Programme for Government 2015 to 2016

03 A Strong, Sustainable Economy

The Scottish Government will continue to take action to strengthen the Scottish economy. We will do so by improving our productivity, boosting skills, encouraging innovation and promoting fair work. We will ensure that Scotland remains a highly attractive location for international investment.

Our track record in supporting business and boosting productivity is well established. Over the past year our economy expanded at its fastest rate since 2006, while the number of people in employment has risen by 28,000 over the last 12 months.

In recent years we have also narrowed the productivity gap with the UK and we have stronger youth, female and total employment rates than the UK as a whole. We have had 11 consecutive quarters of growth - the longest period since 2001. We plan to continue this trend and move up the international ranking of productive nations. In March of this year we published Scotland's Economic Strategy ( SES) which set out our strategic approach to creating a more prosperous and fairer nation.

SCOTLAND'S ECONOMIC STRATEGY

At the heart of Scotland's Economic Strategy are the two mutually supportive goals of increasing competitiveness and tackling inequality. Both are necessary to boosting productivity and creating greater prosperity for all.

A more prosperous Scotland is one where our businesses are more competitive, productive and employ more people in meaningful and well-rewarded jobs. At the same time, if we are to become more productive we must use the talents of everyone in Scotland and deliver genuinely inclusive growth.

Our ambitions in Scotland's Economic Strategy are underpinned by four priorities:

• Investing in our people and our infrastructure in a sustainable way.
• Fostering a culture of innovation and research and development.
• Promoting Scotland on the international stage to boost our trade and investment, influence and networks.
• Promoting inclusive growth and creating opportunity through a fair and inclusive jobs market and regional cohesion.

The Strategy is being delivered with partners across Scotland and close engagement with businesses, trade unions and the third sector. This joint working is essential to delivering long-term structural change but also to tackling short-term challenges as and when they emerge such
as the establishment of the Energy Jobs Task Force in response to the new challenges faced by our Oil and Gas industry.

Delivery of Scotland's Economic Strategy will be informed by the work of the new Council of Economic Advisers. The Council held its first meeting in March 2015 and has been bolstered by new members including Professors Sir Harry Burns & Sara Carter (University of Strathclyde); Professor Mariana Mazzucato (University of Sussex); Professor Anton Muscatelli, (Principal of the University of Glasgow); and Amanda McMillan (Managing Director of Glasgow Airport).

INVESTING IN OUR PEOPLE AND OUR INFRASTRUCTURE IN A SUSTAINABLE WAY

Investment - in human capital, our transport and digital infrastructure and in businesses - is vital to creating a more productive and competitive economy. The Scottish Government will continue to maximise the economic contribution of our own investment and our wider activities to maximise levels of private investment in the Scottish economy. We will publish our plans in an updated Infrastructure Investment Plan alongside the draft Budget.

We will also protect and enhance our natural capital, our brand and reputation as a country of outstanding natural beauty, our commitment to low-carbon and the opportunities our resources and assets provide for our economy and future generations.

The planning system is a key route through which the Scottish Government can help businesses to invest and grow. We published Scotland's Third National Planning Framework (NPF3) and revised Scottish Planning Policy ( SPP) in June 2014. These require planning policies and decisions to give due weight to the net economic benefit of development along with other aspects of sustainable development. We will also review our planning system with a view to increasing the delivery of high quality housing developments, as set out in Chapter 5.

Creating the Conditions for Businesses to Invest

Our objective is that Scotland is the most competitive place in the UK to do business and to invest. We will therefore take forward the following:

• Continue to provide the most competitive business rates package anywhere in the UK.
• Fund the Small Business Bonus Scheme which will help more than 96,000 business properties by removing or reducing their rates bills.
• Invest in our Enterprise Agencies - Scottish Enterprise, Highlands & Islands Enterprise and Scottish Development International - to deliver targeted support to businesses across Scotland.
• Continue to support local authorities in their economic development activities, including the business support they provide through the Business Gateway helping over 10,000 businesses start-up.

We also want to ensure that there are enough good locations for businesses. Scotland's four Enterprise Areas, comprising 14 strategic sites, were established in April 2012 with an additional site in West Lothian added in 2013. Since established, these sites have attracted over 46 businesses and at least 840 jobs.

We also want to support Scotland's manufacturing base. We will therefore, through our Enterprise Agencies, launch a Manufacturing Action Plan this Autumn which will:

• Deliver concrete initiatives to boost productivity including in leadership and skills, energy efficiency and the adoption of the circular economy across the manufacturing sector.
• Stimulate innovation and investment including the 're-tooling' of Scottish manufacturing sectors to better compete globally.

We are mindful too that Scotland has built up a considerable track record as a world leader in social enterprise and the social economy - these organisations are an increasingly important part of Scotland's economy. We are already investing £5.4 million in social enterprise development and will be strengthening the support available as part of the 10-year social enterprise strategy to be published in 2016.

EXTENDING ENTERPRISE AREAS IN SCOTLAND

We will extend the operation of Scotland's Enterprise Areas ( EAs) by three years to 2020 and will evaluate how to maximise their effectiveness in boosting growth and employment.

