Building community wealth: consultation

Part 2. Developing Legislation and Inspiring Change

2.1 General Advancement of the CWB Approach

2.1.1 Overview

Through this consultation we would like to explore which new powers, abilities and duties will enable local authorities, public bodies, wider community planning partners and Regional Economic Partnerships to have more individual and collective influence in taking action to support CWB in their local area or region.

In this section we invite views on a legislative proposal for the general advancement of the CWB approach through an ambitious new CWB duty.

What are we proposing

Proposal: A duty to advance CWB

The aim of the duty is to extend and deepen the implementation of CWB across Scotland, ensuring universal coverage and shared principles whilst allowing for local, regional and organisational flexibility.

We would like respondents views on three options for a CWB duty:

• Option A) a duty requiring Scottish Ministers and prescribed public sector bodies^[18] to embed the CWB model of economic development into their corporate plans and wider strategies
• Option B) a duty requiring those public sector bodies statutorily obliged to be involved in community planning to produce a collective CWB place-based strategy and action plan which contains specific actions across the five CWB pillars to advance the CWB model of economic development in their local authority area
  • This requirement could be taken forward at a regional level if neighbouring local authorities and their community planning partners have a preference for that approach
• Option C) a combined option – featuring a union of both options set out above

All of the options create different opportunities for ensuring the involvement of local communities. For Option B and Option C, there could be a statutory requirement to include business, third sector and communities in the development of a strategy and action plan.

In relation to the proposed CWB duty, during the consultation period we will undertake specific engagement including with, for example, local authorities, health boards, community planning partnerships and Regional Economic Partnerships, in addition to wider engagement.

Why we are proposing this

The Scottish Government would like to ensure a long term and consistent commitment to CWB and that this approach becomes standard economic policy and practice, whilst tailored to the needs and opportunities of places across the country. Whilst we expect variation in the actions taken, commitment to certain principles will be essential to maximising the potential of the CWB approach for all communities.

Whilst local authorities have led the way in implementing CWB in Scotland, the approach relies on commitment of wider public sector bodies and other stakeholders. Encouraging collaboration on CWB across major public sector 'anchor' organisations is an area of importance in accelerating CWB (for example, enterprise agencies, colleges, universities and health boards and wider national public bodies). Collaboration and a commitment to a strategic framework across the five CWB pillars will avoid duplication, disparate initiatives and will ensure a whole system approach. In addition, representatives of the third sector, such as registered social landlords, business, as well as the communities themselves, must all be part of developing CWB plans and meaningfully engaged in the most appropriate manner in order to maximise the holistic benefits of the approach.

It has been perceived that CWB should be a key consideration of anchor organisations and those focused on economic development, and that it should be consistently represented in key operating plans, economic strategies and impact measures. In addition, some feedback has highlighted the need for a strategic approach to the development of CWB strategies to avoid a cluttered landscape and ensure there are no gaps in provision.

Many local authorities are collaborating with other anchor organisations via existing community planning structures or through new 'anchor networks' or Commissions. There is good practice evident in the production and agreement of CWB 'anchor charters'^[19] in certain geographies which can be built on through the production of CWB strategies and action plans.

Regional collaboration on CWB is already taking place across Scotland through, for example, Regional Economic Partnerships, the development of regional economic strategies and the delivery of projects through City Region and Growth Deals. Many anchor organisations span multiple local areas (including some health boards and further and higher education institutions), as do the footprints of some local businesses, therefore we encourage regional collaboration, where appropriate, to maximise benefits and avoid duplication. The systematic approach of CWB means that some Regional Economic Partnerships are placing CWB at the centre of their regional economic strategies (for example Ayrshire) to ensure a coherent approach to all investment including City Region and Growth Deals. We will facilitate engagement with Regional Economic Partnerships regarding how this duty might operate at a regional level.

In line with the Place Principle,^[20] there requires to be local flexibility to respond to issues and circumstances in different places. This includes recognising the differences between urban and rural and island contexts. Delivering CWB should be cognisant of the wider context of place, simplifying the landscape by ensuring that programmes and investment work together, and are directly relevant to the specific needs of the particular environment or community and enable people to live well locally. Shared national principles and reporting could ensure high standards of implementation to unleash the potential of CWB and help address the fact that the way our economy functions has not worked for enough people and places.

Place Principle

The Scottish Government and COSLA have agreed to adopt the Place Principle to help overcome organisational and sectoral boundaries, to encourage better collaboration and community involvement, and improve the impact of combined energy, resources and investment.

It promotes a shared understanding of place, and the need to take a more collaborative approach to a place's services and assets to achieve better outcomes for people and communities. The principle encourages and enables local flexibility to respond to issues and circumstances in different places.

Through early engagement, capacity has been raised as one barrier to implementation. Feedback has also outlined the challenge of embedding a CWB culture across an anchor organisation cannot be underestimated – it is a transformational change which takes time, visible and committed senior leadership, resources, training and skills. The capacity of local communities, the third sector, micro-businesses and SMEs to drive forward CWB has also been raised by various stakeholders.

