Community Wealth Building (Scotland) Bill: equality impact assessment

Equality Impact Assessment for the Community Wealth Building (Scotland) Bill

Type of policy: Community Wealth Building (Scotland) Bill

Summary of aims and desired outcomes of Policy:

The Bill will seek to address economic and wealth inequality between individuals and communities by facilitating and supporting the generation, circulation and retention of more wealth in local and regional economies.

The provisions in the Bill will seek to ensure consistent implementation of the community wealth building model of economic development across Scotland. This will be led by organisations across the public sector landscape, with large anchor organisations playing a leadership role in advancing community wealth building and delivering the benefits it can bring in the form of local jobs and business growth.

Directorate: Economic Development

Division: Regional Economic Development

Team: Community Wealth Building

Executive summary

This Equalities Impact Assessment (EQIA) has been carried out to identify potential impacts resulting from the introduction of the Community Wealth Building (Scotland) Bill.

It is important to note that the protected characteristics are not independent of each other, and some people may be affected by complex and interconnected issues related to disadvantage at any one time. Given the importance of assessing the impact of each of the protected characteristics, the Scottish Government considered the proposal against the needs of the general equality duty as set out in section 149 of the Equality Act 2010. This assessment has considered whether the provisions of this Bill could constitute direct and/ or indirect discrimination.

Specifically, this EQIA considers impacts on equalities groups based on the three tests it is required to address:

• Does this policy eliminate discrimination for each of the nine protected characteristics.
• Does this policy advance equality of opportunity for protected characteristics groups?
• Does this policy foster good community relations between people of protected characteristics groups?

As the duties within the Bill are focused on strategic planning and reporting, it has been determined that the Bill’s various provisions will not have a direct impact on people with protected characteristics. However, the implementation of these duties may have some positive impacts for people with protected characteristics. This is not expected to differ significantly for different equality groups.

It is important to note that the Scottish Government first embraced the Community Wealth Building approach to economic development in order to attempt to retain more wealth in local economies through improved employment prospects, a strengthened business base and greater community ownership of assets. The benefits flowing from this are intended for everyone living in an area. However, from the beginning of work on a Bill, the questions set out at s149 of the Equality Act 2010 have been central to Scottish Government ambitions for Community Wealth Building and the positive impact it can have in fostering a fairer and more inclusive economy for all.

This EQIA has been developed based on consultation, stakeholder engagement and consideration of available research. It will be kept under review as the Bill progresses through the Scottish Parliament and further engagement and impact assessments will be carried out as required.

The Scottish Ministers, local authorities and these public bodies responsible for discharging duties provided for in this Bill are subject to the public sector equality duty under the Equality Act 2010. Where relevant, these bodies will be required to carry out an additional EQIA when implementing actions legislated for in this Bill.

Background

Our goal, reflected in our National Outcomes, is to help people live happier and healthier lives with higher living standards, to help businesses boost profitability, and build a more resilient Scottish economy that offers opportunities for all to succeed and where everybody, in every community and region of the country, will share in our economic prosperity.

As part of these overarching ambitions, the Scottish Government has embraced the internationally recognised CWB policy and approach to economic development using five pillars: Spending, Workforce, Land and Property, Inclusive Ownership and Finance (see Annex A for a summary of CWB Pillars) as a key tool to build and boost the Scottish economy; and to ensure our economy creates the prosperity that is necessary to support our people and communities.

In the 2024-2025 Programme for Government, the Scottish Government committed to bringing forward a Community Wealth Building (CWB) Bill, which seeks to ensure consistent implementation of the CWB model of economic development across Scotland and address economic and wealth inequality between individuals and communities by facilitating and supporting the generation, circulation and retention of more wealth in local and regional economies.

On 31 January 2023, the Scottish Government published a consultation on CWB.^[1] Views and comments were sought on what future CWB legislation should look like and where existing law and policy could be changed to advance action on CWB. The consultation received over 180 responses, which have informed the development of the Bill and the ongoing policy work to support the adoption and implementation of CWB.

The Bill seeks to ensure universal implementation of the CWB economic development approach across Scotland whilst allowing for local, regional, and organisational flexibility. The Bill will require the Scottish Ministers and public sector anchor organisations to work collectively and use the economic levers at their disposal to create meaningful action that benefits local and regional economies across Scotland.

