Enterprise and Skills Strategic Board minutes: August 2021

Attendees and apologies

Attendees

Members:

• Nora Senior (Chair)
• Scott McLarty (Vice Chair)
• Steven Heddle
• Grahame Smith
• Melinda Matthews-Clarkson
• Gillian Murray
• Alison Milne
• Simon Cotton
• Liz Cameron
• Lord Smith (SE)
• Mike Cantlay (SFC)
• Prof Russell Griggs (Sose)
• Alistair Dodds (HIE)

Other attendees:

• Ivan McKee (Minister for Business, Trade, Tourism and Enterprise)
• Carroll Buxton (HIE)
• Jane Morrison-Ross (Sose)
• Linda Hanna (SE),
• Karen Watt (SFC)
• Linda Murray (SE)
• Chris Brodie (SDS)
• Neville Prentice (SDS)
• Keith Winters (LA)
• Stephen Boyle
• Liz Ditchburn (SG)
• Richard Rollison (SG)
• Colin Cook (SG)
• Katherine Peskett (SG)
• Gary Gillespie (SG)
• Adam Reid (SG)
• Cornilius Chikwama (SG)
• Richard Murray (AU/Sec)
• Julie Wilson (Sec)
• Chloe Clark (Sec)

Apologies:-  Frank Mitchell (SDS), Damien Yeats (SDS), Sara Carter, Audrey Cumberford,  and Caroline Barelle
 

Items and actions

Welcome and minutes from previous meeting

The Chair welcomed everyone to the August board meeting and introduced:

• Carroll Buxton interim CEO for HIE
• Colin Cook new Director for Economic Development Directorate in SG
• Linda Murray SE and
• Willie Watt Chair of SNIB – who was attending for Item 2
• she was also delighted to welcome Ivan McKee , Minister for Business, Trade, Tourism and Enterprise who would join for Item 3

The Chair thanked Liz Cameron for her invaluable contribution to the Enterprise and Skills Strategic Board since its inception and welcomed her support for the development of the National Strategy for Economic Transformation (NSET) and the ESSB Strategic Plan refresh. We will miss her wise council.

The Chair asked that the Board to agree the previous minutes with a request for any comments to be made via correspondence to the Secretariat.

There were no conflicts of interest.

Actions:

• all action points were dealt with or covered by the agenda. With respect to ESSB May 21 (03) Richard Rollison would report back on A Trading Nation at a later meeting

Introduction from the chair

The Chair thanked members for joining the meeting and outlined the agenda for the day. There were four areas of update:-

Innovation review

There had been a very productive session with Mr McKee on the Innovation Review and ESSB members were thanked for their feedback. The Minister welcomed the recommendations and has asked the ESSB to scope what an innovation strategy might cover.

Action:

• secretariat to get in touch with Board members to take forward work on scoping what might be covered in an innovation strategy

Business Support Partnership

The Chair and Vice Chair had a good meeting with SE and SDS on the Business Support Partnership. There will be work taken forward to rationalise the over 600 products and services available to businesses. Where products and services relate to specific initiatives we need to ask if they are still relevant.

National Strategy for Economic Transformation and Strategic Plan refresh

We will look at the NSET today and the impact of its timing on our Strategic Plan refresh. With PfG due in September and the NSET in November we have decided to push back our Strategic Plan refresh to the start of 2022. We wish to ensure alignment of these developments across the landscape. We are joined by Mr McKee today who will give an update on the National Strategy for Economic Transformation.

Meetings with Ms Forbes, Cabinet Secretary for Finance and the Economy

The initial meeting the Chair and Vice Chair had with the Cabinet Secretary went well and there will be a follow up discussion on 17th August. Ms Forbes wants ideas for radical actions and initiatives the ESSB can take forward that will deliver transformational change. Feedback already provided by the Board has been incorporated within the draft slides being prepared. 

