Regional economic policy review: paper 1 – the national perspective

3. Scottish Government Delivery Strategies and Frameworks

3.1.1 The Scottish Government has developed a range of longer-term Strategies and Frameworks responsible for steering policy delivery and, where appropriate, funding. It is encouraging that all have been developed with the close involvement of a number of regional stakeholders, e.g. Enterprise Agencies, Third Sector, business leaders, as this supports delivery. It is important that the delivery of these various strategies is cognisant of the need to link shorter-term priorities with the long-term objectives, and don't lose sight of the need to align activity appropriately to avoid contradictory or disjointed economic interventions.

3.1.2 Summarised below are just some key strategies and frameworks which align with the delivery of economic policy activity. Annex E contains a fuller list, with links.

3.2 National Strategy for Economic Transformation

3.2.1 As noted above, the National Strategy for Economic Transformation (NSET) is a 10 year strategy aimed at providing a route to building a strong economy. It seeks to achieve good, secure and well-paid jobs and growing businesses, maximising Scotland's strengths and natural assets to increase prosperity, productivity and international competitiveness. Its overarching vision is that by 2032 Scotland will be a wellbeing economy, thriving across economic, social and environmental dimensions.

3.2.2 NSET seeks to address the deep-seated regional inequalities that exist in Scotland and the particular challenges that face some of its regions. Scotland has rural and island regions with declining populations and reduced labour supply; while there are urban areas facing housing shortages and overwhelmed infrastructure.

3.2.3 If the Scottish Government is to be successful in achieving its vision of a wellbeing economy which thrives across the barriers that exist currently, then these regional inequalities must be addressed. One approach to this is the specific NSET action involving the introduction of Community Wealth Building legislation that builds on the successes and learnings of all of the Scottish Government Community Wealth Building local and regional pilot areas in urban and rural Scotland.

3.2.4 It follows that to achieve the ambitions of NSET and tackle regional inequalities, strong regional collaboration will be needed. NSET acknowledges the importance of Regional Economic Strategies and Investment Prospectuses to build on the strengths within regions and address the weaker elements of the regional economy.

3.2.5 There is a commitment that Scottish Government will work with regional partners to ensure that every region has a REP, or collaborative equivalent, in order to encourage collaboration between key economic actors.

3.2.6 Furthermore there is a commitment that Scottish Government support the development of Regional Economic Strategies and recovery plans in order to allow REPs to make long-term, strategic plans that address the strengths and weaknesses within their region; promoting and adopting change that will have a substantial impact on the region. These strategies serve as an agreed foundation with clear priorities that future inward investment and both Scottish and UK Government can support.

3.2.7 By having REPs lead on and own their strategies, the Scottish Government is acknowledging the importance of regional autonomy, and need for horizontal accountability. REPAG believe that this model of accountability should be fully supported by the Scottish Government.

3.3 National Performance Framework

3.3.1 The National Performance Framework (NPF), Scotland's north star of delivery frameworks, aims to create a more successful country with reduced inequalities via sustainable and inclusive growth. NPF sets out the kind of country the Scottish Government wants to create, steering the public sector, individuals and organisations across the private and third sectors towards this. It was initially published in 2007 but a programme of continuous improvement exists to ensure that it remains relevant.

3.3.2 To achieve the aims of NPF, a number of National Outcomes exist that address many facets of life in Scotland – from the economy to the environment. The National Outcomes straddle a number of different policy areas with effort required from national and local government alongside voluntary groups and businesses in order to achieve them.

3.3.3 Success against the Outcomes is measured via the National Indicator Performance with some indicators broken down to a regional level (skills and economy). As we have seen through our consultation there are a number of policies that recognise the benefit of working regionally to help deliver these outcomes. These will be discussed further in Paper 2 of this review.

3.4 Child Poverty (Scotland) Act 2017

3.4.1 The Child Poverty (Scotland) Act 2017 sets in statute ambitious income-based targets to significantly reduce levels of child poverty in Scotland by 2030. The Act requires three national delivery plans to be published (in 2018, 2022 and 2026) setting out action to drive progress against the targets. In addition, progress reports require to be published annually by Scottish Ministers and jointly by local authorities and health boards.

