Programme for Government 2019 to 2020

Chapter 2: A Successful, Fair and Green Economy

A 'no deal' Brexit remains the most significant challenge that our country faces. Whilst this uncertainty is a serious threat to our economy and a challenge to business, we are taking every possible measure to increase our resilience and strengthen the foundations of our economy.

As set out in our Economic Action Plan, we continue to deliver on our long-term commitment to investment – in tackling climate change, improving the wellbeing of our people, encouraging innovation, adopting new technology, creating world-class infrastructure and delivering skills for the future.

Over the coming parliamentary year, the Infrastructure Investment Plan, Capital Spending Review and Climate Change Plan will further reinforce that direction – all of these landmark publications will help us to create the conditions for a fair and green economy.

In the year ahead we will invest more than £5 billion in infrastructure projects and, beginning in 2021, we will invest £1 billion in our schools to deliver real transformation to communities around Scotland.

We will make £130 million available this year to set up the Scottish National Investment Bank, readying Scotland for a shift in how government and business work together to drive investment.

We will continue to support businesses to innovate, providing £37 million of funding per year for research and development.

We will continue to look outwards to our key international markets. As a parallel to our Export Plan, we will put in place a Foreign Direct Investment (FDI) Growth Plan setting out how we will grow FDI and secure inward investment which helps to build expertise in green and sustainable technologies and sectors, as well as address major global challenges around ageing and wellbeing. Our enhanced export plan is now focusing on the sectors, markets and businesses where we will have the greatest impact.

The Enterprise and Skills Strategic Board, along with our own engagement, has highlighted that skills are a top priority for business. That is why our Future Skills Action Plan sets out a vision for Scotland's skills system and details how we will work proactively with business to address current and future skills shortages.

We remain firmly committed to an economy in which everyone has the opportunity to contribute and benefit from growth. We will continue to make Scotland's workplaces fairer through our work to reduce the disability employment gap, tackle the gender pay gap and demonstrate leadership in tackling race inequality in employment.

There is still much to do, but our work this year will provide further investment in our economy's foundations and enable us to grasp the opportunities ahead.

Scotland's infrastructure

We have committed to the most ambitious long-term level of infrastructure spend ever in Scotland, steadily increasing annual investment so that our investment this year of £5.2 billion will reach £6.7 billion by the end of the next Parliament.

This is a long-term commitment to boosting our international competitiveness, protecting and creating jobs. It also underpins our efforts to tackle climate change and improve quality of life for people across Scotland.

This year, our investment of more than £5 billion will support provision of affordable housing, five new NHS elective care centres and contribute to City Region and Growth Deals, as well as help us to achieve our zero carbon ambitions by providing essential funding to Energy Efficient Scotland and active travel initiatives.

Beginning in 2021, we will invest a further £1 billion of capital investment in our schools, benefiting around 50,000 pupils across Scotland. This is in addition to the 60,000 who, by the end of next year, will have seen their schools renewed or refurbished since 2009 through the existing Schools for the Future programme. This significant investment will deliver digitally-enabled, low carbon schools and campuses providing benefits to pupils and the local economy.

The Infrastructure Investment Commission for Scotland will publish its advice on priorities by the end of this year. Its advice will help us to identify key strategic investments that will boost economic growth and support public services, while helping us to achieve our ambitions for a zero carbon economy.

We will set out our plans for the next five years, including the next Infrastructure Investment Plan, early in 2020. The key priority of the Plan will be low carbon infrastructure, sending a strong signal to investors that Scotland is creating the conditions for green growth.

Investment

We are readying Scotland for a shift in how government and business work together to drive investment.

Following the introduction of legislation to establish and capitalise the Scottish National Investment Bank, we will invest a minimum of £2 billion over 10 years in our businesses and communities. This year, we will provide £130 million to set up the Bank. We will continue to work with stakeholders to develop its key missions, the primary one of which will be securing the transition to net zero.

A key element of the Bank's work will be to help to shape and develop commercially-investable low carbon markets. As well as opening up significant new investment opportunities, the Bank will work with businesses to identify opportunities and break down barriers to green investment.

We are working closely with advisers on developing the other areas of focus for the Bank. They may be:

• responding to the pressures of an ageing population and supporting the health of the whole population
• place-making and local regeneration

The Bank's missions will have been finalised by the time the Bank makes its first investments next year.

The Building Scotland Fund, the precursor to the Bank, has agreed investments of £94 million so far across a range of housing, regeneration, industrial and commercial projects. It will invest a further £56 million or more by March 2021, helping to trial some approaches to investment that the Bank could take in the future.

As well as this, the Bank will build on other initiatives currently underway such as the Scottish Growth Scheme and the equity investments activities of Scottish Enterprise, helping to simplify the investment landscape for businesses and private investors.

As of the end of July this year, 201 companies have received £135 million of investment in loans and equity under the Scottish Growth Scheme.

Supporting businesses

Scotland continues to be an excellent place to do business. According to a report updating the Global Entrepreneurship Index for Scotland, our business support ecosystem is a global leader, ahead of other UK nations and we have a highly-qualified and highly-skilled workforce.

Businesses told us that they want it to be easier to get information, advice and support at the right time. By the end of 2019, businesses will be able to access products and services from our enterprise and skills agencies, as well as Business Gateway, through an online single entry point currently being developed under the leadership of the Enterprise and Skills Strategic Board and in close collaboration with businesses.

In 2020, the single entry point will expand and connect to every source of government business support. This will make all products and services offered to businesses by public sector organisations visible and available in one place online.

Last year, the Economic Action Plan set out a number of measures specifically designed to support rural businesses and drive positive outcomes for people and communities. Between 2015 and 2018, over £119 million has been invested in nearly 1,500 community-based or micro-enterprise projects in the rural economy.

