Programme for Government 2018 to 2019

Chapter 1 - Building a Globally Competitive, Sustainable and Inclusive Economy

A strong economy with growing, competitive and innovative businesses is essential to supporting jobs, incomes and our quality of life. Our economy must also be environmentally sustainable and inclusive – involving and providing benefit and opportunity for all of our people and communities. In turn, a strong competitive economy depends on a skilled, healthy and flexible workforce. And our rich ecological capital and natural environment are powerful assets that can help create economic value for the country as a whole.

So, our core purpose is clear: we will grow the economy in a sustainable and inclusive way to increase wellbeing. We want all of our communities, both urban and rural, to flourish economically, socially and environmentally.

We are already seeing the benefits of this approach. Scotland has seen the fastest productivity growth in the UK since 2007, our exports are growing and we have the highest proportion of employees in the UK paid the Living Wage. We do better than the rest of the UK on employment rates for women and young people. But we know that Scotland still has untapped potential in individuals, businesses and communities. So we will do more to make sure that every person in Scotland has the skills and opportunities to thrive and to help make Scotland a more successful country.

Last year we set out an ambitious package of measures to promote digitally-enabled and low carbon growth. This included harnessing technological change to improve the economic and social wellbeing of all. We will continue to deliver on this through ongoing investment in skills and innovation, new technologies, advanced manufacturing, infrastructure and broadband. This will improve our productivity, boost our exports, and help make Scotland the most competitive place to do business. In turn, it will also increase our wellbeing as a nation.

Our infrastructure will continue to see substantial investment. We will make it our mission to steadily increase annual infrastructure investment so it is £1.5 billion per year higher at the end of the next Parliament than in 2019-20. We will award contracts that will mean that every home and business has access to superfast broadband and continue to see more investment in low carbon energy and transport solutions. Building on the ambition we set out last year to phase out the need for new petrol and diesel cars and vans by 2032, we will add 1,500 new charge points in homes, business and communities including 150 new public charge points. We will invest in new ultra low emission vehicles ( ULEVs) by more than doubling the funding available to £20 million to enable more people and businesses to make the switch to electric. We are adding more than 500 new ULEVs to public sector fleets and will establish a ‘Switched on Taxis’ initiative.

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We will Increase Investment in scotland’s Infrastructure by around £7 billion by 2026

Taking advantage of the benefits of the circular economy, we will take the next steps on designing our deposit return scheme for drinks containers and consult on how we can go further to improve the use and reuse of other materials. This will help our world-leading action on climate change. And we will maintain our environmental standards following Brexit.

We will continue to drive forward work that will make Scotland the most competitive place to do business – where innovation is rewarded, a global outlook is encouraged and fair work principles are key to success. We will introduce legislation to pave the way for the Scottish National Investment Bank and further reform of non-domestic rates.

Our enterprise and skills support system will become more customer focused. Across our enterprise and skills agencies we have a wide range of high quality products designed to help businesses grow. We are developing a single online point of entry for business support to enable Scottish businesses to more rapidly navigate and identify the support that is available to them, and once that is developed to build in the ability to deliver rapid decision making on eligibility based support such as grants.

To reach our full potential we need every part of Scotland to have strong economic growth, with a sharp focus on the opportunities within regional economies. We will introduce a Bill to establish a new enterprise agency for the South of Scotland, to drive inclusive growth and ensure that the region benefits from a new approach that supports a diverse and resilient economy, sustains and grows communities, and harnesses the potential of people and resources.

Scotland’s infrastructure – digital, physical and natural

Good infrastructure is essential to our economy and wellbeing and for the delivery of efficient, high-performing public services. We want to do more to recognise the value of our infrastructure investment, while acknowledging that our natural assets are as valuable as our broadband, roads and bridges.

We know the value of investing in our infrastructure goes beyond modern homes, schools, hospitals and world-leading engineering projects such as the Queensferry Crossing. It unlocks economic potential, supports jobs and allows our communities to flourish and businesses to grow. Research by the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Bank and the EU all draws the conclusion that infrastructure investment is a key driver of productivity growth.

We will continue to make the investment in our infrastructure that is required to support economic growth, boost international competitiveness and prepare for the uncertainty of Brexit. And we will go further. We will make it our mission to steadily increase annual infrastructure investment so it is £1.5 billion per year higher at the end of the next Parliament than in 2019-20. This bold mission will increase Scottish Government capital investment by an additional 1% of current Scottish GDP and to achieve it we will need to continue to innovate in our models for investment and work across the public sector. On current estimates that would mean around £7 billion of extra infrastructure investment by the end of the next Parliament.

This is a direct investment in the competitiveness of our country’s assets – in our digital infrastructure and transport – and will help to maintain competitive economic conditions in an increasingly global market. And this step change in infrastructure investment will deliver a long-term boost to Scotland’s economy. We will start identifying priority projects to take forward that ensure the positive effects of this investment will be felt now and by future generations.

Digital and data

By the end of last year we had exceeded our target of 95% fibre broadband coverage across Scotland. To ensure we continue to be at the forefront of the digital revolution, we will now award contracts for the first phase of our Reaching 100% programme. Our £600 million investment will unlock superfast broadband of 30Mbps for all homes and businesses in Scotland by the end of 2021. Our digital infrastructure will create greater opportunities for education, work and leisure as well as enabling economic growth – particularly in rural Scotland.

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£600 million To ensure all homes and businesses Have access to superfast broadband

We have awarded a contract for the delivery of new masts to boost the coverage of 4G in remote areas and we will develop a 5G strategy that allows Scotland to gain first-mover advantage from this emerging technology.

We will continue to press Ofcom and the UK Government that the UK-wide regulatory environment should prioritise mobile coverage in rural and island areas. The UK Government must also ensure that we do not lose out on digital benefits of being part of the EU – such as free mobile phone roaming – as a result of Brexit.

Data-driven innovation

Scotland is already at the forefront of the use of data to boost productivity and improve public services and we are well placed to become a global centre of excellence. There are clear economic gains for business and through highly-skilled jobs, but this area also has potential to transform our everyday lives.

We will build on our digital infrastructure investment and continue to place digital transformation and innovation at the heart of our economic policy.

We launched Scotland’s first widespread Internet of Things network last month. We want as many people and businesses to benefit from the transformative potential that the Internet of Things offers. To do so, in the year ahead we will develop a range of activities across Scotland to inspire and enthuse enterprises of all sizes along with public bodies and our communities with what this technology can achieve.

Our existing support for innovation centres like The Data Lab and Censis is working to promote digitisation, innovation and address the digital and data skills gap. We are working with stakeholders and interest groups to develop a common public sector approach to online identity assurance. The aim will be to test ways in which we can deliver an online ID scheme which safely provides easier and better access to public services for Scotland’s citizens.

We are investing in measures that will enable Artificial Intelligence ( AI) to be used to improve lives in Scotland and around the world, including a world-leading clinical imaging data resource and measures that develop future AI applications for the public good.

We will make more of our rich public sector data open for social and economic good and will support the creation of secure and effective technology platforms that will enable collaborative research in the public interest and attract investment and innovation.

We will provide £1.5 million over three years to support the establishment of a ‘ UNICEF Data for Children Hub in Scotland’ in partnership with UNICEF, The Data Lab and the University of Edinburgh. Taking advantage of Scotland’s growing tech and innovation capabilities, the Hub will bring together participants in the exchange and use of data, data science expertise, and resources to develop data-driven collaborative solutions to improve children’s wellbeing. The Hub will shed light on complex problems such as improving child health through behaviours around factors such as nutrition and physical activity; achieving better mental health outcomes for young people and equality of opportunity in education and employment. It will establish ethical and promising collaborations that transform data into public good.

Cyber resilience – security and opportunity

Digital technology offers huge opportunities for Scotland as a modern, progressive nation. However, our ability to flourish in the global digital economy will increasingly rely on our ability to design and deliver innovative products and services that are resilient to ever-evolving cyber threats.

We want to ensure our people, businesses, charities and public institutions are protected, and to make Scotland a centre of global excellence for cyber resilience. To achieve this, we will continue to implement our cyber-resilience plans.

We will invest in advice and support for workplace training on cyber security and make £500,000 available to smaller businesses and charities, to at least double the number of Scottish businesses and third sector organisations with critical controls in place to defend against the most common cyber threats.

Our investment and expertise in cyber security can help differentiate Scotland as an attractive and secure place for investment and innovation in the high-value and high-growth technology sector.