We also welcome ideas on support that can be offered to develop and implement CWB strategies, action plans and wider CWB initiatives, however respondents should be mindful of the challenging fiscal backdrop and should consider ways in which existing investment can be maximised.

From this proposed central new general duty to advance CWB we are keen to explore if there are subsequent legislative changes required across the five pillars. In the five sections which follow we outline the current legislative context, provide an overview of current policies and actions to support the delivery of the five CWB pillars whilst providing an opportunity for respondents to suggest any areas of legislative change required to maximise the potential of CWB. Please note that a number of areas across the five pillars are reserved to the UK Parliament, including employment law, company law, taxation and financial regulation.

2.1.2 Questions

Q1. a) We are proposing a duty to advance Community Wealth Building, which form do you think this duty should take:

Option A

Option B

Option C

Other

No duty

Please provide a reason for your answer.

In your answer please include views on:

• which bodies should be covered by the proposals
• how to best ensure accountability for implementation to the Scottish Parliament
• how to best ensure the involvement of local communities, business and the third sector in the implementation of the duty

b) One way Scottish Government could support the implementation of the proposed Community Wealth Building duty is to provide statutory or non-statutory guidance. Would this be helpful to partners in meeting the proposed duty?

Yes No Don't Know

Please provide a reason for your answer.

In your answer please include views on:

• areas in which it would be helpful for this guidance to focus on, e.g. areas to consider when implementing the five pillars, links to further support materials
• whether the guidance should be statutory or non-statutory

Q2. a) Are there other non-legislative measures that you believe are required to accelerate the implementation of the Community Wealth Building approach in Scotland?

Yes No Don't Know

Please provide a reason for your answer:

b) Are there specific actions required to advance delivery of the items contained within the Shared Policy Programme?

• 'working within and developing procurement practices to support local economies, including Small and Medium sized Enterprises (SMEs) and micro-businesses, and improved access to training and labour markets for disadvantaged communities and individuals.
• encouraging public kitchens, including school canteens, to source more food produced by local businesses and organic producers.
• where possible, to base public sector capital and revenue funding decisions on targeted social, economic and environmental outcomes'

Yes No Don't Know

Please provide a reason for your answer:

2.2 Spending Pillar

2.2.1 Overview

The spending pillar of CWB is focused on maximising tangible community benefits through procurement and commissioning, developing good enterprises, promoting Fair Work and a drive to create and maintain shorter supply chains. The Scottish public sector spends approximately £14.5 billion a year buying goods, services and works in a way that can deliver the most benefit to society, contributing directly to a fully functioning wellbeing economy. Procurement projects vary hugely from large infrastructure developments, including roads and bridges (23%), to food and catering (1.2%).

The spending pillar of CWB uses the spending power of anchor organisations to better support local and regional economies including by growing local spend with SMEs, the third sector and supported businesses through activity such as:

• understanding where spend is going and increase knowledge of local suppliers;
• supporting local businesses bases and third sector to enhance their capacity to bid for public sector contracts;
• creating local supply chains to re-circulate wealth in the local and regional economy, create local jobs and support net zero and environmental ambitions;
• maximising community benefits to ensure they deliver CWB ambitions and the needs of local communities.^[21]

A significant amount of work has already taken place in Scotland. The Procurement Reform (Scotland) Act 2014,^[22] and the Procurement (Scotland) Regulations 2016^[23] built on the work achieved in the reform of public procurement, providing direction to public bodies and setting out procurement responsibilities and accountabilities.^[24] Under the terms of that Act, contracting authorities which have significant procurement expenditure need to create and annually review procurement strategies that set out how they intend to use their procurement spend to contribute to a range of national and local priorities and to the sustainable procurement duty. They are also required to publish annual procurement reports describing how their procurements have complied with their organisational procurement strategy.^[25]

The sustainable procurement duty^[26] requires that before a contracting authority buys anything, it must think about how it can improve the economic, social and environmental wellbeing of the area in which it operates, with a particular focus on reducing inequality – and in carrying out a procurement, act with a view to securing such improvements. It also requires a contracting authority to consider how its procurement processes can facilitate the involvement of SMEs, third sector bodies and supported businesses, and how public procurement can be used to promote innovation.

Statutory^[27] and non-statutory^[28] guidance has been published to help public bodies comply with the sustainable procurement duty and support sustainable procurement. The guidance is framed in terms of Scotland's purpose and outcomes meaning that in the process of complying with the sustainable procurement duty, a contracting authority will also be contributing to national priorities including Fair Work, the Economy, the Environment and Human Rights. For example, compliance with the sustainable procurement duty underpins the contribution that a contracting authority makes to addressing climate change in the course of its procurement activity. To reinforce this connection, the Scottish Government encourage contracting authorities to refer to the same information in climate and procurement reporting.^[29]

We are working to improve access to public contracts for SMEs, the third sector and supported businesses. This includes business support, splitting larger requirements into smaller lots, making it easier for smaller firms to bid for work. Figures show that 11,025 new contracts were advertised through the national Public Contracts Scotland (PCS) Advertising Portal in 2020-21. Of these, 92% were for low value contracts and 78% were 'Quick Quotes', a simpler method of competing contracts than that required for high value/high risk procurements. Some 15,656 suppliers were awarded public contracts through PCS, of which 76% were SMEs, 73% were Scottish-based, and 59% were Scottish-based SMEs.

