National Strategy for Economic Transformation Delivery Board minutes: November 2022

Attendees and apologies

• John Swinney, Deputy First Minister and Cabinet Secretary for Covid Recovery, Interim Co-Chair
• Barry White, Co-Chair, Former Chief Executive, Scottish Futures Trust
• Audrey Cumberford, Principal and Chief Executive, Edinburgh College
• Gillian Docherty - Chief Commercial Officer, University of Strathclyde
• Roz Foyer, General Secretary, Scottish Trade Union Congress
• Uzma Khan, Vice Principal Economic Development and Innovation, and Deputy Chief Operating Officer, University of Glasgow
• Sir Simon Lister, Managing Director, BAE Systems Naval Ships
• Jamie McGowan, Managing Director, Essence of Harris
• Douglas Millican, CEO, Scottish Water
• Nora Senior, Former Executive Group Chair, Weber Shandwick and past Chair, Enterprise and Skills Strategic Board
• Ellis Watson, Former Chief Executive, DC Thomson Media Group

Apologies

• Ewan Aitken, Chief Executive, Cyrenians
• Colette Cohen, CEO, The Net Zero Technology Centre

Supporting officials

• Louise Macdonald, Director General Economy, Scottish Government
• Aidan Grisewood, Director for Economic Strategy, Scottish Government
• Kersti Berge, Director of Energy and Climate Change, Scottish Government
• Colin Cook, Director of Economic Development, Scottish Government
• Stephen Pathirana, Director of Advanced Learning and Science, Scottish Government
• Richard Rollison, Director for International Trade and Investment, Scottish Government
• Karen McAvenue, Deputy Director for Regional Economic Development, Scottish Government [item 3]
• Rachel Phillips, Unit Head for Regional Economic Development, Scottish Government [item 3]

Items and actions

Introductions

Deputy First Minister (DFM) welcomed everyone to the third meeting of the National Strategy for Economic Transformation (NSET) Delivery Board. He noted the publication of the delivery plans at the end of October 2022. The main discussion for the day was on green economy jobs and regional economic partnerships (REPs).

Deep dive on the green economy

Barry White gave a presentation on the green economy drawing on the information he and Colette Cohen gleaned as part of a fact finding exercise with a range of public and private sector organisations. Barry noted that although green economy jobs sits within the new market opportunities programme it also permeates into the other NSET programmes. The scale of the opportunities was highlighted, especially Scotwind and hydrogen, and the need to be fleet of foot to realise the economic benefits. There are also more immediate opportunities to be seized in relation to heat in buildings, with the prospect of greater local employment. Significant work is underway by the Scottish Government (SG) and public sector partners in these areas but there is evidence that the approach is fragmented, with greater scope to join-up activity.

In the discussion the following points were made:

• clear measurement criteria are needed to assess how successful agencies are in attracting investors to Scotland. Stronger indicators do exist on inward investment (for example the EY Europe Attractiveness Survey 2022 reports that Scotland ranked second in the UK for inward investment) than on capital investment. The establishment of the new Net Zero: Investor Panel, to be chaired by the First Minister, will provide greater insight into this
• a Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis would be useful to tease out what our competitors are doing, with scope to raise our international profile on the potential for areas such as hydrogen
• there are investors looking at green economy opportunities in Scotland but the government and agencies need to move fast to secure these. Opportunities are sometimes treated in the same way as procurement processes which can have a long lead-in time. Scope to pilot new approaches to secure quicker investments in Scotland
• demonstrating clearly to investors that Scotland is fully committed to supporting a particular sector, like hydrogen, would be very powerful. However, there needs to be a clear plan to support such a commitment, for example how we can transition at pace, scale and place for training and reskilling
• supporting the skills pathways into green economy jobs is essential, with evidence that the skills passports which are working well for those in the offshore industry. There will be cases for very targeted skills support needed to successfully secure the supply chain in Scotland, particularly for manufacturing
• a number of pathfinder projects are underway exploring how the system can be more responsive, with one specifically on the Climate Emergency Skills Action Plan (CESAP). The findings from these projects will be brought back to the Board. However, it was recognised that individuals will only commit to developing skills if they can see concrete job opportunities
• there was a concern about the speed of investment in Scotland in hydrogen, with evidence that countries such as Norway are making greater progress in repurposing existing offshore infrastructure. The work Scottish Development International (SDI) are doing on the low carbon hydrogen energy project in Scotland was noted and there are on-going discussions with major investors
• the opportunities from decarbonising heat in buildings are more immediate. Retrofitting the housing stock provides another opportunity and it was noted that local authorities/housing associations are well placed to take a lead role in developing a pipeline of work
• recognised that greater alignment of the work underway supporting the green economy was needed. A shared vision between the public and private sector was being developed for four sectors, along with mapping out opportunities and being clear on roles and responsibilities. Agreed that this work will come back to the Board once it has been progressed
• it is important to understand what the key enablers and blockers are to hydrogen, recognising that some of these will lie with the UK Government
• all industries will need to transfer to net zero and therefore will be part of the green economy. Consequently, it is important the public sector is strategic on which parts of the economy it targets for support, as some sectors will transition and create local economic impact  by the nature of the work. Other sectors will require hard targeted work to secure wider supply chain opportunities to Scotland. There is the need to leverage the full support of the public sector, including the Scottish National Investment Bank (SNIB) and enterprise agencies, to provide a coherent message to investors in each key sector
• important to recognise both the immediate and longer-term employment opportunities from the green economy, with laying the foundations for the latter having the potential to be more beneficial for the Scottish economy
• current offshore wind deployment in Scotland has had much of the fabrication work done abroad. Given the supply chain opportunities in ScotWind, and initial commitments made by developers, we have to do the utmost to secure a better outcome in future offshore wind
• more data would be required for the NSET Delivery Board to be in a position to make definitive conclusions, although there was sufficient evidence to identify agreed issues and to ask officials to look at these and come back to the Board
• DFM noted strong answers on the two questions posed to the Board and raised the following points:
  • The excellent international promotion of Scotland as a confident place to do business
  • the need to engage in a cohesive way to land investors – North Ayrshire and GSK were highlighted; and
  • the ability to deliver manufacturing opportunities on the ground, with the need to pivot to develop skills and the supply chain
• there was a need for a whole system approach – Team Scotland and not just the public sector, with the private sector having the confidence that we can successful deliver on this approach and draw in significant investment
• although we can do a lot in Scotland, the fact that a lot of the key levers, such as ‘contracts for difference’ pricing mechanisms for renewables sit with the UK Government was noted
• work is underway within the SG to ensure clearer accountability within the Director Generals for Economy, Education and Net Zero for supporting the green economy

In summing up, Barry noted the benefits if we were able to identify a senior lead person, either in the SG or the delivery partners, to be accountable for each of the major green economy segments. There was also a need for analysis and segmentation to underpin which sectors we have to be most active in, with the Board needing extra assurance that cohesion is being sought.

Deep dive on regional economic policy

Barry welcomed Karen and Rachel to the meeting and noted the recommendations from the recent review of regional economic policy had been accepted by Ministers. Karen explained that within NSET there is the ambition to reduce regional differences in the economy. The review was a collaborative process and looked through three perspectives: the national approach set out in NSET, how regions currently approach economic policy and international best practice. Keen to hear from the Board on which recommendations should be prioritised and how the Board wanted to engage in this work going forward.