This year, we will work with Scottish Enterprise and Scottish Development International to build and promote Scotland’s reputation for robust cyber security products and services. We will provide seed funding of over £350,000 for a Cluster Management Organisation to support the growing number of businesses in this sector. We will also provide dedicated funding of £250,000 for a cyber-resilience innovation call, to stimulate fresh thinking in our private sector and help meet the future cyber-resilience challenges our public sector will face.

As well as thinking about today’s opportunities and challenges, we will make sure that Scotland has the expertise it needs for the future. We are working with key partners to provide clearly defined learning pathways into cyber-security careers (including for career changers) and will support children and young people in our schools, colleges and universities, and also in non-formal learning settings such as youth work, to develop key cyber skills. Scotland will also take full advantage of available extra-curricular and online programmes, including the UK-wide CyberFirst and Cyber Discovery programmes. To make sure people develop the skills they need, we will support teachers and college lecturers by providing additional learning resources and building quality content into teacher training and professional learning programmes.

Over the last year, our public bodies have been working to implement a common set of critical cyber-resilience controls, meaning our public sector will have appropriate protection against the most common forms of cyber-attack. Over the coming year, we will continue to strengthen our defences by funding central cyber security posts for local government, health bodies and the universities and colleges sector. We are also developing guidance and tools for public bodies to help them understand and comply with the legal and regulatory landscape around cyber security and to make sure that any suppliers they work with meet appropriate cyber security standards.

Transport – connecting and improving lives

A modern travel and transport system is fundamental to sustainable and inclusive economic growth – it opens up new opportunities for people and directly impacts the health and wellbeing of communities and the effectiveness of our public services. We will continue to invest more than £1 billion every year in public transport and deliver our programme of investment in all forms of transportation. We will increasingly focus our transport investment on low carbon solutions, in pursuit of the ambition we set out last year to phase out the need for new petrol and diesel cars and vans by 2032. Drawing on data-driven innovation, we will support opportunities to explore the potential of new transport solutions tailored for individuals – where we can access information, ticketing and payment options in one place and from our smart phones or watches.

Active travel

We will work across all levels of government and with our NHS, businesses and communities to realise the potential of a shift to active travel including as a prescription for better health. In the past year we have supported the take up of e-bikes and e-cargo bikes. Our actions in the coming year include:

• promoting walking- and cycling-friendly businesses
• subsidising bike hire for jobseekers, modern apprentices, young people and students
• developing a system of Greenways for walking and cycling – bringing together the benefits of active travel with enjoying our natural environment

Air quality, low emission zones and ULEVs

We have set out a bold ambition to phase out the need for new petrol and diesel cars and vans by 2032.

We will step up our work in the year ahead and launch ‘Plugged In Households’. This will widen access to electric vehicles, including through housing associations and car clubs, so that communities across Scotland can share in the benefits of ultra-low emission vehicles.

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1,500 new Charge points In homes, businesses And communities

We will build on our plans to electrify the A9 by expanding the scope of our Switched on Towns and Cities initiatives to create at least 20 Electric Towns across Scotland by 2025. And, in close collaboration with the sector and local government, we will establish a ‘Switched on Taxis’ initiative to build on our existing programme of support for the sector. The initiative will include a new fund for electrifying taxi ranks with emphasis on major transport and tourist hubs. This year we will also:

• invest £15 million to add an additional 1,500 new charge points in homes, businesses and communities including 150 new public charge points
• increase our Low Carbon Transport Loan Fund from £8 million to £20 million to enable more businesses and consumers to switch to electric vehicles than ever before. To date, the Loan Fund has supported around 500 ULEV purchases; with another 450 forecast to be supported in 2018-19 with this increased funding
• add an additional 500 ULEVs to public sector fleets

We will introduce Europe’s most comprehensive network of cutting-edge remote sensing air quality monitors on local and trunk roads with the first monitors being deployed by August 2019. This will give us accurate data on exhaust emissions based on real life use rather than relying on manufacturers’ information. Our Transport (Scotland) Bill currently being considered by Parliament will enable the creation and enforcement of low emission zones. Together with our commitment to introduce low emission zones in our four biggest cities by 2020, this will make our cities cleaner, healthier places to work, study and live. And to help those who will have the most difficulty in making the transition we will create a Low Emission Zone Support Fund that will target specific cohorts of both commercial and private vehicle owners affected by the introduction of low emission zones in Scottish cities.

Our ambitious programme for electric and ultra-low emission vehicles will create new challenges for our electricity networks, but also considerable opportunities. We will work with Scotland’s network operators and others to make sure that we are well placed to address and respond to these. We will also look to the opportunities of data-driven innovation to influence and manage consumer demand and improve network management.

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500 More new ultra-low Emission vehicles, And over 100 more green buses

We will take steps to improve access to the information from our ChargePlace Scotland network to commercial operators, investors and network companies. In collaboration with the Scottish data and informatics partnerships, we will explore platforms to build on research and commercial opportunities in the development and application of data at the interface of the transport and energy sectors.

Roads

The Aberdeen Western Peripheral Route will be fully open to traffic this autumn and is expected to cut journey times across Aberdeen by up to half at peak times, improve journey time reliability and enable local authorities to develop public transport solutions. In the year ahead our work across the rest of the country includes:

• maintaining the trunk road network in line with international best practice
• investing in essential road maintenance schemes and increasing resilience of the roads network
• progressing dualling of the A9
• starting work on replacing the Shlatach Bridge in Glenfinnan
• progressing work on the Maybole bypass

Rail

In the year ahead we will see more results from our significant investment in the ScotRail franchise. By the end of 2019 we will have a 23% increase in seating capacity across the network and enhanced train facilities with 200 new services across Tayside, Stirlingshire, Perthshire, Aberdeenshire and the Borders.

We plan to have the first dedicated carriages for cyclists and other sports enthusiasts in service next year providing greater access to Scotland’s great outdoors.

Work will start on redeveloping stations in Aberdeen, Inverness, Motherwell and Stirling to improve facilities, access and connectivity and we are progressing with plans to enable a competitive public sector bid for the next ScotRail franchise contract.

Buses

More than three-quarters of public transport journeys in Scotland are by bus. We will provide stability for bus services with funding over three years. Building on our Transport Bill, we will improve passenger information and integration with other travel options and give those communities that need it most, whether urban or rural, more transport options.

We will finalise the eighth round of the Green Bus Fund. We expect our £1.7 million investment will add over 100 green buses to the fleet, meaning that we are ahead of schedule in delivering the Climate Change Plan commitment of 50% by 2032.

Links by air and water and our maritime sector

This year we have seen Hainan Airlines launch Scotland’s first route to China, linking Edinburgh and Beijing.

We remain committed to reducing the overall burden of Air Departure Tax by 50%, abolishing the tax altogether when resources allow, and working with the UK Government to find the best possible solution for the Highlands and Islands before the tax can be introduced in Scotland.

We will build on current activity through Scotland’s airports and ports to expand our international export routes, to create more international routes and trade direct from Scotland. We will also explore the viability of a direct ferry link to Europe from Scottish ports.

Scotland’s marine economy contributes £5.1 billion to our economy and employs 79,000 people. The maritime sector is a key part of that and takes many forms.

From the commercial ferry service at Cairnryan ports, connecting Scotland with Northern Ireland, to cruise ships and small harbours supporting fishing, the sector supports tourism and coastal communities. It connects communities and provides lifeline services. It is also key to our imports and exports. In addition to our rich construction and manufacturing heritage, we have world leading maritime and skills training within Glasgow City College and companies across the country complementing our successful ship management sector and supporting industries. We will work with the Scottish maritime industry to develop a Scottish Maritime Strategy. This will highlight the strengths and successes of our vibrant maritime sector and the significant contribution it makes to the economy. It will also identify key opportunities to harness the potential of our maritime and coastal assets sustainably.

We have supported the Brodick Harbour project, creating first-class facilities for Arran. We will continue to apply Road Equivalent Tariff ( RET) fares on the Clyde and Hebrides Ferry Services network. We introduced a 20% reduction on passenger and car fares on the Aberdeen – Lerwick and Kirkwall – Lerwick ferry services this summer, and remain committed to continue to pursue all avenues to deliver RET for Orkney and Shetland.

We will support the implementation of the new £3.5 million Ferries Resilience Fund to upgrade equipment on existing ferries to reduce the risk of vessels breaking down and get them back into service for our islands more quickly if they do.