The National Council of Rural Advisers recommended that a new approach to business support be developed to ensure that the true potential of the rural economy is realised. This year, we will test a place-based approach to integrated business support for micro-enterprises operating in rural areas, recognising the different challenges they face such as access to markets, connectivity issues and employment patterns. The new approach will deliver flexible support that is tailored to the needs of the business and its geographical location.

Supporting entrepreneurship

We continue to support our entrepreneurs. We have delivered the first Unlocking Ambition programme, with some of Scotland's most promising entrepreneurs receiving a range of specialist business development training and support. In the new phase, we will seek to prioritise applications which will create businesses which support a low carbon economy.

We continue to support enterprise education in schools and colleges, offering young people the opportunity to achieve their entrepreneurial potential. We have invested in a range of measures to support female entrepreneurship and are seeing a significant rise in the proportion of women starting a business and a reduction in the gender gap in entrepreneurship.

Supporting innovation and adoption of technology

Businesses that innovate are central to achieving our economic and social ambitions as they enable growth and create high quality jobs.

We are creating flagship centres of innovation, such as the Michelin Innovation Parc, and the National Manufacturing Institute Scotland (NMIS). We are investing in the evidence base for Mobility as a Service to provide innovative solutions to reduce reliance on private cars by integrating different modes of transport and providing information and payment functions in a single mobility system.

We are encouraging advances in Connected and Autonomous Vehicles or driverless vehicles. These vehicles can communicate with their surrounding environment, enabling safe and efficient movement of people and goods. We are supporting an autonomous bus trial on trunk roads between Fife and Edinburgh starting next year. Our programme of innovation centres also includes £13.5 million support for the Data Lab. Combined with the radical action we are taking to accelerate progress to net zero emissions, these actions are creating the conditions needed for innovation in Scotland.

We are focused on hitting our target of doubling business investment in research and development (R&D) to £1.75 billion by 2025. Last year, we provided £37 million to co-fund R&D projects and, in 2019-20 and 2020-21, at least £37 million will again be available. We will now simplify and streamline our R&D support, providing a single application route for businesses, and target research calls to support the transition to a zero carbon economy.

We have signed a memorandum of understanding with Nesta, a leading innovation foundation. We will work together with them to develop strategic innovation projects across the economy and the public sector that put Scotland on the map as a global leader in applying new ideas to tackle important problems.

Driving innovation in manufacturing

We continue to take action to make Scotland world-renowned for inventing, designing, developing and manufacturing key products and technologies.

Manufacturing accounts for 54% of Scotland's international exports and employs 185,000 people. It has higher average wages than the service sector and tends to distribute jobs more widely across the country, making it a key contributor to our inclusive economic growth ambitions.

The first phase of NMIS, the Lightweight Manufacturing Centre, opened in June this year. It provides Scottish industry with the skills and services needed to put it at the forefront of lightweight manufacturing and materials and helps companies of all sizes to compete globally.

In the coming year, construction will begin on the NMIS. Our £48 million investment secures the creation of a digital factory in Renfrewshire which will work with an extended network of existing and planned facilities. These will work with business to develop new processes and technologies to help them overcome manufacturing challenges or take advantage of new opportunities. It will also include a skills academy to provide advanced manufacturing training and upskilling and support the embedding of circular economy skills in future workforce training.

Over the coming year, we will further develop that network of facilities by investing the first tranche of the £14 million Advancing Manufacturing Challenge Fund. Facilities and services will target small and medium manufacturing businesses to advance their research, develop new products, improve their productivity and upskill their workforce so that they have the right tools and resources to lead the way in this rapidly evolving marketplace.

We will also launch the First Minister's Award for Manufacturing Leadership to recognise the importance of leadership in the sector to improve efficiency and productivity and encourage collaboration and inclusivity.

Industrial biotechnology

Industrial biotechnology is an emerging sector in Scotland, with potential for major growth.

It is replacing existing pharmaceuticals, chemicals and fuels with sustainable, non-fossil-based alternatives, giving it potential to help us meet our climate change targets.

We will continue our support for the Industrial Biotechnology Innovation Centre, with further funding of up to £11.1 million agreed up to 2023. We are working with the Centre and industry to deliver on the National Plan for Industrial Biotechnology. The Plan aims to increase the number of companies active in industrial biotechnology to over 200 and achieve turnover of £900 million. Progress reported earlier this year highlighted that the number of active companies and value of sales have doubled.

Life sciences

We will continue to develop and drive close links between industry, academia and the health sector in order to support improved wellbeing and inclusive economic growth.

The life sciences sector employs 37,000 people in highly-skilled work in Scotland and it is able to inform and support our responses to emerging global trends such as the ageing population, proliferation of chronic diseases and increasing pressures on healthcare. The sector contributes to new digital technologies, advances in genomics, big data and precision medicine and is a key player in driving high-value medical manufacturing.

In partnership with the UK Government and industry, the new £56 million Medicines Manufacturing Innovation Centre will offer pharmaceutical companies, from start-ups through to multinationals, a unique opportunity to collaboratively develop and adopt novel manufacturing techniques into their own manufacturing processes and supply chains.

The space sector

Scotland already punches well above its weight in the space sector. Businesses based here employ 18% of the UK's space sector workforce and Scotland produces more small satellites than any other country in Europe.

Our ambition is for Scotland to become the first country in Europe to provide an end-to-end solution for small satellite manufacture, launch and innovation in satellite data analysis, including critical earth observation and environmental data.

We aim to develop launch capability – both vertical and horizontal – to serve small satellite producers, with plans for spaceports in Sutherland and Prestwick. This is powered by investment through Highlands & Islands Enterprise and the Ayrshire Growth Deal respectively, forming a key part of our ambition.