The Board raised the following points in discussion:-

• the regional economic approach is extremely powerful and could give the Board visibility on the delivery of NSET across Scotland. Recognised that the bottom up work complements the top down approach of NSET
• the foundations are there for a stronger regional economic approach, building on the success of the Scottish City Growth and Regions Deals. Key to success is a clear articulation of local priorities which public sector partners can then work together for a shared purpose. However further work needs to be done to breakdown silos on-the-ground and to put in place a framework which aligns the funding and policy environment
• there are opportunities to foster a culture of collaboration between local authorities as at the moment it often relies heavily on individual relationships
• regional leadership is particularly crucial when attracting inward investment to Scotland. The cluttered landscape can make it more complex for potential investors looking to engage with local partners
• the review closely links in with separate work underway on Community Wealth Building (CWB) which will enhance the place-based approach and bring more local autonomy to decisions affecting communities
• the review has profound implications for the Scottish and UK governments and how they work with local government. It also impacts on how resources are allocated and the way the enterprise agencies work. Discussions are underway with the Convention of Scottish Local Authorities (COSLA) and the Society of Local Authority Chief Executives (SOLACE) on how we can successfully adopt this fundamental change in our approach to regional economic development
• recommendation nine on improving the analysis and intelligence was also key. REPs were great for granular planning and delivery with data needing to be right for the region. Some of the recommendations on structure and delivery were not felt to have gone far enough. It was agreed the NSET Delivery Board would come back to REPs
• DFM was delighted with the progress that had been made and felt this draws together our economic strengths to a common purpose, on skills, decisions, infrastructure and spend

High level overview of the performance of NSET programmes

Aidan updated the Board on progress implementing NSET. Key achievements included: tech scalers, entrepreneurial campuses, Innovation Strategy, REP review,  independent review of the skills delivery landscape starting, rural visa pilot proposal and work with health policy colleagues on economic inactivity. The publication of the delivery plans with their four phases to the work had been well received.

A key challenge for delivery is the fiscal outlook and what that means for our ability to take forward the actions set out in NSET. 

The infrastructure governing NSET has now been established, with the accountability framework about to be published setting out roles and responsibilities. There is a Portfolio Board awayday planned for January 2023 which will look to build on the work undertaken to date and explore cross programme connections which can enhance the impact of NSET.

Barry reported that concern over the budget position had been raised during his discussion with the Chairs of the enterprise and skills agencies. In addition, the issue of clarity over the current position of Green Freeports had been raised with a keenness to know the outcome at an early opportunity, recognising that other parts of the UK had made greater progress.

Barry reiterated in shorthand the three roles of the Board: policing delivery, challenging (like on green economy jobs) and changing (e.g. making recommendations to Ministers). The prototype dashboards would assist the Board in this role.

The Board endorsed the dashboards, highlighting they were clear, well focused and will prove helpful in supporting the Board. Specifically, the programme level dashboards will provide additional information should the Board wish to explore in greater depth the performance and impact of specific aspects.

It was recognised that fair work did not feature in the draft templates. However the specific dashboard which will be completed for the Fair Work and Equal Opportunity programme would contain further information and that the commitment on fair work was embedded throughout NSET.

On the metrics, it was noted that Scotland is performing well despite the challenging economic conditions. For example, on the gender pay gap and the real living wage.

Barry thanked the Board for the feedback and the particular support from members and the SG team which helped shape the dashboards.

Forward look and any other business

Barry noted the next NSET Delivery Board meeting would be on 25th January 2023. The deep dive would be on housing where he, Jamie and Uzma had already met SG officials and would be meeting people from the private sector before Christmas 2022. They would give some thought as to who could come to the Board. There would also be a brief look at entrepreneurship with the aim of having a fuller session with Mark Logan in attendance for the 29th March 2023 meeting of the Board.

Actions

• Kersti to come back to the Board with the vision statement and action plans for the four key sectors identified, starting with hydrogen
• Stephen to bring the refreshed CESAP to the Board for comment ahead of publication in 2023
• Richard to share the qualitative and quantitative data on inward and capital investment
• Louise to update the Board on progress to clarify accountability for supporting the green economy within the SG
• a further discussion among NSET Delivery Board members will take place to consider the question of prioritising the REP review recommendations