Future of transport – Intelligent Mobility

We will invest up to £2 million to support the testing of ‘Mobility as a Service’ in Scotland. This concept has the potential to transform the way we use transport – making public and shared transport options as desirable as owning our own car. Models being developed include using our personal smart devices, such as phones and watches, to get personalised travel information, ticketing and payment for transport all through one portal incorporating all modes. We want to facilitate growth and innovation in this area, building on strengths and skills already in Scotland. This funding will be available from 2019 and will complement our existing work on smart ticketing.

We will also encourage and support the research, development, demonstration, and deployment of Connected and Autonomous Vehicles or Driverless Cars. We will hold a summit in 2018 and explore with others how Scotland can best capitalise on the opportunities and benefits of this technology.

Boosting sustainable and inclusive economic growth

Scotland’s economic success is not only growing GDP, but ensuring that economic growth is inclusive, sustainable and boosts the wellbeing of all our people. In practice this means our economic policies should drive our wellbeing as individuals and communities. So while we will support all of our businesses to grow, this needs to happen with the principles of fair work and opportunities for all embedded at every level. We are working with a group of other Wellbeing Economy Governments to share best practice on how wellbeing is embedded in our economic approach.

The most competitive place to do business

We want Scotland to be the most competitive place to do business, delivering a strong, dynamic and productive economy which creates wealth and employment across Scotland.

While our powers over business taxation are limited we have delivered the most competitive business rates package of reliefs in the UK. We are making our businesses more profitable and competitive by abolishing business rates for over 100,000 premises, saving small businesses around £1.5 billion. Our Business Growth Accelerator, for new-builds and businesses that make improvements to their properties, is stimulating growth and investment.

The Non-Domestic Rates Bill will deliver a rates system designed to better support business growth and long-term investment

We will bring forward a Non-Domestic Rates Bill to implement further recommendations from the Barclay Review. The Barclay Review was established to deliver a rates system designed to better support business growth, long-term investment and reflect changing marketplaces. Having already introduced the Business Growth Accelerator and Day Nurseries relief recommended by the Review, the Bill will include other measures to support growth including:

• moving to a three-year valuation cycle
• improving administration of the system by reducing the number of appeals and improving quality of information available
• increasing fairness and ensuring a level playing field by reforming reliefs and tackling known avoidance measures

We will also continue to progress work on the Barclay Review recommendations which can be implemented without the need for primary legislation – through an Advisory Group, which will report later this year to inform further decisions on implementation.

In the coming months our enterprise and skills agencies will step up their support for businesses to navigate through Brexit.

We know that effective public procurement has huge potential to support business and sustainable and inclusive economic growth. In the coming year we will publish a report on public procurement activity drawing together the experience of more than 100 of the highest spending Scottish public bodies. The report will inform any further actions that are needed to help maximise procurement’s contribution to sustainable and inclusive economic growth, including on the Living Wage and community benefits.

We want to help businesses innovate to address real social challenges, and export their solutions to the rest of the world. We will therefore set up Procurement Innovation Partnerships for the Scottish Government to work collaboratively with public bodies to procure new goods and services to solve social challenges, creating opportunities for SMEs including micro-businesses.

CivTech ^Ⓡ is our ground-breaking innovation programme, bringing together public sector expertise and private sector creativity to solve real problems, develop new solutions and deliver better services for everyone. For entrepreneurs and businesses it combines a streamlined procurement process with a comprehensive support programme, providing a springboard for innovative exportable technologies.

The first two cohorts have seen the participating companies win over £1.4 million in contracts after the programme, create new jobs and secure equity investment. Benefits for public services have included a public sector organisation making a cost avoidance of £1.5 million.

The third cohort is currently in progress and saw a record number of sponsors submitting potential challenges as well as companies applying from across the UK. It has also seen the development of an intrapreneurship programme for those showing entrepreneurship while working for a large organisation.

The success of CivTech ^Ⓡ has attracted international interest and we are scoping plans to scale the CivTech ^Ⓡ Programme.

We intend to build on the reputation that Scotland now enjoys as a leader in the growing market for ‘govtech’ and find new and innovative ways to engage with businesses to both promote innovation in public services and stimulate our digital economy.

Investing in skills

Investing in the skills and creativity of our workforce, protecting workers’ rights and providing decent working conditions are essential for us to reach our economic potential and for Scotland’s businesses to thrive.

We will take a strategic approach to Scotland’s skills system that reflects both the jobs that are needed now and the jobs of the future – making the most of opportunities such as automation, technology, data and digitalisation and mitigating the negative impacts of change. We will do more to support those moving jobs through their working lives as the balance of opportunities changes.

We will listen to the views of the business-led Enterprise and Skills Strategic Board and work with others from industry including the trade unions to develop an action plan by early 2019 to ensure Scotland has a skilled and productive workforce for the short, medium and long term.

We know that this is not simply the role of government and our agencies. Instead we must continue to reinforce co-operation and harness the ingenuity of our businesses, trade unions and workforce. Following discussions with key stakeholders we will now establish a national retraining partnership, working with trade unions and employer bodies. It will have the aim of helping workers and businesses prepare for future changes in their markets by enabling the workforce to upskill and retrain where necessary. This will be part of our wider action plan that will define how we support workers by bolstering existing skills and helping people to transfer their skills and experience and transition more easily between workplaces and sectors. Through this partnership, government, employers and trade unions can work together to ensure jobs are designed and work is organised in a way that allows people to make full use of the skills and knowledge they possess.

We will continue to improve opportunities for apprenticeships as well as providing opportunities for the existing workforce through a range of programmes including the Flexible Workforce Development Fund, Individual Training Accounts and the Scottish Union Learning Fund. We will prioritise Science, Technology, Engineering and Maths ( STEM) and higher level apprenticeships and continue to progress our Developing the Young Workforce Programme. We will also continue to increase the number of modern apprenticeships, to meet our commitment of 30,000 by 2020.

Fair work

We want Scotland to be a world-leading Fair Work nation. We will publish a Fair Work Action Plan by the end of 2018 that will set out the next steps we will take to embed fair work practices in Scottish workplaces by 2025. As part of this we will:

• introduce fair work criteria, including paying the Living Wage, excluding exploitative zero-hours contracts and being transparent on gender-equal pay to business support grants through Regional Selective Assistance and other large Scottish Enterprise job-related grants, starting with grants offered in 2019-20
• explore options to develop support and advice for small, micro and Business Pledge employers to support fair work practices in their businesses including employing disadvantaged groups

No one left behind

Scotland’s labour market is performing well for many people. We have seen record employment levels and have delivered our targets to reduce youth unemployment, but we know that many people continue to face real challenges to move into work and we must do more to provide the joined-up support people need to fulfil their potential and ensure no one is left behind.

Fair Start Scotland, our new devolved employment service, went live in April 2018. With these new powers we will make a significant impact for those further from the labour market, in a way which treats them with fairness, dignity and respect, but this is not the end of our ambitions. We are reviewing the existing Scottish Government funded employability services, with a view to strengthening relationships with local and regional partners and developing a new delivery model that builds on the principles underpinning Fair Start Scotland by providing more flexible, joined-up and person-centred support to help those furthest away from the labour market to make a successful journey into fair and sustainable work. We will set out the conclusions of this review later this year.

As part of these reforms, we are committed to supporting many more disabled people, whose skills and talents are underutilised, into work. We have seen recent improvements in the employment rate of disabled people, but we know they remain more likely to be out of work and to live in poverty. Our economy, and our society, is missing out as a result of this, and we understand and appreciate the valuable contribution disabled people make. We have therefore committed to at least halve the disability employment gap. It is estimated that by halving the employment gap, we could boost our GDP by as much as 3.5% per year in real terms, on top of the individual benefits to people of being in work.

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Help 2,000 More women to return to work With £5 million investment

We will also increase the number of practitioners with National Institute of Disability Management and Research training so that they can support people to remain in or return to work – our aim is for 300 practitioners to be trained across Scotland as part of a five-year programme.

We will also take a joined-up approach across our public services to help keep people in work by piloting a Health and Work Support Service in Dundee and Fife, set to run until June 2020. This tests a single, easy to navigate, entry point for health and work services to reduce length of sickness absences and the risk of job loss. The pilot aims to support 6,000 people who are struggling to stay at work, or in employment and absent from work due to ill-health and disability, or who have recently fallen out of work.

Gender equality

We are determined to reduce gender inequality and improve the position of women in the workplace. We know that women earn significantly less than men over their entire careers for complex, often interrelated reasons. These include differences in caring responsibilities; more women in low skilled and low paid work; men in more senior roles; occupational segregation and outright discrimination.

