID to respond;
  • Maximising the opportunities for local suppliers and the Third Sector, we will continue to fund the Supplier Development Programme and explore options to increase capability and capacity to develop and grow local markets;
  • Working with public authorities to broaden and advance the impact of the Sustainable Procurement Duty within the Procurement Reform (Scotland) Act 2014; and
  • Taking a place-based approach to help deliver Community Wealth Building.

Lessons from responding to COVID-19 – procurement and job creation

The COVID-19 pandemic exposed vulnerabilities in global supply chains for medical equipment such as ventilators, consumables such as Personal Protective Equipment (PPE) and hand sanitiser, and COVID-19 testing kits. The Minister for Trade, Innovation and Investment led work across government and the wider public sector including NHS Scotland Supplies and Enterprise Agencies to work closely with Scottish businesses to meet exceptionally high demand from NHS Scotland.

Bringing together the procurement expertise of NHS Scotland Supplies, the technical manufacturing knowledge of the National Manufacturing Institute for Scotland and the in-depth company knowledge of Scottish Enterprise allowed us to work closely with individual businesses to encourage expansion, repurposing and new manufacturing by Scottish businesses. Over the course of just weeks we were able to increase manufacturing self-sufficiency and create new supplies of masks (both Type IIR and FFP 3 masks), gowns and hand sanitiser. These public sector orders gave businesses confidence to invest and expand – and will inform future work to develop supply chains for critical goods within Scotland

Major achievements include:

  • Alpha Solway, based in south-west Scotland, has purchased new machines capable of making type IIR masks with production due to begin in August at their facility in Dumfries. As well as providing an increased supply of masks, this has boosted employment in the region with 30 full-time permanent members of staff hired to work at this facility. The company is using raw material sourced from Don & Low in Forfar.
  • Berry BPI has adapted its existing facilities and invested in new equipment in Greenock and Dumfries to produce 2 million aprons per week (with a total order for 108 million), creating 60 additional jobs by the end of July
  • Supporting capital investment in new machinery to make Scotland more than self-sufficient in “Melt blown” (a key filter material for masks which is in short supply globally)

2.1.2. Better Planning and Regulation

43. Our planning and regulatory systems will be crucial in supporting investment and growth as part of our economic recovery, while maintaining our high standards.

44. We are currently taking forward the changes introduced by the Planning (Scotland) Act 2019. This focus on implementation of the changes already introduced alongside improved practice, is the most immediate way of improving the planning service and ensuring that it supports recovery effectively. As part of this work we will:

  • Carry out a comprehensive review of national planning policies and the extension of permitted development rights, removing the need to apply for planning permission for priority areas of development, to support economic recovery. We will consult on detailed proposals in the autumn and lay regulations in Parliament later this year;
  • Explore options to alleviate planning restraints, build capacity and deal more quickly with complex applications; and
  • Publish a Digital Planning Strategy in November followed by a Programme launch in the New Year which will kick-start a five-year transformation programme to deliver digital tools to realise benefits across business, infrastructure and utility providers, public sector organisations and communities.

45. The Scottish Government’s fourth National Planning Framework (NPF4) will be brought to Parliament in September 2021. This work will focus on developing our understanding of how Wellbeing, Place and Economy issues vary across Scotland to provide a clear picture of infrastructure and development priorities across the country.

46. Through our ground-breaking Heat Networks Bill, we are establishing a regulatory framework for the development of district and communal heating systems in Scotland. The framework draws on successful approaches in Europe, in creating the supportive environment needed to deploy these schemes which will be key in meeting Scotland’s net zero targets. This will be a streamlined change, with new heat network developments being routed through a bespoke consenting process that will grant deemed planning permission, subject to meeting the local and national climate change and fuel poverty targets required.

47. Over the last 12 months, our Energy Consents Unit has made a number of improvements to its processes to speed up decisions, and we will continue to engage
UK Government on areas where they have reserved powers.

48. The Advisory Group’s report also highlighted specific issues on offshore wind, which were further reinforced by the Climate Emergency Response Group (CERG)[7] report’s focus on the infrastructure required to support offshore wind development. We are developing a clear framework to enable greater scale and speed in the growth in offshore and onshore wind development to support our commitments to delivering net zero by 2045.

49. As part of our approach we will adopt Scotland’s sectoral marine plan for offshore wind later this year, outlining development areas for offshore wind leasing to support the sustainable expansion of offshore wind energy. In addition, we are implementing practical measures to increase the efficiency of processing marine licences, which will help optimise the resource available for offshore wind consenting.

2.1.3. Investing in our digital capabilities for economic recovery

50. Digital connectivity has played a pivotal role throughout the pandemic. Utilising our digital capabilities during lockdown has supported the work of the health and emergency services; enabled people to work effectively from home; and allowed families and friends to maintain important social bonds. The CERG report also noted the potential for increased digital connectivity to support continued home working, SME capability and reduced transport demand.

51. We will continue to invest in service design and wider digital skills, including an education system that is fully aligned to delivering our skills needs and addressing the role of digital exclusion in social inequality. Research suggests that every public pound invested in broadband in Scotland delivers nearly £12 to the Scottish economy[8]; and a recent study by PwC[9] suggests that the use of artificial intelligence solutions as part of a national data infrastructure could be worth £16.7 billion to the Scottish economy in 2030.

52. We are, therefore taking the following actions to support our ambition around digital transformation:

  • Progressing the recommendations of forthcoming Logan Review[10], which considers how we can elevate Scotland’s “Technology Ecosystem” to a world class level in a way that increases the rate at which we generate profitable, high growth tech businesses. The forthcoming Programme for Government will consider its recommendations in more detail.
  • Updating the 2017 Digital Strategy for Scotland – setting our infrastructure ambitions within the wider context of transforming the delivery of digital public services and bridging skills and inclusion gaps through the provision of affordable connectivity and equipment to ensure that our most excluded can benefit from the opportunities of digital connectivity.
  • Investing £600 million to extend broadband infrastructure via the Reaching 100% (R100) programme to ensure that every home and business in Scotland can access superfast speeds; and £25 million via the Scottish 4G Infill Programme to build new masts in selected mobile ‘not-spots’.
  • Establishing the Scotland 5G Centre. This will develop projects to improve rural and island connectivity, create an urban test bed for 5G in the centre of Glasgow and assist the deployment of supporting infrastructure.
  • Supporting SME adoption of digital technologies. The pandemic has underlined the economic importance of digital capability. The businesses that have coped best are those who have been able to innovate digitally: pivoting quickly to homeworking, adopting cloud computing for collaborative working and using digital platforms to access customers and repurpose products and services. To maintain this momentum, we will explore new ways of supporting businesses to adopt digital technologies, stimulating growth and job creation. This includes examining making grants and
    loans contingent on a ‘digital health check’.
  • Working with Scottish Futures Trust, Scottish Enterprise, SDI and others as part of a cross-sector working group to develop an action plan around green data centres and international connectivity, aimed at stimulating the market and incentivising commercial investment in particular promoting Scotland as a green data hosting location.