We will work with partners to establish a fifth Enterprise Area site at BioCity in North Lanarkshire. This will reinforce our commitment to this strategic life science location by offering innovative life science companies business rates relief, streamlined processes to deal with planning applications, bespoke skills support and assistance in accessing international markets.

This will complement other initiatives underway at the site including the MediCity Scotland initiative which will focus on commercialisation in the medical technology sector as well as an Innovation Hub which was launched in April 2015. The Hub is providing early stage companies with an opportunity to learn from and work with major healthcare practitioners, entrepreneurs and scientists.

Small and Medium sized Enterprises ( SMEs)

In order to grow, innovate, create jobs, and seek opportunities in new markets, Small and Medium sized Enterprises ( SMEs) often require access to appropriate and affordable finance. In August 2015 we published The Market for SME Finance in Scotland. This identified substantial gaps in both the supply of and demand for finance, highlighted opportunities and set out our approach to business finance.

Our approach to these challenges is focused on increasing the level of funding available to SMEs, expanding and deepening financial support and advice for SMEs, and providing easier access for SMEs seeking finance.

The establishment of a Scottish Business Development Bank will form a key part of this approach. The Bank will act as a mechanism to bring new sources of finance to Scotland. We have been working with stakeholders, including experts at the University of Strathclyde to consider approaches across a range of European countries in order to identify the most appropriate way forward. We have also explored market issues with a range of organisations including the European Investment Bank, the High Street Banks, the British Business Bank and the Strategic Banking Corporation of Ireland. We will set out in late 2015 options for the Bank, how it will operate, and a timetable for introduction.

As a result of our research into the Business Development Bank we will also take action, working with our Enterprise Agency and Local Authority partners, to simplify how SMEs access finance, advice and support. We will bring together all our finance products for SMEs and financial support services under a single brand and digital platform. We will also strengthen the links between our actions on business finance and the wider range of business support and advice. We will set out more details in late 2015.

Our Enterprise Agency partners will expand the provision of specialist financial readiness advice for SMEs, so that a greater number and wider range of companies can benefit from a readily accessible service. A key element of our approach is to continue to increase the level of finance available to SMEs. Pending the establishment of the Business Development Bank, we will:

• Introduce a new £40 million SME Holding Fund to provide investment to SMEs. The fund will be launched in Autumn 2015.
• Continue to provide equity investment through the Scottish Investment Bank, alongside private sector partners, supporting early-stage innovative companies access risk capital investment to support Scotland's high-growth companies to achieve their full potential.

INVESTING IN ENTERPRISE AND GROWTH

We will use European Structural Funds to introduce a new £40 million SME Holding Fund, which will increase the levels of loan, equity and microcredit being offered to Scottish SMEs. The Fund will contribute to the delivery of the priorities set out in Scotland's Economic Strategy by supporting more SMEs to grow, increase their levels of investment, and boost their exporting ambitions.

The Fund will provide microcredit finance up to £25,000, loans up to £100,000, and equity investment up to £2 million. The Fund will support public and private sector partners to deliver this finance thereby generating a minimum of £100 million into the SME finance market over the next three years. New and existing SMEs will be able to access these financial products through appointed delivery partners.

Alongside these economy-wide measures we will also take action to support investment and growth in key sectors. In particular we will work with the private sector to increase the level of investment in manufacturing companies, supporting the development of new manufacturing technologies, improving their efficiency and competitiveness.

Investing in Digital Infrastructure

The digital revolution is positively impacting on the lives of everyone in Scotland, and the Scottish Government's digital strategy reflects this transformation.

Although we have made substantial improvements in recent years, too many businesses and communities remain hampered by slow internet connections. This year, we will invest further in Scotland's digital infrastructure in order to:

• Deliver a step change in broadband for 95% of Scottish premises by the end of 2017 by continuing to roll out the £400 million Digital Scotland Superfast Broadband ( DSSB) programme. Already 389,000 homes benefit from new infrastructure. To help meet our ambitions, an additional £42 million will be allocated to further extend superfast coverage and we will announce in early 2016 plans for how that investment will be used.
• Continue to support Community Broadband Scotland in areas least likely to have superfast broadband. This £7.5 million initiative is currently supporting 87 community organisations that cover over 1600 properties across Scotland and has approved funding for a further 57 projects.
• Progress our commitment to promote access to free Wi-Fi, particularly in public buildings to boost digital participation and help improve connectivity in hard-to-reach communities.

We will also press the UK Government to take action to improve mobile coverage, especially in those parts of the country where coverage remains a concern.

While digital technology brings significant benefits we also need to be alive to the risks posed by cyber-crime. We want Scotland to be a cyber-secure place to do business. In November we will publish a Cyber Resilience Strategy, with a joint action plan to follow in spring 2016 - this will have a focus on education and skills, awareness raising, and research and innovation. We will develop this in partnership with Scottish Enterprise, Education Scotland, Skills Development Scotland and the Scottish Business Resilience Centre.

Investing in Physical Infrastructure

We also have a well-targeted programme of investment in Scotland's physical infrastructure. Transport infrastructure is a key area where improving connectivity between our cities and centres of economic activity is vital to boosting productivity and competitiveness. Improving connections between more remote and rural communities is another important aim.