We will implement the Gender Representation on Public Boards (Scotland) Act 2018 and provide guidance on the new requirements for women’s representation on public boards, making Scotland the only part of the UK to have this standard.

To tackle the gender pay gap, raise family incomes and grow our economy we need to support the women who have taken a break from paid work back into jobs that match their skills and experience. We have a pool of talent who often find it difficult to find employment that rewards their abilities. Our transformation in early learning and childcare – as well as being an investment to give our children the best start in life – will also allow more women to return to work.

We will take forward a range of actions including investing an additional £5 million over the next three years to support around 2,000 women to return to work. We will also:

• work with business organisations to showcase the positive contributions of women returning to work and address skills gaps in businesses across Scotland
• work with employers to extend the offer of comprehensive training and support delivered through employability and skills programmes.
• seek to offer pre-employment support to women in their local area before they undertake a three-month placement with an employer
• encourage women to return into more advanced roles where we know the gender pay gap is widest
• work with training providers and employers to support women returning to the workforce to undertake roles in male-dominated sectors

Support for veterans
Veterans are assets to our society, and we remain fully committed to ensuring there is no disadvantage to members of the Armed Forces and veterans community in Scotland when accessing services and support. This year marks a decade of investment in our Scottish Veterans Fund with over £1.3 million provided to charities and organisations supporting over 150 projects. We will continue to positively support veterans through the Fund, with our multi-year commitment, in partnership with Standard Life Aberdeen, which totals £600,000 over three years to 2019-20. As part of our work to support veterans, in the coming year we will progress delivery of the Veterans Commissioner’s recommendations to support those transitioning from the military to find fulfilling civilian careers and to develop a distinctive Scottish approach to meet the healthcare needs of veterans. We will also accelerate opportunities to create business workspaces to help veterans and military spouses who want to run their own business, such as developing hubs near to the main defence bases.

Investment

In last year’s Programme for Government we set out our ambition to establish a Scottish National Investment Bank, this year we will introduce the legislation that will support the establishment and capitalisation of the Bank. In addition to the planned investment in the next two years as a precursor to the Bank, our aim is for the Bank to be investing in our businesses and communities from 2020, subject to regulatory and legislative approval. Backed by our commitment of at least £2 billion investment in its first 10 years, this will pave the way for a step change in innovative and inclusive growth.

The Scottish National Investment Bank Bill will pave the way for the Bank to become operational in 2020

Building on his work to develop an implementation plan, Benny Higgins, former CEO of Tesco Bank, will act as strategic adviser on the development of the Bank.

In advance of the Scottish National Investment Bank being open for business our £150 million Building Scotland Fund provides debt and equity support to the private sector and organisations such as housing associations and universities to support the development of housing across all tenures; develop modern industrial and commercial space; and support industry-led research and development. In line with the vision for the Bank, it is focused on projects and investments that support inclusive growth, reduce carbon and sustain and create places.

And the Scottish Growth Scheme is already delivering additional investment in Scottish SMEs, and leveraging new investment from private investors. A range of sectors have been supported including software development, textiles, energy, multi-media, Fintech and healthcare.

Entrepreneurship

We have an impressive past and, more importantly, an exciting future as a world-leading entrepreneurial nation. Our people are our greatest asset to realising this future and by building on ‘Scotland CAN DO’ we will continue to support successful programmes that unleash the potential of our future entrepreneurs. In 12 rounds over the past six years ‘Scottish EDGE’ has awarded over £11 million in grants and loans, supporting over 300 businesses to create in excess of 1,300 new jobs, growing turnovers by over £100 million and leveraging an incredible further £82.47 million in investment.

Building on the success of this model; ‘Unlocking Ambition’ is already supporting a first cohort of 40 high-potential and high-innovation entrepreneurs picked from global applications from academia and beyond and gaining support from public and private partners and from our nation’s current entrepreneurial successes. The businesses being supported are those capable of making real change to the economy and that are growing their business in a way that benefits society – including developing construction products from waste materials and creating products for safe financial learning for young people. Entrepreneurship is, and must be, a force for good and by supporting work such as ‘Scotland CAN B’ that celebrates and guides businesses impacting positively on society and by delivering upon the ‘Women In Enterprise’ programme to tackle the gender gap in enterprise we will ensure growth and innovation go hand-in-hand with wider benefits for all of society.

Advanced manufacturing

180,000 people are currently employed in manufacturing, which accounts for 52% of all of Scotland’s international exports. In the past year we have seen new investment to build a subsea manufacturing campus in Montrose and work has started on the new National Manufacturing Institute for Scotland ( NMIS). As part of the NMIS Skills Academy, 30 industry doctorate students will be recruited over the coming year. We will continue to prioritise this area of strategic importance.

Life sciences

Life sciences continues to be a tremendously important sector for Scotland. Over 700 life sciences organisations employ more than 37,000 people in high quality jobs, making Scotland one of the largest life sciences clusters in Europe.

In partnership with the UK Government and industry we have announced the new £56 million Medicines Manufacturing Innovation Centre. A world-first, the new industry centre will offer pharmaceutical companies, from start-ups through to multinationals, a unique service to develop and adopt novel manufacturing techniques to adapt into their own manufacturing processes. By transforming processes and technologies, the speed of bringing new drugs to market could improve drastically.

We have seen continued investment in the life sciences sector in the last year, including Össur cementing its commitment to Scotland with an agreement to invest £5.6 million over a three-year period to develop ground-breaking myoelectric prosthetic hand and arm solutions at its Touch Bionics operations in Livingston. And Scottish Enterprise provided TC BioPharm with £2.7 million funding to co-develop a novel immunotherapy product with the aim of treating a broad range of cancers and major viral disease and Synpromics was awarded a £1.9 million grant to expand its programme of cell and gene therapy.

Companies are attracted to Scotland because of the expertise on offer and meeting business needs is central to the new Life and Chemical Sciences Skills Investment Plan published in May which will work to ensure Scotland remains competitive and attractive as a place to do business.

Financial services and FinTech

Scotland is an established, successful financial hub and the financial services sector continues to play a significant role in Scotland’s economy – both in its own right as one of our most significant employers, with 86,000 employed directly in the sector, and also as a driver and supporter of wider economic activity across the country.

We will continue to work with the sector to attract new investment and jobs to Scotland, such as the planned Barclays expansion in Glasgow, supported by Scottish Enterprise, that will bring up to 2,500 jobs to Glasgow. Such investments will ensure that Scotland continues to be a major financial centre.

We will build on our support for FinTech, though the newly-established FinTech Scotland, and ethical finance to support innovation and diversity in the sector taking full advantage of Scotland’s strength and history in finance and technology.

Our universities

Our university research is amongst the best in the world and makes a significant contribution to our economy. We are boosting our investment in university research and innovation by an additional £17.6 million this financial year. This includes £11.6 million specifically aimed at increasing the number of partnerships with businesses in Scotland and competitive grants secured from UK Research & Innovation in order to contribute to inclusive economic growth in Scotland.

Economic Action Plan

We will publish a new Economic Action Plan at the end of October. The plan will set out how our key economic initiatives are supporting the business community to deliver sustainable and inclusive economic growth. It will outline how we are working with business and industry to ensure success on the ground across all of Scotland. It will also demonstrate how our policies interact to deliver on the strategic objectives that Scottish businesses, consumers and our citizens want to see. Our Economic Action Plan will demonstrate how our Economic Strategy is delivering for Scotland, and how we are adapting our approach in response to recommendations from others including the Enterprise and Skills Strategic Board, the Scottish Parliament and the work of the Sustainable Growth Commission. We will also address how our economic policy will respond to emerging economic challenges and opportunities.

Glasgow: Realising the potential of innovation and investment
Over the coming year we will work with Glasgow City Council and other public and private partners to help realise and connect key opportunities along the River Clyde and to capitalise on the city’s knowledge and innovation assets to deliver inclusive growth.

Key assets such as the SSE Hydro, the Media Quarter at Pacific Quay and the Queen Elizabeth University Hospital are already delivering economic benefits for Glasgow and Scotland. Further investment such as Barclays’ new campus at Buchanan Wharf which will create up to 2,500 new jobs; plans for the expansion of the Scottish Event Campus ( SEC); and the development of the National Manufacturing Institute for Scotland and associated Advanced Manufacturing Innovation District near Glasgow Airport has the potential to deliver further significant growth.

We will work with public and private partners to help realise those opportunities and maximise their collective impact.

