Enterprise and Skills Review: report on Phase 1

Foreword by Keith Brown

S cotland has a vibrant and diverse business base, with strengths across a wide range of sectors. That success is based on both the skills and ingenuity of our people and the maintenance of a supportive and competitive business environment.

We are justifiably proud of our enterprise and skills agencies - Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, and the Scottish Funding Council. Our agencies, colleges and universities have played a key role in developing this environment and in helping our businesses to thrive and grow. In recent years their efforts have contributed to real improvements in our economic performance across a range of key economic indicators.

Since 2007 we have seen growth in R&D investment by Scotland's businesses, exports have increased, and we have consistently secured among the highest levels of inward investment in the UK. Alongside these achievements we have continued to develop a highly-qualified and well-educated workforce.

More fundamentally, we have made progress in narrowing the productivity gap with the UK. But we know that further improvement is required - our ambition is for Scotland to rank among the top performing OECD nations for productivity, equality, sustainability and wellbeing.

On 25 May 2016, the First Minister announced a review of enterprise and skills support in Scotland to help make further progress towards these goals. Since then, the EU Referendum result has made the economic context more challenging. It requires that we renew our focus, prioritise our efforts, and leverage all our assets across the public sector and in partnership with business and civic society to maintain prosperity and opportunity for our people.

Although the economic context has changed, Scotland's Economic Strategy continues to set the overarching framework for delivering the more productive and cohesive Scottish economy that we seek through ever greater focus on growth driven by investment, innovation, exports and inclusion.

In undertaking this review, I have been grateful for the support of the members of the Ministerial Review Group and the wide range of expertise, constructive input and challenge that they have brought. I am also very grateful for the high level and high quality of responses to the call for evidence that we undertook as a key part of the review.

This review has focused on how we can work within the framework of our economic strategy and build on existing strengths and successes to further improve the enterprise and skills support system in Scotland. Its decisions cover a range of aspects that are designed to deliver on our aspirations for a more prosperous and inclusive Scotland by ensuring coherence and hence a simpler, more flexible and cost-effective system of national and local support. This will ensure a system in which all of our agencies work hand in glove with each other and collaboratively with our business, academic and civic partners to optimise economic impact across the whole of Scotland.

In taking forward this work, I want to harness and build on high levels of engagement generated by the review so far. This report sets out the conclusions of phase 1 of our work and the framework for the shape of enterprise and skills services in the future. Phase 2 will take forward implementation of those conclusions. In phase 2, we will also explore how we can better work in partnership with local government and their business and other local interests to maximise regional opportunities and respond to local needs and how, working with our agencies, we can take forward the right digital approach and a new system of enterprise and skills support.

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

October 2016