Our commitment to Scotland's transport infrastructure is clearly visible in the construction of the £1.4 billion Queensferry Crossing - the most significant transport project in a generation. Work will continue through 2016.

In rail, we will open the Borders Railway in September, providing a major boost to business and tourism. Work continues on the Edinburgh-Glasgow Improvement Programme, with electrification of the mainline due for completion by December 2016. Work continues on the £170 million Phase 1 of the Aberdeen-Inverness Improvement Programme, including infrastructure to support two new stations at Dalcross and Kintore.

We will also invest in our road and motorway network. This includes the first stage of dualling the A9 with a £35 million investment between Kincraig and Dalraddy, and work to progress the Bypass of Aberdeen (due to open in 2017). We will also publish plans for the dualling of the A96 between Inverness and Nairn. Improvements to the M8, M73 and M74 will also bring benefits to the busiest part of the motorway network in central Scotland.

Significant investment will also be made to support ferry services. The Ullapool-Stornoway route is benefiting from the new £41.8 million MV Loch Seaforth and associated harbour improvements. A new hybrid ferry, at a cost of £12.9 million, is being built on the Clyde, and plans are well advanced for the procurement of two new vessels for deployment between Skye and the Western Isles and the Ardrossan-Arran route.

We are also investing over £10 million in our airports in the Highlands & Islands. This includes over £2 million at Sumburgh Airport.

Investing in Education and Skills

Investing in the early learning and childcare, education, training and skills of current and future generations is one of the most important investments we can make. The work we are doing to boost attainment in schools is covered in Chapter 4.

These efforts will be complemented by the steps we are taking to support our university and further education sectors. Over the next Parliamentary term these will include:

• Continuing to deliver free tuition, ensuring that access to university is based upon ability to learn and not ability to pay.
• Taking forward the recommendations that will flow from the Commission to Widen Access to University.
• Maintaining 116,000 full-time equivalent college places and continuing the modernisation of the college estate.
• Funding Opportunities for All which guarantees an offer of a place in education or training to all 16 to 19 year olds.
• Supporting employer-led groups across Scotland to strengthen employer engagement in education and training to ensure young people have the skills and abilities that industry needs.
• Offering extra support for young people to get into work including an additional £10 million for the new Scottish Employer Recruitment Incentive; £6 million for Community Jobs Scotland and a £0.5 million package of support to enable employers to take on young people who face barriers to entering employment.
• Continuing to support the Scottish science centres and festivals.

DEVELOPING SCOTLAND'S YOUNG WORKFORCE

We will invest a further £16.6 million this year to deliver our commitments to Developing the Young Workforce - Scotland's Youth Employment Strategy - to further improve learning options for young people to prepare for work and reduce youth unemployment.

Actions include:

• Introduction of good quality careers advice in schools at an earlier stage.
• A new standard for work placements to give young people and employers maximum value from these experiences.
• New guidance to improve school-employer partnerships.
• Expansion of foundation apprenticeships.
• Regional Developing Scotland's Young Workforce industry-led groups to improve engagement between education and industry.
• A package of in-work support for young people who are disabled, care leavers, carers and those with criminal convictions.

Digital skills will be vital for our country's future. Our plans include:

• Continuing to support CodeClan - the industry-led digital skills academy will take its first students in October 2015. The academy will open in Edinburgh and help meet Scotland's pressing need for skilled software developers.
• Investing £7 million through our enterprise bodies to promote business awareness of digital technologies. This includes a Digital Voucher Scheme, with up to £5,000 available for companies to invest in new technology, and a Supplier Development Programme to help SMEs with digital procurement.
• Launching a National Digital Engagement Programme with the aim of equipping over 10,000 businesses with the expertise to benefit from digital technology.
• Increasing our support for those individuals most at risk of digital exclusion. We will work with Scottish Council for Voluntary Organisations to establish a network of Digital Scotland community hubs to promote digital skills and help those who need to take advantage of digital public services.

Investing in Energy and Tackling Climate Change

Our approach to energy is an important contributor to our efforts to promote growth, tackle inequalities and deliver on our climate change ambitions.

In contrast to the UK, the Scottish Government has a well-established framework for energy policy including ambitious renewable targets, clear plans to boost energy efficiency and the most stretching emissions-reduction targets in the world.

Our efforts have led to dramatic changes in the energy system in Scotland over the last decade. For example, renewable electricity output has more than doubled since 2007. The role of thermal electricity generation in Scotland - providing base load and balancing services - is also changing. For example, Longannet coal-fired power station (which accounts for around 20% of total Scottish generation) is set to close in March 2016, but we want thermal generation to continue to be an important part of Scotland's electricity mix in the foreseeable future. Unlocking Carbon Capture and Storage ( CCS) and advanced storage technologies will be an important factor in replacement thermal generation in Scotland and increasing the role of renewables in our energy mix going forward.

Our efforts on energy efficiency will be complemented by further investment in Scotland's low carbon infrastructure. In March, we launched the Low carbon Infrastructure Transition Programme worth £76 million over the next three years - for private, public and third sector low carbon infrastructure projects. It will leverage £50 million of private sector investment annually into the low carbon sector.

