National Strategy for Economic Transformation Delivery Board minutes: September 2023

Attendees and apologies

Present

• Neil Gray, Co-Chair, Cabinet Secretary for Wellbeing Economy, Fair Work and Energy
• Barry White, Co-Chair, Former Chief Executive, Scottish Futures Trust
• Ewan Aitken, Chief Executive, Cyrenians
• Douglas Millican, Former CEO, Scottish Water
• Nora Senior, Former Executive Group Chair, Weber Shandwick and past Chair, Enterprise and Skills Strategic Board
• Roz Foyer, General Secretary, Scottish Trade Union Congress
• Uzma Khan, Vice Principle Economic Development and Innovation, and Deputy Chief Operating Officer, University of Glasgow
• Gillian Docherty, Chief Commercial Officer, University of Strathclyde
• Ellis Watson, Former Chief Executive, DC Thomson Media Group
• Sir Simon Lister, Managing Director, BAE Systems Naval Ships

Apologies

• Audrey Cumberford, Principal and Chief Executive, Edinburgh College

Supporting Officials

• Adrian Gillespie, Chief Executive, Scottish Enterprise
• Jane Wood, Chief Executive, Homes for Scotland
• Gregor Irwin, Director General, Scottish Government
• Aidan Grisewood, Director for Economic Strategy, Scottish Government
• Colin Cook, Director for Economic Development, Scottish Government
• Sean Neill, Director for Local Government and Communities, Scottish Government
• Joe Brown, Deputy Director Ukraine Resettlement, Scottish Government
• Mathew Cramb-Low, Head of NSET Delivery Unit, Scottish Government

Items and actions

Welcome

Barry welcomed members to the eighth meeting of the NSET Delivery Board and thanked Sir Simon and BAE Systems for Hosting.

Apologies were noted from Audrey Cumberford and the Cabinet Secretary who would join the meeting from 10.00 - 11.00.

Barry recorded the Board's thanks to Richard Murray for his hard work on NSET and their congratulations on his new appointment. Marcus McPhillips will take up post as Deputy Director of Economic Strategy and Delivery at the start of November.

The minute of the June Board meeting was approved subject to any final amendments to be submitted to the Secretariat by Friday (8 September). The Action Tracker was noted, and no issues raised.

High level overview

Aidan provided a brief update on the current economic position and confirmed there would be a more in-depth look at Programme Delivery at October's Board meeting.

Members noted:

• further work has been done on the Programme dashboards to make them more concise, transparent and clear on risks
• the initial recommendations from Anna Stewart's Report have been accepted and initial funding allocated
• the First Minister's Investment Panel recommendations are due soon and the Scottish Government Investment Strategy and Delivery Unit has been established
• on skills, work is underway on the significant change programme required on the back of the Withers Review
• discussion continues on Fair Work conditionality and there has been progress on No One Left Behind and Best Start Bright Futures
• on the Summary Dashboard, work is underway to benchmark against OECD comparators and there should be something to share with the Board soon

Barry thanked officials for the crisper and clearer dashboards and undertook to pass on further comments, particularly around risk.

Members noted the following in discussion:

• the need to guard against optimism bias in the dashboards - they will return to this in more detail at the October Board meeting
• although real terms pay has increased in the last year, with the exception of the Finance and Energy sectors, it has fallen over a two-year period
• there are real concerns about the number of young people with no qualifications and the Board will discuss this at its November meeting. The grant criteria for No One Left Behind Employability funding were also raised as a concern and further information will be shared with Board members

Implementing NSET - Scottish Enterprise

Adrian Gillespie provided an overview of Scottish Enterprise's (SE) work to develop their new Strategic Plan, focusing the Agency on economic transformation which capitalises on the wealth of opportunity in Scotland but also in the context of a challenging funding environment. Key points included:

• SE currently have a three-year resource funding agreement with longer on capital
• the Strategic Plan builds on SE's three key strengths - international reach; support for innovation; and raising and providing investment
• SE has a strong record on delivery including significant income generation from investment returns, property transactions and residual European Regional Development Funds (ERDF)
• funding challenges will require that they reduce staffing levels and close offices in the next few years
• business cases for each of the Plan's missions are currently under discussion with a view to publishing the Corporate Plan in the autumn

Barry opened up the discussion to members and the following points were noted:

• in terms of SE's work on developing the green energy supply chain, they have taken a mission-based approach, growing a small team of four and transforming it into a core element of their activity. Their biggest barriers going forward will be around scale and quality
• given the narrow window of opportunity in relation to the green economy, it will be critical for all partners - including the Scottish Government (SG), the Enterprise Agencies and the Scottish National Investment Bank (SNIB) - to work together. The Programme for Government (PfG) commits to setting up the Investment Strategy and Delivery Unit and SE and partners will need to be at its heart. Relations with the United Kingdom Government (UKG) are also key
• work on the green supply chain is moving to implementation and Roz undertook to follow up with Adrian on the scope for joint activity with the unions to improve messaging around workforce skills and opportunities
• Scotland is attractive in terms of its skills base, renewable energy capacity and proximity to mainland Europe but there are challenges around infrastructure, the National Grid and Government support for the adoption of new technology
• on demand for hydrogen, there is real investor interest, but we need to be clearer about where investment is needed long term and avoid the risk of undertaking too many small pilot projects
• on regional skills planning, SE has an interest and works with EPS on this
• overall, members were supportive of SE's three missions and asked to be kept in touch with progress and made aware of any barriers or areas where their support would be helpful

NSET - wider context

The Cabinet Secretary underlined his commitment to the Board and apologised that parliamentary commitments prevented him from joining in person.

He outlined the clear economic focus in the PfG, the emphasis on support for business, the plans for a Green Industrial Strategy and the work around delivering the New Deal for Business Groups (NDBG) recommendations. He invited comments from members who noted the following:

• although the PfG has one mention of NSET (around Enterprise and Entrepreneurialism), the Strategy underpins Government's economic plans and will continue to evolve and develop for example in areas such as the Green Industrial Strategy, Housing and Care
• the recent Fraser of Allander report had shown that business confidence in government listening to them was low, illustrating why NDBG is so important
• migration and talent attraction are important, particularly in the context of the response to Withers and securing a coherent skills landscape 
• PfG sets Ministers' high expectations, but these will need to be backed up by action, funding etc
• there can be tensions between getting business on board and aspects of delivering Fair Work and a wellbeing economy - emphasising the importance of NDBG in understanding and taking into account business perspectives
• housing is key to NSET, not just in terms of social infrastructure, but economic activity and in delivering Scotland's energy ambitions
• there are opportunities to come together around the Green Industrial Strategy and skills, working with colleagues and universities to ensure those delivering education are clear on the jobs Scotland needs
• it will be important to ensure the views of the Board are fed back to the NDBG

Programme 3 - Productive Businesses and Regions

Colin Cook summarised the key points from the paper circulated in advance of the meeting. He noted the original actions under the Programme were, with hindsight, insufficient to deliver Government's ambitions and were spread widely in terms of ownership. He highlighted the recently published Innovation Strategy, the Regional Economic Strategy and forthcoming legislation on Community Wealth Building (CWB).

Gillian shared some key points about the Glasgow City Region:

• Its strengths are innovation and collaboration and recent successes have included £33m innovation accelerator, £80m Investment zone and £26.5m on Clyde Mission. Collaboration between the three districts is strong (e.g., on NMIS and MMIC) and they have used data effectively to leverage further investment
• the city centre has challenges in places and footfall has not fully recovered. More widely, follow-through on regional policy is key - in terms of transport infrastructure funding only £3m of the £500m Bus Partnership Fund has been spent to date and there is a lack of urgency. More regional skills partnerships are needed as is greater flexibility to allow colleges to work with business. Also transport progress is too slow - more investment is needed now in surface transport. Air links are also seen as key with a need for new routes to the USA in particular to support business activity
• it was noted that there has not been demonstrable change since the conclusion of the Regional Economic Policy Review - and it wasn't clear when the implementation was going to have an impact on regional economic planning and development. Though, notwithstanding that, the overall view from those Gillian had spoken to was considerable optimism about the future opportunities for Glasgow City Region

