Enterprise and Skills Strategic Board minutes: March 2021

Attendees and apologies

Members

• Nora Senior (Chair)
• Scott McLarty (Vice Chair) 
• Steven Heddle
• Sara Carter
• Audrey Cumberford
• Grahame Smith
• Poonam Gupta (attending the Strategy Day only)
• Melinda Matthews-Clarkson
• Liz Cameron 
• Gillian Murray 
• Caroline Barelle 
• Alison Milne
• Simon Cotton
• Frank Mitchell (SDS) 
• Lord Smith (SE)
• Mike Cantlay (SFC)
• Prof Russell Griggs (Sose)
• Alistair Dodds (HIE)

Other attendees

• Charlotte Wright (HIE) 
• Jane Morrison-Ross (Sose)
• Linda Hanna (SE)
• Damien Yeates (SDS) 
• Karen Watt (SFC) 
• Liz Ditchburn (SG)
• Mary McAllan (SG)
• Richard Rollison (SG) 
• David Wilson (SG)
• Lorna Gibbs (SG)
• Stephen Pathirana (SG)
• Katherine (SG) 
• Adam Reid (SG)
• Gavin Gray (SG)
• Stephen Boyle
• Keith Winters (LA)
• Stuart King (AU)
• Richard Murray (AU/Sec)
• Julie Wilson (Sec)
• Natalie Stevenson (Sec)

Apologies

• Gary Gillespie (SG) 
• Ms Hyslop, Cabinet Secretary for Economy, Fair Work & Culture

Items and actions

Welcome to new attendees

The chair welcomed everyone to the meeting and introduced the following attendees who would be supporting the Strategy Day discussions:

• Poonam Gupta, returning to provide insight as a previous board member
• Jane Morrison-Ross, SoSE CEO

• Adam Reid, Deputy Director, Fair Work and Labour Market Strategy
• Gavin Gray, Deputy Director, Young Person’s Guarantee
• Richard Rollison, Director of International Trade and Investment
• Stephen Pathirana & Katherine Peskett, Director for Advance Learning & Science.

Item one – introduction from the chair

The chair thanked members for joining the 2021 Strategy Day and outlined the agenda for the day.

She set out the priorities for the Strategic Board in the short-medium term as per the email to members in January 2021, which includes:

• the refresh of the Board’s Strategic Plan to be published in Autumn 2021 to reflect the emerging findings from the review of the original missions, taking on board agency economic recovery plans and the Scottish Government’s post-election priorities
• using the Annual Analysis as an evidence base for taking forward the planned work of the board to support the economy
• strengthening the Board’s links with interlinked Stakeholders, including Industry Leadership Groups, business community, local authorities to drive forward the skills alignment programme and build on the work undertaken to date on Find Business Support to make it easier for businesses to access the right support
• continuing to support businesses with the exit from the EU: including the board supporting the Scottish Government and agencies on the specific challenges faced by businesses, by utilising the expertise from the business Board members, their networks and the ILGs to help identify key gaps in support
• innovation: A review of the innovation funding landscape which will develop options for how this could be decluttered in the future and the investment best aligned to support the recovery
• skills alignment: An implementation plan of the skills alignment programme will be taken forward by the Skills Alignment Assurance Group and progress of this will be updated to the board later in the year
• alignment and collaboration: the Strategy Day presents an opportunity for closer alignment and collaboration at an earlier planning stage. It is an opportunity to identify and agree priorities and resources where applicable

The Chair also updated the board on her recent engagement with Scottish Government Minister’s and her involvement in wider stakeholder engagement, including ILGs, as part of the Strategic Board comms & engagement work:

• 9th March 2021, Ms Fiona Hyslop, Cabinet Secretary for Economy, Fair Work & Culture to update on the board’s work and the immediate priorities the board are taking forward, including the review of the innovation landscape, the skills alignment implementation plan and the missions review
• 24th March 2021, Mr Ivan McKee, Minister for Trade, Innovation & Public Finance as part of continued engagement with the Minister to discuss the progress of the innovation work and wider engagement with ILGs to share best practice and intel from industry on the economic recovery
• 24th March 2021, Co-Chaired the ILG Chairs Roundtable meeting with Mr Ivan McKee, Minister for Trade, Innovation & Public Finance, to encourage greater collaboration, sharing of best practices and expertise across the different sectors

The Chair drew members’ attention to the letter from Ms Hyslop on the progress of the economic recovery and her ambitions for the Board going forward. As the Strategy Day falls within the pre-election period, the outputs from the day will be shared and discussed with the new administration after the Scottish parliamentary election.