3.4.2 As set out in 'Best Start, Bright Futures', the second Tackling Child Poverty Delivery Plan for the period 2022-26, progress toward the targets which will be achieved through action focused on the three drivers of child poverty reduction – increasing earned incomes, reducing costs of living and increasing income from social security.^[21]

3.4.3 A 2022 study^[22] of Regional Economic Development and child poverty found that whilst child poverty is recognised as a problem and is of relevance to the economic development agenda, it is not seen as a headline issue or the primary focus of work being taken forward by regional partners. Researchers noted that:

"reducing child poverty is on the agenda of REPs and there is movement in the right direction in regional and local economic regeneration policy in Scotland, however, while the sentiments and terminology of inclusion are expressed there has been no corresponding reorientation yet in how economic development is conceptualised and in how it is delivered so that the significant resources devoted to regeneration are applied intentionally to reduce child poverty."

3.4.4 Many issues critical to tackling child poverty will be considered at a regional level, including the likes of transport and skills. Child poverty should be seen as a specific focus and outcome for regional economic development across Scotland, with consideration given to how measures can be assessed as impacting on child poverty and outcomes for families in respective areas.

3.5 Programme for Government

3.5.1 The Scottish Government publishes its Programme for Government (PfG) annually which outlines the short-term priorities and what actions will be undertaken to address these.

3.5.2 Both 2021-22, and 2022-23 PfG contain a regional narrative which identifies policy areas and ambitions that are served well at a regional level. As a result, there is a repetition of the commitment to ensure all of Scotland has a REP, but REPAG must highlight that this amounts to an ask of regional partners without any offer of support to resource and build capacity, and as such Scottish Government must either manage expectations regarding how much REPs can achieve, the scale of ambition they have for them, and/or examine how better to use existing funding that flows into regions through disparate pots to encourage improved and shared outcomes.

3.6 Infrastructure Investment Planning

3.6.1 Published in February 2021, the Infrastructure Investment Plan is a £26 billion programme^[23] aspiring to promote a diverse, productive, net zero economy across Scotland by means of innovative projects. The plan is built upon the 2019 Infrastructure Commission for Scotland which established recommendations – notably concerning transport and place-based policy – which are integral to fair and green economic development.

3.6.2 Similar to other major plans, these are influenced and directed by stakeholders across numerous sectors. Through this initiative it is planned, at both regional and national levels, that Scotland will have a sustainable economy and be recognised as growing and internationally competitive by providing jobs, educational opportunities and enhanced entrepreneurship.

3.6.3 Projects are underway, including the A77 Maybole Bypass and Dunfermline Learning Campus development, crucial to enhancing Scotland's productivity and skillsets in the workforce. In the context of the Covid-19 pandemic and cost of living crisis, this investment plan could contribute to a focused and intentional approach to ensuring Scotland's regional economies build resilience whilst encouraging room for growth and evolution to demands and changing industries. However, this requires careful link-up between relevant policy areas within Scottish Government to ensure pipeline of projects aligns with regional strategies and national economic aims.

3.7 Spatial Strategies

3.7.1 The Planning (Scotland) Act 2019 established a duty for a planning authority, or authorities acting jointly, to prepare and adopt a regional spatial strategy. These are long-term spatial strategies which specify the area/s to which they relate, and identify:

• the need for strategic development;
• the outcomes to which strategic development will contribute;
• priorities for the delivery of strategic development; and
• proposed locations, shown in the form of a map or diagram.

3.7.2 Prior to this, regional planning was based on Scotland's four Strategic Development Planning Authorities: Glasgow and Clyde Valley; South East Scotland [SES] plan; Tay Cities; and Aberdeen City & Shire. It became clear that this arrangement failed to recognise that 'strategic planning' was occurring in other policy areas e.g. through Economic Development (City and Regional Growth Deals), Transport planning (Regional Transport Partnerships), Infrastructure Investment Plan (Cross boundary investment), and did not make it easy to bring these various activities together.

3.7.3 Whilst the new duty is yet to be enacted, the review of the National Planning Framework (NPF4) presented an opportunity to develop early thinking on Regional Spatial Strategies to help inform the preparation of the NPF4 and make effort to better align.