53. We understand the imperative to increase levels of digital inclusion, which is why, through the Connecting Scotland programme we have already committed £5 million to provide devices, data, skills training and technical support to people on low incomes and digitally excluded who are at high or very high clinical risk from COVID-19. We are considering how we might extend the programme to others at risk of digital exclusion including working with Education Scotland using E-Sgoil, a digital platform that delivers real-time interactive lessons, to develop national provision for all senior phase pupils to access high quality online lessons with qualified teachers.

2.1.4. Investing in SMEs and early stage companies

54. As at March 2019, there were over 350,000 Small and Medium-sized Enterprises[11] (SMEs) operating in Scotland, providing an estimated 1.2 million jobs. SMEs accounted for 99.3% of all private sector businesses, 55.4% of private sector employment and 41.5% of private sector turnover.

55. Investing in SME’s and creating the conditions to support our small and medium size businesses is vital to our economic recovery and resilience. We want to see companies successfully grow, and provide good quality employment. To do this, we must ensure that existing businesses have the right support on which to build our sustainable, inclusive recovery and to protect employment.

56. We are also acting to support new businesses with high growth potential at the start of the business growth pipeline. We recognise that support for Scotland’s entrepreneurial ambitions starts early and that is why we support Young Enterprise Scotland to work with our young people in schools and colleges to build their ambition and knowledge to create the businesses of the future. We continue to work closely with Entrepreneurial Scotland to build a strong ecosystem for start-up, early stage and growth businesses to provide more and better co-ordinated support for businesses to achieve significant growth.

57. The most ambitious of Scotland’s new businesses would traditionally look to the investment market for capital to grow and develop. This investment pool is shrinking globally and may not recover for several years. We have therefore put in place an additional £38 million support package for early stage businesses, to be implemented by Scottish Enterprise in partnership with private investors and other partners with relevant experience.

58. To boost the number of business of scale in Scotland, we are providing funding to help support the Scale Up Scotland programme, led by the Hunter Foundation, which provides practical and relevant learning for high growth potential entrepreneurs.

59. We are also committed to working with private sector partners who can bring their own experience of building businesses to advise others, including:

  • Using the Logan Review, undertaken by Mark Logan to consider how we maximise the impact of the tech sector;
  • Funding the Scottish EDGE competitive model of entrepreneurial development and support, working in partnership with the Hunter Foundation, Entrepreneurial Scotland and a range of private sector partners from the entrepreneurial ecosystem in Scotland; and
  • Funding the Unlocking Ambition programme to provide financial support and intensive training and mentoring to develop early stage businesses with the greatest growth potential.

2.2 Business Engagement and Partnership Approach

60. Our response and recovery is predicated on a partnership approach with business, trade unions, the third and voluntary sectors, local authorities and our enterprise and skills agencies, that is based on shared ambitions.

61. The Scottish Government and business have long worked closely together towards our shared economic ambitions. One of the core strengths of the response to the COVID-19 crisis in Scotland, has been the boost in collaborative efforts by businesses in Scotland and the public sector.

62. Working together has helped us tackle the critical issues of business resilience, helped protect the productive capacity of Scotland’s industries, and built new and innovative supply chains around personal protective equipment and related supplies for the NHS and care sector. It is a partnership that has encompassed businesses of all sectors and sizes, and the public sector in all its forms, from the Scottish Government through enterprise agencies to local authorities.

Tourism

Scotland’s new tourism strategy – Scotland Outlook 2030 – was launched immediately before the pandemic and was developed in complete collaboration with industry and our agencies.

That productive partnership has been integral to our pandemic response, through the Scottish Tourism Emergency Recovery Group, and now the Tourism Recovery Taskforce.

The sector has benefited from our overall package of £2.3 billion business support, but its seasonal nature means that, to ensure survival and revival, we will continue to explore what more can be done, and to press the UK Government to do the same.

Our new shared strategy puts the environment, communities, fair work, jobs and a skilled workforce at its heart and the Taskforce will focus on three key areas: Recovery, Investment and Stimulating Demand – reporting in September 2020.

Scotland’s tourism offer depends on the beauty of our natural environment and this strategy will deliver tourism as a positive force for our businesses, the communities they support, and our environment, as also highlighted by CERG

63. Dealing with the crisis has begun to forge a new collaborative partnership between business and government. Individual businesses, business organisations and trade unions have been at the forefront of developing and delivering COVID-19 sectoral guidance and they will be an integral part of the development and delivery of our joint sectoral recovery plans. We will continue to engage closely with business to ensure necessary actions to prepare for the end of the EU Transition Period are taken. An example of an established
and productive partnership approach on the Tourism industry is highlighted above.