Scotland's ambition is to have £4 billion of the global space sector market by 2030 and we will work with the Scottish Space Leadership Council and other partners to achieve this.

Digital and Data

Digital technology is transforming the way we live. There is now a huge opportunity to ensure that people and businesses are given the tools and skills they need to harness this potential.

Digital infrastructure

We are delivering world-class digital infrastructure which will deliver huge social, economic and environmental benefits to the whole country – enabling innovation, helping to reduce travel, opening up opportunities and addressing isolation and remoteness.

Our plan to provide access to superfast broadband to every home and business in Scotland is the most ambitious of any government in the UK.

We will award the contracts to deliver the R100 programme by the end of the year and begin deployment as soon as possible thereafter. We will continue to press the UK Government to ensure that Scotland does not lose out on its share of funding for UK digital connectivity activity.

5G can help to take our digital connectivity to the next level, and could add £17 billion to our economy by 2034 and create 160,000 new jobs. Our 5G strategy will help to forge our digital future and make sure that we are ready to capitalise on this emergent technology.

In the coming year, we will establish the Scotland 5G Centre, to drive forward the strategy and create a Scotland-wide approach to 5G Rural First, building on the success of the Orkney project. The public sector has a key role to play in enabling 4G, 5G and other telecoms. We will develop rental guidance for public sector land and buildings to site infrastructure, focusing first on those owned by the Scottish Government. We will pilot a sustainable 5G transport corridor along an existing trunk road.

The involvement of commercial operators is also vital.

We will host a roundtable with mobile and digital providers and businesses to secure their commitment to delivery of the 5G strategy and maximise full fibre coverage throughout Scotland. We will continue to support them to invest here, particularly through the 10-year rates relief on new fibre infrastructure. We will launch a Full Fibre Charter for Scotland for mobile and digital providers benefiting from these measures to help us deliver inclusive growth and a fairer Scotland.

Last year, we awarded a contract for the delivery of new masts to boost the coverage of 4G in remote areas – work has begun to secure agreement with mobile operators to deliver the 45 new mast sites currently in the programme by 2022, supported by a £25 million investment.

Digital public services

As government, we need to have digital capability fit for the future.

Giving everyone a way to identify themselves online, in a secure way where their privacy and personal data is protected, will help to make sure our public services are easy to access from anywhere in the country.

We have completed nearly two years of research to understand how digital identity can improve our public services, explore the barriers people may face using it and conducted a successful proof of concept to test our technological choices. This year we will develop an early version to support Social Security Scotland benefits from 2020 as work continues on a full solution.

Digital skills

An inclusive digital nation will be one that embraces change and ensures that everybody can participate in the opportunities this brings.

This year, we launched our £1 million Digital Start Fund to help more people – particularly those from disadvantaged backgrounds and women returning to work – access the training they need to improve their digital skills and embark on a new career.

We have invested over £3.5 million in the Digital Growth Fund and Digital Boost programme, which are helping Scottish businesses invest in new technologies such as cyber security, data analytics, software engineering and providing improved staff training and skills.

With partners, we will develop a programme to help rural businesses access all the digital support currently available to enable them to upskill and expand.

Data-driven innovation

Scotland is data-rich and our public sector holds an immense amount of information which can be transformed for social and economic good.

Making data-driven innovation work for everyone is a key aim of the Edinburgh and South East Scotland City Region Deal signed last year, as it works to create the Data Capital of Europe. It is working to bring learning materials to every school in the region, working with housing associations to tackle fuel poverty by targeting help to those in greatest need and supporting entrepreneurs with the commercial and technical know-how to enable their businesses to take off.

Our ongoing investment in the Data for Children Collaborative with UNICEF is shedding new light on how to improve children's wellbeing locally, nationally and globally. One of its first projects will be tackling childhood obesity, with further projects exploring how to effectively plan and deliver child services and looking closely at the complex causes of poverty to determine how best to intervene and improve outcomes for children. We expect the results of its first phase of research to be made available early next year.

We are developing new sources of environmental data to enable us to meet our ambition to be a world leader on tackling climate change, making the most up-to-date environmental data on Scotland's natural and built environment available openly to support our businesses, public sector and communities.

The second phase of our Data Science Accelerator programme launches this month, open to a wider group of public sector bodies than ever before, and we will shortly issue a call for artificial intelligence projects to help us tackle complex issues, such as climate change, awarding grants of up to £100,000 to foster new ideas and develop practical solutions.

Supporting businesses to adopt digital technology is key to boosting productivity, unlocking wage growth for workers.

Harnessing the support of partners in the public and private sectors, we will look to develop new ways to help businesses transition to highly-digitalised, low carbon business models. This work will target high employment, low productivity sectors, piloting new approaches to support companies to embed digital technologies that help them to grow, deliver greater economic impact and provide more and better employment opportunities. A key part of this testing will be to ensure that the transition can benefit everyone, providing opportunities for people to reskill and upskill and access higher quality jobs.

Fintech

Fintech brings together Scotland's historic strengths in finance and the exciting new world of digital technology. We will Support FinTech Scotland in its role in developing Scotland's fintech sector, working with partners in industry and academia to drive collaboration across Scotland.

To ensure that Scotland's ecosystem supports future innovation in fintech, we will examine the treatment of crypto assets and related technologies in Scottish legislation.

Cyber resilience

The importance of cyber resilience has never been greater. Digital technologies bring enormous opportunities – but they also bring with them new threats and vulnerabilities that we must take decisive action to manage and address.

We are investing over £1 million to drive growth in the cyber security industry, working with ScotlandIS in their role as a cluster management organisation to formalise and develop Scotland's cyber cluster. This year, we will fund an innovation challenge alongside CENSIS to examine cyber resilience in the Internet of Things.