3.7.4 Authorities were encouraged to work to consider how they might self-assemble to consider the preparation of early 'indicative Regional Spatial Strategies' (iRSS) prior to enactment of the new duty (anticipated to be by end 2022). A total of 15 iRSS groupings have formed based on: existing groupings (e.g. Clydeplan, SESplan, etc.); existing administrative arrangements (e.g. National Park Authorities; Island Authorities); large, complex, and diverse authorities presenting a strategic overview (e.g. Argyll and Bute, Highland); Growth Deals (e.g., Ayrshire, Moray), or new and emerging arrangements (e.g. Forth Valley, South of Scotland).

3.7.5 The collaborative input of the iRSS groupings has helped to inform the draft NPF4 and specifically the 5 Action Areas as described in the Draft NPF4 spatial strategy.

3.7.6 However, REPAG would like to be clear that, given the aim of better alignment, the Scottish Government should have taken the opportunity to overlap more with existing and emerging REP boundaries.

3.7.7 As a final note relating to all of the above in this section, the Scottish Government can at times develop these high-level strategies with positive aims and ambitions, but with insufficient note of existing boundaries and structures. There would be merit in Scottish Government improving alignment between policy and funding decisions and impact on delivery bodies. In addition, given the appetite for monitoring and evaluation, Scottish Government ought to improve upon including measureable, and shared, objectives so as to be clear on how their success will be quantified.

3.8 Scottish Government Policy Operating Regionally

3.8.1 The consultation engaged with a number of Scottish Government's policy teams to better understand their views on how regional working is currently being delivered and how it might be beneficial. The focus was on those policy areas that enable economic development such as transport, housing, land-use, planning, digital economy, Community Wealth Building and skills.

3.8.2 Our consultation revealed an optimistic and shared perspective between several^[24] policy areas that there are opportunities to better align with regional strategic work and decisions across current and future strategic infrastructure investment programmes. Almost all of the policy areas who contributed to the consultation were keen to work with REPs and saw clear paths to how their various activities could be better involved with them and the development of Regional Economic Strategies.

3.8.3 Whilst it is not the Scottish Government's role to dictate and deliver Regional Economic Strategies, regional work must by its nature be taken forward collectively. Our consultation makes it clear that more effort needs to be made by the Scottish Government to support the regional structures and decision making bodies that can be used to drive forward new policies of regional scale. This view is particularly strong among regional partners.

3.8.4 Another shared preference among internal and external consultees was that this review does not add to the clutter but instead structures such as REPs are strengthened and their scope and membership include priority economic enablers for that region, to defend against further clutter and confusion.

3.8.5 We've already seen some economic enablers embrace the regional structure. For example, Land Use policy officials noted that by working at the regional as well as national level, their Regional Land Use Partnerships (RLUPs) pilots will be able to properly engage with the wide and complex range of land use stakeholders. There is no one-size-fits-all model across Scotland's regions, and so their view is that a regional approach is appropriate.

3.8.6 Given RLUPs and REPs shared scope, REPAG would welcome RLUPs, and other related policy delivery vehicles to work closely with REPs, bringing more cohesion to future work and potentially (eventually) aligning boundaries.

3.8.7 Relatedly, Regional Spatial Strategies^[25] will be a key vehicle for bringing together a wide range of regional priorities in order to support join-up and provide a long-term spatial vision for each area.

3.8.8 In terms of Transport, it is a statutory function of each Regional Transport Partnerships (RTPs) to have a Regional Transport Strategy (RTS). Taking their overall cue from the National Transport Strategy, each RTS must take account of the differing strategic needs in the RTP area and look for opportunities to make improvements.

3.8.9 Whilst transport and planning are economic enablers, cities and large urban settlements have a role as economic drivers for their regions. Policy for cities focuses on their specific needs as a type of place (e.g., the impact of Covid on the amount of footfall in city centres), whichever region they are in, with the existing policy role being to support the benefits of collaboration between cities on the challenges and opportunities that fall disproportionately on large urban areas.

3.8.10 While we know that cities and towns play a significant role in their regions, the strengthened focus in NSET on productive regions calls for a greater clarity on what this role looks like and how the Scottish Government can best promote and strengthen it, especially when spend catchment areas do not necessarily map onto existing REPs, and there will be some instances where working across boundaries to leverage maximum benefits will be important for Scotland's economy^[26].

3.8.11 Another policy area that has to work across boundaries in order to link to regional strategic planning is housing. Delivered and funded entirely at a local level, regional partners have noted that the impacts are often felt at a regional level. Additional housing requirements within the wider travel to work areas is becoming a key inhibitor for some regional economies, both urban and rural, with stock not matching demands. Legislation and funding prevents a regional approach yet clearly it's a strategic consideration for stakeholders, and will likely feature in considerations for Regional Economic Strategies.