64. We recognise that our economic recovery needs to be a national endeavour. We want to capture the gains in collaborative working, take on board new ideas for sector-led recovery and to create action-focussed partnerships to tackle Scotland’s most pressing economic challenges. We will:

  • Co-produce and deliver a programme of collaborative and focused projects to be taken forward over the next three to nine months, and beyond – including Sandy Begbie’s leadership of the design and implementation of a job guarantee for young people, and developing a partnership with BT to boost SME digital skills, innovation and productivity in the South of Scotland;
  • Ensure this initial partnership programme augments existing collaborations such as our work with the Scottish Chambers of Commerce on exports and developing the young workforce and with SCDI on Productivity Clubs and business aspects of Test and Protect;
  • Forge stronger partnerships with Industry Leadership Groups (ILGs), by collaboratively implementing the Enterprise and Skills Strategic Board’s recent Review[12] and working with ILGs, trade unions and others to develop and deliver sector recovery plans (using the co-production model described above, which worked well for sector re-start guidance);
  • Work with business bodies to agree a new compact for and with business which sets out our shared values and aims, and provides clarity, commitment and accountability on mutual policy engagement and approach;
  • Develop a plan to champion and enhance the role of SMEs and their engagement with opportunities across the Energy and Oil and Gas sectors through the Oil and Gas and Energy Transition Strategic Leadership Group, working alongside wider industry, public partners and the Trade Unions;
  • Invite business and other leaders to provide constructive challenge and support across the Scottish Government to ensure the design and delivery of key policies takes better account of the needs and priorities of businesses and opportunities for economic benefit. Each business leader will work with the most senior leaders in the Civil Service on a small number of specific policies to drive change;
  • Work with the Banking and Economy Forum, to take forward an action-focussed partnership with Scotland’s financial services industry to identify and address economic challenges as they emerge, including consideration of issues such as recapitalisation of Scottish businesses, identifying new pressures in particular sectors or supply chains and using data to deepen our real-time understanding of economic impacts on households and businesses;
  • Share knowledge and experience through inward and outward secondments from and to business; and
  • Increase private sector representation on public body and agency boards.

Creative Sector

Arts, culture and creative industries in Scotland have been badly affected by the pandemic, in particular those that rely on public-facing activities such as the performing arts and museums. Without continued support, a significant share of the 72,000 workers in the Arts, Entertainment and Recreation sector face an escalating risk of redundancy.

We quickly put in place a package of support for the sector, including freelancers, and subsequently developed additional support to help businesses and individuals to navigate their way through the crisis. Nonetheless, as noted by the Advisory Group, many challenges remain, not least maintaining important cultural infrastructure and the freelance workforce.

The recommendations from the Advisory Group broadly align with our long-term vision for the sector as set out in the Culture Strategy – strengthening culture, transforming through culture, empowering through culture.

The welcome additional funding of £97 million from the UK Government for the culture, creative and heritage sectors will allow us to build on these recommendations and work in collaboration with our partners and the recently-established National Partnership for Culture to develop the resilience and diversity of the sector.

  • Building on the proposal for a National Arts Force, we will create a “Culture Collective” to harness and maximise the contribution of Scotland’s creative workforce (particularly freelancers) to the building of a wellbeing economy. We will incorporate advice and recommendations from the National Partnership for Culture on the most strategic and sustainable ways to achieve this, following the principles of the Culture Strategy.

65. The Advisory Group recognised that the precise form and structures of a new partnership are not an end in themselves. Our objective is to create a shared agenda with aligned ambitions to deliver the kind of recovery that Scotland needs. We will therefore take action as set out above and review and empower, build on, or repurpose existing advisory groups to boost co-production, before determining whether to establish a new Council of Business Advisors.

66. Of course, our partnerships must extend beyond business. We have strong and effective partnerships with the trades unions, and will continue to strengthen these to embed fair work and wellbeing principles at the centre of our economic recovery. We will re-energise our partnership with local government, linking this to public service reform, aligning delivery bodies and key anchor institutions to find more effective ways to deliver our shared outcomes.

67. COSLA has indicated that the findings and recommendations of the Advisory Group are broadly consistent with their own views on response and recovery. We welcome this and will work with our local government partners to mitigate the worst impacts of the COVID-19 economic crisis and support recovery. This will include joint work on employability, job creation and business support and economic development and will recognise the central role of local Government in place-based working.

The Third Sector

The third sector is a major contributor to the delivery of our national outcomes as well as contributing more than £6 billion a year to the Scottish economy.

The sector’s role during the crisis has been vital during the crisis and we have acted quickly to support the sector. The Third Sector Resilience Fund has provided over £22 million financial support and advice to third sector organisations who would otherwise have succumbed to income and cash flow issues now and in the immediate future. Through our prompt action, we have saved up to 15,000 jobs and financial analysis suggests that this investment has saved between £72 million – £145 million in tax receipts.

We are currently working with partners to develop a new Third Sector Recovery Programme combining investment with enhanced business support – this will also aim to help the sector to move forward and adapt. Longer term we will explore new forms of social investment and finance to build upon Scotland’s world leading position in social enterprise. We will seek to address the barriers facing the sector by strengthening collaboration between the Scottish Government, Local Government and the Third Sector. And we re-make our commitment here to longer term funding across the Scottish Government.

68. The shared Partnership Working Agreement for Employability between the Scottish Government and COSLA which has been in place since December 2018 has provided
a strong foundation for joint working on employability and skills. We will now develop a similar approach for the business support and economic development landscape so that
our collective knowledge, expertise and resources deliver maximum impact. This will include accelerating work already underway with local government and other partners to provide
a joined up system of support that meets the needs of businesses right across Scotland.

69. Equally, our enterprise and skills agencies are critical to our purpose. Working with local government and Business Gateway, these agencies have a critical role in leading and supporting recovery, whilst also meeting the immediate needs of businesses and existing commitments for 2020/21 and beyond. As set out more fully in the place section, over the next 12 months Scottish Enterprise will shift to a more regionally, place focussed model for economic development drawing on its national capacity and expertise.

70. We will explore with Scottish Enterprise how to capitalise on the existing investment in the rural leadership programme by:

  • testing a mechanism that creates peer to peer support for micro-enterprises by matching successful and innovative rural business leaders with businesses in their area who need help to reach their potential; and
  • Connecting innovative rural leaders with young entrepreneurs in their area to explore business opportunities and provide support and mentoring.

71. We will also issue guidance to all public bodies and agencies to encourage them to strengthen their relationships with business, trade unions, the third sector and local government.

2.3 Employment, Skills and Training

72. The coronavirus pandemic has had an unprecedented effect on Scotland’s labour market. Workers have been furloughed or lost their jobs as businesses have temporarily or permanently closed and many of those who have kept working have experienced significant changes in working practices such as a move to home working, physically distanced offices and reduced public transport.