TACKLING CLIMATE CHANGE

The Scottish Government will undertake a range of initiatives this year to support low carbon investment and to tackle climate change.

Energy: Investing over £200 million during 2014-15 and 2015-16 including the National Renewables Infrastructure Fund and the new CARES Local Energy Challenge Fund to support the roll out of low carbon energy. This is complemented by increased spending on domestic energy efficiency, which was £99 million last year and £119 million in 2015-16.

Transport: Investing £320 million over 2013-14 to 2015-16 in low-carbon transport policies, including in the ChargePlace Scotland electric vehicle charging network which now has over 800 public charging bays (over 400 units) across Scotland including rapid charging units supporting Scotland's strategic road network.

Forestry/Agriculture: Investing £104 million over the next four years to support woodland creation, through forestry grants and on the National Forest Estate. We have also increased funding for Farming For a Better Climate, doubling the number of climate change focus farms.

Peatland: Investing an additional £3 million this year to support peatland restoration.

Circular Economy: As part of our proposals for creating a more circular economy, we are investing £24 million this year through Zero Waste Scotland to help businesses use resources more efficiently and accelerate the roll out of household food waste collection.

Sustainable Action Fund: This includes investing £22.1 million over 2014-15 and 2015-16 in the flagship Climate Challenge Fund, which supports communities across Scotland to take action on climate change.

Paris: We have been clear that the international community must match Scotland's high ambition if the new global climate treaty to be agreed at the United Nations Framework Convention on Climate Change ( UNFCCC) 21st Conference of Parties ( COP21) in Paris this year is to stand a good chance of limiting global temperature rise to no more than 2°C. We will continue to promote high ambition within the UK and the EU and promote the Scottish example of tackling climate change internationally to demonstrate the economic and social benefits of doing so.

Community Energy

We also want to help local communities take control of their own energy. We have facilitated the investment of almost £9 million in Scotland's local communities every year through community benefit renewable energy schemes. We have a target of 500 MW of renewable energy in community or local ownership by 2020, with over 360 MW already in operation including in Point and Sandwick which will be the largest community owned wind farm in the UK.

We have set up our CARES Local Energy Challenge Fund, with up to £20 million for major projects providing transformative local energy solutions. Five projects were successful in the first round. These include:

• £1.3 million to Orkney Surf 'n' Turf to combine electricity from two tidal turbines and a wind turbine on Eday. The excess electricity will be used to produce compressed hydrogen, which will be transported to Kirkwall, where it will be converted to electrical power for buildings and ferries at the harbour. Along with reducing harbour costs, it will generate revenue for the community, and support programmes for training and employment. A second round to support early feasibility of projects was announced in March 2015.

Investing in the Oil and Gas Industry

The North Sea oil and gas industry makes a significant contribution to the UK and Scottish economies. While there is a long-term sustainable future for the North Sea, it currently faces a range of challenges. The Scottish Government is using all the levers it has to support the industry, including the establishment of the Energy Jobs Taskforce, set up by the First Minister in January 2015.

We also support the establishment of the Oil and Gas Authority ( OGA) and its commitment to Maximise Economic Recovery. We will continue to work with industry and the OGA to secure the maximum value to the economy.

We will refresh the Scottish Oil and Gas Strategy in light of recent developments in the industry. This will focus on securing a long-term sustainable future for the industry, with a particular focus on the structure and capability of the domestic supply chain and the sector's contribution to the wider economy.

The Scottish Government announced a moratorium on onshore unconventional oil and gas developments in January 2015. The moratorium has been welcomed by both industry and environmental NGOs and will continue until such time as a full public consultation as well as health and environmental impact assessments are completed.

FOSTERING A CULTURE OF INNOVATION, RESEARCH AND DEVELOPMENT

Innovation is a fundamental driver of long-term competitiveness, productivity and sustainable growth. This is one of Scotland's strengths. We also have the fourth highest higher education expenditure on R&D as a percentage of GDP in the OECD (2013 figures) and last year's Research Excellence Framework ( REF) found that each of Scotland's higher education institutions undertook research of 'world-leading' quality.

We will cement these achievements by continuing to support research and innovation in Scotland's universities. This includes investing £282 million in core research and knowledge exchange in
2015-16.

We can achieve much more by way of exploiting our world-class research, where businesses turn innovation and ideas into commercial opportunities. There is already excellent collaboration using the research and science produced by our universities and our business base with its highly skilled workforce. However, there is huge potential to do more. We will therefore:

• Help strengthen the links between business and academia through the Innovation Scotland Forum and its Action Plan.
• Support our new network of Innovation Centres to use academic expertise to address real world business issues, helping them to raise their profile with businesses in Scotland and beyond.
• Increase our investment in Interface, Scotland's central hub connecting businesses here and internationally to our higher education and research institutes, raising Scotland's innovation profile at home and abroad.

We will support business to boost levels of innovation in order to improve competitiveness, growth levels, new market penetration and resilience to change.