Community benefit requirements are defined in the Procurement Reform (Scotland) Act 2014 as contractual requirements imposed by a contracting authority.^[30] They are intended to complement other economic, social and environmental considerations in the Act, in particular, the sustainable procurement duty.^[31] Guidance on community benefits places an emphasis on tailoring community benefits to the individual procurement and the place-based benefits that might accrue. Detail and examples of this approach are included in the Scottish Government policy note on Measuring Social Impact in Public Procurement.^[32]

Fair Work First is the Scottish Government's policy for driving high quality and Fair Work across the labour market in Scotland by applying Fair Work criteria to procurement, grants, other funding and contracts being awarded by and across the public sector. For example, we announced in October 2021 that companies bidding for Scottish Government contracts will routinely have to pay the real Living Wage (more information on Fair Work First is provided in section 2.3).^[33]

Increasing public procurement spend with Scottish companies and SMEs is a long-standing priority for the Scottish Government. Extensive benchmarking has shown Scottish public procurement approaches have made great progress. Whist we have ambitions to do more, further progress will not be without its challenges. We are continuing to listen to Scottish businesses and third sector through a variety of forums, helping to test and inform public procurement approaches to ensure our approaches are flexible and scalable for SMEs and the third sector.

Wider activity underway to grow local spend in Scotland includes:

• funding a spend analysis tool for all local authorities to help them to identify opportunities to develop their local supply base;
• funding the Supplier Development Programme to ensure that SMEs, third sector organisations and supported businesses who wish to bid and win for public contracts have support to increase their competitive capability;
• the Supply Chain Development Programme is a key part of NSET and aims to improve the capacity, capability and development of Scottish supply chains; and
• prime contractors are encouraged to use the PCS advertising portal to facilitate access of subcontracting opportunities to SMEs, the third sector and supported businesses.^[34]

This work takes place in an environment where international trade agreements and investment rules, including those governed by the World Trade Organisation, afford reciprocal access to public contracts. Simply preventing foreign firms from bidding for Scotland's public contracts would not only risk breaching international trade rules but could also limit opportunities for Scottish firms to export their goods and services to other countries. Therefore, work to make public contracts accessible to Scottish businesses takes place alongside work to build business capacity and capability to participate in national and international markets.

The Scottish Government recently consulted on a Circular Economy Bill and Waste Route Map which will help advance a zero waste and circular economy. Not only does this benefit the environment, a more circular economy can strengthen communities by providing local employment opportunities and lower cost, more sustainable access to the goods we need. This is also more self-sufficient as it reduces our reliance on imported goods and materials, and provides increased economic resilience.

Additionally, the Scottish Government will update Catering for Change, which will set out principles in relation to sustainable procurement of food and catering services in the public sector to align public procurement behind sustainable, low carbon farming and food.

The Good Food Nation (Scotland) Act provides an over-arching framework for clear, consistent and coherent future Scottish food policy, which applies to the national as well as the local level. The Act places duties on Scottish Ministers and certain public authorities (including local authorities and health boards) to produce plans of their policies in relation to food and set out what they will do to make those plans real. When preparing the plans, Scottish Ministers and relevant authorities will be required to give consideration to a number of high level principles set out in the Good Food Nation (Scotland) Act. This includes the principle 'that each part of the food system and supply chain plays an important role in the provision of food'.

In order to achieve the ambitions of the spending pillar of CWB, and go beyond existing legislation, policies and guidance, as part of early engagement stakeholders have suggested a focus on the following areas:

• review the national, sectoral, local and regional frameworks and contracts to ensure that the arrangements in place ensure logical groupings that facilitate access to SMEs, the third sector and supported businesses;
• further investment in supplier development capacity and to improve knowledge of local supplier within anchor organisations;
• investment in capacity to support linkages between local procurement teams and economic development;
• explore opportunities for joint procurement between anchor organisations;
• develop the content of annual procurement strategies and reports to demonstrate how the procurement activity of individual public bodies contributes to CWB;
• an improved focus on place-based thinking in the use of community benefits and reporting to reflect how this is being achieved.

2.2.2 Questions

Q3. Are there ways in which the law could be changed to advance the spending pillar of Community Wealth Building?

Yes No Don't Know

Please provide a reason for your answer. In your response you may wish to consider the stakeholder suggestions outlined above which have arisen from early engagement.

