National Strategy for Economic Transformation Delivery Board minutes: September 2022

Attendees and apologies

Present

• John Swinney, Deputy First Minister and Cabinet Secretary for Covid Recovery, Interim Co-Chair
• Barry White, Co-Chair, Former Chief Executive, Scottish Futures Trust
• Ewan Aitken, Chief Executive, Cyrenians
• Audrey Cumberford, Principal and Chief Executive, Edinburgh College
• Gillian Docherty - Chief Commercial Officer, University of Strathclyde
• 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

• Colette Cohen, CEO, The Net Zero Technology Centre
• Roz Foyer, General Secretary, Scottish Trade Union Congress
• Uzma Khan, Vice Principal Economic Development and Innovation, and Deputy Chief Operating Officer, University of Glasgow

Supporting officials

• Louise Macdonald, Director General Economy, Scottish Government
• Colin Cook, Director of Economic Development, Scottish Government
• Helena Gray, Director for Fair Work, Employability and Skills
• Aidan Grisewood, Director for Economic Strategy, Scottish Government
• Stephen Pathirana, Director of Advanced Learning and Science, Scottish Government
• Richard Rollison, Director for International Trade and Investment, Scottish Government

Items and actions

Introductions

Barry White welcomed everyone to this second meeting of the National Strategy for Economic Transformation (NSET) Delivery Board and the first chance to consider the delivery plans.

Barry set out the rapidly changing context the board is working in which made the need for growth in Scotland even more important, as is the need to prioritise the actions to transform the economy. 

Barry noted the Terms of Reference (ToR) for the board were now finalised with a remit to police the delivery of the strategy, challenge whether the actions are having impact and prioritise on what is needed in this every changing economic environment.

Overview of performance of NSET programmes

Aidan Grisewood highlighted that while the delivery plans were being developed, there had been significant progress in recent months delivering the strategy, such as tech scaler hubs and the Wellbeing Economy Monitor (WEM).

The board will receive a monthly progress bulletin summarising the implementation of the strategy.

On governance, the Senior Responsible Owners (SROs) had taken their own approach to establishing programme boards, either establishing new structures or building on existing structures in place. Crucially, they will all involve business. In advance of this meeting, the NSET Portfolio Board established that the delivery plans were affordable, deliverable and as far as possible impactful too, whilst recognising that they will have to reflect the Scottish Government response to the cost crisis ahead of publication at the end of October 2022.

The Deputy First Minister (DFM) emphasised that the publication date allowed enough time for the delivery plans to be in the right shape and stressed the importance of securing delivery of the plans. The DFM reflected that the capacity for delivery had been strengthened in the Scottish Government since the previous parliamentary term.

Programme delivery plans

Barry introduced this item and invited the NSET programme SROs to highlight the two or three priority actions from their plans before feedback from the board.

Skilled Workforce programme

Helena Gray outlined the considerable engagement with stakeholders and delivery partners in developing the plan and highlighted that the Minister for Further Education, Higher Education, Youth Employment and Training has launched an independent review of the skills landscape.  

In addition, there will also be a refresh of the Climate Emergency Skills Action Plan (CESAP) and work is underway on talent attraction, both international and from the rest of the UK. 

On the cost crisis, retraining programmes are being evaluated and this will be useful should the board need to consider similar interventions should unemployment rise.

In discussion the following points were made:

• this programme delivery plan was considered pragmatic, relevant and responsive to improving productivity and skills
• the board needs to be informed of things not being on track or no longer being a priority because of funding pressures
• clarity is needed on who leads different elements of this programme as there is a risk of multiple stakeholders pulling in different directions for example the UK shared prosperity fund
• it was recognised that the review of the skills landscape had the potential to be significant, as would the review of qualifications and assessment led by Emerita Professor Louise Hayward. There is the need to ensure an entrepreneurial mind-set for young people was embedded in this review
• those furthest from the labour market should be supported through this programme, for example via the intensive family support. The Lifetime Skills offer is looking at reaching those furthest from the labour market
• talent attraction and migration were identified as key areas. For example, how to retain students after they have graduated
• it was recognised that measuring success is broader than just skills shortages

New Culture of Delivery programme

Aidan noted the focus has been on developing the strategy’s actions into deliverable plans, setting up the governance structures and engagement with business, and completing the Resource Spending Review. There was a platform for reforming and making efficiencies in the system through the Business Support Partnership, streamlining and improving the offer to business.

On the cost crisis, agencies were working together at pace to prioritise support for business and part of the wider work on reviewing regulation is the consideration of forthcoming regulation which could be delayed to help businesses during this challenging period.

