Council of Economic Advisers: annual report 2015-2016

1. Introduction

The Role of the Council

The role of the Council of Economic Advisers ( CEA) is to be an independent advisory group to the First Minister. In this regard, we act as a critical friend: challenging the policies of the Scottish Government and putting forward suggestions, which members of the Council believe could make a difference.

The Council of Economic Advisers was first established in 2007 to advise Ministers on how to best position Scotland amongst the world's most competitive economies. It was reconvened in 2011, when the Council were tasked with advising the then First Minister on the recovery and jobs, economic levers, and internationalisation.

Following the Scottish Government's Programme for Government for 2014-15, the Council's membership and remit were refreshed. The refreshed Council now focuses on advising the First Minister on actions to improve the competitiveness of the Scottish economy, and on actions to tackle inequality. These are the central pillars of Scotland's Economic Strategy ( SES).

Membership of the Council

The membership of the Council draws upon a range of knowledge and expertise. The Council consists of leading figures from the private sector and academia, all of whom receive no remuneration for their work or membership of the Council. An overview of our membership is provided in Annex A .

The Council's Engagements

The Council aims to have two full meetings a year, where we are joined by the First Minister and the Deputy First Minister. Full meetings were held in March and October 2015, and in February 2016. In our meetings, we have considered and discussed emerging trends in the Scottish economy, and developments in each of the three workstreams we have taken forward in support of Scotland's Economic Strategy. These are:

• Inclusive Growth;
• Innovation; and,
• Measures of Scotland's broader economic performance.

Our discussions are recorded in the minutes of our meetings, which are available on the Scottish Government website at: http://www.scotland.gov.uk/Topics/Economy/Council-Economic-Advisers/Meetings. ^[1]

The Council also takes forward a considerable amount of engagement and work in between these meetings. Council members have had regular engagement with the Scottish Government over the past year, in particular through the Office of the Chief Economic Adviser. Council members held conference calls with Scottish Government officials in May, August and December 2015, and in March 2016.

In his capacity as Chair of the Council, Crawford Beveridge also attended the Scotland CAN DO Innovation Forum on 7 ^th October 2015, and met with Naomi Eisenstadt, the First Minister's Independent Adviser on Poverty and Inequality, on 4 ^th February 2016.

Crawford Beveridge, Professor Sara Carter, Jim McColl and Professor Anton Muscatelli also gave evidence to the Scottish Parliament's Economy, Energy and Tourism Committee on the work of the Council on 8 ^th October 2015.

Council members are also advising the Scottish Government through several other forums. Professor Anton Muscatelli is the Chair of the Standing Council on Europe, which is tasked with advising the Scottish Government on securing Scotland's Relationship with the EU. Professor Frances Ruane and Amanda Macmillan are also members of the Standing Council. Crawford Beveridge and Professor Ruane are also members of the Cabinet Secretary for the Economy, Jobs and Fair Work's Ministerial Review Group for the Enterprise and Skills Review.

Structure of the Council's Report

This report brings together the advice that the Council has provided, and sets out in greater detail the areas the Council has focused upon over the last year:

• Chapter 2 gives an overview of the main economic trends in the Scottish Economy in 2015-16, which formed the backdrop to the Council's discussions;
• Chapter 3 summarises the evidence around Scotland's performance around inclusive growth, and discusses the strategic frameworks the Council has advised on. It also considers policy aspects of this agenda such as the Business Pledge;
• Chapter 4 gives an overview of Scotland's recent innovation performance, and the complexity of the innovation landscape in Scotland;
• Chapter 5 sets out the Council's deliberations around measures of economic progress, particularly related to the ambitions articulated in Scotland's Economic Strategy; and,
• Chapter 6 summarises the Council's findings and recommendations across the areas within its remit.