2.3 Workforce Pillar

2.3.1 Overview

The workforce pillar of CWB is focused on driving Fair Work practices and creating meaningful labour market opportunities in local communities that support wellbeing through actions such as:

• anchor organisations and employers committing to Fair Work practices;
• payment and promotion of the real Living Wage;
• providing appropriate channels for effective voice;
• action to create more diverse and inclusive workplaces;
• seeking to recruit locally and from groups often excluded from the labour market;
• support for skills development, in work progression and employee wellbeing, including for those at risk of potential exclusion from labour market in the future.^[35]

Although the Scotland Act 2016 transferred powers to Scotland to provide employment support for disabled people and those at risk of long term unemployment, all other aspects of employment law and industrial relations remain reserved to the UK Parliament, including employment rights, trades unions, equality and health and safety. This means that the Scottish Government is limited in what it can do to influence changes in workplace practices. We are doing all that we can with the levers available to us to encourage employers to adopt fair working practices. The Scottish Government has recently published a refreshed Fair Work Action Plan, incorporating a refresh of the Gender Pay Gap Action Plan, Disability Employment Gap Action Plan and actions derived from Anti-Racist Employment Strategy.

The Fair Work Convention, which independently advises the Scottish Government on Fair Work, published its Fair Work Framework in 2016. It sets a vision that, by 2025, people in Scotland will have a world-leading working life where Fair Work drives success, wellbeing and prosperity for individuals, businesses, organisations and society. The Fair Work Framework defines Fair Work as work that offers effective voice, respect, security, opportunity and fulfilment; it balances the rights and responsibilities of employers and workers, and can generate benefits for individuals, organisations and society.^[36] NSET includes a commitment to take further steps to remove barriers to employment and career advancement for disabled people, women, those with care experience and people from minority ethnic groups.

Fair Work means increased financial security, greater independence, and better physical health and mental wellbeing. It means equal opportunities at work, including to learn, develop and progress, and to enjoy a culture and environment free of bullying and discrimination, helping people live more fulfilling lives. Fair Work is also a model for innovation and success, with many employers in Scotland already implementing Fair Work practices, providing safe and secure working environments and promoting positive workplace cultures where staff are engaged and have their voices heard. There are also a range of business benefits to adopting Fair Work practices. A report published by Carnegie UK and The RSA indicates that higher quality work, like higher pay, can serve as a spur to greater work satisfaction and motivation, thus leading to higher levels of workplace productivity.^[37]

While progress has been made to support workers access and sustain Fair Work, more needs to be done to ensure that we remove the barriers so that all workers can experience the benefits of Fair Work and achieve the outcomes as set out in our aims. The key objectives are:

• increasing the number of people paid at least the real Living Wage and on stable contracts;
• work with employers, workers and trade unions to strengthen effective voice, through a range of appropriate channels;
• support employers to adopt flexible working practices;
• reduce the Gender Pay Gap for employees in Scotland by the end of this parliamentary term (May 2026), and to maintain or where possible improve our position relative to the UK as a whole and our international neighbours;
• reducing the Disability Employment Gap to 18.7 percentage points (p.p.) by 2038, therefore halving the gap from the baseline in 2016;
• improving labour market outcomes for racially minoritised people and increase the impact of actions taken forward by employers to address racial inequality.

As highlighted in section 2.2, Scottish Government has published Fair Work First guidance which supports employers and public sector partners to adopt fair working practices by applying Fair Work criteria to grants, other funding and contracts being awarded by and across the public sector, where it is relevant to do so. Fair Work First asks employers to commit to:

• appropriate channels for effective voice, such as trade union recognition;
• investment in workforce development;
• no inappropriate use of zero hours contracts;
• action to tackle the Gender Pay Gap and create a more diverse and inclusive workplace;
• payment of the real Living Wage;
• offer flexible and family friendly working to all workers from day one of employment;
• oppose the use of fire and rehire practices.

In line with the Bute House Agreement, we have strengthened our approach to conditionality by introducing a requirement on public sector grants recipients to pay at least the real Living Wage to all employees and to provide appropriate channels for effective workers' voice, such as trade union recognition. The requirement will apply from 1 July 2023.

The Scottish Government actively champions the real Living Wage which helps to ensure peoples' basic pay meets the cost of living and is a key area of focus of actions to tackle child poverty. We fund the Poverty Alliance to run the Scottish Living Wage Accreditation initiative which includes the Living Wage Places programme.^[38] Scottish Enterprise, in conjunction with the Scottish Government, Fair Work Convention and other partners, have developed a Fair Work Employer Support Tool to help employers understand and fully embed the dimensions of Fair Work.^[39]

An example of Fair Work in practice is the South of Scotland Enterprise Act 2019 inclusion of a requirement for South of Scotland Enterprise to establish a committee to advise it on what might be done to advance the interests of workers in the South of Scotland.^[40]

The Scotland Act 2016 transferred new powers to Scotland to provide employment support for disabled people and those at risk of long term unemployment. The changes took effect in April 2017 and we are taking action to help those facing the greatest barriers to work to find and stay in jobs, through Fair Start Scotland.^[41]

