Investing for jobs: Capital Spending Review 2021-2022 to 2025-2026

Chapter 4: Capital to drive Economic Recovery and Inclusive Growth

The Advisory Group on Economic Recovery considered the importance of capital investment to support Scotland’s recovery from the Covid-19 pandemic.  They noted in their report: “Towards a Robust, Resilient, Wellbeing Economy for Scotland”^[11]:

“The UK and Scottish Governments should commit to securing a significant increase in access to capital investment to support the recovery. This should maintain the Scottish Government’s commitment to a Mission to raise infrastructure investment and it is imperative that the Scottish National Investment Bank opens this year.”

The Scottish Government fully accepts this recommendation, recognising that investment in infrastructure across Scotland will be key to our recovery.

The investment over the Capital Spending Review period builds on a £230 million economic capital stimulus package the Scottish Government made early in 2020-21, aimed at tackling the immediate effects of the Covid-19 pandemic and boosting funding beyond the levels set out in Budget 2020-21.

Although all Government portfolios make an important contribution to Scotland’s economy, non-infrastructure focused capital investment that most directly supports inclusive economic growth occurs predominantly in our Education and Skills; Rural Economy and Tourism; Finance; Economy, Fair Work and Culture; and Transport, Infrastructure and Connectivity ministerial portfolios.

Our capital funding supports economic growth by investing directly in businesses to boost innovation and employment, funding research and development, and capitalising the Scottish National Investment Bank.  Such funding seeks to encourage additional investment from the private sector, boosting overall economic activity.

For example, the Capital Spending Review allocations ensure:

• Capital for jobs – £595 million total investment by enterprise agencies, boosting innovation and employment in Scottish businesses.
• Capital for jobs - £50 million support specifically to supply chains which can service the green economy.
• The balance of the £2 billion capitalisation due to the Scottish National Investment Bank, starting with £200 million new net investment in 2021-22.
• £1,582.1 m in capital investment in research and knowledge exchange activity at our universities, underpinned by additional capital investment in university research infrastructure, the level of which will depend on matched funding. We are also investing in aerospace research and development and continue to support our marine science service. All of this supports our economy, society and environment.
• Early development of our digital business sector with £4 million allocated to implementation of the recommendations of the Logan Review.
• £110 million investment in developing transformed digital public services, so they are easier to access and boost productivity.

Scottish Ministers have set an ambitious goal to reach the same economic performance as those OECD nations in the top quartile.  Not all of that can be delivered through infrastructure, but it has a key role to play.  Boosting our international and country-wide digital connectivity and capacity, particularly in rural areas, can help boost Scotland’s productivity and competitiveness.

The Infrastructure Investment Plan highlights key projects and programmes using capital.  A number of these funded schemes specifically aid our ambitions to boost inclusive economic growth, including:

• Completion of the £75 million National Manufacturing Institute Scotland.
• A further £25 million for the Mission Clyde project in Glasgow.
• £4 million investment in Spaceport Sutherland.
• £10 million to restore the Cairngorms funicular.
• Completion of the £600 million Reaching 100% (R100) programme that will boost access to digital connectivity in every part of Scotland.
• Doubling investment in bridge and roads maintenance, enhancing safety with a programme of around £1.5 billion over 5 years.
• £525 million Scottish Government investment to deliver the next five years of the £5 billion City Region and Regional Growth Deals programme.  This investment will help drive inclusive growth that will deliver significant and lasting economic benefits for individuals, businesses and communities in: Glasgow City Region; Aberdeen City Region; Inverness and Highland; Edinburgh and South East Scotland; Stirling and Clackmannanshire; Tay Cities; Ayrshire; Borderlands; Moray; Argyll and Bute; Falkirk; and the Islands.