Item two – annual analysis – Richard Murray (Analytical Unit)

This session was led by Richard Murray who provided an overview of the key findings and emerging themes from the annual analysis, which will shape the positioning of the refresh of the Strategic Plan. 

Key points from presentation:

• the Annual Analysis uses indicators from the National Performance Framework, aligned to the Board’s key areas of focus - productivity, equality, wellbeing and sustainability, in order to understand the economic context for Scotland and to assist in setting priority areas for action in the year ahead. On productivity, performance was improving but from a low base
• this year the Annual Analysis included emerging evidence around the dual impacts on business of COVID and Brexit [gathered intel from ILGs, business community – a paper will be shared developed by the Analytical Unit (as referenced by Richard during the presentation) on these findings with the minutes], as well as longer term analytical priorities around innovation and the returns to our substantial investment in education and skills in Scotland
• innovation is a key area which the board has already achieved a lot in and will continue to do through the innovation review

The item was opened up for discussion with the following issues raised:

• the effects of Brexit cannot be underestimated as this is affecting the economy through a number of different channels: exports, inward investment and companies rethinking their supply chains
• concern was raised over business resilience, with fears that companies might adopt a “hire and rehire” approach
• Scotland continues to have a highly skilled workforce but the evidence shows this is not driving productivity growth. Potential explanation may be around skills utilisation
• the slides mapping the missions to the Board’s performance framework indicators was helpful although the interconnections between the missions (and therefore the indicators) needs to be more strongly linked
• it is vital that the skills system provides a pipeline of future workers to support the sectors that will drive the recovery including the opportunities that Net Zero ambitions will present
• the pandemic has hit sectors differently which in turn has meant certain groups of people have been more affected than others. This needs to be borne in mind when considering strategies to support the recovery
• investment in innovation and skills need to be aligned. There is also the broader issue of the role of innovation centres and whether this investment is sufficient to make a difference, recognising that some of the benefits may not materialise for a number of years
• it was recognised that community and place are at the heart of the agencies’ approach to supporting economic development. This needs to be factored in when developing national strategies, highlighting the role of agencies and areas of alignment. There is scope for a step-change in knowledge transfer, with the value of our assets and IP being converted to help renew the economy and attract inward investment. Knowledge transfer between universities and colleges needs to support this, and transfer of knowledge between FE/HE and business
• Fair Work must be at the centre in line with the future skills mission and to support skills utilisation
• how can business be encouraged to invest in workforce. How can the supply chain be strengthened?
• furlough is masking the true impact of the pandemic. Placed based strategies are important to support sectors/regions i.e. areas reliant on tourism and food and drink

Things for board to consider:

• how we ensure we measure the right things, future proofing and benchmarking against different data. Is productivity the right measure?
• a wellbeing economy will involve investment which supports economic growth, net zero and reducing child poverty
• what is the gateway for businesses to business support and innovation/R & D and how do we align and make this more productive?
• how is the link between innovation and high growth companies strengthened?
• what are the cross cutting plans to develop and attract inward investment (assets and IP)

Actions

• action 01: There was an offer from Karen Watt (SFC) to provide a brief offline on innovation centres and the progress being made to align Universities and Colleges through the SFC review

• action 02: SFC will be conducting broader engagement with the board as part of the SFC review

Item three – overview of the missions review – Julie Wilson (secretariat)

This session was led by Julie Wilson (secretariat) who provided an update on the emerging themes stemming from the missions review now that all of the workshops have taken place since the last board in December 2020. 

Key points from the secretariat presentation:

• there were 113 actions facing the enterprise and skills landscape from the original missions and additional Government reports including ESSB Sub Group, AGER, ILG Review. The board agreed to a pragmatic and proportionate review of the four missions; and it worked closely with the agencies to map out all the actions against the original mission goals, their status and who leads them
• the board held workshops to look at the prioritisation of the missions. At the December board meeting there was a request for material on the impact of the missions and this is enclosed in the papers
• it’s clear that missions are in different phases and the Board would like to learn more about how the missions are integrated with the agencies core offer rather than seen as a separate project
• following the workshops and recent review of the status of the actions there were 35 actions that were a priority and are now complete; and there are 28 actions that are a priority and still ongoing
• the missions review will feed in to the Board’s ambition to refresh its Strategic Plan next year. The mission impact templates [SB(31.03.21)3d-g], from agency mission partners, sets out the key achievements to date, lessons learned and future priorities and milestones for each mission – and will help the board consider the key priorities over the next 3 years which will be captured in the refresh of the strategic plan
• a supplementary paper was circulated summarising key priorities of the agency business plans, emerging future priority areas including digital, innovation, Brexit, Place, Skills, the move to Net Zero to support the economic recovery and the board’s aim to move to the top OECD quartile for productivity, wellbeing and sustainability

Key points from Business Board Members Simon, Melinda, Alison and Poonam on their own reflections of the challenges they were experiencing within their own sectors and the key areas they believe the system needs to focus on to support the recovery:

• the speed of response from agencies to provide business support and intel on economic recovery was welcomed and the ‘ask’ is for this positive approach to be continued. However some parts of the economy missed out (e.g. charities and those able to maintain trading but at reduced levels). Firms which didn’t use furlough were unable to access other forms of support
• Brexit has affected exporting of goods, investment, and ability to attract and retain EU workers. The impacts are structural rather than temporary. Going forward companies need to invest more i.e. machinery upgrades, investment in staff. Businesses need to adapt their business models to changing circumstances or risk being left behind. In particular the adoption of digital practices and technology were regarded as essential. Businesses affected by the domino effect i.e. closure of retail, tourism, hospitality, etc. However business balance sheets have been significantly affected and this will hamper their ability to invest during the recovery
• need to recognise that the payback for investments in green technologies can involve long payback periods for business
• need to utilise the business board member experience to inform Government of the needs of industry e.g. no provision of textile specialist skills, need to utilise online learning to maintain/develop skills i.e. promote apprenticeship opportunities
• still scope to better align skills provision with actual demand (e.g. 4,000 students annually receive training in textile design but there are only a handful of vacancies each year. There remains a demand for technicians)
• communication vital to manage the flow of business; CBI and other business groups are a great support by sharing learning. Need to link the data, utilise data hubs i.e. where are jobs being requested? Ensure a more linked up approach
• business now needs to think about marketing strategies, digital age need to promote business online/social media channels
• skills gaps a problem (particularly at the senior management level), retaining staff once trained up

Key points from Keith Winter on his reflections from the local authority perspective on the missions, their impact and how they need to evolve going forward:

• keen for the missions and the strategic work of the board to link with the local level, Ministerial approach must also consider this. Needs join up and clarity over link to National-Regional-Local levels of activity, purpose, goals and resource planning
• need to look for opportunities for collaboration - silos apply, thematic and geographic?
• regional level operation currently pushed, pilots pending but seems lack of clarity in the ' what and how', maybe who also. Regional variation for purpose, role, focus and capacity needs allowed
• councils’ role and responsibilities are much broader than Business Gateway and start up activities as appears presented/understood by the Board
• some great local personal professional relationships to build on or act as bulwark to issue but needs to be more systematic and transparent
• issue for national focus agencies to adopt/accept perhaps regional set priorities and goals

Key points from subsequent discussion:

• the comments and insight members provided was extremely valuable and needs to be used alongside the more formal evidence from the performance framework
• minimising layers of bureaucracy is important, working with economic partnerships to achieve this. How will agencies simplify access for businesses to relevant support
• key areas of focus for the agencies place/rural economy/supply chain/net zero/infrastructure/investment in skills/digital/fair work
• need to be forward looking not just reactive. Important to listen and react, look at resource, talk to partners on the ground 
• growth deals are significant investments in local areas
• how does population change relate to areas of inward investment/clusters of new economic areas (decarbonisation/space). How will new ways of working (e.g. homeworking) impact on place and talent attraction?) Cross-cutting solutions need to be developed
• pre-Covid challenges haven’t went away including Brexit, acceleration of 4.0, the pace of the challenges have just accelerated
• economic vision is not clear, regional or national focus? Going forward are we focussed on the right things? Consistent narrative needs to be agreed
• how are metaskills embedded, recognised and prioritised?
• the Scottish Government has established a group which will help shape business support during the recovery. How to deliver with limited resource, considering inter-fluid teams, Team Scotland approach

Things for the board to consider:

• are these still the drivers or do we need to pivot our approach in the Strategic plan refresh?
• how do we monitor progress? The original missions still appear the right areas for the Board to focus on. ‘Missions should be replaced by themes or activity bundles
• opportunity for wider engagement with ILGs and utilising the business membership of the board to develop thinking around how Government can best support industry
• we are all under budgetary pressure and n-benefit in co-production and engagement models locally, so what steps are needed to achieve this?
• need to declutter enterprise and skills landscape, to reduce overlap, and create clarity over remit and areas where greater links are required, including greater engagement with Local Authorities, ILGs etc. Wat is the process for joined up engagement and planning?
• resources – enhanced shared services
• measurement consistency – process for implementation and measurement (productivity and big economic indicators are potentially too remote) Need balance between output and outcome commitments; Consider net dashboard across LA/agencies/SG
• letters of guidance to be replaced by outcome/impact agreements giving clarity of focus and accountability
• clarity around role of Boards of public agencies
• what does speed of response look like?

Item four – breakout session part one

Future scenarios for the Scottish economy and priorities for the recovery (the what)

The Board broke into breakout groups to discuss the uncertainty over the shape of the recovery, with the first breakout session considering four potential scenarios:

1. Early return to normal’.
2. ‘Restructuring while growing’.
3. ‘Late 70s and early 80s revisited’.
4. ‘Post-2008 revisited’.

Board members were instructed not to focus on the specifics of the scenario, but instead think about how would the enterprise and skills system best support the challenges that would arise under such a recovery. 

Item five – breakout session part two

How to implement priorities (the how)

The board broke up to discuss the next steps for taking forward future priorities and considered the following:

Group A: how best to capture the activity of the agencies so the Strategic Board can make judgements on impact and value for money.

Group B: how to ensure greater impact from the Board’s work and alignment with SG priorities?

Group C: how can agencies achieve greater alignment of business planning and what are the key areas for greater alignment and collaboration which will best support the recovery?

The emerging themes from both sessions were as follows [a paper will be developed to consider how to implement the next steps for the refresh of the Strategic Plan]:

• with huge uncertainty over the recovery, important to stay agile and consider investments through the lens of net zero
• need a narrative for the Scottish economy that is consistent
• infrastructure investment is needed to support the transition to net zero, again ensuring that it is there for different places to avoid them falling behind
• ensure the missions are more inclusive (sectoral, regional and size of business)
• PfG and letters of guidance need to be tempered by local demand from business. We need to avoid having too many priorities whilst also being able to adapt. Need to embed the asks of the board into letters of guidance and incorporate this into the internal reporting mechanisms
• improve the letter of guidance by switching from a list of actions/outputs to more outcome focused
• the Strategic Board needs to think about the whole system and have a sense of how joined up is
• striking the right balance between directing resources at supporting current/immediate challenges and seizing future growth opportunities
• despite the fiscal challenges, there is a real risk associated with not investing now given the wide range of opportunities which exist
• there needs to be fewer mission actions and these have to be flexible. The Board should focus on the key areas for collaboration and alignment which will add the greatest value to the enterprise and skills system. The Board can guide Ministers in a stronger fashion on the changes needed to be made to the system
• fewer set of key priorities, with clear accountability and resourcing
• need to look at where best the agencies can integrate and take time to get it right
• greater flexibility of the missions
• explore alternative, intermediate indicators to productivity
• digital disruption has speeded up and it’s important to position Scotland so it can seize these global opportunities. Schools need to be part of the whole system approach. Start early – especially digital skills
• innovation has accelerated and there are some sectors where we’re world leading: climate tech; space; data. What are the areas of intersection with traditional industries?
• key opportunities exist around: net zero; life sciences; space; food and drink; tourism (with businesses already investing in new facilities)
• enhancement of Ministerial engagement programme to ensure added value of the ESSB through ‘voice’ Greater clarity needed around role of ESSB and its authority to ensure agencies implement agreed priority areas

Item six– reflections and close

The chair thanked members for contributing to the discussions of the day. She outlined four themes to be taken forward:

1. Clarity (clarity of focus, direction, outcomes, resources and accountability. Clarity of agreeing priorities and measurement)
2. Consensus (around priorities – national, regional, local. PfG)
3. Collaboration (where and around what will agencies collaborate on; shared resources and services)
4. Communication (engagement with stakeholders & Ministers etc.)

A paper will be developed to outline the next steps.