The No One Left Behind approach is focused on placing people at the centre of the design and delivery of employability services and aims to deliver a system that is more responsive to the needs of people of all ages who want help and support on their journey towards and into work - particularly people with health conditions, disabled people and others who are disadvantaged in the labour market. To realise our ambitions for No One Left Behind, Scottish and Local Government are working collaboratively and with other partners in the public, private and third sector through Local Employability Partnerships (LEPs) in each local area. LEPs bring together a range of partners to develop a strategic approach to planning, implementation and delivery of employment support in a way that meets the needs of individuals and emerging local labour market demands.^[42]

As part of early engagement on CWB legislation stakeholders have suggested a focus on the following areas:

• taking further steps to encourage anchor organisations to pay the real Living Wage and become Living Wage accredited;
• anchor organisations should develop and commit to local or regional fair employment charters, these could include a focus on seeking to recruit locally and from groups that are often excluded from the labour market.

The Scottish Government is limited currently in what it can do in terms of legislation to advance the workforce pillar given that employment law is a reserved area, therefore we make no legislative proposals in relation to this pillar. We launched the Fair Work Nation consultation in 2021 which requested views on the opportunities, challenges and the actions that need to be taken for Scotland to become a Fair Work Nation. Some respondents offered suggestions for what the Scottish Parliament could do with full control of employment law.^[43]

2.3.2 Questions

Q4. Employment law is reserved to the UK Parliament. Are there other devolved areas where the law could be changed to advance the workforce pillar of Community Wealth Building?

Yes No Don't Know

Please provide a reason for your answer. In your response you may wish to consider the stakeholder suggestions outlined above which have arisen from early engagement. You may also wish to consider areas that the Scottish Government could work with the UK Government on if you have proposals regarding changes to the law which remain reserved to the UK Parliament. We will cross-reference to responses received as part of the Fair Work Nation consultation which was held in 2021.

2.4 Land and Property Pillar

2.4.1 Overview

The land and property pillar seeks to grow the social, ecological, financial and economic value that local communities gain from land and property assets. This pillar focuses on maximising the use of land and property including through:

• productive and sustainable use of land and assets to support communities and enterprise;
• promoting and enabling diversified ownership and management of land and buildings;
• supporting community capacity building to grow community ownership;
• tackling vacant and derelict land and buildings to support regeneration including within town centres, increase community wellbeing, create employment opportunities, tackle climate change and protect our natural capital.^[44]

The use and ownership of Scotland's land is one of the central issues for the future of our environment, our society and our economy. As a result of the Land Reform Acts of 2003 and 2016 and the Community Empowerment Act of 2015, Scotland has taken significant steps forward in supporting and enabling communities to have greater opportunity to own or to influence the use of the land and property on which they live.

A consultation on the next Land Reform Bill was launched in July 2022 building on Programme for Government 2021-22 and Bute House Agreement commitments. The next Land Reform Bill will be introduced by the end of 2023 and will make important changes to the framework of law and policy that govern the system of ownership, management and use of land in Scotland.^[45]

The Land Reform Bill aims to address long-standing concerns about the highly concentrated pattern of land ownership in rural areas of Scotland. Proposed measures include:

• the introduction of a public interest test for transfers of large-scale landholdings;
• a requirement on owners of large-scale holdings to give prior notice to community bodies of their intention to sell;
• a requirement on those seeking land-based subsidies to have the land registered in the Land Register, to ensure transparency around who benefits from public funding;
• strengthening the Land Rights and Responsibilities Statement.^[46]

In addition, the consultation focused on how to ensure communities benefit from future investment in Scotland's natural capital, greater transparency around land and asset ownership and on the future role of taxation in respect of land reform. These proposals all have the potential to contribute to the ambitions of CWB.

The Community Empowerment (Scotland) Act 2015 has provided a legal framework to promote and encourage community empowerment and participation, creating new rights for community bodies and placing new duties on public authorities. The review of the Community Empowerment Act was launched in July 2022 and will include a focus on community right to buy and asset transfer.

Local authorities already have broad compulsory purchase powers, which can be used for a wide range of purposes – including bringing vacant and derelict land and property back into productive use. We will separately be taking forward work to reform and modernise compulsory purchase legislation in Scotland to establish a fairer, quicker and more effective system for assembling land required to deliver development, regeneration and infrastructure projects in the public interest.

Local authorities also have existing mechanisms for securing financial or in-kind contributions to community facilities and infrastructure (sometimes referred to as 'developer contributions') from those undertaking development – for example, through Section 75 planning obligations.^[47] As part of the Scottish Government's ongoing review of existing land value capture mechanisms, we recently published independent research on the effectiveness of using planning obligations for these purposes. The research estimated that approximately £0.5 billion was agreed through existing developer contribution mechanisms in Scotland in 2019/20.^[48] The findings from this research will inform our consideration of future reforms in this area, including the introduction of a new infrastructure levy under powers in the Planning (Scotland) Act 2019.