73. It is anticipated that the unemployment rate will increase – potentially significantly – as the job retention scheme unwinds. Certain groups such as women, disabled people, people with minority ethnic backgrounds and young people who are already disadvantaged in the labour market, have further suffered disproportionately as a result of COVID-19 and its impacts on the labour market. These groups tend to be over-represented in those sectors hardest hit from the impacts of COVID-19 and the lockdown in the economy. Our response must ensure we are adequately responding to the particular needs of these groups, ensuring their inclusion in the labour market through effective design of policies and considerations around equality of opportunity, pay and progression as part of our economic recovery measures.

74. Alongside this report, the Scottish Government has published its response to the Enterprise and Skills Strategic Board’s report setting out a delivery plan for implementing actions to support those workers facing redundancy, and to provide training to help unemployed people back into work. Our immediate priorities to support the economic recovery requires actions in three key areas of the labour market: support for our young people; support for those made redundant or at risk of job loss; and support for those currently seeking work or who are at-risk of long-term unemployment.

2.3.1. Job support for our Young People

75. We will seek to mitigate the worst impacts on rising youth unemployment. To do this, we have already announced investment of at least £50 million to support up to 20,000 young people in jobs. This will include:

  • Development of the Scottish Job Guarantee recommended by the Advisory Group. Work to develop an implementation plan for the Guarantee is being led by Sandy Begbie and will be taken forward in partnership with employers, local authorities, third sector and youth work organisations to ensure an equitable offer to all young people. We are in a unique position to build on the strength of our existing structures and networks and it is critical that we fully utilise these in shaping the Guarantee. We recognise that our approach must fully account for those young people who already face significant barriers in the labour market such as those from disadvantaged backgrounds, minority ethnic young people, lone parents and people with a disability
  • Increased investment in Developing the Young Workforce as well as providing wrap-around support to those on the Kick Start Scheme and identifying how we support those not eligible.

2.3.2. Job support for those facing redundancy

76. We will begin a programme of retraining for people made redundant or whose employment is at risk. Despite improvements in access to retraining and upskilling interventions in recent years, Scotland’s skills system will require significant investment and reform in order to respond to the levels of unemployment currently forecast. Therefore, we will:

  • Work with stakeholders to develop a COVID-19 Transition Training Fund; a flexible and proactive programme of skills interventions, including digital skills, to support people facing redundancy in those sectors and regions most affected by the current crisis.
  • Refocus our skills strategy. The pandemic has highlighted the importance of improving access to retraining and upskilling opportunities. Additional investment has already been made in supporting retraining and upskilling: £3.7 million to enable the re-opening of Individual Training Accounts and £20 million for the Flexible Workforce Development Fund. Helping individuals across Scotland to upskill and retrain will be critical to our economic response to COVID-19, and offers opportunities to reskill people for the jobs associated with our transition to net zero. It also demonstrates our commitment – as set out in Scotland’s Future Skills Action Plan (2019) – to creating a culture of collective investment in Scotland’s skills system and developing more opportunities for lifelong learning.
  • The need for strategic planning on skills will be an important factor in delivering a just transition to a net zero, circular economy in Scotland, in response to the global climate and nature emergencies. We will look for opportunities to prioritise investment, innovation, skills and supply chains in support of green jobs. This will deliver decarbonisation and wider environmental outcomes, create long term skilled jobs, and help rebuild a stronger, sustainable economy.

2.3.3. Support for those seeking work or at risk of long-term unemployment.

77. We will ensure disadvantaged groups are not left behind. This will require focussed support for the 115,000 people likely to be at risk of long-term unemployment including:

  • extension of Fair Start Scotland services for a further two years to March 2023 providing support for unemployed people with disabilities, health conditions and other barriers to moving into fair and sustained work;
  • extra funding for Partnership Action for Continuing Employment (PACE) to provide immediate advice to all at risk of being made redundant and provide additional support to groups at risk of falling further behind (e.g. disabled people and minority ethnic people); and
  • a £5 million investment in Parental Employability Support Fund to help low income parents into and progress in work in 2020/21.

78. We will collaborate with partners to initiate early planning on a Centre for Workplace Transformation, aiming to have completed plans by the end of 2020. This has the potential to add real value to our knowledge base on workplace innovation, business models and organisational change and productivity, as well as to support the public and private sectors to deliver positive change in workplaces across Scotland in line with the Fair Work agenda.

2.3.4. Tackling Inequalities for a wellbeing economy

79. COVID-19 has both exposed and exacerbated health inequalities in Scotland. The disproportionate harm caused by COVID-19 to minority ethnic groups, people living in greatest deprivation, people with obesity, diabetes and respiratory disease[13] has highlighted new vulnerabilities and underscored widening existing health inequalities. However, health inequalities cannot be addressed through health and social care alone and are themselves primarily manifestations of economic, social, structural and cultural inequalities. In its report, the Advisory Group was clear that “in setting the direction of Scotland’s economic recovery, we must seek not only to mitigate inequality but to reduce it.”

80. The emerging data and evidence also tells us that we are seeing larger rises in unemployment levels and higher rates of furlough for young people. In addition, more deprived, and rural & remote areas with large tourism employment have seen the largest percentage point rises in benefit claimant rates. Additionally, evidence at the UK level indicates larger employment falls for minority ethnic groups due to higher levels of employment in affected sectors and also atypical work. There is also a growing level of evidence of higher levels of social impacts for disabled people than non-disabled people which could have a negative impact on their employability longer term.