The board raised the following points:

• all the key elements were in the programme delivery plan except for the mechanism for looking cohesively across government and not just the agencies
• honesty, transparency and agility were all vital. The board needs to know what worked well and not so well and needs this in a timely fashion to enable adjustments in the programmes where necessary
• for the next board meeting it would be helpful to have a risk register, a highlights report and a Red, Amber, Green (RAG) status on progress across the NSET programmes
• alignment around a common cause/purpose was key – as policy and funding can often pull in different directions. For example, the Scottish Government has a lot of funds under its control and therefore a clear line of sight across government activity is crucial. This requires a genuine change in culture within the Scottish Government, reaching out to involve areas such as health, education and housing more closely in the delivery of NSET
• the DFM reiterated the interconnected nature of some of the key policy challenges, such as shortages in the social care sector which are affecting hospital waiting times which in turn is adversely impacting productivity with people potentially being off sick from work for longer. There are economic opportunities for both private and third sector enterprises within the social care sector which would deliver multiple benefits for the Scottish economy

Entrepreneurial people and culture programme

Colin noted the embedding of Mark Logan’s role and the forthcoming appointment of a cadre of other entrepreneurs around Mark to reflect the different entrepreneurial communities in Scotland. Ana Stewart’s “Women in enterprise” review was due in the next week and would be brought to the board. This was part of a drive to get more people involved in entrepreneurship. The tech scaler hubs were being rolled out and these will be promoted on an international scale. There were opportunities to leverage big public sector projects to secure growth and give opportunities for entrepreneurs, with discussions already taking place with the National Care Service.

During the discussion the following points were raised:

• changing the entrepreneurial mind-set of individuals is vital, with entrepreneurs in other cultures having the expectation that they will succeed rather than a fear of failure. Inspiring young people to be entrepreneurial is crucial, as is fostering an environment where we catch people if they fall and support them with their next enterprise
• it is important to take a wide view of entrepreneurial activity, as this includes not only starting up new companies but scaling up existing companies across all sectors of the Scottish economy
• more businesses should develop a greater sense of social purpose, recognising their wider impact on the environment and society, and this direction is supported by investors increasingly adopting an Environment, Social and Governance (ESG) agenda. This would help achieve some of NSET transformational goals
• the plan on tech scalers was considered to be strong but the board will want to see progress on growing/scaling business 
• scope for the existing system to support those who have been made redundant to start their own business, and the board must challenge to make sure existing resource is being aligned to secure NSET’s outcomes
• as this programme focuses on entrepreneurial culture, it is one of the hardest to measure progress in the short term. For the metrics which have been established, comparisons with other countries are needed in order to assess Scotland’s relative performance
• it was questioned how this programme sits with the wider work Scottish Enterprise are undertaking on entrepreneurship and Colin reassured the board that the agencies were involved in the development of the plan

New market opportunities programme

Richard noted the strong connections between programmes 1, 2 and 3. The Scottish Government recently published progress reports on the delivery of its exports and inward investment plans, with good progress being made despite the challenging external environment. There was a desire to bring cohesion around net zero opportunities, in addition to delivering the actions within the economic strategy. It was recognised that there are lots of employment opportunities around ScotWind and hydrogen but concern from businesses bidding for future supply chain contracts that they aren’t as yet sufficiently certain of the opportunity to put in place the facilities to deliver the contracts. On the cost crisis, there was work with agencies getting business to do more around energy efficiency measures.

The Board raised the following points during the discussion:

• the skills element of this programme is crucial. For example, in areas such as FDI, net zero, ad hydrogen and space. There is a need for a skills programme to support these plans, growing the talent for new markets
• the DFM asked what role the board can play to seize new market opportunities, connecting localities with these economic opportunities. This is not picking winners but demonstrating clear commitment from the Scottish Government and delivery partners to support a particular investment which in turn would help attract business to coalesce around these opportunities. Edinburgh’s BioQuarter was highlighted as an example of where this approached had worked well
• there is also the need for a connected approach to seizing these opportunities at a national, regional and local level. Important not to just focus on skills shortages as Scotland needs a skills pipeline coming through. There are examples of this starting to happen, such as the National Manufacturing Institute Scotland (NMIS)
• there was a discussion about the Scottish Council for Development and Industry (SCDI) and the trade envoys talking to key sectors and the wealth of opportunity flowing from connections made at the United Nations Conference of the Parties 26th Annual Summit (COP26)
• the economic opportunities around hydrogen were recognised and the benefits from having a single point of coordination/leadership, working across different public organisations, to lead on securing these investments in Scotland. It was noted that green jobs would be discussed in more detail at the next board meeting

Productive businesses and regions programme

Colin highlighted the complexity of this programme and that the newly established programme board will need time to fully consider the plan. NSET considered digital and transport infrastructure, but housing underpins economic development, especially in rural and islands areas. The regional economic policy review was finalised now and will change the way we work with regional partners to enable them to build on regional strengths. Furthermore, the innovation strategy, which is at the heart of the productivity challenge, will be published in November 2022. 

