National Strategy for Economic Transformation: third annual report

Annex B – Response to Audit Scotland’s recommendations

In February 2024, Audit Scotland produced a briefing on the National Strategy for Economic Transformation with 8 recommendations. Since then, we have implemented 6 recommendations in full and partially implemented the remaining 2 recommendations. We continually seek ways to improve our governance and delivery in the spirit of embedding a ‘Culture of Delivery’. Further detail is available below.

1. Establish the Economic Leadership Forum – Accepted and implemented Response: A new Ministerial Group has been established. Following a governance review, the Cabinet Sub-Committee for Investment and Economy (CSC-IE) was created in November 2024 to provide political leadership and a route for the Delivery Board to escalate major delivery concerns. Chaired by the Deputy First Minister, it meets quarterly with relevant Cabinet Secretaries. The Delivery Board has already escalated key issues to this group, such as the housing emergency and planning system challenges.

2. Increase transparency for the NSET Delivery Board on funding decisions – Accepted and partially implemented Response: Budget decisions are made by Ministers considering various factors, including economic impact. Governance forums, including the NSET Delivery Board, receive regular delivery reports with financial and risk data. Each action has a senior delivery lead responsible for reporting progress. Funding is also reviewed during the Programme for Government’s prioritisation and assurance process.

3. Clearly set out prioritised actions and funding in revised delivery plans – Accepted and implemented Response: An audit was conducted to clarify priorities and their alignment with the Programme for Government. This was shared with governance forums. Progress, including prioritisation rationale, is detailed in Annex A and monitored through monthly reporting. Funding and financial risk are routinely reviewed.

4. Clarify links between NSET actions and wellbeing economy outcomes – Accepted and implemented Response: The Programme for Government prioritises NSET actions based on their expected impact on economic growth. Equality Impact Assessments are conducted for major programmes. Evaluation activities assess whether actions are delivering intended outcomes. Annex A outlines actions and their expected long-term impacts, which are integrated into delivery plans and metrics.

5. Define interim and long-term targets and timescales for NSET actions – Accepted and implemented Response: While economic targets are not set due to reserved powers and external global events, delivery plans are reviewed annually and monitored monthly. These plans include financials, staffing, outcomes, outputs, and milestones. Performance is communicated externally via the Annual Report.

6. Develop an evaluation approach to assess impact and investment effectiveness – Accepted and partially implemented Response: A range of bespoke evaluations have been conducted, including on exports, inward investment, and employability services. These inform policy development and delivery. The Scottish Government’s Evaluation Action Plan guides this work. Evaluation of major programmes is ongoing and phased. Upcoming evaluations include Techscalers, Fair Work, and employability.

7. Review governance groups supporting NSET delivery – Accepted and implemented Response: Governance groups are reviewed regularly, especially after the Programme for Government is published. In 2024, the NSET Delivery Board was refreshed with new members focused on housing and the green economy. In 2025, the Portfolio Board was renamed the Economic Growth Programme Board. A Cabinet Sub-Committee on Economy and Investment was also established.

8. Be transparent about timescales for NSET update publication – Accepted and implemented Response: Following a committee evidence session on 29 May 2024, the Deputy First Minister wrote to Parliament to confirm that there would be no update to our economic strategy. The Scottish Government remains committed to the original objectives and will continue reporting progress through the Annual Report.