Through the Scotland CAN DO Innovation Forum we have brought together key innovators to drive greater levels of demand and investment in business innovation. To drive this agenda we will:

• Support Scottish Enterprise to assist 800-1000 additional businesses this year to become innovation active, whilst Highlands & Islands Enterprise will support 150 additional businesses this year, and 180 next. This activity will include promoting supply chain and customer-led innovation to encourage greater collaboration between large and small firms.
• Encourage public sector and large and small firms to collaborate on projects through Scottish Enterprise's Scottish Open Innovation programme. This £2.9 million programme will support the development of an open innovation culture across Scotland by identifying projects and creating partnerships to drive them forward.

We will also support Scottish Enterprise to develop a new Workplace Innovation Service. This will help companies implement progressive workplace practices which can lead to improved performance and increased levels of employee engagement. The service will be launched in Spring 2016.

Innovation is also vital in delivering better public services. We will roll out the £1 million Innovation Challenge Fund to support our Innovation Centres develop particular collaborative projects. The first challenge was announced in July 2015 and will focus on cancer care in Scotland.

Entrepreneurship

Fostering a strong culture of entrepreneurship goes hand in hand with innovation and will also help deliver our goal of a more innovative and productive economy.

Following the successful pilot in August 2015, Highlands & Islands Enterprise, Scottish Enterprise and Scottish Funding Council will work with business and universities to implement Scotland CAN DO SCALE - an education programme targeted at developing the entrepreneurial skills of people working in a high growth potential business or simply with an innovative emerging business idea.

The Scotland CAN DO approach will be also used to maximise the impact of entrepreneurial learning and support in our colleges and universities. We will continue to support the delivery of the 'Scotland's Enterprising Schools' project to enable all schools to develop a values-based entrepreneurial culture amongst Scotland's young people.

We will accelerate progress in tackling the enterprise gender gap. We will continue to implement the 2014 'Women In Enterprise Action Framework', developed in partnership with 'Women's Enterprise Scotland'.

All members of society should be able to benefit from being active in enterprising activity. For example, this year we will work with partners, including Co-operative Development Scotland, to promote alternative and progressive business models. We will also support social enterprise in schools and will provide £0.5 million to the Social Entrepreneurs Fund.

PROMOTING SCOTLAND ON THE INTERNATIONAL STAGE TO BOOST OUR TRADE AND INVESTMENT

We want to strengthen Scotland's links with the global economy and the opportunities this brings for trade, investment and sharing expertise in order to maximise Scotland's economic potential. Scottish exports have increased from £23 billion in 2010 to £28 billion in 2013, a 20% increase.

A Trade and Investment Strategy will be published later this year, setting out initiatives to encourage more firms to export and to support businesses in sectors where we already have a strong international presence.

Scottish Development International ( SDI) will continue to lead work in Scotland and its overseas offices to promote Scotland's exports and champion Scotland as an international destination for inward investment.

Over the past year, SDI helped to attract 91 inward investment projects to Scotland - a 17% increase on the previous year. These projects will bring £433 million of inward investment into Scotland and will create or safeguard nearly 10,000 jobs.

The dynamics of world trade have changed significantly over the past decade with new and fast growing markets. SDI's High Growth Market Unit is providing expert market knowledge, experience and networks and will work intensively with current exporters on a one-to-one basis to ensure successful market preparation and entry to these markets.

SDI encourages potential and early stage exporters to take their first steps to exporting to new markets through its Scot Exporter programme. Additional support is being developed around key opportunities for Scottish exporters, for example the Food and Drink Collaboration initiative for small-scale premium producers in the Highlands & Islands.

At the centre of our approach to internationalisation will be our new Innovation and Investment Hubs.

INTERNATIONAL INNOVATION AND INVESTMENT HUBS

Our Innovation and Investment Hubs will provide a location for delivering and supporting activity by the Scottish Government, its agencies and public and private partners to boost trade and investment, promote the research and innovation capability of Scottish companies and universities and enhance international collaboration.

We have identified three initial pilot hub locations in London, Brussels and Dublin.

The London Hub will create opportunities to progress our international trade, investment and innovation agendas with governments, companies, investors and academic, research and policy institutions headquartered in London and take advantage of London's status as a 'Global Gateway'.

The Brussels Hub will strengthen Scotland's strategic engagement with Europe and the EU. It will provide a platform for the delivery of projects in key EU innovation and investment work-streams, ensuring Scotland is equipped to compete with the best European examples of projects.

The Dublin Hub will build on existing close relations with the Republic of Ireland on economic development and innovation as well as policy development. In particular the hub will provide further support for the development and delivery of Scottish/Irish projects funded through European programmes, as well as delivering support to new bi-partite commercial and academic collaborations.

Inclusive Economic Growth

Inclusive economic growth creates opportunities for all, and distributes the benefits of increased prosperity fairly. To support inclusive growth, we will:

• Pursue an inclusive labour market by reducing barriers to employment to help women, young people and other groups to overcome structural challenges to their participation in work.
• Address regional disparities in economic performance.
• Invest in skills to promote a high-skill, high-wage economy.
• Develop the fair work agenda to improve the quality of work, progression prospects and productivity.
• Design new, devolved employability programmes that support those otherwise unable to return to the labour market.
• Support social enterprise and the social economy.