In particular, we will work with the University of Glasgow, which is already investing over £1 billion in the transformation of its West End campus, to develop a business case for a new Clyde Waterfront Innovation Campus in Govan, bringing together world leading research and infrastructure alongside companies manufacturing components for growing industries such as quantum technology. This development would be part of the wider Glasgow West End and Waterfront Innovation District, which will help drive investment by major companies and SMEs in sectors such as precision medicine, data science and FinTech.

Elsewhere in the city, we will work with the University of Strathclyde to take forward the next phase of the Glasgow City Innovation District. Building on the success of the Technology Innovation Centre, Tontine House and the Innovo Building, the Innovation District will further transform central and east Glasgow by creating a thriving ecosystem of small, medium and large innovation companies supported by the knowledge, research and skills of the University.

Strong regional economies

Our cities and their regions make up around two-thirds of Scotland’s economy. When they thrive, all of Scotland benefits. We are supporting Scotland’s strengths in research and innovation through City and Growth Deals across Scotland, including Edinburgh Region’s approach to data-driven innovation and our investment in a network of learning centres across the Highlands and Islands, which is transforming science, technology, engineering, mathematics and digital creativity ( STEMD) education across the entire region as part of the Inverness and Highland City Region Deal.

Beyond our cities we are taking action that recognises the particular needs of the South of Scotland by introducing legislation to establish a South of Scotland Enterprise Agency.

Too many communities in Scotland have suffered a negative economic legacy from the decline of their local industries and Regional Economic Partnerships have the potential to develop and prioritise needs at a local level, driving prosperity and equality. As part of the Local Governance Review we will consider what more can be done to enable more Regional Economic Partnerships.

And whether urban, rural or island we know that with limitless ambition, and the right support, communities can develop and regenerate places and spaces where they live and make them even better.

Business improvement districts and regeneration

We want our towns and town centres to be vibrant, creative, enterprising and accessible. Business Improvement Districts can create platforms for economic growth and regeneration, and help town centres to thrive and meet the needs not just of businesses, but also residents and visitors. Over a decade ago we successfully introduced Business Improvement Districts ( BIDs) in Scotland and we now have 40 established BIDs including the world’s first Food and Drink BID in East Lothian, a UK award-winning BID in Falkirk, and a European award-winning BID in Aberdeen.

We will now create a new generation of BIDs with wider reach and impact. We will launch a new and more expansive BID model later this month which will build much greater capacity through stronger public, private and community partnerships which are more strategic and sustainable and ensure BIDs can make an even bigger contribution to inclusive economic growth. Scotland’s Towns Partnership ( STP) will provide new and increased support to accelerate and innovate the development of new Business Improvement Partnerships. We expect to see new pilots coming through, for example in Lanark, over the course of this year. And we will launch a pilot Digital Improvement District, a BID dedicated to digital improvements, to model the delivery of digital infrastructure and WiFi within towns through strategic collaborations and partnerships with local businesses, agencies and communities to best meet their needs.

Building on our successful approaches to regeneration, we will also pilot a new industrial and commercial space growth initiative that will be used to support the remediation of public sector land and enable the development of industrial space by public/private partnership. The initiative would use Scottish Government funding towards this land remediation and site preparation to drive wider private sector investment and development.

We will continue to work with COSLA and individual local authorities on the use of innovative funding mechanisms to unlock investment and boost local economic growth.

Rural and island economies

People are key to the economic and social wellbeing of Scotland’s rural and island communities. We are determined to reduce the potential disruption of Brexit on rural and island life and to help our communities and businesses flourish. There is untapped potential in the rural economy and the right opportunities and infrastructure can help unleash that.

The South of Scotland Enterprise Agency Bill will establish a new enterprise agency to support a diverse and resilient economy, sustain and grow communities and harness the potential of people and resources

We will introduce a Bill to establish a South of Scotland Enterprise Agency. Ahead of this we have established the South of Scotland Economic Partnership – backed by £10 miilion funding. Its members have engaged widely with local communities and businesses to establish priorities for the new agency and will take forward a range of projects and investments to drive the local economy. We want the South of Scotland to benefit from a new approach that supports a diverse and resilient economy, sustains and grows communities and harnesses the potential of people and resources.

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We will develop an Islands Passport Scheme To encourage people To visit more of Scotland’s 80 Inhabited Islands

We will develop a Rural Economy Action Plan, which will steer our transition to more sustainable and inclusive economic growth in rural areas. This will be an essential part of an overarching Scottish Economic Action Plan and include measures to:

• increase the number of people living and working in rural Scotland
• support micro-enterprises to improve their productivity and grow
• improve connectivity to encourage innovative delivery of public services and access to education, employment and business opportunities
• provide new opportunities for young people to develop rural skills

Post-Brexit, we envisage a shift in thinking about how best to invest across all aspects of rural Scotland’s economy, including how we continue to produce high quality food; promote economic diversification; protect our environment; and enable sustainable repopulation – where communities thrive. Drawing on the recommendations of the National Council of Rural Advisers, the Agriculture Champions, the Griggs Greening Review Group and others, we will set out our strategic approach to farming, food and drink production and rural development for the medium and long term. This will allow for a transition period during which new and innovative approaches will be tested to determine the best mechanisms to support sustainable, inclusive growth across rural Scotland.

As a start, we will establish an agri-tourism monitor farm programme which will involve working with farms, estates and crofts to develop food tourism as an additional strand to food and farming businesses.

We will support the hosting of the next Rural Parliament in Stranraer in November and continue to listen to the views of rural communities about what matters to them most.

We will take forward work on a Crofting Bill and publish a national development plan for crofting.

In May, the Scottish Parliament passed the historic Islands (Scotland) Act to address the particular opportunities and challenges for island communities. In the year ahead we will begin implementing its measures by preparing the national islands plan.

We will also develop an Islands passport scheme as a marketing initiative to encourage people to visit more of Scotland’s 80 inhabited islands.

Farming and food production

In the difficult year ahead, we will ensure that farm and rural businesses receive their current payment entitlements. We will also seek to provide certainty through the immediate Brexit transition by taking forward the proposals in our Stability and Simplification consultation, and we will continue to support the Agriculture Weather Advisory Panel as an effective platform for rapidly sharing information and best practice, building resilience and encouraging co-operation across the sector.

We will continue our work on encouraging new and young farming entrants and make 750 hectares of land on the national forest estate available for potential lease.

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More Opportunities For children to visit a farm

We want farmers to move towards a more profitable, low carbon future, adapting to the changing climate and securing business viability for future generations. Our specific actions to reduce greenhouse gas emissions include:

• establishing and publishing first-phase research into the feasibility of a SMART target for reducing Scotland’s emissions from nitrogen fertiliser by the end of 2019
• reviewing and renewing our flagship Farming for a Better Climate programme
• appointing young farmer climate change champions by the end of 2018

We will improve Scotland’s international reputation for high quality meat production by updating Farm Animal Welfare Codes and introducing compulsory video recording of slaughter in abattoirs. We will also use the new Plant Health Centre to build our national resilience against risks posed by pests and pathogens to agriculture, forestry, horticulture and the wider environment.

We will also protect the provenance and reputation of Scotland’s food and drink by legislating to ensure that after Brexit, Scotland can continue to opt out of cultivating Genetically Modified ( GM) crops.

Aquaculture and fishing

We want to ensure that Scottish fisheries are managed in a way that best benefits the Scottish industry, coastal communities, our marine environment and people throughout Scotland. This applies equally to offshore, inshore and farmed activity.

We will develop a new approach to fisheries management in partnership with the fishing industry and other stakeholders, establishing a world-leading, sustainable fisheries management strategy, with inclusive economic growth at its heart. This will include a future catching policy which continues to support the principle of a discard ban.

We will publish a national discussion paper on the Future of Fisheries Management in the autumn, using the views on that to develop policy proposals for consultation at the end of 2019.

We will also take steps to modernise the management of inshore fisheries through the introduction of appropriate vessel tracking and monitoring.

We want to help coastal communities keep fishing harbours operational because of their importance to the maritime and rural economies, and the greater wellbeing of those communities. Therefore, in the year ahead, we will provide up to £2 million to meet emergency work at fishing harbours which ensures the continued operation of the facility and the safety of the fishermen and wider community. We will also work with Fisheries Local Action Groups to deliver projects which support harbour diversification and delivers an increase in harbour income.

Forestry

Scotland’s forestry industry is a future-proofed carbon negative industry that is worth £1 billion a year while protecting our environment, biodiversity and enhancing our wellbeing.