The board highlighted the following points during the discussion:

• it was noted that work had started on the regional economic policy deep dive, and this would come to the next board meeting
• the lack of supply of housing is at the heart of many of the economic challenges communities across Scotland face. Land reform needs to be considered as part of this, with the cost of land acting as a barrier for increasing the housing stock 
• there is also the need to connect forthcoming legislation on Community Wealth Building (CWB) to work on 20-minute communities
• the issue of housing was top of the list among the agency chairs. Although this was acute for rural areas it is also an urban issue with the recent example of a shortage of rented accommodation for students in Glasgow

A fairer and more equal society programme

Helena outlined the governance arrangements in place for the programme and highlighted the key priorities were implementing phase two of No One Left Behind (NOLB) and revising the Fair Work Action Plan (FWAP) which will be finalised this year, with sectoral fair work plans starting next year.

On cost crisis, Helena noted the announcement of the increase in the Real Living Wage (rLW), officials met with a range of business organisations a few weeks ago to discuss the implications of a range of scenarios in relation to rLW noting the impact this may have on the cost of doing business, whilst recognising the importance of the rLW for family incomes. Helena also highlighted the ongoing analysis in relation to economic inactivity which will be shared with ministers soon.

• this programme was recognised as having the potential to be the most transformational, with businesses playing a key role in bringing those currently excluded into the labour market and paying them a rLW

• while the number of employers paying the rLW has increased in recent years, the sharp rise in the rLW and other cost pressures facing Scottish businesses risks threatening this progress

• detailed information is available on the sectors where employers not paying the rLW are concentrated in and there’s a real opportunity for the board to hold conversations with these large employers to highlight the wider benefits from them becoming rLW employers. The board could act as a mobilisation force behind the rLW

• the inactivity work should not be a separate programme as it is cross cutting

• there was discussion of how powerful the rLW was for families. It was often assumed to be detrimental to the profitability of businesses but in practice it can benefit the company through increased motivation, enhanced productivity and better retention of staff

• there was a sense that some businesses were acting for a higher purpose and their shareholders were increasingly expecting this (for example ESG impacts of organisations). There would be benefit in engaging with pension funds, insurers and investors as part of this programme

Louise commented that the discussion had been helpful and would pick up on all of the actions flowing from that. Louise agreed with the DFM that we were at a pivotal moment and the end of October 2022 when the delivery plans are published would be a key milestone. Louise felt a lot had been delivered to date and the honest challenge of the NSET Portfolio and Delivery Boards helped shape things. If there were issues going off track this would be raised with the NSET Delivery Board straight away to allow them to advise.

Barry asked members to send any further comments to the Secretariat who would share them with the SROs. Barry noted that the later phases of the delivery plans needed further work and suggested coming back to the plans in six to eight months. This would give time for the SROs to flesh out the longer-term actions. The next NSET Delivery Board meeting would start the process of deep dives.

Forward look

Barry noted the next board meeting would consider green jobs where he was working with Colette and Regional Economic Partnerships where he was working with Ellis.

In January 2023 the board will consider the key area of housing, and work is underway to develop a longer-term programme. Barry encouraged members to approach him and the Secretariat between board meetings as these interactions have been beneficial and was keen to maintain momentum. 

DFM thanked members for their contributions and shared the view that it had been a really valuable discussion.

Actions

• Secretariat to send board members the next monthly progress bulletin
• Secretariat to share a GANTT chart summarising the key NSET actions which will be delivered across the NSET programmes
• Secretariat, with input from Gillian Docherty and Douglas Millican, to develop a dashboard for the next meeting
• Helena to invite Sir Simon and Audrey to a Skilled Workforce Board meeting
• Audrey to discuss with the Analytical Unit the measurement of success
• Secretariat to follow up on the common cause discussion with some practical examples that could support delivery of NSET outcomes and discuss these with the NSET Portfolio Board, which covers all major Scottish Government policy areas
• that a suite of programme materials are developed by the NSET, programme officer that would support the board ask for transparency and clarity on risks, so they can properly hold programmes to account on delivery
• Colin to follow up with Ewan on how we might encourage more businesses to have a strong social conscience
• Barry and Richard to meet to discuss sector leadership
• Helena to catch up with Sir Simon on the Centre for Workplace Transformation
• Barry, Jamie and Uzma to meet with housing officials as there will be a deep dive on the importance of access to affordable housing at the January 2023 board meeting
• Helena to explore opportunities for utilising the board in encouraging businesses to become real living wage employers
• Helena to engage with pension funds, insurers and investors
• SROs to reflect the discussion in their delivery plans ahead of publication
• board members to provide any further observations to the Secretariat
• Secretariat to set out the approach to deep dives and sketch out a longer term programme