We are continuing to support the public sector, businesses and the third sector to build their cyber defences, aided by £500,000 investment in a Cyber Essentials voucher scheme for small businesses and charities. The significant majority of public bodies in Scotland now have in place Cyber Essentials or Cyber Essentials Plus certification for their core networks and we will refresh our Public Sector Action Plan on Cyber Resilience this year to build on progress.

We will continue work to improve access to key resources and advice and host a second Cyber Scotland Week in February 2020.

Demand for cyber skills in Scotland is high and rising. This year will see the consolidation of a coherent framework of qualifications in cyber security in schools, colleges and universities. We will support the roll out of Young Scot's Digiknow? initiative — a cyber-resilience engagement programme for young people who live in disadvantaged areas or who are at risk of offending.

We will also set up a programme of industry and school/college partnerships to raise awareness and inspire students to study cyber security and consider a career in this area. Working with universities, we have helped to fund pilots aiming to promote inclusive cyber skills growth and, over the coming year, we will make available supported training for neurodivergent people to get into cyber security.

Digital and data ethics

Advances in digital technologies and the use of data and artificial intelligence (AI) are happening at pace, presenting economic and social opportunities.

However, we also recognise the challenges and concerns which must be addressed if we are all to benefit from these opportunities. In the coming year, we will develop principles and frameworks setting out how we will become an ethical digital nation. These will be clear statements of how Scotland will use digital, data and artificial intelligence to improve public services, boost productivity and drive inclusive growth in ways which protect privacy, enhance security and promote accessibility, inclusion and diversity.

We will develop an AI strategy which will help to ensure that Scotland maximises the potential economic and social benefits of AI and sends a strong signal to the world about our ambition. Our new Research Data Scotland service will launch in spring next year. It will provide support for researchers to access and use data about people, places and businesses in a secure setting for public benefit and help to attract investment to Scotland.

These actions will create the conditions which enable industry and public services to innovate with confidence, encourage inward investment to Scotland and give our people the reassurance that technological advancement will benefit Scotland socially and economically through the principled and ethical exploitation of digital technologies.

Protecting consumers

Consumers are a vital part of our economy, accounting for around 60% of spending.

The choices consumers make can help us tackle some of our most difficult challenges, such as responding to the global climate emergency, improving public health outcomes and encouraging businesses to prioritise Fair Work.

But there is evidence that consumers have low trust in some of our most essential services, such as finance, telecoms and energy. Vulnerable consumers – those on low incomes or people with disabilities – are more likely to suffer harm as a consumer and pay relatively more for goods and services, making inequality worse.

To address this, we have introduced the Consumer Scotland Bill. It will establish Consumer Scotland as a new advocacy and advice body by 2021.

Consumer Scotland will work to:

• reduce consumer harm in Scotland
• increase Scottish consumers' confidence in dealing with businesses that supply goods and services to them
• increase the extent to which consumer matters are taken into account by Scottish public authorities

As well as setting up this new body, we have taken other action to improve consumer fairness. We replaced the UK-wide consumer helpline with a Scottish service. This is now a free service and allows more bespoke support to be provided to those who need it. In the coming year we will:

• launch an awareness campaign to make it easier for consumers to find qualified electricians and publish a consultation on the regulation of electricians
• publish a scams prevention strategy to protect our most vulnerable people
• continue our work to tackle unfair delivery charges. The harm caused by these are felt most by our rural, island and remote communities and we will take action by launching the Scottish Parcel Delivery Map. We will introduce a new postcode tool to reduce the instances of unfair delivery charges resulting from postcode misclassification
• continue our work on the Energy Consumers Action Plan to protect consumers from excessive or avoidable costs, prevent new forms of social exclusion and promote the benefits of smarter domestic energy systems

Tourism

Scotland's tourism industry is an important contributor to the Scottish economy, employing over 200,000 people. There were 15.3 million overnight visits to Scotland in 2018, including over 3.5 million international visitors, showing that the rest of the world wants to experience our unique culture, beautiful natural environment and world-renowned hospitality.

However, in these uncertain times, we know that we cannot take this important industry for granted. We have asked the sector to tell us exactly what its challenges are and we are listening carefully to what they have to say. We are now working with our industry partners to co-design solutions.

We will provide a package of support for the tourism sector to:

• minimise the burden of regulation and associated cost
• recognise the essential role of marketing Scotland at UK and international levels
• provide sustainable support to enable industry to deliver high quality, value-for-money and memorable experiences
• support the growth of a skilled, professional and inclusive tourism workforce
• continue investment in Scotland's digital infrastructure to accelerate growth
• consider how we ensure that transport policies, practice, taxation and the industry's tourism strategy work best together for the benefit of the Scottish economy

In the coming months, the new Tourism Strategy for Scotland will be launched, developed in partnership with the sector, followed by an action plan in spring next year. These will help to ensure that our tourism industry drives inclusive economic growth, enhances the wellbeing of those who work in it, benefits communities and strengthens our international reputation. It will also set out the actions we will take to continue to support the tourism industry.

We must make sure that tourism respects the environmental, social and economic foundations of tourism destinations, contributes to local communities and builds a resilient industry that is fit for the future. We will make sure that the benefits tourism brings reach all parts of the country, particularly those areas that depend on the jobs and income that it creates.

We have established an agri-tourism monitor farm programme to help farms, estates and crofts use food tourism as a sustainable contribution to their businesses. The first four agri-tourism projects started this year in Shetland, Uist, East Lothian and West Dunbartonshire.

We will build on the £500,000 marketing campaign that highlighted the hidden gems of the south of Scotland, continuing our investment again this year. The campaign will focus on promoting the area's fantastic mountain biking facilities, underpinned by our additional investment at Glentress to improve visitors' experiences.