We will plant more trees and make more of our forestry resources. We will meet our target of planting 10,000 hectares of woodland every year, and increase this by a further 50% by 2025. In the coming year, we will deliver a National Forestry Strategy setting out our long-term vision and objectives for forestry and woodlands and by April 2019 we will have new arrangements in place for forestry in Scotland.

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We will plant 10,000 Hectares Of woodland Every year

We will manage woodlands and forests more efficiently with better technology. We will use remotely-sensed data to develop new information on tree-felling activity to ensure that Scotland’s woodland area is increasing and following consultation, put in place new regulations relating to the control of felling. To increase skilled opportunities for young people in forestry, a new Forest Machine Operators Modern Apprenticeship scheme will be operational by the end of the year.

Good Food Nation

The food and drink industry is a major contributor to Scotland’s economy, with a turnover of around £14 billion each year and accounting for around 1 in 4 manufacturing jobs. We have nearly 17,000 food and drink businesses employing over 111,000 people. We will continue to support the sector to grow sustainably and inclusively through the industry-led strategy, Ambition 2030.

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We will strengthen Scotland’s brand as a Good food Nation At home and abroad And publish a new Food and drink 5-year export plan

Food and drink exports are now at record levels of £6 billion a year but Brexit threatens to dislocate trade from our biggest international market. We will do all we can to reduce that disruption and enhance and strengthen Scotland’s brand as a Good Food Nation at home and abroad. By March 2019 we will publish a new Food and Drink 5-Year Export Plan and bring forward new measures to promote and market our produce in overseas markets.

Protected Geographic Indications ( PGIs) such as Scotch Beef, Arbroath Smokies and Ayrshire Dunlop cheese are worth more than £1 billion to the Scottish economy. We want to grow that value further by increasing the number of Scottish products with protection and supporting the development of existing products with Geographic Indications.

We want to expand the sectors covered by Food and Drink Sectoral Plans to include beef, sheep, dairy, poultry and craft beer. In the coming year we will continue to support small producers, including community groups, to help promote their products through the Regional Food Fund. Our Food to Go initiative will continue to provide small grants to help get fresh and locally sourced food in local shops.

We will take action to streamline and simplify our support for food and drink businesses to ensure they can access the right support quickly and effectively.

We will work with the industry to bring forward, by the end of the year, measures to strengthen primary producers’ position in the supply chain, creating more equity to improve their position and profitability.

We will publish a Good Food Nation programme in the autumn, highlighting progress to date, while also seeking views on new and developing proposals and actions and what legislative measures might be required to underpin our ambition.

Key to being a Good Food Nation means ensuring everyone who lives here appreciates and benefits from Scotland’s quality produce. We will therefore create more opportunities for more primary school children to have the chance to visit a farm to raise their awareness of where their food comes from and the key role Scottish farmers play as custodians of the countryside and as food producers.

Internationalisation – growing our exports

While the uncertainties of Brexit are making it difficult for businesses to look beyond the immediate challenges, we remain ambitious about Scotland’s potential to grow our overseas trade.

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We will help companies grow their Businesses through a new national Export plan, supported by over £20 million Investment

Scotland is globally renowned for its high quality products, burgeoning tech sector and innovation. We want to help Scottish businesses export their products and services to strategic markets. We must be ambitious about Scotland’s potential to grow our overseas trade and will work to boost the value and range of Scottish products, services and businesses in overseas markets.

On top of our actions on food and drink, we will work with industry on how we can achieve our ambition and with the support of the Enterprise and Skills Strategic Board set out a range of detailed actions in A Trading Nation: Our Plan for Growing Scotland’s Exports by spring 2019. We will support our new plan with over £20 million investment in the next three years. As part of that work we will:

• invest £2 million over three years to intensively support 50 high growth businesses per year to ramp up overseas activity and create 100 new business to business peer mentorships per year for new exporters
• expand the network of in-market specialists to identify untapped potential in overseas markets and support Scotland’s exporting interests
• increase Export Finance support for Scottish companies looking to enter new markets

Scotland’s population

Inward migration is vital to meeting Scotland’s economic, demographic and cultural needs. All of Scotland’s population growth over the next 25 years is due to come from migration. Due to the challenge of population ageing that all western economies now face, without population growth we will be less prosperous and less able to provide leading public services. We have set out ambitious plans for Scotland but we cannot deliver them without attracting talent to Scotland and growing our population.

A distinct Scottish approach to migration

The dual threat of leaving the Single Market and Customs Union and the UK Government’s approach to immigration is risking Scotland’s future. We need a migration system that meets Scotland’s needs which is rooted in dignity and respect by:

• continuing free movement of people by the UK remaining in the European Single Market and Customs Union after Brexit
• devolving power to allow the Scottish Government, accountable to the Scottish Parliament, to set visa rules and criteria tailored to meet Scotland’s most acute needs
• rethinking the UK immigration system to design a new regional approach, with powers for the Scottish Parliament tailored to meet Scotland’s full range of needs

The time for change is now, and is backed by a majority in the Scottish Parliament.

Last year, the Scottish Government prepared an extensive summary of the evidence demonstrating how migration benefits Scotland’s economy, demography and society, and presented that to the Migration Advisory Committee ( MAC). The MAC will advise the Home Secretary in the coming weeks on the impacts of migration on the UK labour market.

We will consider the MAC conclusions on how migration policy should interact with labour market policy as we focus on delivering solutions that meet Scotland’s distinct needs. We need to ensure that we have enough healthcare professionals caring for us in the NHS, that we have the workers needed for a thriving rural economy and that our universities are able to attract and retain talent from around the world. We will therefore also consider if there are other policy dimensions more relevant to Scotland than to other parts of the UK that need to be taken into account – including the impact on remote and rural communities, and the role of migration in responding to demographic change. We will commission further research and expert advice, where necessary, to ensure that Scotland’s needs are taken into account.

We will continue to push the UK Government to recognise the action that is needed to protect Scotland’s prosperity and wellbeing.

We will also take forward work to break down misconceptions on migration in Scotland and build on the success of the ‘We are Scotland’ social media campaign to promote an inclusive vision of Scottish identity. We will bring forward an Electoral Franchise Bill to give fair access to voting rights for all those who have a legal right to live in Scotland. This will mean that citizens of all countries will be treated in the same way for elections to the Scottish Parliament and local government. This Bill will be brought forward after a consultation on prisoner voting has been undertaken.

The Electoral Franchise Bill will give fair access to voting rights for all those who have a legal right to live in Scotland, meaning that citizens of all countries will be treated in the same way for elections to the Scottish Parliament and local government

Retaining and attracting talent

We know that for EU citizens currently living in Scotland this is a particularly worrying and uncertain time. We want those who have made Scotland their home to be able to stay here and continue their positive contributions to life in Scotland.

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An advice and support Service for those 235,000 Eu citizens Who have made Scotland their home

With the powers we have, we will make provision for an advice and support service for those 235,000 EU citizens resident in Scotland. This will seek to offer information on the new settled status scheme and provide support to EU citizens in understanding the impact Brexit will have on them.

We are clear that EU citizens should not have to pay a charge to retain the right to live and work in this country. We will continue to press the UK Government to change their policy on this issue. We are particularly concerned about the proposal to charge a fee for around 36,500 children. In particular, we recognise the contribution EU citizens make to our public services and this is why we will meet the settled status fees for EU citizens working in our devolved public services.

We value the EU citizens who are making a positive contribution to our economy, our communities and to our public services. EU citizens are playing crucial roles in our schools, our health service and our police service. We will therefore encourage individuals from across the EU who can make a positive contribution to our public services to move to Scotland. We want to continue to attract students from the EU to study at our universities.

We will also attract people from elsewhere in the UK to work in world-class and rewarding public service. Healthcare professionals working in England, Wales or Northern Ireland, who want greater recognition of their service through improved pay are welcome in our NHS in Scotland.

We want people to do us the honour of making Scotland their home and help us to create a more successful country. We will therefore work with partners to develop a Welcome to Scotland resource.

Tourism

2017 was a record-breaking year for our tourism industry, with 3.2 million people visiting – and spending record amounts of money in – Scotland from overseas. Our reputation as a country that warmly welcomes visitors to enjoy our landscape, culture and hospitality is world-renowned.

Our tourism sector supports around 207,000 jobs – 8% of Scottish employment and we will encourage more fair work practices across the sector including increasing the number of businesses paying the Living Wage, excluding exploitative zero-hours contracts and improving gender-equal pay. We will also continue to explore the potential of the key elements of the sector, including golf, mountain biking and marine tourism, as well as developing a campaign to promote tourism as a career of choice.

