Enterprise and Skills Review report on Phase 2: Regional Partnerships

1. Introduction

In recent decades globalisation has brought major changes in the economic landscape, prompting national, regional and local governments to review established models of economic development and business competitiveness. Scotland has influenced now well-established international evidence which recognises the vital importance of place.

There is a significant and long-standing body of evidence that national economies can benefit from an effective regional tier of governance that can tailor policy and delivery to suit an economically diverse nation ^[1] . Scotland is not only economically diverse, it is geographically diverse, with major urban centres in the central belt whose priorities and needs differ from those of rural Scotland and the Islands. The academic literature on thriving regional economies offers global comparators at a range of scales with specific comparisons made with countries of a similar size/scale to Scotland (New Zealand, Chile, Finland, Belgium) as well as comparisons with the city deal/devolution deal experience in England ^[2] . From the wide variety of examples illustrated, it is clear that to be effective, regional solutions need to be tailored and bespoke; what works well in one situation, will not necessarily translate well to another.

The Scottish Government has long recognised the importance of thinking about and addressing regional challenges and opportunities. We have a regional enterprise body Highlands and Islands Enterprise ( HIE) which is the Scottish Government's economic and community development agency for the north and west of Scotland. From launch in 1965, HIE has forged ahead to foster a successful and competitive region in which increasing numbers of people choose to live, work, study and invest. Building on this the Scottish Government has published an Islands Bill designed to ensure a sustained focus across Government and the public sector to meet the needs of island communities both now and in the future. Recognising HIE's success we have also committed to a further regional enterprise body to meet the unique needs of the South of Scotland which will take forward a range of activities to drive forward the economy and maximise the area's contribution to Scotland's inclusive growth ^[3] .

These are formal structures set out in legislation which are designed to meet the requirements of the particular regions concerned given their particular needs. However in the rest of Scotland we want to encourage the development of regional economic partnership arrangements which are self-assembled around the bespoke requirements of particular regions. These will build and expand on the experiences, structures and learning from City Deals and we envisage that these partnerships will evolve over time and will be underpinned by the participation of the region's key private, public and third sector interests including Community Planning Partnerships ( CPP), universities and colleges. ^[4]

This report identifies the key attributes of successful partnerships and a series of actions: for regional partnerships, for national agencies and for Scottish Government. Taken together, these actions are designed to better align our combined resources to support regional partnerships to deliver improved inclusive economic outcomes across their regional economies.

Regional Partnerships and City Deals

Across Scotland our city region travel to work areas generate two thirds of our Gross Value Added ( GVA) and are home to over half our population. If our cities and their regions thrive, then all of Scotland benefits. Scotland's cities and their surrounding regions represent the most significant concentrations of economic assets in the country. City Region Deals act as enablers to unlock these assets in order to fully realise their potential, drive economic growth and maximise impact. The Deals are designed to enhance alignment between national, regional and local ambitions, strategies and resources. By empowering Local Authorities to operate strategically with their partners at a regional level, the Deals encourage collaboration across and between cities and their surrounding areas to build their international competitiveness and wellbeing. The Deals also provide opportunity for greater private sector involvement complemented by strategic alignment of public resource behind those projects with the greatest economic potential for the region.

Scotland's Agenda for Cities ^[5] reinforced the importance of cities working in close partnership with their regions - with collaborations and partnerships developing between local authorities, colleges and universities, businesses and with other public sector partners. It made a commitment to subsidiarity, to local decision-making and to supporting city region deals for all Scotland's cities, recognising the value of the regional collaborative partnerships forged as part of the deal process. As noted in the Policy Scotland submission to the Scottish Parliament ^[6] "City Deals reflect a determination to move past 'one size fits all' policymaking, to allow interventions to be geared to the unique needs of local places". As part of the deal process, each city region develops its own bespoke regional governance, drawing in collaborative partners as appropriate and geared to its unique need. A number of city regions have established the basis of a regional partnership to develop or deliver these deals. More information about current and emerging city region deals is in Annex A.

Other Regional Partnerships

The move to build stronger regional economies has already evolved beyond City Deals. An 'Ayrshire pathfinder' was established as part of this project. The pathfinder is considering what is best delivered at local, regional and national levels. It is building on earlier collaborative work involving the three Ayrshire councils, and with full input from national agencies, to develop proposals for an Ayrshire Growth Deal. The Ayrshires are also examining opportunities to strengthen their approach to growing the economy. The pathfinder is utilising an inclusive growth diagnostic to systematically investigate the constraints to unlocking regional inclusive growth.

Other areas are developing active partnerships to address opportunities across a smaller geography. The Falkirk Economic Partnership, for example, brings together the public and private sector to agree and deliver the Falkirk Economic Strategy. This partnership, led by the Council, is built on strong and effective relationships with business to address the needs of this area which includes one of the most important industrial complexes in Scotland.

The Scottish Government welcomes the different approaches that have been adopted to responding to issues critical to the economic health of the region concerned. We welcome this diversity and see strength in locally driven responses tailored to the needs of the area. Annex B and C provide further information about the Ayrshire pathfinder and emerging economic partnerships outside the city regions.

We also recognise that the emergence of regional partnerships has demonstrated the need for an approach that better understands regional strengths and opportunities, enabling a more tailored response at both the regional and national level.