We will invest a further £1 million in forest tourism in the south of Scotland by 2021, supporting our work to establish Scotland as an adventure tourism destination and to encourage sustainable tourism.

Given the unique circumstances and critical impact on tourism in Lossiemouth of the loss of the town's East Beach Footbridge, and to celebrate next year being the Year of Coasts and Waters, the Scottish Government will fund its replacement, restoring the only safe access to the beautiful sands, protecting jobs and businesses in the town into the bargain.

In 2017, we announced a two-year £6 million package of funding through the Rural Tourism Infrastructure Fund to enhance the experience of visitors to our iconic rural and island tourist sites. Since its launch, the funding has been used to help the tourism industry keep pace with the growing number of visitors these sites attract by developing and maintaining key infrastructure and facilities, as well as helping to protect the natural environment.

Due to the success of the Fund, we will make another £3 million available to invest in new projects in 2020-21.

We will use technology to improve visitors' experience of Scotland's tourist sites by:

• creating a free open public Wi-Fi system at 10 sites on the North Coast 500 Route. It will add to the existing Highland Council Wi-Fi project, providing tourists and residents with increased internet connectivity all year round
• launching a Scottish UNESCO digital trail, providing an online experience featuring all of Scotland's UNESCO sites

People are vital to the success of our tourism industry and ensuring workers are protected and treated fairly is essential. We have been working to encourage more Fair Work practices across the sector and increase the number of businesses paying the real Living Wage. An additional 50 hospitality businesses were accredited this year as real Living Wage employers.

But there is more to do. This year, we will work with the Poverty Alliance to further increase the number of Living Wage employers and work with the Scottish Trades Union Congress to make sure that workers' voices are heard. We will also invest in a campaign to promote tourism as a career of choice, to help address skills challenges across the sector.

2020: Year of Coasts and Waters

2020 will be designated as the Year of Coasts and Waters, which will promote opportunities to experience and enjoy Scotland's beautiful coastal landscape and waters.

The Waverley Paddle Steamer is currently out-of-service and urgently requires new boilers in order to sail again. As part of the Year of Coasts and Waters, we will work with partners to support the repairs, helping to make sure that locals and visitors are able to enjoy the journeys the Waverley makes to over 60 ports and piers in the UK.

We will make £50,000 available for one-off grants for community groups, charities and social enterprises to hold themed events, co-designed with young people.

We will provide an additional £400,000 this year for North Ayrshire's Coig project. This will result in a total investment of £700,000 since 2018 for routes giving visitors the chance to enjoy the area's islands, coastal landscapes, harbours and beaches.

To further encourage visitors to more of Scotland's inhabited islands, we will launch the new Islands Passport early in 2020.

Scotland in the global economy

Exports are a key driver of Scotland's economic growth, driving business innovation and productivity, creating jobs and helping to raise living standards as well as generating tax receipts to support essential public services.

In 2018-19, export of goods increased by 12.9%, faster than the other UK nations and the UK as a whole. We want our performance to be even better over the next year, increasing the value of Scottish exports and increasing the number of businesses in Scotland that export. This will ensure that our export base is diversified and more resilient.

Our enhanced export plan, A Trading Nation, has been published and is backed by £20 million of investment over three years. It sets out plans to grow Scotland's exports to add around £3.5 billion to Scottish GDP and create 17,500 more jobs. We have developed new data tools to improve our export intelligence and support the exporting community to grow.

This year, we will:

• recruit 15 new in-market specialists for priority markets, to help Scotland's exporters take advantage of new overseas potential. These will be in place by August 2020
• build on our partnership with the Scottish Chambers of Commerce to run more international trade missions, supported by up to £2 million
• begin work to expand our Trade Envoy network from four to 12
• backed by £1.5 million, develop a new digital portal which supports exporters, as well as providing them with mentoring and skills development
• support trade activities around the Dubai Expo, Rugby World Cup and the Royal Edinburgh Military Tattoo shows in China
• continue the roll out of the First Minister's Export Challenge, where experienced exporters mentor new exporters, supported by £2 million over three years
• begin work to revamp the GlobalScot network with a new digital platform and promotional material, which will see it expand from 600 members to over 2,000
• launch a campaign of awareness raising to make sure that Scottish companies know about, and can access, export finance support

This year, we will expand this evidence-based approach to drive stronger performance in Foreign Direct Investment (FDI). By summer 2020, we will put in place an FDI Growth Plan for Scotland. It will set out how we will target FDI attraction to grow the sectors where Scotland is currently world‑class as well as building on emerging expertise and enabling technology to address major global challenges around ageing, climate change and wellbeing.

This approach will integrate Scotland's vision of an economy that supports wellbeing and equality into how we promote ourselves abroad and direct the opportunities we seek to attract to Scotland.

We will:

• target investment attraction in markets and sectors where we have a comparative or emerging advantage, such as energy, personalised healthcare and data science, focusing on the best market opportunities for Scotland
• attract start-ups specialising in technology and low carbon to relocate to Scotland, helping to build an entrepreneurial culture around Scotland's future strengths
• attract investors for the long term, creating a buddy system for incoming investors to help them to increase their business opportunities in Scotland and embed them into supply chains
• identify and promote strategic place-making sites and assets to targeted investors who will use and benefit from those assets, for example on former industrial and energy sites
• support the effort to attract green investment in capital and infrastructure projects by attracting the companies that can provide the skills and technology to deliver those projects
• increase the skills match and support for those sectors and companies which make Scotland globally competitive

Focusing on our best opportunities in attracting inward investment that supports our economic vision will also support further growth in exports by strengthening supply chains in many of the same sectors that provide our biggest trading opportunities.

