Enterprise and Skills Review: report on Phase 2

Foreword by Keith Brown

There are a great many reasons for Scotland to be proud of its business achievements.

We enjoy a long-standing reputation for innovation and we are global leaders in many key industries of the future such as life sciences, financial services and digital technology.

We have one of the most highly educated workforces in Europe, our natural, cultural and built heritage has helped create a thriving tourism industry, and Scotland's vast natural resources have put us at the forefront of the world's energy industry, from hydrocarbons to renewables.

We benefit from world class universities, with five in the global top 200, supporting the development of the high-level skills, research and innovation that our businesses need to drive growth. Our colleges make a significant contribution to improving skills and access to further and higher education for young people from communities across Scotland; at the same time as up-skilling and re-skilling those already in work.

And in many respects our underlying economic performance has been improving: Scotland recently progressed to the 2nd OECD quartile for productivity; the last decade has seen growth in levels of research and development; we have seen rises in exports and inward investment; and unemployment is at record lows.

Scotland's Economic Strategy sets out how we capitalise on these strengths through a focus on investment, innovation, internationalisation and inclusive growth, while also recognising that we must face up to major challenges in pursuit of our economic ambitions.

Ensuring that growth is inclusive and socially cohesive is vital, not just because of the moral case to do so but because we know more equal economies are more successful. We have seen the impacts of external factors such as the volatility of the oil price underlining the need for a diverse, resilient and flexible economy. We must also look to minimise the potentially damaging impacts of an ill-planned hard Brexit which could harm our ability to trade internationally and build our skills and research base.

These global factors and the implications of Brexit have clearly acted as a headwind for the Scottish economy. The latest GDP figures show that our economy is not growing at the rate we aspire to and while recent rises in productivity are welcome we must improve further.

Against this backdrop, directing our resources to create the maximum positive effect is of fundamental importance. Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, and the Scottish Funding Council have many successes to their names but we must achieve more. Each of these agencies knows that to achieve our aspirations we must focus our efforts on what will be of the most benefit to Scotland's economy and people.

They will play a key role in helping us reach our stated ambition for Scotland to rank amongst the top quartile of OECD countries for productivity, equality, sustainability and wellbeing, but we recognise that their individual contributions alone will not deliver the economic step change necessary for this to happen.

This is why we embarked upon the Enterprise and Skills Review - to build on the strengths and successes of the four agencies in order to enhance the system of support for enterprise, skills, investment and innovation so that it becomes greater than the sum of its parts.

In pursuing this aim, the level of engagement we have received from a wide range of stakeholders has demonstrated how greatly our enterprise and skills agencies are valued.

With Phase 1 of the Review having set the challenge, Phase 2 has been about starting to place the focus on delivery, and we have continued to listen to the broad range of voices engaged in this process to ensure that a razor-sharp focus is maintained on the needs of the user, from start-ups to large corporations, and from public, private and third-sector employers to learners of many different types.

In this respect I am greatly indebted to the members of the Ministerial Review Group for bringing their expertise and experience to bear on the Review, and in particular to Professor Lorne Crerar for his work on the potential scope and functions of our new Strategic Board.

This report draws Phase 2 of the Enterprise and Skills Review to a close but it is at this point that the hard work begins. There will be difficult choices as to the priority areas for action and we must make these with a clear view on improving performance. The Strategic Board will coordinate these decisions but it will be for each of the agencies to deliver on our vision.

The report illustrates the ambition and the challenge of what we hope to achieve, and work will continue as we look to deliver the step-change in economic performance that will create a more prosperous and more inclusive Scotland.

We live in a constantly changing world - technologically, economically and politically - in which Scotland has often been at the forefront. If we stand still for a moment we will be left behind so it is time to aim high and drive Scotland's economy forward for the benefit of us all.

Keith Brown, MSP
Cabinet Secretary for Economy,
Jobs and Fair Work