Scotland's female employment rate is now the second highest in Europe. However, women still face too many challenges in the labour market and access to affordable early learning and childcare remains a significant barrier to many women seeking to return to work. Details on how the Scottish Government is promoting access to early learning and childcare is covered in Chapter 4.

We also know that women are disproportionately affected by issues such as low pay, underemployment and part-time working. These challenges are being addressed by the Fair Work Convention, established in April 2015, and by a targeted approach to women in our consultation on employability services.

The Scottish Government's partnership with the Scottish Trades Union Congress and strong belief in the contribution of the Trade Union movement to fairness and equity at work is also important. We will continue to oppose the legislation being brought forward by the UK Government which threatens to undermine the Unions' ability to act as partners in economic development.

Over the next year we will continue to work with strategic partners to deliver a more inclusive workforce. We will:

• Work with the Equality and Human Rights Commission, whose recent report on Pregnancy and Maternity-Related Discrimination and Disadvantage showed that around 54,000 new mothers may be forced out of their jobs in Britain each year.
• Continue to promote Fair Work practices through our procurement activity as well as being clear that we oppose any use of exploitative zero-hours contracts.
• Take action on equal pay.
• Pursue the devolution of powers from the UK Government to allow us to legislate for gender balance on boards, although in the meantime we will continue to pursue this through a voluntary route in our 50/50 by 2020 campaign.

GENDER PAY EQUALITY

We will extend the duty on public authorities to publish gender pay gap information and statements on equal pay, including occupational segregation.

These duties currently apply to authorities listed in the Equality Act 2010 which have more than 150 employees. We propose to lower the threshold so that the duty applies to listed authorities with more than 20 employees.

In addition, we will continue to build membership of the Partnership for Change, ensuring more public, private and third sector bodies sign up to the 50/50 by 2020 commitment. We will hold a number of themed events for specific sectors to ensure that the 'pipeline' of talent is ready to deliver diverse candidates for board positions.

Our Employability Fund focuses on supporting unemployed people develop their skills and move into sustainable employment. In 2015-16 we will maintain our investment of £33.7 million in the Employability Fund through SDS to support at least 17,000 people.

Developing the Young Workforce

Education is key to developing our young workforce, and our ambitious reforms of the education system are covered in Chapter 4. However, we are also making significant progress in our seven-year programme to develop Scotland's young workforce, with the aim of reducing youth unemployment by 40% by 2021. We will:

• Fund local authorities to support schools to play their part in embedding workplace skills in our young people.
• Invest in expansion of the Modern Apprenticeship programme, expand the new foundation apprenticeships for senior phase pupils and ensure that all young people have access to work-based learning.
• Enhance careers education so that young people have good information about jobs and careers at an earlier point in their schooling.
• Support our colleges to play their part in widening the options open to young people as they consider their future employment options, articulating our expectations in college outcome agreements, and building on the existing expertise of the college sector in employer engagement.
• Establish industry-led groups across the country to make it easier for schools and colleges to interact with employers and access their expertise to help shape young people's education.
• Support the Investors in Young People accolade, offering an accreditation framework which all employers, whether large or small, can use to improve their engagement with young people, schools and colleges.

Access to Adult Education and Training

In 2014 the Scottish Government launched the Scotland Adult Learning Statement of Ambition which aims to ensure that Scotland becomes recognised globally as the most creative and engaged learning society and that every adult in Scotland will have the right to access learning to meet their educational needs and their aspirations.

The National Strategic Forum for Adult Learning is taking forward an implementation plan that will have a focus on literacy and numeracy, family learning, adult achievement awards and workforce development.

The Scottish Government's learning disabilities strategy, The Keys to Life implementation framework, was launched in June 2015. The framework will be delivered by 2017 and will be supported by £2.7 million for 2015-16. This will focus on four outcomes:

• People with learning disabilities lead healthier, happier lives.
• People with learning disabilities are treated with dignity and respect and protected from neglect, exploitation and abuse.
• People with learning disabilities are able to live independently in the community with equal access to all aspects of society.
• People with learning disabilities are able to participate in all aspects of community and society.

MODERN APPRENTICES

We have exceeded our target to deliver over 25,000 Modern Apprenticeships each year with over 101,000 new opportunities delivered in this parliamentary term.

We announced £3.8 million in May 2015 to deliver an additional 500 MA opportunities in 2015-16 focused on higher level frameworks - the first step towards our commitment to deliver at least 30,000 opportunities each year by 2020. This funding will also be used to expand Foundation Apprenticeships offering exciting work-based learning, based on MA frameworks, to secondary school pupils.

We will increase the take-up of Modern Apprenticeships by young disabled people and young people from BME backgrounds, and to significantly reduce gender segregation within Modern Apprenticeship frameworks.

Fair Work

As well as equal access to skilled work, it is important that people's experience of work is fair, and promotes opportunity, fulfilment, security and respect. Scotland recognises the importance of this in having a Cabinet level post with responsibility for promoting fair work.

Last year we set a target of having 150 Living Wage Accredited Employers by the end of 2015. We met that target eight months ahead of schedule, thanks in large measure to the excellent efforts of the Poverty Alliance and the Living Wage Foundation. Following this achievement, the Scottish Government announced a revised target of 500 Scots-based Living Wage Accredited Employers by the end of March 2016. We are well on track to achieve this, with over 300 Living Wage accredited employers across the public, private and third sectors in Scotland. The Scottish Government itself became accredited in June 2015.