Action:

• secretariat to share the final slides for the meeting Ms Forbes on 17th August with the Board

Update on the Scottish National Investment Bank - Willie Watt, Chair of SNIB 

Willie Watt outlined the history of the Bank which was born out of the work of the Council of Economic Advisers and a report by Benny Higgins. It was launched in November 2020 and currently employs 40 people – 22 of whom are in investing. The Bank belongs to the European Development Bank tradition and worked with Ministers to set three key missions:-

• just transition to net zero
• extending place based equality
• harnessing innovation to let Scotland flourish

The missions are not mutually exclusive and projects usually sit well with more than one mission. The work is not sector specific and they can, for example, work with the oil and gas industry to pivot to supporting low carbon energy and services. Although this pivoting cannot happen overnight.

The Bank is financed to the level of £200m per annum over ten years. For projects to be funded their needs to be a positive return on capital and the achievement of mission benefits. They invest from £1m to £50m in projects and companies across the public, private and third sector and their investment is both foundational and additive. They can also do multiple investment rounds and the timescale is up to 50 years.  Part of the role of the Bank is to solve the lack of private sector investment in certain projects.  However rescues are not a primary interest of the Bank. They have recently invested in two projects: M Squared Lasers and Places for People. Projects totally £150m have been reviewed by the Committee since the launch. Stakeholder engagement is vital to the Bank and they would welcome strong links with the ESSB. Their first set of accounts will publish in September and they will set out how they will measure progress there.

In the discussion that followed the close working together of SE and the Bank was highlighted as both organisations support businesses. As such both keep each other in the loop regards their contacts with potential businesses. They have done a lot of work together over the past six months and will openly collaborate in order to get the best return. It was recognised that the Bank is very much a start-up and is still building up its capacity and operations. The fact that the Bank’s contribution is additive will ensure that the role of the agencies and LAs is not diminished. Indeed the Bank is very keen to work with the agencies. The need for companies to be competitive was also highlighted and the local sourcing flowing from the pandemic (e.g. offshore wind) adds to local competitiveness. Clusters of businesses in the same sector will also fuel competitiveness.

It was noted that the message from other banks and investors was good and they want to work with the Bank. In some cases the Bank has had to pull back from a given project as the project had secured full funding elsewhere. On innovation the Bank is interested in proprietary technology and things that are globally competitive.  Innovation is all about business benefits based on technology and knowledge. The Bank wants to help innovative companies become more global. They also see Universities as part of what makes Scotland globally competitive and are keen to work with the Universities on how best to invest in the sector. 

The importance of the housing aspect of the place based equality mission was clear, especially in rural areas. The Bank wants to work with Housing Associations and other developers on this – to develop affordable accommodation. The potential for unmet need for the Bank’s services was identified. However in some cases, such as offshore wind, the funding gap that first presented was subsequently filled. Funding gaps do appear in different areas and is constantly evolving. In terms of due diligence and Fair Work principles there were legal rules in terms of knowing the customer and counterparties. The Bank is cognisant of Fair Work and will report on how they will manage gender pay and equality issues.

In terms of comments from the chat bar one member reported very positive dealings with the Bank for her business. It was noted that there is a broader task for us all about how we build capacity and capability, public and private, to develop credible, investible propositions. That is part of the work following Global Capital Investment Plan (though at early stage).

In summing up the Chair offered to have a separate discussion on the best way to keep the Bank involved with the ESSB potentially as an observer or attending Board meetings periodically.

Action:

• the Chair to discuss the potential role for the Bank in attending the ESSB

10 year national strategy for economic transformation 

Mr McKee opened the session by saying that as we emerge from Covid we want to take 10 year perspective on what we want Scotland to look like. Ms Forbes talks of a “national endeavour” and the session today was part of their engagement in the development of the strategy. There would also be the opportunity for further engagement. The new Council for Economic Transformation has met once already and has 17 members with very diverse backgrounds. Drivers for this work include net zero and fair work. The National Strategy for Economic Transformation (NSET) will be broad, covering an agenda wider than just the economy (e.g. poverty) and will act as an umbrella for all of the other strategies SG has.

Gary Gillespie remarked that Ms Forbes had noted that countries which brought a strong focus were doing better – so our challenge was to prioritise better. Ensuring the other different strategies were joined up was very much in the territory of the ESSB.  It was all about joining up, system delivery and driving change – with the opportunity to look beyond the immediate. Ministers were also keen to get cross party support.

