National Strategy for Economic Transformation Delivery Board minutes: 27 November 2024

Attendees and apologies

Present

• Kate Forbes, Co-chair, Deputy First Minister and Cabinet Secretary for the Economy and Gaelic
• Barry White, Co-chair, Former Chief Executive, Scottish Futures Trust
• Douglas Millican, Former CEO, Scottish Water
• Roz Foyer, General Secretary, Scottish Trade Union Congress
• Ewan Aitken, Chief Executive, Cyrenians
• Audrey Cumberford, Principal and Chief Executive, Edinburgh College
• Claire Mack, Chief Executive, Scottish Renewables
• Jane Wood, Chief Executive, Homes for Scotland
• Sir Simon Lister, Managing Director, BAE Systems Naval Ships
• Gillian Docherty, Chief Commercial Officer, University of Strathclyde
• Fiona Kell, Homes for Scotland

Apologies

• Ellis Watson, Former Chief Executive, DC Thomson Media Group

Supporting Officials

• Gregor Irwin, Director General Economy, Scottish Government
• Aidan Grisewood, Director for Jobs and Wellbeing Economy, Scottish Government
• Richard Rollison, Director for International Trade and Investment, Scottish Government
• Fiona Simpson, Director of Planning, Architecture and Regeneration, Scottish Government
• Will Tyler-Greig, Deputy Director for More Homes, Scottish Government
• Claire Renton, Deputy Director Employability, Scottish Government
• Ragne Low, Deputy Director Offshore Wind Programme and Investment, Scottish Government

Items and actions

Welcome

Barry welcomed the members to the final meeting of the NSET Delivery Board in 2024. Barry welcomed Jane Wood, Chief Executive of Homes for Scotland and Claire Mack, Chief Executive of Scottish Renewables to their first Board meeting as new members, highlighting the importance their experience and expertise will bring to the board, supporting the Scottish Government's high priority focus on Housing and the Green Economy. Barry highlighted Ellis's regret that a business interest in the US meant that he was currently on a transatlantic flight and therefore was unable to join. Barry will brief Ellis following the meeting.

Update on Economic Priorities and NSET Delivery

Aidan opened the session providing an update on Scotland's Economic Performance, followed by an update on NSET Delivery, key achievements and NSET delivery progress.

Key points included:

• Gross Domestic Product (GDP) has grown for the last three quarters in 2024
• Green Jobs Barometer launched on Monday, 5.6% of Scottish Jobs advertised are green jobs which has increased three-fold since 2021
• on labour market: 3.8% real earnings wage growth in 2024: Scotland's unemployment rate remains around 4%; and wider labour market indicators reflect ongoing strength in labour market conditions, with 25% of businesses reporting skills shortages
• the Cabinet Sub-Committee on Investment and Economy (CSC-IE) has now been confirmed, the first meeting will take place on the 10th December 2024
• officials have identified 14 transformational projects within this year's PfG, which represent the priority areas of delivery of NSET over the next 12-18 months
• NSET Delivery plans are in development and work is underway to identify the specific outcomes, outputs and metrics to measure success and key delivery milestones
• the reporting pack presented will be the last in its current form as we transition to a more intense focus on PfG priorities and delivery
• as at November 2024, of NSET's 77 actions: 21 are complete (27%), 41 are in progress (53%), 7 are paused (9%), 7 have not been started (9%) and 1 has been stopped (1%)
• notable recent milestones include finalising the Natural Capital Market Frameworks and concluding an independent review on social enterprises

Key points raised by members:

• welcome a description of what is defined and measured as a 'green job' when stating 5.6% of Scottish jobs advertised are green
• welcome a timeline on a response from ministers on the review of social enterprise, review is complete, however follow-up has not yet been shared
• concerns raised around 'complete' definition in NSET delivery reporting. For example, action 57 on promoting sectoral Fair Work agreements and collective bargaining is marked complete, however more needs to be done in this area and the review of social enterprise may have been published, but what next following the review?
• reflections were shared on the micro-specificity of some actions; and, an inevitable degree of judgement in assessment of complete vs in progress
• rationale behind completed and paused actions will be shared with Board members as part of the delivery assurance process
• further consideration should be taken on metrics for skilled workforce, as current metrics are too vague
• housing viewed as a national outcome but is not embedded within the 77 key NSET actions where housing is implicated. The Board are pleased that housing is being considered a key part of NSET moving forward
• identifying how issues are raised/brought to the CSC-IE would be welcomed by the board

Housing Investment

Barry outlined that housing is a key priority for both the SG and the Delivery Board and a critical area for achieving the desired economic growth for Scotland. Barry introduced Fiona Kell, Homes for Scotland, to the board to provide a brief update on the housing landscape. Fiona covered housing supply and barriers to delivery.