A diverse, skilled and empowered workforce

We understand that certain sectors are going through periods of rapid change, which is why it is important that we ensure that our skills system continues to match the needs of industry, workers and learners now and in the future.

Our Future Skills Action Plan sets out our vision and ambition to help workers and businesses strengthen existing skills and help people to transfer their skills and experience more easily between workplaces and sectors. It includes a commitment to increase our investment in workforce development by a further £10 million per year from 2020-21, adding to the current £10 million Flexible Workforce Development Fund.

In partnership with Skills Development Scotland and the Scottish Funding Council, we will make sure that our skills system is world class and that it becomes increasingly agile, responsive and flexible. We will ensure more opportunities to upskill and retrain and that the specific barriers faced by particular groups, such as women, older people and minority ethic people, are addressed.

This reorientation of the skills system will put Scotland in a strong position to respond to global challenges and opportunities such as changes in our demography, the impact of technological change, higher levels of international uncertainty and the global climate emergency.

We will:

• through the Scottish National Retraining Partnership, work with the Confederation of British Industry and the Scottish Trade Union Congress to identify opportunities to enhance access to upskilling and reskilling opportunities
• work with employers to develop and introduce new, innovative funding mechanisms to support learners and workers at every stage of their career
• make sure that there are greater opportunities for adult learning, in-work training and re-training so that everyone can benefit from fulfilling and fair work
• build employer confidence in the skills system, with clear opportunities for them to influence it and contribute to what it provides
• expand the range of Graduate Apprenticeships available in critical areas such as civil engineering, digital, cyber security and data science, while also continuing to encourage women to apply. As part of this, we will engage with business on how the Scottish Government's response to the Apprenticeship Levy can continue to address the needs of businesses
• increase investment in workforce development and explore flexible incentives for all relevant stakeholders, including colleges, universities and training providers, to develop new approaches to upskilling and lifelong learning. This will include, for example, more flexible and online delivery models and developing 'micro-credentials' that can be stand-alone skills driven modules or part of a postgraduate qualification

Over the next year, we will work with stakeholders across our education and skills system and those who engage with it to design and develop specific proposals to turn our vision into a reality.

Recognising the particular challenges faced in our rural communities, this year we launched the Skills Action Plan for Rural Scotland to address skills shortages, help attract and retain talent and manage the demographic challenges faced by rural areas.

Apprenticeships

The number of people benefiting from work-based learning has risen for the eighth year in a row. In 2018-19, over 37,000 apprentices were in training, including Graduate Apprenticeships which offer an alternative route for people to develop the higher level skills that our economy needs. We are progressing towards a record number of 30,000 new apprenticeship starts in 2020-21.

To support our work to double entitlement to early learning and childcare to 1,140 hours a year, we have increased the number of childcare-related apprenticeships from 1,691 in 2017-18 to 2,102 last year. We will continue to increase the number of childcare-related Modern and Foundation Apprenticeships, in line with demand, and pilot a Graduate Apprenticeship for the sector.

To help to secure the future forestry workforce, we have put in place a new Forest Machine Operators Modern Apprenticeship scheme. The first apprentices are starting this year and helping the sector to harvest more sustainable timber and contribute to carbon storage efforts.

No one left behind

In December 2018, we published No One Left Behind, a review of employability services which set out our intention to create an employability system that is more flexible, joined-up and responsive to the needs of people using services.

Our work so far through programmes like the Employability Fund and Community Jobs Scotland have made an important contribution, but labour market challenges remain for many equality groups and it is right that our system continues to evolve.

This reform will take time to deliver. We will work closely with local authorities and a range of partners, including Skills Development Scotland, the third sector and private training providers, to plan and deliver services that are shaped by those that use them and the people that deliver them.

This transition is being managed carefully to make sure that the sector stays stable and that support remains available to those who need it. We will continue to support the Employability Fund and Community Jobs Scotland, while making preparations for these and other existing sources of support form part of the new employability system. We will also continue to support young people who are struggling to engage in education or find work through Inspiring Scotland's new Our Future Now Fund and through Discovering Your Potential, which provides flexible and intensive support for young care leavers.

These wider ambitions will build on the early success of our new, devolved employment support service, Fair Start Scotland.

Backed by £96 million, it helps those who face the greatest barriers towards and into work – free from the risk of sanctions on their benefits. It is already making an impact: in the first year of the programme, over 2,000 people have started jobs.

Careers advice

Good careers advice is essential to help people at any age find the right job. We will publish a new Careers Information Advice and Guidance Strategy later this year to make sure that our careers services are flexible and accessible to the needs of Scotland's workforce, as well as helping people be responsive to changes in the labour market and economy.

Supporting more disabled people into work

Last winter, we published A Fairer Scotland for Disabled People: Employment Action Plan which set out how we intend to reduce the disability employment gap by at least half by 2038. The plan focuses on working with employers, helping disabled people into sustained work and supporting young people. In the coming year, we will:

• invest up to £1 million in a new Public Social Partnership to address the barriers that employers face in recruiting and retaining disabled people
• run a campaign to promote the positive case for employing a diverse workforce
• invest up to £500,000 to help disabled people undertake work experience
• ensure disabled people have access to information and guidance about their statutory employment rights and how to take action if those are denied
• improve approaches to supported employment
• evaluate the employment support we provide to those who suffer mental ill-health and make improvements to Fair Start Scotland

As well as supporting disabled people in the workplace, we remain committed to ensuring equality for disabled people across society and we will continue to ensure their voices are heard to make sure we better understand what work we need to do.

Fair Work first

We want Scotland to be a world-leading Fair Work nation by 2025, which is why in February this year we published the Fair Work Action Plan.