The UK Government recently announced an enhancement to the National Minimum Wage, but restricted to over 25s, and with significant reductions to working-age benefits. The Scottish Government will continue, in contrast, to promote a true Living Wage, the level of which is calculated according to the basic cost of living - taking into account the income that households receive via the welfare system. We will work with the Poverty Alliance, STUC, Citizens Advice Scotland, ACAS, the Living Wage Foundation and other partners to raise awareness of the difference, and to clarify for employees the confusing picture that has now arisen with five different rates of 'minimum wage' in the UK as a whole.

FAIR WORK CONVENTION

The Fair Work Convention was established in April 2015 as an independent body to advise the Scottish Government on the development of the fair work agenda. It is co-chaired by former STUC President Anne Douglas and Linda Urquhart Chair of the legal firm Morton Fraser.

The remit of the Convention is to drive forward the fair work agenda by producing a framework by March 2016. This will:

• Set out a practical blueprint for fair work which promotes a new type of dialogue between employers, employees and trade unions, public bodies and the Scottish Government.
• Support the Scottish Government's objectives of increasing sustainable economic growth and reducing inequality through the promotion of greater diversity.
• Understand business challenges in adopting fair work principles and offering help to support a progressive change.

We will respond to the details in the framework produced by the Fair Work Convention in the Summer of 2016. This will set the agenda for implementing all aspects of fair work in Scotland. In the meantime, the new Business Pledge is an effective vehicle to establish relationships with business around fair work practices.

We will abolish fees for employment tribunals, when we are clear on how the transfer of powers and responsibilities will work. We will consult on the shape of services that can best support people's access to employment justice as part of the transfer of the powers for Employment Tribunals to Scotland.

Scottish Business Pledge

The Scottish Business Pledge was launched in May 2015. It is a voluntary commitment made by Scottish businesses to promote and practice the principles of fairness, equality, and opportunity. It acts as a partnership between government and firms to invest in a culture of innovation, productive work practices and internationalisation to boost productivity and competitiveness and responsible business practices including fair work and prompt payment.

Since May, almost 100 businesses - from GSK, Virgin Money and Heart of Midlothian Football Club to Rabbie's Small Group Tours - have signed up to the Pledge. Over the next year we will:

• Continue to raise awareness of the Pledge, and encourage more businesses to choose this route to productivity and business growth.
• Foster a business-led Pledge network, providing opportunities for companies to come together to learn from each other and the Enterprise agencies.
• Work with trade and business bodies to explore sectoral challenges - in tourism and retail, for example - and how they might be addressed.

Regional Economic Development

Many of the social and economic inequalities faced by Scotland are concentrated in pockets of persistent deprivation. Addressing regional economic inequalities so that all of Scotland's regions and communities can prosper is essential to increasing inclusive growth. We recognise the work that has been taken forward by local partnerships to address those economic challenges and the positive impact that their work has had. We want to do more, in partnership across the public sector working across boundaries, to boost economic growth outside the traditional growth areas of Scotland.

We will continue to regenerate our most disadvantaged communities through investment in infrastructure. The Regeneration Capital Grant Fund is providing over £40 million in 2014-16 to 40 projects aiming to support or create over 2000 jobs and 600 training places. We will make progress with the Town Centre Action Plan and support local authorities and communities to revitalise their town centres.

We are contributing £500 million over 20 years to the Glasgow and Clyde Valley City Deal which aims to create 29,000 jobs and lever in £3.3 billion private sector investment. Highland and Aberdeen Councils are in discussion with Scottish and UK Governments on City Deals. We are committed to going further and extending this approach to other cities across Scotland.

REGIONAL PARTNERSHIP PLANS

Building on the approach being adopted in City Regions we will formalise our approach to engagement with regional partnerships. We will encourage regions facing economic challenge to work collaboratively to identify how best to deliver a vision for inclusive growth. This will also build of the work already underway by, for example, the South of Scotland Alliance and Ayrshire Economic Partnership.

NEW ECONOMIC POWERS

Whilst we will continue to use our devolved responsibilities to boost the Scottish economy and tackle inequality, many of the key powers to support businesses, to shape the structure of the economy and reduce inequality remain reserved to the UK Government.

The Smith Commission recommended the devolution of further fiscal powers, including the devolution of Air Passenger Duty and Aggregates Levy and the assignment of a share of Scottish VAT revenues. We will take forward plans for the implementation of these new powers. The Commission also recommended additional powers over income tax including full control over setting different rates of income tax and tax thresholds (other than the starting rate). These proposals are the subject of the Scotland Bill currently being considered by the UK and Scottish Parliaments and we are taking forward plans for their implementation.

Consumer Protection

The Scotland Bill is devolving wider economic levers in the areas of competition and consumer protection. The Scottish Government will work in partnership with interested groups to create an integrated consumer protection regime that puts the interests of consumers first.