Richard Rollison, Director for International Trade and Investment provided an update on housing and the wider investment programme arising from the recommendations of the Investor Panel and DFM's focus as 'investment champion' on investor engagement; creating an investment pipeline and financial instruments with a strong focus on offshore wind, housing and public economic infrastructure. The work of the Housing Investment Taskforce was highlighted.

Will Tyler-Greig, Deputy Director for More Homes provided a brief update on work being taken forward within the Scottish Government. Will covered housing delivery figures noting that by June 2024 22,743 affordable homes were completed. Noting an annual fall in number of new build completion, first fall since 2020. Steps are being taken on the regulatory dimension of housing, more consultation required in order to take steps and set out a suitable timeline.

Fiona Simpson, Director of Planning, Architecture and Regeneration provided a planning update to the board. Fiona outlined figures for planning system performance for 2023/24 - noting issues around timescale for decision making. Some issues for the planning system include low take-up of processing agreements, lack of clarity on information requirements, applicant timescales for providing information, varying levels and types of information required. Stalled sites remain an issue - SG working with Homes for Scotland, Scottish Property Federation, Scottish Federation of Housing Associations, Heads of Planning Scotland to understand the specific issues and factors in delaying delivery.

Key points raised by members include:

• keen to understand how much of the 17% decrease in tenure completion has an overall economic growth for Scotland
• effective regulation is helpful however, policy decisions are negatively affecting the market
• planning/consent isn't the only challenge - concern also that supply is being constrained in order to maintain/boost profit margins in the private sector
• more sustained investment from SG required to assist the housing crisis. SG appear to be solely relying on the private sector to boost housing supply
• the PWC report, categories of green jobs is construction is the largest growth in job advertising (62.8% increase in one year). Colleges are turning away large numbers of individuals wanting to undertake training on construction as courses continue to be underfunded
• financial incentives for SMEs have reduced, impacting upskilling/reskilling 
• consideration should be given to the utilisation of public land for housing supply 
• 'building' our way out of homelessness is not a viable solution. Both public and private sector have a role to play in tackling the housing emergency

It was agreed that given the need for urgent cross-government action on housing that Barry White would write on behalf of the board to refer this matter to the Cabinet Sub-Committee.

Economic Inactivity 

DFM noted that economic inactivity has the ability to greatly harbour our collective efforts on economic growth. DFM asked members to consider ways in which the Scottish Government can maximise support for individuals, allowing more people to get into wok and stay in work long-term.

The DFM welcomed Claire Renton, Deputy Director for Employability, James Wilson, Unit Head Population Health Strategy and Aidan Grisewood to update the board on the progress being made in the economic inactivity space.

This is a UK-wide and international challenge with economic, social and fiscal consequences. In Scotland around 23% of the working age population are currently economically inactive, however it is important to note that not all of this necessarily 'bad', for example students account for a large number of inactivity figures and there is economic and social value to care-related activity. However, long-term sick inactivity continues to increase. Focus of activity thus far has been on promoting flexible work places to reduce barriers to employment; supporting those currently inactive into employment; as well as preventative support as a means to stop people falling out of work.

Key points raised by members include:

• person centred and place based approach is key as well as evidence led
• the level of data collated was welcome and the Board were keen to see more at a follow-up date
• areas for deprivation and poverty have long-term poor outcomes on health
• consider the interventions that are required and timeline for this
• school refusal from young people was a concern as we are seeing increased numbers of young people coming into Employability services
• individuals with experience of the criminal justice system are the furthest from the labour market. Noting people currently in prison are not considered economically inactive. Is there an opportunity to ban the box which requires individuals to disclose criminal justice - pilot?
• it was shared that Ms Constance had met with Lord Timson and the first Employability Advisory Board was being set up with Perth and Aberdeen
• feedback from third sector reports that there is inconsistency in how funding is being dispersed and delays in mulityear approach funding. This point was responded to in relation to work undertaken by the Improvement Service to understand commissioning better, it was also shared that SG fund a third sector partnership post and 46% of funding was commissioned to third sector
• Local Authorities are not under the same scrutiny as third sector and local employability partnerships are not seeing the expected consistency on the approach from SG in terms of funding
• flexible workplace practices is putting difficulty on employers and risks decreased productivity - more support for employers to tackle this
• highlighted concerns with in work poverty and people falling out of work
• careers advice needs to improve, feedback has shown this continuously with Switzerland flagged as an example of good practice. Important that it is visible both in the community and geography
• industry leadership have difficulty in managing the expectations of young people starting in the workforce
• culture and social expectations along with leadership here need to be considered also as part of any plan
• suggestion of maintaining an inventory of programmes in place that are going well (work aware in Glasgow for example) and look to implement similar in areas struggling to improve figures
• interested to see and hear the work around the LEP maturity assessment and also about the national consistency with the LEP
• collective view and focus from employers on addressing FIT notes and OH culture
• discussed regional autonomy and importance in this area