National Planning Framework 4 (NPF4) promotes an 'infrastructure first' approach to planning, through which infrastructure needs and developer contribution requirements are robustly evidenced and clearly articulated at the plan-stage. This approach is intended to provide greater certainty for all parties – including communities – about the impacts that new development will have on infrastructure and the contributions developers are expected to make. Front-loading infrastructure considerations through the plan-making process will provide communities with greater opportunity to get involved and ensure their needs are considered.

NPF4 sets out how our approach to planning and development will help to achieve a net zero, sustainable Scotland by 2045. It contains a policy in relation to CWB which outlines that: local development plans should be aligned with any strategy for CWB for the area; spatial strategies should address CWB priorities; identify community assets; set out opportunities to tackle economic disadvantage and inequality; and seek to provide benefits for local communities. Development proposals which contribute to local or regional CWB strategies and are consistent with local economic priorities will be supported, as will proposals linked to community ownership and management of land. NPF4 also includes a policy in relation to brownfield, vacant and derelict land and empty buildings, specifying that local development plans should set out opportunities for the sustainable reuse of brownfield land including vacant and derelict land and empty buildings, which contributes towards the CWB land and property pillar aims. Policy also seeks to direct development to existing city, town local and commercial centres and supports sustainable rural communities, limiting out-of-town and greenfield development.^[49]

The Scottish Land Commission has produced guidance for public bodies that own, manage, use, and influence the use of, land and buildings in Scotland, to help organisations to take actions that support CWB.^[50]

Scotland benefits from our well established programmes that continue to support place-based community-led regeneration, which enable and create the conditions that can support the delivery of the CWB approach. The Place Based Investment Programme (PBIP) is built on the experience and success of the Regeneration Capital Grant Fund, delivered in partnership with COSLA. The PBIP, underpinned by the Place Principle, seeks to ensure that the investment in our communities and places, such as our town centres and 20 minute neighbourhoods, are community led, making sure that money spent in places has the greatest collective benefit and meets the needs and aspirations of local communities. Our Strengthening Communities Programme helps to develop community capacity and sustainability.

The Scottish Government is also currently carrying out a consultative process to develop a new Agriculture Bill, this includes draft enabling powers for Rural Community Led Development and Rural Networking to advance rural development. The new Agriculture Bill provides the opportunity to deliver both new and further support mechanisms relating to the wider management and utilisation of Scotland's natural assets that further rural development while still remaining aligned with EU outcomes. The new Agriculture Bill will, in particular, allow action and financial support to activities to contribute directly to rural and island communities whilst also enabling and supporting collaboration to allow capacity building and positive change. This potential lever offers an opportunity to build on the existing LEADER network in rural and island areas to increase community and micro enterprise capacity.^[51]

As part of early engagement on CWB legislation stakeholders have suggested a focus on the following areas:

• review compulsory purchase powers and the case for introducing alternative land assembly mechanisms such as compulsory sales orders;
• explore the scope of existing mechanisms for securing development contributions, such as Section 75 planning obligations;
• explore new mechanisms for enabling land value uplifts to be reinvested in economic, social and community facilities.

These matters will be considered in detail through separate workstreams. In doing so, it will be important to ensure that any new mechanisms – or changes to existing ones – are fair to all parties, comply with human rights obligations and maintain incentives to make land available for development.

2.4.2 Questions

Q5. Are there ways in which the law could be changed which are not already covered in the proposals for the Land Reform Bill to advance the land and property pillar of Community Wealth Building?

Yes No Don't Know

Please provide a reason for your answer. In your response you may wish to consider the stakeholder suggestions outlined above which have arisen from early engagement. 

2.5 Inclusive Ownership Pillar

2.5.1 Overview

The inclusive ownership pillar aims to develop models of ownership that enables the wealth generated in a community to stay in that locality, including:

• promotion of more generative forms of business models including locally-owned businesses, employee ownership, co-operatives, social enterprises and community enterprises;

• transition of existing companies to employee ownership;
• transition of existing companies to asset or mission locked social enterprises;
• encouraging citizens, communities and the third sector to play a greater role in ownership and control of assets within the economy;
• public ownership for public good as appropriate.^[52]

A numbers of areas regarding the ownership and taxation of companies are reserved to the UK Parliament. The Scottish Parliament has limited powers when it comes to taxation. Under the current devolution settlement, the vast majority of tax powers remain reserved to the UK Parliament. This constrains what the Scottish Government can do in relation to tax policy. In addition, company law is a reserved area as part of the Companies Act.

As part of NSET, we have committed to a review of how best to increase the number of social enterprises, employee-owned businesses and cooperatives in Scotland. This review will help inform the development of a key pillar of CWB and therefore we will consider any legislative proposals arising from that review which will report by the end of 2023.