81. Inequalities of outcomes can often stem from existing inequalities, particularly in the early years and through to young adults. Our aim to achieve our challenging statutory Child Poverty targets and to close the poverty-related attainment gaps across Scotland, are defining missions of this Government. However, we recognise the disruption and challenges the pandemic is causing to children across Scotland, and especially those from disadvantaged backgrounds. To support our commitments, we have identified a number of actions to mitigate the impacts on those hardest hit and to help wider recovery:

  • We are establishing a new £11.2 million Transitional Support Fund to help childcare providers in both the private and third sectors, including out-of-school care providers, meet extra costs incurred to comply with public health guidance in response to the coronavirus pandemic. On top of this we are working with the Scottish Childminding Association to introduce a new Workforce Support Fund which will provide grants to childminders to help them adapt to the reality of the virus
  • We are investing £182 million through the Attainment Scotland Fund helping support Local Authorities and schools to support our most disadvantaged families and to make adjustments to existing plans to be delivered as schools return.
  • We have announced a further £100 million in additional funding to help the return to school and tackle any loss of learning. This will include support in recruiting additional teachers; support to local authorities in the logistical arrangement and associated costs of reopening schools.
  • We are engaging with Third Sector organisations, through the Attainment Scotland Fund, to deliver summer learning and support programmes, including Young Scot, Youth Link Scotland and Children’s University, to support the most disadvantaged children in our society.
  • We continue to press forward our work to tackle child poverty through our £50m Tackling Child Poverty Fund and aim to refocus our work to meet the emerging needs of priority families affected worse by the impacts of the Pandemic

82. Beyond the immediate pressures, through our longer-term recovery plan, there is an opportunity to build a strong national consensus around a national purpose; to learn from other small nations and adapt lessons to Scotland’s specific circumstances that will enable a shift-change towards a wellbeing economy, for example:

  • We will explore new delivery models in sectors that have been highlighted during the pandemic e.g. social care cooperatives
  • We will re-affirm our commitment from our Gender Pay Gap Action Plan[14] to explore options to treat investment in childcare and social care as infrastructure, recognising the value that care, paid and unpaid, plays in our economic and social wellbeing

Care Sector

The care sector represents key economic infrastructure, as discussion with the Social Renewal Advisory Board has made clear. Investment in care as infrastructure yields significant economic return and must be valued as a key part of our economy

Social care support is an investment in Scotland’s people, society and economy.

This principle is at the heart of the joint Scottish Government and COSLA Reform of Adult Social Care Programme launched in 2019. In that, we are working with a wide range of partners to achieve change and improvement. One of the programme’s key priorities is Fair Work in social care. The Fair Work in Social Care Group is taking forward the recommendations set out in the Fair Work Convention report into Social Care published in February 2019.

The programme’s other priorities include how social care is understood and valued by people and society, how it is funded and paid for into the future, consistency of experiences, and what models of care we need in Scotland and how they are delivered. The pandemic has brought many of these issues into even sharper focus and we are currently enhancing the reform programme to ensure the issues and learning that have been highlighted during the pandemic are embedded in our approach.

Childcare

From August all eligible children will be entitled to at least 600 hours of funded Early Learning and Childcare (ELC). We will work with local authorities to expand provision wherever possible and to reinstate the commitment to 1140 hours of funded ELC at the earliest possible date. Childcare is a critical policy for our inclusive growth ambitions. Through our flexible childcare model and our £3 million Access to Childcare Fund we will support a number of innovative community based projects to deliver accessible and affordable school age childcare for low income families. This will be coupled with support for parents to enter employment or training or to increase current hours of work.

Maintaining and widening access to affordable and high quality childcare provision will support the economic recovery and provides opportunities for all to flourish. Having a fully-functioning childcare sector is a vital way to enable parents and carers to return to work, or to increase their working hours.

The lack of childcare provision across Scotland’s rural and islands communities is preventing parents and carers, many of whom are women, from working to their full potential. It is also an obstacle to encouraging young families to move to rural and island areas. The Government will pilot new ways of extending coverage to all of Scotland and augment our ELC commitments. We will focus on identifying potential models of small, flexible and very local provision with an emphasis on parent and community led childcare, co-ops, and social enterprises. Viewing childcare as part of Scotland’s critical infrastructure we will also look at innovative ways to fund sustainable provision.

2.4. Resilient People, Communities, and Places

83. The crisis provides an opportunity to consider different economic delivery models, underpinned by our values, to create a ‘new deal’ for the post-COVID-19 economy. The Advisory Group was clear in its support for “an approach to recovery and economic development that is grounded in local and regional approaches and partnership”

2.4.1 Investing in places and communities

84. Since the start of the COVID-19 crisis, we have made significant investments to support local and regional economies, helping to mitigate the worst of COVID-19’s economic impacts and to create the conditions for communities and businesses to thrive in the longer-term. In particular we have:

  • Provided £2.1 million of funding through the South of Scotland Economic Partnership for tourism, business, community and agricultural projects across Dumfries and Galloway and the Scottish Borders to support economic development as part of the £20 million we committed to invest in the region over 2 years to establish SOSE and support local projects.
  • Created a £62 million Energy Transition Fund targeted at projects, identified by the sector and regional partners, which will accelerate energy transition and respond to the dual challenges of commodity downturn and COVID. Taking a place-based approach, we are working to ensure this investment supports and creates local jobs and benefits wider supply chains across Scotland.
  • Provided £2 million for towns and Business Improvement Districts, in addition to the £1 million Resilience Fund announced in March and the £50 million 2019-20 Town Centre Capital Fund.
  • Invested £35 million in community-led regeneration programmes including the Regeneration Capital Grant Fund delivered in partnership with COSLA and the Empowering Communities Programme.
  • Launched a new £4 million Museums Resilience and Recovery Fund for the independent museums sector to support the return of staff from furlough and the wider reopening of museums and galleries.
  • Committed £700,000 to support our Museums & Galleries Urgent Response Fund and created a Digital Resilience Fund of £115,000 enabling museums to adapt to more digital working during the period of closures.

85. We are also investing £1.9 billion in City Region and Regional Growth Deals and associated investment benefitting every region of Scotland. The Deals programme is regional in nature, with regional partners determining priorities for investment and leading delivery of them. The programme, including investment from other partners, will protect or create over 74,000 jobs. As part of this, in July we:

  • Committed to investing £50 million over ten years through the future Falkirk Growth Deal, to fund targeted economic development activity across a range of themes, including infrastructure, transport, innovation, energy transition and skills. £10 million of this is ring-fenced for ‘green’ projects. The UK Government is also investing £40 million in the Deal.
  • Agreed to invest £50 million via a forthcoming Growth Deal for the Islands, matched by UK Government. The 10 year Deal will support local priorities including innovation, energy transition, tourism and infrastructure.

86. In response to the COVID crisis we are working with regional partners to adapt the Deals programme. We have already enabled Deals in delivery to draw down funding more frequently to aid cashflow; we are speeding up the project development process to ensure money flows out to regional economies as quickly as possible; and we are engaging directly with regional partners to ensure Deal projects and programmes can flex dynamically in response to changed circumstances.