Our natural capital – valuing and protecting our environment

Scotland is a beautiful country and we are blessed with abundant natural resources to rival the best in the world. We recognise that it is our duty to protect and enhance these assets as essential to our economy, culture, way of life and the wellbeing of future generations.

At the same time as protecting and enhancing the natural world and its biodiversity, we can make the most of economic opportunities from our natural assets through tourism, innovation in the circular economy and clean energy.

We can, and will, do more to open up the joy and health-giving properties of our natural environment to everyone. Our commitments to active travel and outdoor learning are key, as is the importance of empowering communities to protect and shape their surrounding areas.

We are clear that environmental protection standards must be maintained following Brexit. We will continue to take world-leading action on climate change and intensify our support of the marine environment so that we are celebrating the year of Scotland’s Coast and Waters in 2020 with a reduced burden of plastics in our seas.

Protecting and restoring biodiversity

We remain committed to delivering Scotland’s biodiversity strategy and striving to meet the ‘Aichi’ 2020 international targets. Our investment in the new Biodiversity Challenge Fund worth up to £2 million will enable targeted action to deliver projects across Scotland focusing on creating and improving habitats for key species and, where appropriate, encourage increased access to nature.

We are also committed to helping shape the new post-2020 international biodiversity targets. We have asked Scottish Natural Heritage to help lead and co-ordinate this thinking, including ensuring that there is a sound evidence base on which to base future action and to help develop our strategic response to the new targets.

Collaboration with partners across the public, private and third sectors will continue to be vitally important. And working with Scottish Natural Heritage, we will also take steps to improve compliance by public bodies with their duty to enhance biodiversity, where they can, in carrying out their functions. We will also remind public bodies of the requirement to publish a report every three years on how they have done this.

Tackling climate change

Our approach to tackling climate change reaches every area of our work in government and is designed to enable everyone to contribute to one of the most important global challenges of our time. Scotland’s low carbon transition is well under way and our approach makes sure that we not only continue to reduce our greenhouse gas emissions but also ensures that we are resilient to climate change impacts.

Next year, Edinburgh will welcome 220 of the world’s top climate scientists as the Scottish Government hosts a meeting of the Intergovernmental Panel on Climate Change’s discussion on their sixth assessment report.

Reducing greenhouse gas emissions

We are making good progress against our emission reduction targets. Scotland’s emissions have almost halved since 1990 and our Climate Change (Emission Reduction Targets) (Scotland) Bill is the next step in our low carbon transition. The Bill will introduce tougher targets and make sure Scotland plays its full part in efforts to limit global temperature rise to well below 2˚C above pre-industrial levels. The 90% reduction target for all greenhouse gases set out in the Climate Change Bill means achieving net-zero carbon dioxide by 2050. In other words, Scotland will be carbon neutral.

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We are the Only country In the world with statutory annual Greenhouse gas reduction targets, And we’ve set an ambitious target To become carbon neutral by 2050

The moral, scientific and economic case for increased global action on climate change is clear and this Bill maintains our position as climate leaders. Scotland is already the only country in the world with statutory annual targets and the Climate Change Bill not only includes the world’s most ambitious statutory targets for 2020, 2030 and 2040, covering every sector of our economy, but our long-term target of 90% reduction of all greenhouse gas emissions by 2050 is also the world’s most ambitious based on domestic effort alone. The Scottish Government is committed to achieving net-zero emissions of all greenhouse gases as soon as possible and we will put a target date into legislation as soon as we can do so credibly and responsibly.

Building resilience

We are building on our work on climate change mitigation by progressing our activity on climate change adaptation. We will publish a new five-year Climate Change Adaptation Programme in 2019 to ensure our communities, economy and natural environment are resilient to the changing climate. This will build on the work already happening nationally and locally like Climate Ready Clyde, Edinburgh Adapts and Aberdeen Adapts and complement our new actions as a hydro nation.

Climate Challenge Fund
This year marks a decade of investing in our Climate Challenge Fund. Our £101 million investment in the Fund has supported more than 1,000 community projects that have helped cut carbon emissions.

From upcycling in Inverness to cycle training in Inverclyde, the Fund has empowered local communities to take action to reduce carbon emissions in a way that also delivers wider benefits for them. The Fund will continue to support projects in the year ahead and we will work to ensure that it continues to deliver for the climate and for communities.

Energy

Our energy sector is a prime example of where we can realise sustainable and inclusive economic growth. Our vision is for our future energy system in Scotland to be a globally competitive sector delivering secure, affordable and clean energy to all of us. In the year ahead we will continue to work to achieve that vision as set out in our Energy Strategy and our two headline targets of:

• the equivalent of 50% of the energy for Scotland’s heat, transport and electricity consumption to be supplied from renewable resources
• an increase by 30% in the productivity of energy use across the Scottish economy

We will report on our progress later this year and publish the first Annual Report on our Strategy in early 2019. We will continue our work to deliver a publicly-owned not-for-profit energy company by 2021, to support our efforts to tackle fuel poverty and will consult on our preferred model later this year.

Energy efficiency is a national infrastructure priority – it reduces our greenhouse gas emissions, boosts household incomes, supports jobs and improves our wellbeing through warmer homes and reduced household bills. We have launched our 20-year delivery programme – Energy Efficient Scotland – to improve the use and management of energy in Scotland’s buildings and help decarbonise heat supply. This includes, among other measures, continuing to invest in Area Based Schemes that support local energy efficient measures to lift people out of fuel poverty. We have consulted on the potential legislative requirements to underpin Energy Efficient Scotland and the potential for a Bill if needed. This included district heating regulation, an area where Scotland is playing a leading role. We will set out the next steps in the coming year.

Our investment to create local green energy solutions has seen projects supported with over £40 million since 2015 in areas including Glencoe, Aviemore, Stromness and St Andrews. This year our £20 million Energy Investment Fund and £60 million Low Carbon Innovation Fund will provide support for renewable and local carbon infrastructure.

We will continue to work to realise the benefits of decommissioning, advancing our commitment to provide financial support for establishing a Deep Water Port in Scotland. Our 2018 deep water feasibility study has identified Dales Voe in Shetland as the optimal UK location and we will continue to work collaboratively with the UK Government, the port, and industry to move work forward to create a facility and unlock the business opportunities this will provide. We are also running a further £5 million round of the Decommissioning Challenge Fund in 2018 to provide support across the Scottish supply chain.

There are still significant opportunities in the North Sea, with up to 20 billion barrels of oil equivalent remaining – which could sustain production for at least another 20 years. That is why we continue to support Maximising Economic Recovery from the North Sea. We have recognised the challenges for the workforce and have supported more than 3,500 people and helped the sector retain talent. Our oil and gas industry is internationally renowned for its offshore engineering and subsea expertise. Supporting continued investment in oil and gas exploration and production and in renewable and low carbon solutions will provide Scotland with the energy system we need for the 21st century.

We will continue to work with industry to encourage investment in key industrial areas where energy efficiency, renewables, bio-technology and carbon capture utilisation and storage could offer significant opportunities for decarbonisation and economic growth.

Offshore renewables

The offshore renewables sector has the potential to create huge value and significant employment across the Scottish economy and supply chain, and we will continue to support its expansion through providing new guidance to industry on licensing and decommissioning. We are providing a further £2 million this year to support innovation and help reduce the costs of offshore wind. We will support research that will help address challenges with the sustainability of offshore renewables. In the year ahead we will consult on a new Sectoral Marine Plan identifying future locations for large-scale offshore wind developments.

Unconventional oil and gas exploration

We continue to take a cautious, evidence-led approach to considering unconventional oil and gas in Scotland. In accordance with our statutory responsibilities, we are required to undertake a Strategic Environmental Assessment ( SEA) ahead of finalising our policy on unconventional oil and gas. The work to complete the SEA and a Business and Regulatory Impact Assessment is under way and their findings will be carefully considered.

A hydro nation

Water is one of our most valuable natural assets. We are fortunate to have the management of this natural asset in public ownership. In the coming year Scottish Water will invest around £600 million in Scotland’s water infrastructure, providing 1.35 billion litres of fresh, high quality drinking water every day, improving quality and resilience, and treating our waste water before returning it safely to the environment.