Ellis shared his views following his recent conversation with the SG Head of Regional Economic Development reflecting that the REPs are at varying stages of maturity and some, like Glasgow, better resourced than others. He suggested there should be more join-up between the REPs and greater coherence between them and Business Gateway, Enterprise Agencies and Local Authorities.

In discussion, members noted the following points:

• Uzma noted the need for a focus on infrastructure and the danger of losing spinouts because there isn't appropriate space. A follow up discussion on this with Adrian Gillespie will be arranged
• Glasgow was the first Regional City Deal and is a successful policy partnership but, the critical issue is around reform of the system, including Regional Economic Partnerships (REPs) and City Regions work with the Enterprise Agencies to drive economic development
• given the need to prioritise in the current economic climate, discussions with the Enterprise Agencies have focused recently on delivering innovation, social infrastructure and key industries
• the need for a plan beyond the end of the City Deals (in 6-7 years' time) and the UK Prosperity Fund. On the latter, officials are working closely with UKG colleagues and the Levelling Up Programme
• Community Wealth Building is closely linked to Government's ambitions for regional economic development
• General housing supply should be an explicit cornerstone of the refreshed Programme 3 and should also look at the benefits and threats around Artificial Intelligence (AI), for example around skills/reskilling and jobs
• on the Transportation plan, the Board will want to be sighted on its delivery and not lose sight just because the publication target has been met
• Colin will work with the Productive Businesses and Regions Programme Board, led by Monica Patterson, to progress the refresh and will update the Board at its next meeting. Board urged that this is progressed with speed  

Deep Dive on Housing Supply

Jane Wood set out the key issues from Homes for Scotland's perspective highlighting:

• the interdependence between the private and social sectors
• the divergence amongst Local Authority Planning Units in terms of resourcing, performance etc. and the consequences for decision-making timescales against a backdrop of falling housing applications
• rising homelessness and the link to housing supply
• Ministers' commitment to Housing targets
• market conditions and barriers around investment
• Net Zero and challenges around the supply chain and grid readiness 

Members discussed Jane's presentation further and the following points were made:

• Members agreed that general housing supply is one of, if not the key issue at the moment. It is critical to NSET and should be included in Programme 3
• housing is a huge issue for trade union members and, given its interconnectedness and critically to the economy, could be a further 'super policy'
• there are a number of groups engaged in work on housing supply and a mapping of that would be helpful
• Homes for Scotland support the creation of a National Outcome around Housing and the establishment of a national agency to provide a single, integrated point of policy/delivery
• there is a need for a 'whole systems' approach given the breadth of associated challenges. Government will need to work with Local Authorities and Industry and although this need not have direct cost implications, if not progressed, a lack of activity could undermine NSET progress
• it was recommended that the Portfolio Board look at the issue when it next meets

Forward look and any other business

Barry thanked members and confirmed that the next meeting would be held on 1 November and would be a shorter, one hour meeting held virtually to focus on performance and delivery.

Actions

• NSET Delivery Team to provide feedback on Dashboards to Programme SROs and to review updates for optimism bias
• Roz Foyer to share ONS pay figures
• Ewan Aitken to share briefing on No One Left Behind grant criteria with NSET Delivery Team
• Barry White and Cabinet Secretary to relay views of the Board to NDBG
• Uzma to discuss spinout challenges with SE CEO
• Barry to write to Programme 3 SRO (Colin Cook) setting out the views of the Board
• Colin Cook to set out timetable for update and confirm target date for completion
• Barry will follow up with the Cabinet Secretary on the Board's views on Housing and NSET
• Barry and Uzma will have a follow-up discussion with Jane and Sean. Barry will provide an update at the next Board meeting