As introduced, the Bill contains new duties for certain public sector organisations. The duties aim to introduce a consistent framework to support implementation of CWB and will require the Scottish Ministers, local authorities and certain public bodies to develop and implement actions to ensure more wealth is generated, circulated and retained in communities and localities. A summary of these duties is set out below:

Duties on Scottish Ministers

The Scottish Ministers will be required to lay in Parliament a CWB statement which sets out measures that the Scottish Ministers are taking or intend to take to reduce economic and wealth inequality between individuals and communities and support economic growth by facilitating and supporting the generation, circulation and retention of wealth in local and regional economies. The Scottish Ministers will be required to consult on a draft of the CWB statement and publish their inaugural CWB statement within 18 months of the relevant section coming into force. Thereafter, the Scottish Ministers will be required to review the CWB statement before the end of the period of 5 years and a new statement must be laid in parliament every 5 years.

The Scottish Ministers will be required to issue guidance to assist local authorities and relevant public bodies to produce CWB action plans and to assist specified public bodies in developing their corporate plans and associated strategies. The Scottish Ministers will be required to publish this guidance within 18 months from the relevant section coming into force.

Duties on Local Authorities and Relevant Public Bodies

Local authorities and relevant public bodies as set out in the Bill, including Territorial Health Boards, Regional Colleges, Scottish Enterprise, South of Scotland Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, and Regional Transport Partnerships, will be known as a CWB Partnership and will be required to jointly prepare and implement a CWB action plan to outline the measures they plan to take to support the generation, circulation and retention of wealth in the local or regional economy. This CWB action plan must be consulted upon by the local authority and prepared by the CWB partnership not later than 3 years after the relevant section comes into force. It must then be published by the local authority as soon as reasonably practicable following preparation. Local authorities and public bodies will be required to review their CWB action plan at their discretion but at least every 5 years.

Local authorities and the relevant public bodies will be required to have due regard to guidance produced by the Scottish Ministers while developing their CWB action plan.

Duties on Specified Public Bodies

Specified public bodies, including Creative Scotland; Crown Estate Scotland; Highlands and Islands Airports Limited; Historic Environment Scotland; Integration joint boards; National Park authorities; Chief Constable of the Police Service of Scotland; Scottish Canals; The Scottish Courts and Tribunals Service; The Scottish Environmental Protection Agency; The Scottish Fire and Rescue Service; Scottish Forestry; The Scottish Further and Higher Education Funding Council; Scottish Futures Trust Limited; Scottish Land Commission; Scottish National Investment Bank plc; Scottish Natural Heritage; Scottish Sports Council; Scottish Water; Special Health Boards; VisitScotland, will be required to have due regard to CWB guidance produced by the Scottish Ministers when developing their corporate plan and associated delivery strategies.

The Scope of the EQIA

Evidence

The following sources of evidence have been considered in this assessment:

• consultation responses,
• quantitative and qualitative data and evidence,
• evidence gathered from international CWB initiatives,
• published research relating to the impact of the CWB model, and
• discussions with relevant directorates across Scottish Government and external organisations where appropriate.

CWB Consultation

In 2023 the Scottish Government held a public consultation relating to CWB welcoming a wide range of views on the changes that are required to grow local wealth and give communities a greater stake in the economy^[2]. Over 180 responses were received. All responses were analysed in detail and a full report on the findings of the consultation was published in Autumn 2023.^[3] Stakeholders with an interest in equalities included: Wellbeing Economy Alliance, Engender, Close the Gap, Scottish Women’s Budget Group, Scottish Trade Union Congress (STUC), Equality and Human Rights Commission (EHRC).

Scottish Government Data and Evidence

The following data and evidence indicates that the wider adoption of fair work practices and support for the development of micro-businesses can have a positive impact on equalities.

Fair Work

• The Fair Work indicators: Fair Work action plan: evidence plan - gov.scot (www.gov.scot) reported the employment rate gap in percentage points as: Disability 2021 = 31.2%; Gender 2021 = 5.1% and Minority Ethnic 2021 = 11.7%
• The latest Gender pay Gap for full-time employees in 1.7 per cent (UK 7.7 per cent), and the latest Gender Pay Gap for all employees is 8.7 per cent (UK, 14.3 per cent). (Gender pay gap - Office for National Statistics (ons.gov.uk) – 2023 provisional dataset, work geography table , gender pay gap median
• Number of employee jobs below the Living Wage is 234,000 in Scotland (April 2023) Employee Jobs Below The Living Wage_V7.pdf
• Black, African, Caribbean, or Black British employees earned less (£13.53) median gross hourly pay than White employees (£14.35), which has been consistent since 2012. UK Ethnicity Pay Gaps (2022): Ethnicity pay gaps, UK - Office for National Statistics (ons.gov.uk)