For workers, Fair Work means increased flexibility to manage family and caring responsibility, greater financial security, better physical health and improved wellbeing. For employers and businesses, it can reduce staff turnover, help with recruitment and drive productivity and innovation.

We are asking employers to work with us to put Fair Work at the core of inclusive economic growth.

Support through Regional Selective Assistance and other large grants is now conditional on employers paying the real Living Wage, not using exploitative zero-hour contracts and taking actions to address the gender pay gap.

Over 80% of all workers in Scotland now earn at least the real Living Wage and we have proportionately more than five times as many accredited real Living Wage employers in Scotland than in the rest of the UK. In addition, we are continuing to provide funding for councils to commission care services that pay adult social care workers the real Living Wage.

In August, we launched an extended Workplace Equality Fund. This £800,000 Fund will support employers to address long‑standing barriers faced by disadvantaged groups in the labour market and enable businesses with innovative ideas to embed Fair Work within their workplaces.

Our work with businesses is paying off – over 650 businesses in Scotland have signed up to the voluntary Scottish Business Pledge, resulting in practices across our workplaces that are good for businesses and good for Scotland, as well as contributing to our efforts to meet the UN Sustainable Development Goals and realise the outcomes in Scotland's National Performance Framework.

However, we know that we need to go further.

This year, we are:

• launching the refreshed Scottish Business Pledge, aligning it more closely with our Fair Work principles and including environmental impact for the first time
• launching a new online Fair Work service for small and micro employers so that they can access more easily the support and guidance that they need to help them to adopt Fair Work practices
• making funding available so that the real Living Wage can be paid to all workers, the majority of whom are women, delivering funded early learning and childcare hours from August 2020
• providing a further £380,000 to the Poverty Alliance to continue their work with employers across the country to make sure more people in Scotland are paid the real Living Wage
• continuing to fund the Fair Work and Trade Union Modernisation Fund to support trade unions to embed Fair Work in workplaces
• working with the Scottish Trade Union Congress to increase the number of workers covered by collective bargaining

All of us benefit when everyone can participate equally in our economy. We are taking specific action through our Gender Pay Gap Action Plan, Disability Employment Action Plan and the Race Equality Action Plan.

The gender pay gap for full-time employees in Scotland is the lowest on record and lower than the UK as a whole. Earlier this year, we published our Gender Pay Gap Action Plan – a first in the UK. It will tackle the causes of workplace inequality, particularly focusing on disabled women, minority ethnic women, older women, women from poorer socio-economic backgrounds and women with caring responsibilities.

Key actions we are taking include:

• investing up to £5 million over three years to help up to 2,000 women to return to work after a career break, particularly in sectors where women are under-represented
• refreshing the gender and diversity element of the Scottish Business Pledge to encourage action to address the gender pay gap
• continuing to fund Close the Gap to challenge and change employment practices and workplace cultures
• continuing to fund Family Friendly Working Scotland to promote flexible workplaces to employers

We recognise that progress in improving the minority ethnic employment and pay gaps has been too slow and it is time to be much more proactive. We have committed to build on the work we have done so far and we will:

• demonstrate renewed public sector leadership on race equality in relation to recruitment and supporting the development of talented people in our workforce
• review what more our devolved employment service – Fair Start Scotland – can do to support more people from minority ethnic communities into work
• consider options for rolling out the Recognition of Prior Learning pilot to other parts of Scotland

Population and migration

Migration to Scotland is vital to our economic, demographic and cultural needs and attracting people with the skills that our employers need has never been more important.

Our position is clear: we welcome EU citizens, we value them and we want them to stay. In the past year, we have successfully worked with other organisations to lobby the UK Government to drop its plans to charge EU citizens a fee to retain rights they already had.

Our advice and support service for EU citizens is now being delivered by Citizen's Advice Scotland and numbers using the service continue to increase. We launched the 'Stay in Scotland' campaign this spring and, over the coming year, we will build on it and also invest £250,000 in community-based support across the country.

Scotland faces a population challenge. While our population grew in the last year, 14 of our local authorities experienced depopulation and projections are that all of our population growth over the next 25 years will be driven by migration. We need to grow our population to make sure we can support sustainable, vibrant and resilient communities and drive inclusive growth.

We continue to argue for powers over migration for Scotland to be devolved to the Scottish Parliament, reflecting that our needs are different from that of the UK as a whole. Current UK Government immigration policy does not meet Scotland's needs and the proposals in the recent Immigration White Paper will be harmful to us.

We have established a new Ministerial Task Force to address our population concerns by intensifying good work where it is already happening and harnessing more opportunities for change.

Following extensive consultation with employers and stakeholders, we will publish a further paper on Scotland's unique population needs and a tailored migration policy later this year.

Addressing skills gaps – a Scottish approach

We will develop a distinct Scottish approach to attracting and retaining talent to address skills gaps in our workforce and we will take action to prepare our labour market to respond to the global climate emergency. We will:

• attract people and families from the rest of the UK to relocate to Scotland by supporting local authorities to develop plans to address skills gaps
• work with partners, including businesses, to highlight the benefits of working and living in Scotland
• work with universities, colleges and local authorities to encourage people to stay in Scotland and to move within Scotland to address regional skills gaps
• make it easier for working families, women, carers and older people to remain in or return to work
• provide a new web-based 'Working in Scotland' advice service for people relocating to Scotland for work, giving advice on current recruitment campaigns, skills and training opportunities. It will include information on skills gaps and shortages, including in areas we will need to tackle the global climate emergency

Scotland's regions and towns

Our £1.8 billion commitment to City Region Deals, Regional Growth Deals and associated investments is delivering on infrastructure, skills and innovation right across Scotland, with almost £300 million of spend on this programme already and up to £1.5 billion to be invested over the next 15 years.

