National Strategy for Economic Transformation Delivery Board minutes: 13 March 2024

Attendees and apologies

Present

• Mairi McAllan, Co-Chair, Cabinet Secretary for Wellbeing Economy, Net Zero and Energy
• Barry White, Co-Chair, Former Chief Executive, Scottish Futures Trust
• Ewan Aitken, Chief Executive, Cyrenians
• Roz Foyer, General Secretary, Scottish Trade Union Congress
• Ellis Watson, Former Chief Executive, DC Thomson Media Group
• Sir Simon Lister, Managing Director, BAE Systems Naval Ships
• Audrey Cumberford, Principal and Chief Executive Edinburgh College

Apologies

• Douglas Millican, Former CEO, Scottish Water
• Nora Senior, Former Executive Group Chair, Weber Shandwick and past Chair, Enterprise and Skills Strategic Board
• Uzma Khan, Vice Principle Economic Development and Innovation, and Deputy Chief Operating Officer, University of Glasgow
• Gillian Docherty, Chief Commercial Officer, University of Strathclyde

Supporting Officials

• Mark Logan, Chief Entrepreneur
• Ricky Cowan, mnAI
• Aidan Grisewood, Director for Economic Strategy, Scottish Government
• Colin Cook, Director for Economic Development, Scottish Government
• Marcus McPhillips, Deputy Director Economic Strategy and Delivery, Scottish Government
• Richard Murray, Deputy Director Economic Development, Enterprise & Labour Market Analysis, Scottish Government
• Stephen O'Neill, Deputy Director Entrepreneurship, Scottish Government
• Lewis Hedge, Deputy Director Fair Work and Labour Market Strategy, Scottish Government 

Items and actions

Welcome and discussion on future governance

Barry welcomed members to the eleventh meeting of the NSET Delivery Board and noted apologies from Douglas Millican, Gillian Docherty, Nora Senior and Uzma Khan.

The minute of the meeting on 29 November was approved subject to any final amendments, to be submitted to the Secretariat that week. The Action Tracker was noted, and no issues were raised.

On governance, Barry provided feedback on his discussions with Board Members and the following points were noted in discussion:

• the current working assumption is that there will be a Ministerial Group, combining Ministers and external members, to replace the current NSET Delivery Board and provide formal oversight and strategic decision-making for NSET
• membership of the Ministerial Group will be key and must include those Cabinet Secretaries and Ministers who have responsibility for delivering key elements of NSET.  Economic objectives should also have primacy in mandate letters
• the current governance structure has had a positive impact but there is not a direct link to follow through on the Board’s recommendations and SG decision-making, for example on Housing. A Ministerial Group would have that direct link to decision-making
• the Board Champion role has worked well and elements of that should be retained in future governance arrangements, with one option being to have a business person embedded in each pillar’s governance in addition to being on the Ministerial Group
• board members are keen that the refresh does not lose NSET’s momentum and is sufficiently focused and ambitious to make a real difference to Scotland’s economic performance

High level overview

Richard Murray highlighted some of the key points from recent figures:

• there was a sharp fall in output (0.6%) in the last quarter of 2023 and although this was not technically a recession, it was preceded by no meaningful growth over the previous year. There was however a degree of optimism going into 2024
• the labour market remains tight with payroll employees at the second highest level since 2014 and the claimant count down to 3.5%
• economic inactivity remains high and above the rest of the UK
• inflation is on a downward trajectory, 4% in January, and projected to fall to 2% by the summer
• the forecast for this year is modest growth of 7% in line with the OBR forecast
• in terms of GDP per head, Scotland ranks 3rd highest in the UK behind London and the South East

Members made the following points in discussion:

• the worklessness rate and number of unfilled vacancies are increasing
• there are risks of bias with these statistics, for example it is a positive that the claimant count is down, but it doesn’t reflect underlying issues around those who cannot claim
• we shouldn’t underestimate the mental fatigue and other factors which cause people to leave the workforce
• school attendance has dropped and is now at its lowest level and the number of young people needing support because they lack qualifications or confidence to access support has risen to 40%

Aidan introduced the NSET Summary Dashboard before inviting comments from members who noted:

• there is still risk of confirmation bias in the Dashboard, particularly where there is a mismatch between the narrative and RAG ratings. Members asked that this should be addressed before April’s performance and delivery session
• there is concern at the rate of progress in terms of joined-up working, particularly across education and the economy and on understanding what will be done nationally or devolved to regions in terms of skills planning

Introduction to Cabinet Secretary

Barry welcomed the Cabinet Secretary and introduced the Board before inviting her to share her initial thoughts and impressions since taking up post.

The Cabinet Secretary underlined the value of her new, expanded portfolio bringing together Economy, Net Zero and Energy and illustrating the Government’s direction of travel. She noted that she had been brought up to speed on NSET, what it had achieved over the last 2 years and the need for a refresh.

She confirmed she would want to take a commercial approach to the refresh with an emphasis on simplicity and clear metrics on delivering success.  It would be an iterative process focused on ‘doing less better’.