DFM concluded by summarising four key items from the discussion:

• mining of data and sharing
• asks for support from industry 
• setting clear expectations 
• budget consistency 

Green Economy

DFM introduced the final substantive item on the agenda which focuses on the Green Economy, specifically opportunities for attracting major international offshore wind supply chain investment. DFM welcomed Richard Rollison, David McIntosh and Ragne Lowe, Deputy Director, Offshore Wind Programme & Investment, to the board to talk through SG progress on Offshore Wind. The update included the following:

• the SG are committed to investing up to £500m, over a five year period to support essential enabling infrastructure and anchor our offshore wind supply chain in Scotland, the first tranche of funding to take forward key projects with delivery partners has already been agreed. The industry-led strategic investment model (SIM) has produced a strong pipeline of port infrastructure and supply chain projects, with a combined value in excess of £6.5bn across 38 projects. A number of hurdles to success exist including a problem whereby offshore wind project developers require UK Government Contract for Difference awards to de-risk their project investments
• projects also require certainty on grid connectivity and capacity and full project approval through planning and consenting. These market risks are preventing developers placing orders with supply chain manufacturers which in turn is preventing them making final investment decisions on new factories
• despite these hurdles we have achieved notable successes and progress to date including: Ardersier - £400m private equity investment, SNIB and UKIB £100m facility; Sumitomo - £150m corporate investment, SG/HIE £24.5m subsidy; XLCC Ltd - £20m UKIB investment; Green Freeports - incentivising inward investment opportunities

Key points raised by members:

• future look to housing and infrastructure in required, using the data available to look at the requirement of both to ensure investment opportunities are seized particularly for large projects
• industry grappling with employment gaps, cannot fill vacancies due to skills shortages
• private skills academies demonstrate that the skills system is not effective in meeting the demand in the green economy space
• focus on CFD auction - one single metric of success
• on green skills, BAE have an academy, growth sectors can provide the academy but there is a huge gap with those sectors who cannot provide similar programmes, particularly SMEs
• small investment in vocational route will result in increased return
• all the employment opportunities rely on a proper deployment programme to give confidence to supply chain investors
• what evidence is available to benchmark Scotland's consenting pathway (noting some of it is reliant on UK consents/CfD) with other global opportunities
• the board welcome the progress that has been made but queried how we will measure success in a years time and in five years time

Close and AOB

The DFM brought the session to a close, thanking members for their input and noting that a minute of the meeting will be shared with members in due course. The next NSET Delivery Board will take place on the 12th March 2025.

Actions

• Barry to brief Ellis on the meeting discussion and follow up points
• NSET Secretariat to share definition of green jobs
• NSET Secretariat to share narrative for the 77 NSET actions, including which actions are paused or marked complete and rationale
• Board Champions to work with policy areas to understand progress in each area
• Homes for Scotland to share data on blockers that are hindering progress to housing supply and discuss possible near term solutions
• Barry to write on behalf of the board to refer all tenure housing supply to the Cabinet Sub-Committee
• NSET Secretariat to share data regarding the make-up of health inactivity, specifically figures on physical vs mental health
• NSET Secretariat to share evidence base on economic inactivity in advance of the next Delivery Board for discussion
• officials to determine what short term tactical steps can be taken to address the immediate skills challenges for key industries and come back to the next Delivery Board on this
• what evidence is available to benchmark Scotland's consenting pathway (noting some of it is reliant on UK consents/CfD) with other global opportunities
• future look to housing and infrastructure is required, using the data available to look at the requirement of both to ensure investment opportunities are seized particularly for large projects