Scotland already has a strong track record in these areas. The Social Enterprise Strategy, which was co-produced with the sector and launched in 2016, sets out a wide-ranging, ambitious and long term programme to develop the potential of Scotland's social enterprise sector. The strategy sets out 3 key priorities: stimulating social enterprise; developing stronger organisations; and realising market opportunities. The strategy is accompanied by a series of three-year action plans which describe the evolving commitments, initiatives and programmes that will deliver on the long term priorities set out in the strategy. The latest Social Enterprise Action Plan was published in March 2021 and details how we will work across the public sector and with partners to build forward and put the social enterprise model at the heart of Scotland's recovery.

Key achievements to date include:

• establishing an enhanced national intermediary body through Social Enterprise Scotland, to represent the whole of the social enterprise sector across Scotland and provide one clear voice advocating for it;
• significant progress with the national schools programme funded by the Scottish Government and run through the Social Enterprise Academy which will ensure that by 2024 every school child will have the opportunity to engage with a social enterprise project at school;
• enhanced tailored business support to the third sector including start up, scaling up, business recovery and leadership development and support through the world-leading Scottish Government funded business support to the third sector currently delivered via Just Enterprise;
• new funding for a range of targeted programmes, established to stimulate and grow social enterprise activity at home and internationally as well as stimulate innovation and test new models of funding including through key delivery partners such as Firstport, Social Investment Scotland, Community Enterprise in Scotland and Social Enterprise Scotland.

The Scottish Government has an ambition for 500 employee-owned business in Scotland by 2030. The Scottish Government has supported the establishment of an employee ownership Industry Leadership Group – Scotland for Employee Ownership (SfEO) – which will empower the employee ownership sector to direct its own development. Scottish Enterprise delivers ownership succession support to companies, where employee ownership is significantly highlighted as a fairer, more inclusive option. Research findings published by Co-operative Development Scotland in 2021 (conducted by the University of St Andrews) showed that employee owned businesses were more resilient than non-employee owned businesses during the Covid-19 pandemic. A significant focus on people, job security, health, equality and wellbeing led to increased business turnover and improved staff retention at a time when many businesses experienced the opposite.^[53]

Co-operative business models can play a critical role in economic recovery, supporting the Scottish Government's aim to create a fairer, stronger and more democratic economy. We will continue to work through Co-operative Development Scotland and the enterprise agencies to support the growth of co-operatives, employee-owned businesses and other inclusive business models.

Support for co-operative development is delivered by Co-operative Development Scotland and is focused on:

• the promotion of the co-operative model, including employee ownership models;
• the direct provision of advice and information to start up co-operatives and others seeking growth opportunities;
• the dissemination of best practice in relation to business development;
• the provision of training in co-operative business skills; and
• a source of research and data on the scale and impact of the co-operative enterprise activity in Scotland.

Key recent Co-operative Development Scotland achievements include:

• in financial year 2021-22, Co-operative Development Scotland reached 128 attendees via four succession masterclasses, held two professional adviser webinars and hosted a webinar exploring platform co-operatives in partnership with Co-operatives UK as well as a partnership event dedicated to community co-operatives;
• in financial year 2022-23, Co-operative Development Scotland has extended its programme of partnership events dedicated to community co-operatives including two events providing CPD (Continuing Professional Development) to upskill development officers and businesses advisors;
• Co-operative Development Scotland have supported 20 new co-operatives in both 2020-21 and 2021-22. To date this year (2022-23) 11 co-operatives are receiving support across the spectrum of community, consortia and platform co-operatives;
• Co-operative Development Scotland have support 39 employee ownership feasibility studies in 2021-22 with 25 adopting employee ownership (2020-21 figures are 29 taken to feasibility and 22 adopting employee ownership);
• Co-operative Development Scotland have responded to 78 employee ownership enquiries this year (2022-23) to date, taking 25 to feasibility stage so far.^[54]

In addition, Co-operative Development Scotland have partnered with Youth Enterprise Scotland (YE Scotland) on a new initiative which provides the first comprehensive source of information on inclusive, values-led business models for young people. Together they aim to inspire young entrepreneurs to set up companies with a social or environmental purpose. YE Scotland have reported that the young people they work with are increasingly interested in developing businesses with a social and/or environmental purpose.^[55]

NSET includes a commitment to build on the findings from the Business Purpose Commission,^[56] to inform how businesses can deliver positive impacts on prosperity, wellbeing and environmental sustainability. This will recognise that businesses which take a long term (inter-generational) view of their stakeholder commitments fare better in times of crisis, including during the pandemic. The Business Purpose Commission proposed recommendations aimed at business, the Scottish Government and the UK Government. The Scottish Government is primarily interested in ways it can, within its devolved competencies, promote purposeful business and support companies to develop purpose driven approaches.

The Community Empowerment Act 2015 covers eleven different topics including areas concerned with community ownership such as community right to buy and asset transfer. As highlighted in section 1.4 and 2.4, the review of this Act will have a particular focus on community ownership and strengthening decision-making to improve outcomes for the local community. We recognise the need for community capacity building, particularly in more fragile communities, to support communities to participate in or lead CWB activities.