Members welcomed the Cabinet Secretary’s comments and offered the following observations:

• there has to be ‘growth with purpose’ and a clearer focus on the foundational economy is particularly welcome
• the refresh should be less about definition and more about execution
• working across Departmental boundaries will be imperative as will aligning funding behind key priorities and projects and avoiding displacement activity
• the aim should be to define what will have been achieved by 2032, for example will we be able to say that Scotland is an entrepreneurial nation and has secured its status as a green powerhouse?
• there needs to be clarity around roles, responsibilities and accountability. The Board see a need to purify roles in key areas - for example who is ultimately responsible and accountable for the offshore consenting process or for leading on securing inward investment in offshore wind

NSET Refresh: People

Before inviting Lewis to talk members through the People pillar, Aidan explained that the refresh is an iterative process, building on the feedback received to date and he:

• underlined the importance of ensuring the Strategy would stand the test of time and have a critical focus on transformative projects
• acknowledged the challenges around prioritisation/de-prioritisation
• confirmed that pillar sponsors will be responsible for leading on development of pillar content and engaging internally and externally to secure buy in, and in the longer-term driving progress against core metrics relating to high level Pillar outcomes

Lewis spoke to the slides shared with members in advance, highlighting:

• many of the actions are either complete or moving forwards so this is a good point to be looking at what’s next
• the five emerging challenges are around skills utilisation, skills alignment, labour market participation, income inequality and talent attraction and retention
• in terms of what good looks like, the focus is on outcomes, ensuring they are right in terms of high-level metrics, and that their contribution is measurable and hardwired to specific actions
• inclusivity is a key element of the Fair Work agenda and must be included in pillar design
• the final element is around understanding the additionality of the People Pillar

The Cabinet Secretary invited comments from members and the following points were made in discussion:

• members welcomed the simplified, more coherent structure
• the People Pillar should reference the lack of collective bargaining coverage and sectoral bargaining in key sectors as a significant factor in pay inequality (as evidenced in a range of data)
• we should build on the success of the Living Wage, going further with Fair Work First and thinking about next steps which could include ‘rates for the job’ for example in construction, which could also be reflected in publicly managed contracts
• there is a need to clarify where Housing will sit and how it will be articulated in the refreshed strategy.  Although it is a key element of the Investment Pillar, there was acknowledgement that it links across a much wider range of areas
• the Skills system is key but there is a lack of clarity on government policy and prioritisation.  It is important to understand what will be done nationally or regionally but as a national approach won’t work across the board, activity should be driven by an agile regional approach
• where Government policy and spending on social policy has had results, the impact on the wider economy has been negligible and it will be important going forward to have fewer and bigger priorities / outcomes to support a growing and green economy

Gender Index Team

NSET: Entrepreneurship and Innovation

Barry invited Ricky Cowan to introduce the Gender Index to members before passing to Mark Logan to update members on the Entrepreneurship and Innovation Programme. 

 Ricky shared copies of the 2024 Gender Index produced by mnAI. The Index provides a single source of unified data which benchmarks female entrepreneurial activity and the impact of female-led companies. It has been used widely including by SNIB and to inform the Pathways Report and Ana Stewart’s recommendations. 

 Mark introduced the slides which had been shared with the Board beforehand and highlighted some key points: 

• the Programme’s mission is to establish Scotland as a start-up country
• the ambition is to scale up, scale deep and scale wide. In the case of small companies and social enterprises which have a wider geographical spread this would have a direct impact on community wealth building. Scale wide measures need to be designed for scale and use a coherent national platform of support. Large scale ups like Skyscanner provide inspiration to others
• the programme has achieved a lot so far, but more could be done at a greater pace with better cross-departmental working in government
• the NSET Refresh will build on the success to date and will:
  • exploit platforms built so far i.e. Techscaler Network
  • implement Pathways
  • recast universities as drivers of economic growth as demonstrated by entrepreneurial campuses 
  • increase Scotland’s International presence, showcasing our best start-ups through the Tech-scaler in Silicon Valley and further potential one in Singapore
• the teaching of Computing Science (CS) and Entrepreneurship in schools needs to be improved and expanded. There are declining numbers of CS teachers with around 20% of schools having no Higher-level capability. The programme has put 2 FTE teachers in STACS to curate best teaching practise and work the best teachers to support Advanced Higher teaching skills

 Stephen O’Neill went on to set out the asks of the Delivery Board:

• advocacy to promote Techscaler delivery, countering some negative attitudes, and to promote the importance of the entrepreneurial programme in an environment of limited funding
• collaboration and closer strategic alignment between Government, its agencies and the private sector to focus budgets on agreed priorities
• for NSET priorities to be reflected by Education stakeholders focussed on schools

 The Cabinet Secretary thanked Mark for his presentation before opening up to members who made the following points:

• on advocacy, there were strong offers of support from Ellis, Audrey and Ewan
• there is no lack of ambition in education but sometimes the system acts as a blocker
• there is a missed opportunity with the Scottish college sector which is a key deliverer of ‘applied innovation’, however recent funding from Innovation UK was not available to the sector. Mark also acknowledged that bandwidth has meant the programme’s focus to date has been on schools and universities
• Social Enterprises are another area of huge potential, with 46,000 charities driven by the purpose of creating a settled society. Mark and Ewan agreed to arrange a follow-up discussion on this
• the education supply issue has been discussed for over a year and members want to understand what more needs to be done to make progress
• Barry stressed the importance of the entrepreneurial programme and reflected on the first meeting of the Delivery Board where it had been agreed that one of the key long-term tests for NSET’s success was Scotland becoming a more entrepreneurial nation. That goal should remain central as part of the NSET refresh

Forward Look and AOB

Barry thanked members and confirmed that the next Delivery Board will be a shorter virtual meeting focused on Programme performance and delivery. A note of the meeting will be circulated in due course.

Actions

• NSET Refresh Team to consider thoughts on governance options and update on plans at May Board meeting
• NSET PMO to work with SROs to review the dashboards in light of feedback and to ensure commentary is consistent with RAG status and key challenges relevant to NSET delivery and progress are surfaced
• Stephen O'Neill to share paper with Barry White on work with public bodies
• NSET Refresh Team to consider bullet points above in developing NSET Refresh and provide a verbal update at the May Board
• Lewis Hedge and Ellis Watson to follow-up labour market discussion