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Invest Around £600 million in scotland’s water Infrastructure, providing 1.35 billion Litres of fresh water every day

We are consulting on the priorities for future investment by Scottish Water in the regulatory period 2021-27 and beyond. Among the many significant issues that must be addressed is the need to revise the approach to the management of surface and storm water. Ageing assets, population growth and climate change all pose challenges. By working together, Scottish Water, local authorities and others can develop approaches to drainage which will reduce the burden on the sewerage network reducing the need for costly new infrastructure and reducing flood risk. By retaining more water in rivers and soils we can improve the environment and support biodiversity while increasing leisure and activity potential and take steps to join the international trend towards Blue-Green cities. We will build on examples of work under way in Glasgow and elsewhere to establish new pilots of this approach.

We have identified that the sewerage systems serving Edinburgh and the surrounding area are facing particular challenges which will be exacerbated by the prospective population growth in the area and climate change. A recent study has shown how the performance of the main treatment works at Seafield is impacted by events elsewhere on the network. It is vital that a sound strategy is developed to meet these challenges and ensure that in future the networks operate efficiently and support the continuing economic growth of the area. We have therefore asked Scottish Water to work with local authorities in the area and SEPA to review future waste water treatment needs in the area in order to guide future investment planning.

Water refills in public spaces

We will pilot water bottle refill points in public spaces – starting small but with a view to establishing a network across Scotland. This will cut down on our use of plastics and promote the benefits of hydration building on Scottish Water’s Top Up at The Tap campaign. Facilities have been put in place by Network Rail at Glasgow Central and Edinburgh Waverley stations and work is being done in communities to sign up local businesses as designated water refill points.

Flood protection

Flooding is currently one of our biggest climate risks. Too many communities have felt the devastating effect of flooding on their homes, businesses and communities, and our work with local government and others on the delivery of flood protection is critical to supporting successful climate change adaptation. In the last year the Huntly Flood Protection Scheme was completed, reducing the flood risk to around 45 properties and a care home. This year we will see progress by local authorities on the delivery of flood protection schemes, including on the Stonehaven and New Cumnock schemes.

In the coming year we will also:

• develop an action plan to promote the economic and social benefits of flood resilient properties and fund the Scottish Flood Forum to raise awareness and increase resilience of communities at risk
• publish, in partnership with the Scottish Environment Protection Agency ( SEPA), an updated National Flood Risk Assessment which embeds climate change and social justice in Scotland’s flood risk management planning approach and puts communities at the heart of the assessment

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Consult on creating four new Marine Protected Areas

Plastics and waste – ending throwaway culture and promoting circular economy

We want everyone to be able to live in clean and unpolluted environments and aspire to being the greenest country in the world. We have reached a turning point, individually and as a nation, about our use of plastics, our throwaway culture and the impact both seen and unseen on our environment.

While we have made steady progress on recycling, there is more to be done. In 2016 less than half of household waste was recycled.

Building on our work in the past year to reduce, reuse and recycle waste we will go further in the coming year and ban the manufacture and sale of plastic-stemmed cotton buds. We have appointed an Expert Panel on Environmental Charges and Other Measures. The Panel will identify the bold actions we need to take as consumers and producers to tackle our throwaway culture, including on disposable cups and plastic straws. And in early 2019, Scotland will host an International Conference in Glasgow on improving and protecting our marine environment, focusing on reducing the level of marine plastics in our seas.

Deposit return scheme

We have asked people for views on how a deposit return scheme for drinks containers should work. We know that as well as cutting litter and pollution we could gain significant economic benefits by developing the circular economy.

We will use the views shared with us to help design an effective system that will work well for everyone in Scotland. Deposit return offers an exciting opportunity to expand our recycling infrastructure creating new job and investment opportunities. As with all our action to reduce, reuse and recycle we know that the success of new measures depends on how people can easily adapt change into their everyday lives.

We will also take the next step of moving beyond drinks containers and consult on what additional measures should be considered to improve the use and reuse of other materials.

Protecting life and habitats – below water and above land

On top of our commitment to maintain our environmental protections following Brexit we will do more to safeguard our biodiversity, species and habitats for future generations to enjoy.

We want to enhance our protection of charismatic species such as the basking shark, minke whale and Risso’s dolphin. To do this, we will consult on proposals to create four new Marine Protected Areas which would also protect seabed habitats. These will be among the first sites in the world created to protect these species.

In the year ahead we will:

• consult on the creation of a national deep sea marine reserve, with the aim of this being in place by the end of 2019. This will protect some of the most vulnerable habitats and species on the planet, such as coral gardens and the leafscale gulper shark
• identify actions to address the significant declines in seabird populations, such as puffins, through a new Seabird Conservation Strategy
• work with the fishing sector and coastal communities to develop proposals to tackle the issue of fishing litter and lost gear

A natural health service

We know that a healthy clean environment is good for us and that enjoying the outdoors supports our good physical and mental health whatever our age and stage of life. Some communities do not have a quality natural environment on their doorsteps and we need to do more to maximise opportunities for all.

We will explore how to promote the existing Community Right to Buy ( CRTB) mechanisms to enable community allotments and other forms of community growing.

In the coming year we will also:

• invest in the Outdoor Learning and Nature Fund, working with schools and nurseries to help children and young people spend time in nature – something we know is good for wellbeing
• provide opportunities to involve young people in Scotland’s nature and outdoors, including taking forward a number of the recommendations made by ‘ReRoute’, Scotland’s Youth Biodiversity Panel
• continue to develop Europe’s largest greenspace project, the Central Scotland Green Network ( CSGN), through our core support for the CSGN Trust and the CSGN Development Fund including creating 4.5km of ‘Greenway’ over three different sites along the John Muir Way – creating ecological links between pollinator hubs and encouraging active travel and enjoyment of the route
• invest in the Water Environment Fund and support delivery of River Basin Management Plans – in the coming year we will open up 175km of rivers for fish, create accessible green space for more communities and continue to improve the quality of our bathing waters
• launch a review of our air quality strategy, building on the progress made under Cleaner Air for Scotland and as part of that, we will also review our arrangements for driving delivery

Scotland’s place in Europe – protecting, maintaining and enhancing environmental standards

Much of the progress in environmental protection in Scotland and the UK has been driven and enabled by EU membership. Around 80% of our environmental legislation comes from the EU and EU membership has provided essential sources of funding, labour, scientific expertise and collective initiatives that have played an important role in delivering Scotland’s environment and climate ambitions.

While Scotland did not vote for Brexit, we do now have to manage the consequences and ensure that we uphold our ambitions for our environment. We are committed to maintaining and enhancing environmental standards in Scotland and carrying forward EU environmental principles. It is also vital to ensure effective governance arrangements are in place to monitor and enforce these standards. In the autumn we will consult on future environmental governance arrangements in Scotland as well as how EU principles will continue to guide our approach to environmental policy.

Regardless of the UK’s future relationship with Europe, Scotland will continue to lead action to protect, enjoy and enhance our environment and tackle global environmental challenges. To support this, we will publish an Environment Strategy which will help to co-ordinate action and guide future activity across Scotland’s existing environment policies, addressing biodiversity, land use, water, air, seas, climate change, the circular economy and our connection with nature.

As the UK prepares to leave the EU, Scotland will not leave our moral responsibilities behind. We support the EU’s vision to phase out single-use plastics by 2030 and will do what we can in Scotland to make this a reality. We will continue to press the UK Government to step up their action on plastics to match our ambitions in Scotland.

Protecting public services – fairer and more progressive tax
We have a strong track record of using the powers we have to make taxation fairer and more progressive. We have taken a more open, consultative approach to taxation – something we will continue to champion in future Budgets.

We have radically reformed income tax. These reforms and the increase in the personal allowance mean 70% of income tax payers in Scotland will pay less tax this year than they did last year, for a given income. And 55% pay less than those on the same income elsewhere in the UK, with those that can afford it paying a little bit more.

Our reforms to Council Tax, in place since April 2017, have protected household incomes, making Council Tax fairer and local authorities more accountable.

Scotland led the way in the UK by introducing a progressive approach for Land and Buildings Transaction Tax, replacing the slab approach used for Stamp Duty Land Tax and prioritising support for first-time buyers.

We listened to business, and delivered on their number one ask of us at last year’s Budget relating to the cap for business rates uplifts.

We have delivered these reforms and others whilst raising additional revenue to support our public services, help tackle the worst effects of the UK Government’s austerity programme and protecting those on lower incomes. We lifted the public sector pay cap and will continue to offer a fair deal for public sector workers that also is affordable to the public purse.

In the year ahead we will work with the Scottish Parliament and others to develop a new approach to the planning, management and implementation of changes to devolved taxes with the aim of bringing greater certainty, transparency and efficiency.