Regional economic policy review: paper 1 – the national perspective

2. Definitions

2.1 Context

2.1.1 To ensure some shared understanding it is necessary to frame the discussion by setting out agreed definitions for key terms; region, economic development, Inclusive Growth and the Wellbeing Economy.

2.1.2 These definitions are not intended to be absolute; REPAG understand that there are other interpretations across different nations, organisations and even within different policy areas in Scottish Government and UK Government. However, in order to be clear about what it is we are referring to in the context of this review, we offer up the following.

2.2 Defining Region

2.2.1 A fundamental definition discussed with all those consulted for this review was how to define a region, which led to some revealing conversations regarding the impacts of the boundaries drawn as a result of different understandings, policies and drivers.

2.2.2 There are a wide variety of regional boundaries, carved out on the basis of functionality, political boundaries, legislative basis^[14] and existing governance structures^[15]. It will suffice to say that few policy areas within Scottish Government use the same boundary when they refer to a region, and structures that have been established to deliver policy at a regional level do not necessarily overlap with other existing structures.^[16]

2.2.3 This creates onward challenges for those undertaking regional work, whether developing Governance, Regional Economic Strategies, disbursing funding, or responding to reporting, monitoring and evaluation requirements. It can also cause difficulties when engaging with and between stakeholders, being summarised in the following stakeholder comments:

• "there are so many different variations on "regions" that it's another complexity we have to engage with."
• "there is no one consistent approach to regionalisation. The complexity of different approaches to Regional Economic Partnerships, Strategies and Skills Investment Plans makes consistent and strategic engagement challenging."
• "different boundaries means different partners which makes it difficult to bring them all together; a big benefit would be to have consistency across regions".

2.2.4 Whilst 'region' often refers to a specific geographical area, historically, it was the official term given to defined Council wards in Scotland following enactment of the Local Government (Scotland) Act 1973, e.g. Strathclyde Regional Council. When the Local Government (Scotland) Act 1994 replaced the collection of regions and districts with 32 unitary local government areas, the definition of region from an economic policy perspective became opaque and open to interpretation. Whilst the creation of City Region and Growth Deals, and REPs have helped demarcate boundaries to some extent, there remains many variables with an unhelpful lack of consistency.

2.2.5 Given some boundaries are statutory, REPAG suggests Scottish Government refine and enhance their understanding of functional economic geographies and support engagement with existing governance structures such as REPs rather than creating new ones in different policy areas.

2.2.6 Though we are acutely aware that there are several ways to define a region, and notwithstanding the above observations relating to the different established boundaries, given the perspective of this review we will consider a region defined by its economic functions; the travel to work (and learn) area^[17]. This definition would be largely reflected in the eight REP areas^[18].

2.2.7 It is worth noting REP geographies can be comprised of multiple travel to work areas, with a shared understanding of challenges and opportunities. These boundaries are intended to be helpfully porous depending on function, and are set and agreed by regional partners themselves.

2.2.8 The above understanding of region can play into the wider discussion around placed-based policy making where "place" can also refer to regions, and taking a holistic look at an area seeking to address all its needs within a given boundary.

2.2.9 As stated, this definition and understanding is based on a functional economic geography, and does not intend to usurp local actors, or seek to dictate the boundaries for REPs, noting that they are locally led and self-assembling. Continuing this, our emphasis on the regional dimension does not seek to subsume agendas and policies that are specific to cities or towns, rural or island areas, though each of them would be included in a region.

2.3 Defining Economic Development

2.3.1 Economic development is understood in a fairly broad sense - as interventions and enabling activity that seeks to support inclusive economic growth. As SPICe note in their briefing paper Economic Development in Scotland:

"There is no single agreed definition of economic development, but it can include targeted investment in, and running of, infrastructure, investment in skills and training, and support for marketing, promotion and network building. These interventions can have various purposes, including improving productivity, encouraging 'greener' activity, supporting innovation, generating more exports, promoting start-ups, encouraging inward investment, and getting people into good quality jobs".

2.4 Defining Inclusive Growth

2.4.1 By inclusive economic growth, we remain consistent with the Scottish Government definition that this is growth that combines increased prosperity with greater equity; creates opportunities for all; and distributes the dividends of increased prosperity fairly.^[19]

2.4.2 While reference is still made to inclusive growth within Scottish Government policy making, it is now set within the context of the Wellbeing Economy, which is increasingly used as the central economic ambition with clear links to the National Performance Framework of the Scottish Government. The justification for this centrality is that it extends economic considerations of inclusive growth beyond that of human wellbeing, to also include the environment and wellbeing of the planet.

2.4.3 In an attempt to evaluate how inclusive economic growth has been, the Scottish Hub for Regional Economic Development (SHRED)^[20] published a set of metrics to measure outcomes, based on agreed and consistent indicators. These included a range of outcomes that cover Productivity, Population, Participation, People and Place. It is possible for regional partners to develop an Inclusive Growth Diagnostic based on the data gathered within SHRED, however, whilst this offers regions a baseline by which to judge progress, it is for regional partners to determine how to go about improving on those metrics. The data also supports partners identify inequalities within and between regions.

2.5 Defining Wellbeing Economy

2.5.1 Scottish Government defines a Wellbeing Economy as an economic system, within safe environmental limits, which serves and prioritises the collective wellbeing of current and future generations.

2.5.2 Scotland was a founding member of the Wellbeing Economy Governments (WEGo) group in 2018, which also includes New Zealand, Iceland, Wales, and Finland, with Canada taking part and formally invited to join. The group seeks to move the concept of wellbeing from theory into practice by facilitating collaboration and the sharing of expertise and transferable policy among governments who have a shared ambition of delivering wellbeing through their economic approach.

2.5.3 Scotland's emphasis on inclusive growth has developed through the intentions set out in the National Performance Framework, first introduced in 2007. This provides a clear long-term purpose and set of outcomes for Scotland's future wellbeing, and is the vehicle for delivery of the United Nations Sustainable Development Goals. To align with this, the National Strategy for Economic Transformation sets Scotland's vision for a wellbeing economy to deliver economic prosperity and wellbeing for all Scotland's people while respecting environmental limits embodied by relevant climate and nature targets.

2.5.4 The national level Wellbeing Economy Monitor was published in June 2022. It includes measures such as preventable deaths, fair work indicators, child poverty, greenhouse gas emissions and biodiversity. The Scottish Government is now working to develop a local level version of the Wellbeing Economy Monitor to support its rollout of the Wellbeing Economy Framework.

2.5.5 Learning some lessons from SHRED, it is important that we ask here who the audience is for the Wellbeing Economy Monitor; who will access and use the data, how will the Scottish Government encourage private sector to consider these impacts and outcomes when they are pushing to improve on productivity? How will it influence decision making, and how money is spent? Given that NSET talks of a whole systems approach and collective endeavour, REPAG are keen that the Scottish Government ensure they bring everyone along with them and take an active role in ensuring regional partners make use of the new Monitor and its metrics.

2.5.6 They may specifically wish to consider how REPs would make use of the Monitor when measuring the success of their Regional Economic Strategies, thereby making a direct link between regional endeavour and national ambition. It is important to note that it may be challenging to determine attribution, particularly where metrics are slow to move, however the value of shared reporting and measuring across appropriate metrics still justifies sensible steps being taken to work towards this goal.