Gary talked through the key slides from the presentation. On framing and scope everyone agreed that we are at an inflection point in the economy. The three priority themes of jobs, supporting and developing business and place were outlined. There are also two cross cutting priorities of net zero and biodiversity and being bold and ambitious. On delivery arrangements for the strategy there are thematic groups which the agencies are involved with. The Council met for the first time in July and will meet each month until the strategy is published in November. The thematic groups have also met and took the evidence base as their starting point.

There is extensive engagement in the development of the strategy and there have been around 30 responses to the consultation to date. In terms of progress to date Council members were clear that the system is complex and there are a lot of cross sectoral activities. They might take one or two missions and look at opportunities across the missions. The challenge would be the clarity of the 10 year vision. There are three aspects:

• facilitate the move to net zero by 2030
• maximise the economic benefit
• wider transformational change – environmental, social and economic

There was also a strong emphasis on regions and fair work. The availability of labour supply is likely to be a major constraint to growing business in the future which brings us back to the skills pipeline. Gary also talked through the systems-based approach for framing the issues and the desire to set a hard boundary of net zero to drive innovation. The need to look across the system was akin to the work of the ESSB.

The ESSB then split into two breakout groups to discuss the following three points:

• feedback on the draft vision and outcomes
• how can the enterprise and skills system help deliver transformational change?
• what are the key opportunities/projects for delivering transformational change?

Break out group one – facilitated by Gary Gillespie – key themes

• positive response on the draft vision and outcomes. The latter need to be practical. Focus should be on national and regional growth - also need to think about the role of local authorities in this space
• understanding the issues facing rural areas is really important. Sectoral approaches do not work well for a rural economy
• need to ensure we have clear targets and accountability in order to ensure the strategy is delivered upon and is not just another gloss document. Clarity, focus and delivery are key
• there is a lack of investment and poor business innovation. Need to think about the levers we have in order to bring about change. Agencies have a role on innovation
• need to ensure natural assets are captured
• we are all agents of change. Need to be clear who can effect change and at what point
• need to concentrate on the demand side and not the supply side. We need enough ambitious businesses. Work on BMWI is really important as this gets to the heart of the demand side

Break out group two – facilitated by Cornilius Chikwama – key themes

• clear that the strategy needs to take a systems wide approach, focusing on missions rather than sectors. The outcomes identified and the overall vision are in the right territory
• sectoral approach does not work in rural areas where there is a lack of a critical mass within sectors
• care needs to be taken on the language used as this needs to “talk” to business. For example, what are the short, medium and longer term steps business need to take
• greater recognition of the partnership approach needed with the private sector in delivering the strategy
• importance of examining the data through a place-based lens, recognising that even in the Central Belt there are remote rural areas which need support
• some of the data pre-dates the pandemic and therefore the decisions taken in the strategy need to reflect resent economic trends which are likely to continue for the next few years
• on vision and outcomes, focus on: wellbeing, net zero, fair work and biodiversity is welcome

Mr McKee thanked members for their valuable contribution to the strategy development. The Vice Chair wrapped up by saying that acceptance of the strategy was clear and we need to think what the ESSB can do to support it and what we will take into our Strategic Plan refresh. He thanked Mr McKee for his time.

Action:

• secretariat to arrange further session with the Board on the 10 year NSET

Reflections and close - vice chair 

The Vice Chair concluded by thanking Liz Cameron for her contribution to the ESSB.

The Vice Chair thanked members for their participation and closed the meeting. 

Next meeting – 27th October 2021.

Actions:

• secretariat to get in touch with Board members to take forward work on scoping what might be covered in an innovation strategy - lead: secretariat - deadline: September 
• secretariat to share the final slides for the meeting with Ms Forbes on 17th August with the Board - lead: Chair - deadline: August
• the Chair to discuss the potential role for the Bank in attending the ESSB - lead: chair - deadine: before the next Board (27 Oct 2021)
• secretariat to arrange a further session with the Board on the 10 year NSET - lead: Secretariat - deadline: August