Business

• The Scottish Small Business Survey insights show how smaller businesses are more inclusive with 88% of micro-businesses (fewer than ten employees) having at least one woman as a director or partner, this drops to 59% for medium sized business (50-250 employees).
• Only 5% of businesses in Scotland are minority-led, and 91% of businesses have no minority ethnic group directors or partners. Minority ethnic groups are slightly more represented in smaller businesses.

Get Heard Scotland Report

Evidence provided via the Poverty Alliance Get Heard Scotland programme as part of the consultation process on CWB reported that participants recognised the potential of this model in tackling poverty and inequality.^[4] The report gave seven recommendations to ensure that CWB is implemented in the manner that would reduce poverty and inequality. These recommendations included the need to ensure:

• CWB will tackle, rather than entrench, inequality;
• the strategic aims of CWB can be easily understood;
• a collective understanding what ‘community’ is defined as in CWB;
• proactive engagement with communities during implementation of CWB;
• capacity building for communities and anchor organisations;
• effective implementation of CWB actions; and
• that communities and community organisations can participate in the economic development process.

Public Health Scotland Health Impact Assessment

The Public Health Scotland Health Impact Assessment (HIA), published in December 2024, identified the likely impacts of implementing CWB in Scotland.^[5] The assessment concluded that CWB has significant potential to benefit health, help reduce health inequalities and achieve other positive outcomes. The HIA gave overarching and specific recommendations aligned to the CWB pillars, including the following recommendations that are particularly relevant to equalities:

Supporting socially responsible businesses

• Implement support, guidance, policy, and legislation to ensure all businesses adopt fair work practices and increase the number of employee owned and supported businesses.

Fair work and employment

• Harness the power of anchor institutions to provide fair work conditions and set expectations for fair employment within local labour markets.
• Identify and implement measures that would encourage and mandate a wider range of businesses to adopt fair work practices and create an enabling environment for alternative ownership models. This includes developing infrastructure to help smaller businesses to manage flexible work and reasonable adjustments.
• Reduce barriers and provide support for population groups that are further from the labour market to gain meaningful employment. This includes valuing young people’s work more fairly, providing equal pay including for apprenticeships, and ensuring care experienced young people can access training, education, and employment.
• Increase provision of childcare to enable parents to access employment.

Plural ownership and community engagement

• Identify barriers that prevent people participating in plural ownership, community engagement and influence, and provide support to reduce these barriers, especially in communities with lower levels of wealth or power.

International Evidence

The CWB approach has proven successful internationally. The experience in Cleveland of re-directing wealth back into the local economy and placing control and benefits into the hands of local people, has indicated that this approach has the potential to help advance equality of opportunity.

Often cited as the original CWB initiative, the ‘Cleveland model’ developed as a response to post-industrial decline and depopulation. The principal feature of this approach was to localise and retain the spending of local public, private and third sector ‘anchors’ through the development of new local cooperatively owned businesses. A key feature of Cleveland’s model is that wealth re-circulates in the city, as organisations procure services from the cooperatives (within the United States procurement context), which employ local workers and help tackle urban inequalities.^[6]

Key Findings

CWB provides a strategic framework to build on some of the progressive policies and action already underway in Scotland to tackle inequalities and transform how our economy operates. The provisions in the Bill will seek to ensure consistent implementation of this model across Scotland, while allowing for local and regional flexibility to ensure that actions can be tailored to the unique challenges and opportunities of localities.

The development of this EQIA has highlighted how successful implementation of the CWB Bill could support the achievement of our shared goal, reflected in our National Outcomes, to help people live happier and healthier lives with higher living standards, to help businesses boost profitability, and build a more resilient Scottish economy that offers opportunities for all to succeed and where everybody in every community and region of the country will share in our economic prosperity.

The Scottish Government recognises that, whilst the economy impacts everybody, the impact is not felt equally and people with some protected characteristics can be disproportionately affected, for example women, disabled people and minority ethnic people. It has also been noted that individuals who are already marginalised on the basis of one or more protected characteristic are more likely to be economically disadvantaged. This reality has been central to development of the provisions contained in the Bill.