87. We are continuing work with the Equality and Human Rights Commission to ensure the Deals investment delivers better inclusive growth outcomes including for under represented, disadvantaged and deprived people and communities.

2.4.2 Place-based Approaches to Economic Development

88. We will accelerate the implementation of the Place Principle[15] to ensure that the significant investments we make in our regional and local communities are relevant to local needs, support economic recovery and protect communities from the worst impacts of COVID-19 on jobs and livelihoods.

89. Local authorities have a critical role in meeting the needs of communities and in shaping and supporting places and local and regional economies. This has been demonstrated through their important role in responding to COVID, including the distribution of funds to businesses. The crisis has also seen a new and more collaborative and agile way of working between local and national government and our agencies. We want to maintain and build on that as, together, we look to economic recovery and renewal.

90. Our three enterprise agencies, Highlands and Islands Enterprise (HIE), South of Scotland Enterprise (SOSE) and Scottish Enterprise (SE) reflect the different economic geographies of Scotland and already have a strong focus on the local and regional economies they serve. Both HIE and SOSE are particularly embedded in their communities, including in fragile rural areas. All three agencies capitalise on the strengths and assets of their areas to create high quality jobs. For example, SOSE has committed £2.7 million over five years to support a new tourism, marketing and destination development programme; HIE is working to ensure the long-term environmental and economic sustainability of Cairngorm Mountain and the surrounding area; and SE’s support for the Halo Project in Kilmarnock is regenerating the former Johnnie Walker site as a new urban quarter and it is repurposing the former Michelin site in Dundee to create the Michelin Scotland Innovation Parc as an innovation hub for low carbon and sustainable mobility.

91. Over the next 12 months, as part of a continued shift to a more regionally focussed, place-based model for economic development, Scottish Enterprise will work intensively with partners in three regional economies (Glasgow and Clyde, Ayrshire and the North East) to learn by doing and demonstrate the value of deeper and more regionally focussed collaboration.

92. This shift to a more bespoke, regionally-focussed approach across the SE area by the end of 2022, recognises that needs and opportunities are varied across Scotland. It will draw on SE’s international and national capacity, insight and expertise and will focus on understanding and leveraging all available assets to maximise opportunities for these regional economies. SE will continue to provide business and economic development support across its own area as well as pan-Scotland services and international activities such as leading on trade and investment.

93. Regional Economic Partnerships (REPs) bring together local and national government, enterprise and skills agencies, the education sector, and business to align and leverage economic opportunities. The Scottish Government wants REPs to play a strong role in leading regional economic recovery and renewal and will ask each REP to deliver an action plan for doing so. We will help each REP convene national and local economic actors – members of the REP and others – to take a focussed ‘taskforce approach’ to this work. We will look to private sector partners to play strong leadership roles in identifying and prioritising regional strengths and driving forward collaborative action that exploits opportunities, including increasing investment from within and beyond each region.

94. These regional economic recovery and renewal action plans will help drive more inclusive and greener economies with a particular emphasis on helping people access
more and better jobs as we recover from the Covid-19 crisis. We will work with our agencies to help align these regional plans across Scotland for maximum impact, ensuring that each plan informs others as well as national delivery.

2.4.3 New Approaches to Economic Development and Regeneration

95. Economic recovery offers an opportunity to accelerate, or lock-in new ways of approaching an economic and social revival through a green recovery, across all parts of Scotland. In partnership with others, we will identify opportunities to enable progress towards our wellbeing economy objectives:

  • We will accelerate our plans for community wealth building to retain spend within local economies to aid local job creation and drive inclusive growth, working with local partners to leverage the purchasing power, assets and recruitment practices of our ‘anchor institutions’ such as colleges, universities and healthcare facilities, for the benefit of local people and businesses. As discussion with the Social Renewal Advisory Board has made clear, community wealth building is a key means to deliver many of our ambitions in Scotland in terms of strong local economies and vibrant communities.
  • We will take forward our £3 million commitment to an innovative community wealth building pilot through the Ayrshire Regional Growth Deal, commencing in early 2021; and work with partners to produce community wealth building action plans setting out specific activities to strengthen local economies and engage with national bodies to consider their local impacts across the country. Drawing expertise from the Centre for Local Economic Strategies, we have increased capacity inside Scottish Government to support the roll out of the model in a number of additional areas.
  • With thousands of office workers currently working from home and retail, tourism and leisure particularly affected, Scotland’s cities have been hit hard by COVID-19. Nonetheless, they remain vital hubs of economic and social activity and are at the heart of our public transport systems. We will therefore work, as a partner, through the Scottish Cities Alliance (SCA) and with other public and private partners, to help cities recover from the impacts of COVID-19 and realise their full economic potential. In addition, we will support the SCA’s renewed focus on achieving the transition to net zero carbon cities.
  • We will continue to invest in regions to support our transition to a net zero economy, such as investments in energy transition in the North East and around Grangemouth as well as an initial investment of £10 million in Mission Clyde in 2020/21, as a first step to regenerate the Clyde as an engine of sustainable and inclusive growth for the city.
  • We will empower people and communities to take action on climate change and benefit from the opportunities of a just transition to net zero emissions by delivering a network of regional Community Climate Action Hubs that will help to ensure regional initiatives with an economic development focus are aligned with our climate ambitions and commitments. We will also deliver the £1 million a year Climate Action Towns initiative to help Scotland’s small towns play their part in climate action, taking into account differing local circumstances.
  • We will ensure our Colleges and Universities are at the centre of economic recovery, recognising the breadth of their contribution to a skills led recovery: through their support to community cohesion; as partners in the school curriculum; in enabling and responding to the demand for skills; and in providing world leading teaching, research and knowledge exchange.
  • We will introduce Regional Land Use Partnerships from 2021, to maximise the contribution Scotland’s land plays in regional economic development and meeting climate change goals. In addition, the Scottish Land Commission’s Vacant & Derelict Land Task Force will report this autumn with advice on how to bring more land back into productive use.
  • We will work with local authorities, to use our ‘Green Growth Accelerator’ to unlock additional investment for infrastructure projects that support the transition to a net zero emissions economy and help transform our cities and regions.
  • We will complete a review of the Town Centre Action Plan (TCAP) to develop a new vision for towns and the means to deliver it, learning the lessons from COVID-19.