3.8.12 Helpfully, there are examples of where traditionally local policy areas have scaled up to the regional level. The Scottish Government has embraced the Community Wealth Building (CWB) approach to economic development as a key tool to transform local and regional economies.

3.8.13 Seen as a practical way to achieve wellbeing economy objectives outlined in NSET by transforming the Scottish economies purpose and functionality, the development of legislation currently underway will underpin this commitment. There are good examples of collaboration with Community Planning Partnerships, Local Authorities, and at a regional level via REPs. CWB Action Plans are being developed in pilot locations: Clackmannanshire, South of Scotland, Western Isles, Tay Cities/Fife and Glasgow City Region, and there is £3 million committed to Ayrshire Growth Deal to advance CWB.

3.8.14 For newer policy areas, such as Just Transition, policy officials have noted a welcome intention to work with the eight existing REPs. Although work is very much in development, it is anticipated that Regional Just Transition plans^[27] will likely stand more distinct from specific national sector and local site plans, Just Transition policy officials understood that there may need to be regional references within sector plans, given the lead some regions take in specific sectors. In an effort to empower regional-level planning, Just Transition officials are scoping the opportunity for REPs to be involved in the plans, given that they represent a coalition of public, private and third sectors as a single forum for engagement.

3.8.15 Digital Economy represents another policy area where value could be added as a result of including at least some aspects of digital economy in the kind of strategic regional work carried out by REPs, or their equivalents. There is currently no regional dimension to digital economy policy in the Scottish Government, however, where digital adoption is identified as a core driver to boosting productivity within a region, as it is in NSET in the Productive Business and Regions Programme, it is clearly of value that the Scottish Government consider how to work with regional partners to support deliverable strategic activity that realises this ambition.

3.8.16 Digital Economy have referred to data that has been collected through the Digital Boost programme that could be assessed at a regional level. This data would aid discussions around what businesses need in terms of digital adoption, how they use that technology, and any barriers to further development, within any given region.

3.8.17 We ought to note here the launch of Tech Scalers, associated with the work carried out by Mark Logan on behalf of the Scottish Government, which have a place based association. Though the work and aims of the Tech Scalers has not formally acknowledged regional structures or relevance, there may be scope to do so, particularly if REPs are able to strengthen their identity as the regional forum to engage with on a strategic level.

3.8.18 Finally, worth noting that in Scotland, there are 4 Enterprise Areas (EA's). First established in 2011, the policy aim is to support the most dynamic industries to create new employment opportunities, stimulate private investment and boost growth. Each EA has a clear sectoral focus to enable them to create and foster knowledge clusters. They focus on: Life Sciences; Low Carbon/Renewables North; Low Carbon/Renewables East and Manufacturing and Growth Sectors.

3.8.19 There are currently 16 geographically dispersed sites across the 4 EAs which have access to a package of financial and non-financial measure including: Non Domestic Rates Relief, streamlined planning processes, sector specific international promotion and marketing provided by Scottish Development International, and skills and training support provided by Skills Development Scotland. With a fresh emphasis on the potential of Enterprise Areas from the UK Government, it will be interesting to see whether and how these areas are used by central Governments as another instrument of economic development.

3.8.20 In summary, if successful in strengthening the identity of REPs and bringing together Scottish Government policies under their strategic work, a fundamental shift may take place, whereby this improves alignment of relevant economic development policies not just within the REP but across Scottish Government.

3.8.21 A huge benefit of this could be that policy makers begin to work more closely not just in terms of design, but also in terms of funding – using REPs to flow related funding streams through to achieve shared outcomes.^[28] This improved alignment would support REPs in their strategic economic planning, looking at enablers and levers, constraints and barriers as much as developing statements of intent. This is a view shared by respondents to our consultation:

"Through the Regional Prosperity Framework, partners are trying to guide and integrate public, private and third sector decisions, actions, collaborations, strategies, policies and investments across areas such as sustainability, climate change, energy, transport, planning, housing, infrastructure, well-being, economic development, and delivery. This is challenging due to the timing misalignment of new and refreshed national strategies which impact these areas. Greater alignment on national strategies and policies would be helpful."