We will give consumers greater clarity on where to turn for help and advice, including those in vulnerable positions. We will also use these regulatory levers to support economic growth by stimulating competition and enabling better regulation initiatives. We will achieve this through:

• Publication of our response to the recommendations of the Consumer and Competition Policy Working Group.
• Developing a Consumer and Competition Strategy for Scotland.
• Working with our stakeholders to deliver a Scottish approach to consumer redress that is comprehensive, effective and widely used.
• Outlining the form and functions for a unified consumer body, which will provide high quality, efficient and accessible advocacy and protection.
• Outlining our vision for how we will use the competition powers being devolved to safeguard consumers and prevent anti-competitive behaviour. Publication of our first strategic assessment of Scottish markets will identify areas of competition concern and prioritise how we and other stakeholders will work together to address these market failures.

AIR PASSENGER DUTY

We are committed to replacing Air Passenger Duty ( APD) with a more competitive regime that better supports our goal of boosting international connectivity and business growth.

We have established a forum, with membership from the airline industry, Scotland's airports, environmental groups, business organisations and tax professionals. This forum will support the development of our policy proposals, including helping us to shape a policy consultation on a Scottish APD which we plan to launch this October. The Scottish Parliament will be able to legislate for a replacement Scottish tax only once the new Scotland Bill has been passed by the UK Parliament.

We will reduce the burden of APD by 50% with the reduction beginning when we introduce a Scottish APD in 2018 with a view to abolish it completely when resources allow. We are currently consulting with stakeholders on the best way to apply that reduction across new and existing routes.

Scotland's Tax Powers

From April 2016, under the Scotland Act 2012, the main UK rates of income tax will be reduced by 10p for Scottish taxpayers and in its place the Scottish Parliament will be able to set a Scottish Rate of Income Tax ( SRIT) each year. For example, if the Scottish Parliament set the rate at 10p, Scottish taxpayers would continue to pay the same amount of income tax as they do now. We will bring forward proposals for SRIT as part of our 2016-17 draft Budget.

The 2012 Act income tax powers offer limited flexibility as any rate changes must be applied equally to all tax bands. We continue to argue, therefore, for the transfer of the further income tax powers in the Scotland Bill at the earliest opportunity. The ability to set thresholds and vary rates by band will allow us to design an income tax policy which supports Scotland's Economic Strategy and reflects our stated approach to taxation - a policy that will meet the distinctive needs of Scotland, supports sustainable economic growth and is linked to the ability to pay and tackles inequality.

The first national taxes set by the Scottish Parliament in over 300 years came into operation in April this year. Land and Buildings Transaction Tax ( LBTT) and Scottish Landfill Tax replaced Stamp Duty Land Tax ( SDLT) and UK Landfill Tax in Scotland on 1 April 2015. Alongside this Revenue Scotland, Scotland's new tax authority, started collecting these devolved taxes.

LBTT provides for a tax that is modern, efficient, and progressive and which minimises distortions in commercial or housing-market activities. Our residential LBTT rates and bands prioritise support for first-time buyers. We are taking 50% of house purchases out of tax altogether - 10,000 more than under the UK's SDLT. Over 90% of house buyers will pay less in tax compared to SDLT or will pay no tax at all.

The Scottish Government will also bring forward the Bankruptcy Consolidation Bill to put Scotland's bankruptcy legislation in one place in order to ensure that Scottish bankruptcy law is readable, accessible and easier for both practitioners and those affected by the law to use.

SCOTTISH FISCAL COMMISSION BILL

The Scottish Fiscal Commission plays an important scrutiny role in Scotland's fiscal framework. The Commission currently operates on a non-statutory basis. We published a consultation on our legislative proposals to place it on a statutory footing in March 2015.

The Bill will establish a robust and fully independent Scottish Fiscal Commission on a statutory basis, which is directly accountable to Parliament. The Commission will scrutinise tax forecasts and other fiscal projections prepared by the Scottish Government. While the initial remit of the Commission will be proportionate to the fiscal powers devolved to the Scottish Parliament, the Bill will create a platform to expand the functions of the Commission as new fiscal powers are devolved.

The Bill will require the Commission to publish reports setting out its assessment of:

• Forecasts of receipts from the devolved taxes.
• The assumptions made in relation to the economic determinants underpinning forecasts of receipts from non-domestic rates.
• Forecasts of receipts from income tax attributable to a Scottish rate resolution.
• Scottish Ministers' projections as to their borrowing requirements.

BANKRUPTCY CONSOLIDATION BILL

The Scottish Government is committed to modernising debt management and debt relief, ensuring the options available to help people in financial difficulty are appropriate for the 21st century. Extensive consultation and reform of personal insolvency has introduced many legislative changes over the last decade, with the Bankruptcy (Scotland) Act 1985 heavily amended so that the ordering of the legislative provisions has lost coherence and structure. Consolidation will make the legislation more accessible for practitioners and those affected by it, saving time and money.

ANNUAL BUDGET BILL

The work laid out in this Programme for Government will be supported by the annual Budget.

BUDGET BILL

The annual Budget Bill provides Parliamentary approval for the Scottish Government's spending plans, allowing the allocation of resources to our strategic objectives and supporting progress towards our vision of a more successful country, with opportunities for all of Scotland to flourish through increasing sustainable economic growth.