2.4.4. Investment in Housing

96. Housing plays a vital role in the lives of everyone across Scotland, and is a critical asset for a wellbeing green recovery.

97. Our Housing to 2040 strategy will set out our long-term housing investment plans. It will be a lasting legacy that is not just about new homes, but also takes into account the people, places, environment and communities in which our homes are located. The concept of ‘Place’ will sit at the heart of this work to secure a well-functioning housing system which supports sustainable communities and provides high-quality and sustainable homes that meet people’s needs.

98. We are carefully assessing the outputs from the Housing to 2040 consultation, which concluded on 28 February 2020, alongside our COVID-19 recovery planning to inform our final vision and route map for 2040.

99. We are also taking immediate action to ensure that our housing investment uses a place-based approach:

  • We have committed a record investment of more than £3.5 billion in Affordable Housing over this parliamentary term, and beyond the current target period, we have provided £300 million interim funding certainty for 2021-22 ahead of the budget later this year, to ensure that affordable homes continue to be delivered.
  • We have invested £150 million in our Building Scotland Fund, which is supporting housing investments already alongside leveraging significant private finance.
  • Once it becomes operational later this year, the Scottish National Investment Bank can play an important role, using its capital and mission-based approach to secure investment in high quality housing supply across Scotland.
  • We have provided Emergency Loan Funding to support small and medium-sized home-builders in Scotland who are experiencing problems with liquidity due to
    the COVID-19 crisis, in order to safeguard jobs, protect suppliers and help ensure a continued supply of homes.
  • We have made a further £50 million available to the First Home Fund to further boost support for first time buyers this year and to support the housing market to recover.
  • We have also taken action to help buyers and support the housing market by introducing legislation to increase the Land and Buildings Transaction Tax (LBTT) starting threshold to £250,000 (effective between 15 July 2020 and 31 March 2021). Excluding the Additional Dwelling Supplement, this will mean that 8 out of 10 buyers pay no LBTT during this period, whilst reducing the tax for others by £2,100. The change must be approved by the Scottish Parliament to remain in force.

2.5 Investment in a Green, Wellbeing Recovery

100. Investment plays an important role in the economy, stimulating business activity and innovation, delivering public goods like transport infrastructure housing and environmental projects, creating healthy competition, attracting talent and, most importantly, creating jobs. The Advisory Group’s report was clear on the importance of investment to our economic recovery.

101. Choosing what we invest in, how we invest and who we attract to invest in Scotland, allows us to choose a green recovery with equality at its heart.

102. As Scotland’s new publicly-owned investment institution, the Scottish National Investment Bank will become operational by the end of 2020, working to deliver investment of £2 billion over ten years. Guided by its missions, of which the commitment to net-zero by 2045 is paramount, and in pursuit of a thriving, resilient, Scottish economy, the Bank will build a strong bridge between public and private investment and contribute to the coherence of financial investment and other public policy action.

103. In our work to support recovery, we will look to the Bank to take up its central role in the architecture of economic development in Scotland with respect to investment. Its net-zero mission gives it a particularly critical role in green recovery. Working in partnership with others, the Bank can play an important role as a catalyst for the renewal and realignment of existing agencies and other players as actors in delivering the necessary economic stimulus. As it develops and expands its functions over time, it will become the primary source of public investment in commercial propositions in Scotland – whether that be investment into small or medium-sized enterprises or long-term patient capital projects.

104. From first functioning, the Bank will be looking to crowd-in investment, including through attracting private sector co-investment in individual investments. The Covid-19 crisis has served to strengthen the case for it to acquire the ability to leverage its balance sheet, and so deliver greater impact, as soon as practicable. It should work to achieve this within five to seven years. In creating the Bank, we are creating an organisation that is intended to be active in the Scottish economy for many decades to come.

105. Investment in infrastructure offers opportunities to boost inclusive economic growth and in June, our Economic Stimulus Package announced £230 million of projects this year, in construction, low carbon, digitisation and business support, providing a flow of work for businesses and supporting jobs.

106. In September, we will publish the details of our next five-year Infrastructure Investment Plan. The plan will focus on three strategic outcomes that sit at the heart of our Wellbeing Economy: boosting inclusive economic growth; building sustainable places; and enabling the transition to net zero emissions and environmental sustainability.

107. Our upcoming Capital Investment Plan, to be published later this year, will provide a strategic approach to delivering more effective leverage of private investment into projects to provide public good and an acceleration of private sector investment.

108. While there is a clear green thread to all of our spending, we have made some specific commitments in our Climate Change Plan. In our next update (due late 2020), we will set out climate and nature investments to help stimulate demand, jobs and supply chains. Stakeholders, including the Committee on Climate Change and CERG, have noted the role public sector investment can play in providing market certainty and unlocking private sector investment. Our investment will aim to maximise these cross-cutting benefits.