As part of early engagement on CWB legislation stakeholders have suggested a focus on the following areas (please note: a number of these suggestions, for example employee right to buy, Marcora Law and exploring incentives are proposals in which the Scottish Government is limited where it can act given they cover reserved matters):

• greater recognition of the role of inclusive business models in the economy;
• availability and accessibility of start-up support for the establishment of inclusive business models;
• greater acknowledgement of the role of support organisations and the need to ensure they are adequately resourced to maintain and grow outputs;
• a duty for business support services to consider the distinct needs of inclusive business models and to promote these models;
• preparatory work with public sector bodies to improve understanding of inclusive business models in advance of supporting the development of CWB plans and their subsequent implementation;
• a need to increase the knowledge and improve the culture around cooperatives to support new cooperative enterprises or transitions across Scotland;
• supplier development support for inclusive business models including social enterprises to build capacity;
• explore incentives to encourage the establishment of inclusive business models;
• an 'employee right to buy' when a business is put up for sale which allows a window for employees to consider developing a bid and raising the finances;
• a 'Marcora law'^[57] which would give workers support to organise a co-operative buyout or rescue when a business is up for sale or under threat. Whilst the Scottish Government would be keen to further explore suggestions around employee right to buy and Marcora law, these proposals are heavily focused on reserved matters.

2.5.2 Questions

Q6. Are there ways in which the law could be changed to advance the inclusive ownership pillar of Community Wealth Building?

Yes No Don't Know

Please provide a reason for your answer. In your response you may wish to consider the stakeholder suggestions outlined above which have arisen from early engagement. You may also wish to consider areas that the Scottish Government could work with the UK Government on if you have proposals regarding changes to the law which remain reserved to the UK Parliament.

2.6 Finance Pillar

2.6.1 Overview

The finance pillar of CWB aims to increase flows of investment within local economies by harnessing the wealth that exists locally and directing wealth to tackle inequality, including through:

• promoting the development and use of progressive forms of finance including credit unions and Community Development Finance Institutions (CDFIs);
• ensuring micro-businesses and SMEs have access to finance;
• promoting and harnessing social investment;
• value-led responsible investment;
• incorporating clear CWB criteria into public forms of investment and business cases.^[58]

It should be noted that financial regulation is a reserved matter and therefore we do not make legislative proposals in relation to financial regulation. The Financial Conduct Authority (FCA) regulates the financial services industry in the UK.

There is already a wealth of activity across Scotland in support of the above. This includes:

• the Affordable Credit Loan Fund which supports the affordable credit sector by enabling social lenders, such as CDFIs, to provide access to affordable credit to low income households;
• in response to a recommendation from the Carnegie UK Trust's Advancing Affordable Credit report in February 2022, Scottish Government launched a national affordable credit marketing campaign to promote awareness of the community lending sector;
• the Scottish Community Lenders Fund supported both credit unions and CDFIs to promote the availability or affordable credit and strengthen the balance sheet of affordable credit providers;
• Social Investment Scotland offers loan funding and business support for social enterprises, charities and community groups looking to make a positive impact on people's lives, society or the environment;
• the Catalyst Fund delivered through Firstport offers ambitious social enterprises who have potential to deliver significant social impact but are unable to access existing social investment products;
• access to finance for SMEs including through Business Loans Scotland and DSL Business Finance Ltd;
• the Scottish National Investment Bank (the Bank) provides long term patient capital to help crowd in private investment into Scottish businesses and projects. The Bank's missions are to; address net zero, improve places and harness innovation while also promoting equality, diversity and fair work across its partners and investees;
• NSET includes a commitment to develop a values-led high-integrity market for responsible investment in natural capital. This commitment, including more detail on Government's expectation on community engagement and community benefit from this market, is set out in more detail in the Interim Principles for Responsible Investment in Natural Capital published in March 2022,^[59] and is supported by the Government's Land Rights and Responsibilities Statement^[60] and related Scottish Land Commission guidance;
• the Scottish Taskforce for Green and Sustainable Financial Services launched in February 2022 will focus on capitalising on the opportunities of financing the global shift to net zero;
• the Scotland Loves Local programme aims to help revitalise communities and town centres, increasing footfall and activity by encouraging people to shop locally.

As part of early engagement, some stakeholders have suggested a focus on the following areas:

• exploring if CWB principles and standard criteria could be built into funding and funding assessment criteria;
• encouraging investment funds including, for example, pension funds, to be directed to build local wealth;
• greater recognition of the role of credit unions and CDFIs and explore the establishment of community banks.

2.6.2 Questions

Q7. Are there ways in which the law could be changed to advance the finance pillar of CWB?

Yes No Don't Know

Please provide a reason for your answer. In your response you may wish to consider the stakeholder suggestions outlined above which have arisen from early engagement. You may also wish to consider areas that the Scottish Government could work with the UK Government on if you have proposals regarding changes to the law which remain reserved to the UK Parliament.