A high level summary of the potential impacts of the Bill, which have been considered on an intersectional basis, is provided below:

Eliminating unlawful discrimination

• The duties within the Bill are focused on strategic planning and reporting activity. As such, it has been determined that the Bill content is not likely to have a direct impact on eliminating unlawful discrimination, harassment and victimisation. However, in planning this focused legislation, the potential benefit in reducing inequality was central to design thinking.

Advancing equality of opportunity

• Access to local and fair employment opportunities, fairer wages, and skills development opportunities have the potential to advance equality of opportunity for people with protected characteristics.
• In considering the Bill consultation findings, and centrality of fair work in addressing inequalities, this cemented fair work considerations in the final content of the Bill as introduced.
• The Bill encourages the Scottish Ministers and CWB partnerships to consider how they can promote employment opportunity, workforce development and equality in the workplace.
• It is also anticipated that guidance published by the Scottish Ministers to assist CWB partnerships and specified public bodies as named above will encourage these bodies to consider how they can support more businesses to embed fair work practices.
• The promotion of fair work practices, such as payment of the real living wage, and developing employability programmes that support access to work and progression opportunities for local people, can enable people with protected characteristics to participate the labour market.
• Embedding fair work practices can also create diverse and inclusive workplaces by reducing barriers that restrict employment opportunities for those who are marginalised in the labour market, particularly women, people from racialised minorities, disabled people, and the over 50s.
• In addition, people who belong to more than one marginalised group could see positive impacts through actions taken to support access to employment or progression opportunities.
• While the Bill itself will not have a direct impact on advancing equality of opportunity, the implementation of the duties it contains, including the development and implementation of a CWB statement and CWB action plans, have the potential to indirectly advance equality of opportunity for groups of people with protected characteristics.

Promoting good relations among and between different groups

• As the duties within the Bill are focused on strategic planning and reporting, it has been determined that it is not likely that there will be any direct impact on the promotion of good relations among and between different groups. However, a core theme of the Community Wealth Building approach is enabling improved fairness in economic outcomes for all. In embracing Community Wealth Building and proposing legislative change, the Scottish Government has considered the potential this can have for better relations between groups and wider economic and community cohesion.

Overall, the evidence considered in this EQIA suggests that, whilst the provisions contained in the Bill are not expected to have a direct impact on equalities, the implementation of these duties could potentially have some positive impacts for people with protected characteristics. This is not expected to differ significantly for different equality groups.

Recommendations and Conclusion

The EQIA has supported the development of the Community Wealth Building (Scotland) Bill.

As the duties within the Bill are focused on strategic planning and reporting, it has been determined that the Bill will not have any direct impact on people with protected characteristics. However, the implementation of these duties could potentially have some positive impacts for people with protected characteristics. This is not expected to differ significantly for different equality groups. The Public Sector Equality Duty has been a central consideration as the Bill have been developed, as a central ambition for Community Wealth Building is contributing to creations of a more equal economy and society.

The Scottish Ministers, local authorities and public bodies responsible for discharging duties provided for in this Bill are subject to the public sector equality duty under the Equality Act 2010. Where relevant, these public bodies will be required to carry out an additional EQIA when implementing actions legislated for in this Bill.

Annex A

Community Wealth Building Pillars Overview

Spending: Maximising community and business benefits through procurement and commissioning, developing good enterprises, Fair Work, and shorter supply chains. Higher levels of spend with SMEs, micro-businesses and inclusive business models resulting in business growth and improved, resilient local and regional economies.

Workforce: Increasing Fair Work and developing local labour markets that support the prosperity and wellbeing of communities. Access to local and fair employment opportunities, fairer wages, skills development opportunities and improved wellbeing of employees.

Land and Property: Growing social, ecological, financial, and economic value that local communities gain from land and property assets. Land and property are used for the common good and benefit communities, SMEs and micro-businesses and the environment.

Inclusive Ownership: Developing more local and inclusive enterprises which generate community wealth, including social enterprises, employee-owned firms, and cooperatives. More inclusive and democratically owned enterprises and assets which means the wealth created locally and by local people stays in those communities in the form of incomes and profits rather than being extracted out.

Finance: Finance: Ensuring that flows of investment and financial institutions work for local people, communities, and businesses. Money and investment stays in a local area and is available to support communities and businesses.