109. Our Green Investment action includes:

  • Delivering an additional £2 billion fund of additional capital investment over the next Parliamentary term to be spent on delivering a green recovery and accelerating our transition to net zero.
  • Allocating more than £198 million to our domestic and non-domestic energy efficiency programmes this year to improve energy efficiency and reduce emissions from our homes and buildings.
  • Expanding our key low carbon heat and energy efficiency programmes – including the Low Carbon Infrastructure Transition Programme and Energy Efficient Scotland – ready for significant upscaling of heat in buildings, energy efficiency and low carbon infrastructure investment over the next decade. Not only will this transform our homes and buildings so that they are warmer, greener and more efficient, but it will support a significant number of jobs right across Scotland.
  • A commitment to launching a Green Investment Portfolio, identifying £3 billion of investable projects over the next three years.
  • Setting out a Heat Decarbonisation Policy Statement and updated Energy Efficient Scotland Route Map from the end of this year setting out a clear pathway for transforming the way we heat our homes and buildings, including reducing the demand for heat through energy efficiency measures.
  • Continuing to support hydrogen demonstration projects. We expect to see hydrogen projects come forward and feature strongly within the £62m Energy Transition Fund initiative. We will publish our Hydrogen Policy Statement & Action Plan this year exploring opportunities for the development of a hydrogen economy in Scotland.
  • Supporting our Scottish Energy Advisory Board (SEAB) as a vehicle for gathering and discussing proposals to support a green recovery. We will build on this over the coming months with a view to incorporating into our Energy Strategy refresh in 2021. We will identify green business champions, strong proponents of green recovery plans and investment, to work with us on generating consensus with other business leaders – developing real impetus and practical ideas and collaborations.
  • Working with businesses and business organisations to develop net zero transition plans including a toolkit for transition planning. This will help identify and realise opportunities for Scottish businesses from the net zero transition and showcase Scottish business leadership and investment opportunities at COP 26.
  • Investing in our natural environment and nature-based solutions as part of underpinning a green recovery and to help address the twin challenges of climate change and biodiversity loss. We will make a transformational change in the scale of peatland restoration over the next 10 years, substantial woodland expansion and investment in protecting and improving biodiversity.
  • Continuing the Woodland Carbon Code and the Peatland Carbon code – ensuring a carbon standard that builds market confidence in the capacity of natural assets to deliver emissions removals and to lever in additional private finance for woodland creation and peatland restoration, in line with recommendations from CERG.
  • Continuing to support Local Authorities to develop and implement flood protection schemes and will look to support future investment in coastal change adaptation measures.
  • Continuing to support the Scottish Forum on Natural Capital as a means of broadening the understanding and uptake of natural capital concepts and practices across the Scottish economy and undertaking further work on the measurement of Scotland’s Natural Capital.
  • A sectoral plan for offshore wind energy, which will provide the guide for the next round of offshore wind projects to be leased by Crown Estate Scotland through ScotWind.
  • Working through a strategic partnership with Scotland’s network owners (Scottish Power Energy Networks and Scottish and Southern Energy Networks) to develop a clear, evidence-based set of regulatory requirements which can be put to Ofgem. That work is continuing, and will play a vital part in helping ensure that our energy networks are able to anticipate and respond to the expected growth in demand for electric vehicles and heat pumps – vital to a green recovery and to the decarbonised energy system that will be essential to achieving net zero.

Forestry

Forestry contributes about £1 billion a year to GVA and supports over 25 000 jobs in woodland creation and management, timber transport and processing, and renewable energy. It supports recreation activities and underpins the wider tourism sector. It offers a cost-effective contribution to a low carbon economy through emissions removals and storage (9.5 MtCO2/year, valued at over £650m/year).It provides a range of natural capital benefits – including flood prevention, water and air quality, biodiversity and health benefits – which support wellbeing across the economy and society. Forestry in Scotland is an exemplar of effective partnership between public and private sectors. The scale and diversity of national forest estate managed by Forestry and Land Scotland (FLS) helps underpin inward investment by the private sector and delivers a wide variety of public benefits, while the support for woodland creation (£53.8 million in 2020-21) delivered by Scottish Forestry (SF) is enabling the private sector to expand at an increasing rate, from 12,000 Ha this to 15,000 Ha per year by 2025. To create employment opportunities SF and FLS, are doubling the employment opportunities for young people, demonstrating commitment and leadership which private sector companies can build on, given suitable support, to increase employment for new entrants.

Aquaculture

We also recognise the benefits of encouraging sustainable growth of Scottish aquaculture with due regard for the environment as a way of boosting economic prosperity, contributing to global challenges by delivering low carbon, nutritious animal protein and adding value to supply chains that support often highly skilled jobs and much needed investment in Rural Scotland. Scottish aquaculture is an essential component of our rural economy, supporting families and livelihoods in some of our most fragile communities. Along with its wider supply chain, aquaculture contributes £620 million GVA to the Scottish economy, supporting
over 12,000 jobs.

For aquaculture, consideration of, and changes to, the regulatory framework involving key stakeholders – regulators, fish farmers and broader NGO interests – have been underway since the Rural Economy Committee report on the sector in late 2018. Further changes to improve those regulatory arrangements are expected soon, in relation to wellboat licensing and clarity of spatial planning for new fish farm developments based on the application of available evidence and continued enhancements in the scientific base through partnership working.

2.5.1 Inward investment

110. Inward Investment has a critical role to play in positioning us to survive and thrive in this changing global environment. The pandemic is predicted to have a major impact on the flow of foreign direct investment. UNCTAD forecasts global inward investment flows will fall by 30-40% in 2020-21.[16]

111. Inward investors to Scotland make a disproportionately positive impact on our economy. Representing just 3% of the business base they account for 34% of employment, 50% of turnover, 63% of business R&D spending and 77% of exports.

112. For the seventh consecutive year, Scotland has reinforced its position as the most attractive location for inward investment in the UK outside of London with a 7.4% increase in projects. Positively, some of this performance can be attributed to increasing numbers of existing overseas companies investing further in Scotland. And there has been evidence of this continuing in spite of the crisis[17].

113. The Scottish Government and our partners have continued to work with our agency partners and existing investors throughout the pandemic and will redouble these efforts as part of Re-shaping Scotland’s economy – inward investment agenda.

114. The plan to be published in September, sets out a purposeful, values-led approach to investment, describing how we will work with those investors, new and existing, who share our values of a technologically enabled, net zero economy with the principles of fair work and sustainable, inclusive growth at its heart.

115. Immediate actions include;

  • The development of a national prospectus that sets out where Scottish advantage meets global opportunity – highlighting our £3 billion Green Investment Portfolio;
  • Galvanising all of Scotland’s International Network to become part of our salesforce; and
  • Working with existing investors to identify scale-up opportunities.

116. A focus on values-led investment, in particular, around net zero, fair work, sustainable and inclusive growth and a wellbeing economy will ensure a strong and bold prospectus for Scotland. However, the impact of COVID-19 is not the only headwind causing uncertainty and impacting upon investment. BREXIT is also leading to heightened uncertainty for households and businesses. Therefore, it is important to ensure that our approach is globally-focused, and enables Scotland to be internationally competitive and attractive
to inward investors.


Contact

Email: BESTCovidHub@gov.scot

First published: 5 Aug 2020 Last updated: 18 Dec 2020 -