Thanks to persistent calls from the Scottish Government, the UK Government has committed to achieving 100% coverage of Scotland with a Growth Deal. This means that, as well as existing Deals, communities in Argyll and Bute, Falkirk, Shetland, Orkney and the Western Isles will benefit from fresh investment from both governments to stimulate inclusive and sustainable economic growth.

We will continue to support the strategic Regional Economic Partnerships developing from City Region and Growth Deals, using Deal investment as a catalyst to drive their long-term inclusive growth plans. We will work with, and provide support to, local authorities and other Deal partners to ensure this investment supports our climate change ambition – and we will encourage the UK Government, which matches our Deal funding, to do likewise.

We want our towns and town centres to be vibrant, creative, enterprising and accessible – to make them places where people meet, socialise and do business.

Three new Business Improvement Districts have been created in the past year in Nairn, Selkirk and Lanark, resulting in a total of 37 across the country. We have funded and launched the first Digital Improvement District in Cupar, which is piloting a model of delivering digital infrastructure and WiFi for Scotland's towns.

We have partnered with COSLA to make available a £50 million Town Centre Fund which will stimulate and support a wide range of investments in local buildings, access and infrastructure, encouraging town centres to diversify and flourish.

Strengthening our rural and island economies and communities

Traditional rural sectors like farming, food production and forestry are essential to our success. Scotland's rural and island assets also provide natural and business resources for other key economic sectors, especially food and drink, but also energy, tourism, creative industries and life sciences. We must also work to improve the wellbeing of our rural, coastal and island communities and provide a positive future for them.

Achieving our climate change ambitions will involve harnessing the power and capital of all our natural assets. This is a challenge but also an opportunity to help people stay on the land, and create sustainable, productive businesses and communities in even our most remote and isolated rural areas. Our land and our rural population are key allies in the fight to tackle climate change.

We know that more young people want to stay, and now consider staying, in the areas they grew up, but we need to do more to stem rural depopulation and to attract more people to live and work in rural and island communities.

We will develop an action plan to support repopulation of our rural and island communities and work with partners to test approaches using small scale pilots in rural Scotland. Our 'Stay in Scotland' campaign will work with rural businesses and industries to promote it to employees and we will showcase Scotland as a desirable place to work and live to recruitment agencies at home and overseas.

The soft fruit and seasonal vegetable sector is important to Scotland's rural economy and we understand the reliance it has on migrant labour provision. We will work with this sector during the course of the next year to better understand the challenge it faces in the medium to longer term and how best to support businesses to meet their workforce needs.

As part of our work on the fourth National Planning Framework, we will explore new, proactive policy options for planning to enable development that supports dynamic rural economies and helps to sustain and support rural communities in the future. We will also review permitted development to examine what additional measures can be introduced to further support the delivery of affordable homes in rural areas.

To do that, we will build on recent research to develop a better understanding of the challenges and lived experiences of people across rural Scotland and the impact of changes in our economy on key rural sectors. In this Parliament, we will explore how the rural and island housing fund might be adapted in the future to expand the range of options to support housing development in remote and island communities.

We will review the services on the West Highland rail corridor to find opportunities to integrate rail services with other transport modes as well as active travel. These will boost the local and regional economy, help to develop sustainable tourism and improve connectivity for local communities and the Islands. In addition, we will identify opportunities across the rural rail network in the south west of the country, drawing on the successful approach adopted in the recent study of the line north of Inverness, to exploit the value of those lines for the benefit of local communities and the wider economy.

The third Rural Parliament was held in Stranraer in November last year, with over 370 people from rural communities across Scotland gathering to discuss the issues which are important to them and to put forward potential solutions. We will work with Scottish Rural Action and others to support the development of a rural movement that will engage with communities between rural parliaments to include a more diverse range of voices, including those in disadvantaged communities.

Work is underway to establish the new South of Scotland Enterprise Agency by April next year. It will be the first ever enterprise agency to embed Fair Work at the core of its operations and a key priority will be to identify action to address gender pay inequality and low pay in the region. We will invest £13.3 million this year to set up the organisation and to support a number of crucial projects across the area, including work to address skills shortages and support regeneration.

To further drive collaboration in inclusive and sustainable development, we will establish the Convention of the South of Scotland. It will bring together public bodies with responsibility for growth and provide a forum for the exchange of ideas on priorities and how to tackle key regional issues.

This year, we have consulted with island communities to inform the development of the first ever National Islands Plan. We will publish it by the end of the year. It will set out how we and other public sector partners will work to improve outcomes for island economies and communities and, once it is published, we will report on our progress each year. We will also create a Young Islanders Network for young people from all Scottish islands to ensure their interests and priorities are reflected in our work.

Maximising the value and sustainability of our land and marine assets

Scotland's land and marine assets are at the heart of thriving rural and island economies.

The marine economy

The marine economy supports high quality jobs in some of our most remote communities, boosts our exports and plays an important role in our efforts to tackle climate change.

Our natural marine assets and our expertise in the sector help to support our work to develop and deploy offshore wind, wave and tidal energy technologies and to explore the potential of carbon capture, usage and storage.

We have consulted this year on our Scottish Maritime strategy. It will be launched later this autumn and will set out how the marine economy supports our economic ambitions and helps to sustain communities, as well as identifying areas where we can take further action to make it a world-class industry.

Fisheries and aquaculture

We have held extensive discussions with a wide range of stakeholders on our proposals for the future of fisheries management. We are now developing that framework and will consult further on firm proposals which will help to protect our environment, support and grow local businesses and protect and strengthen the interests of rural communities.

We have invested £2 million to carry out emergency work at fishing harbours to keep them operational, securing vital jobs in coastal communities. We have worked with Fisheries Local Action Groups to support traditional fishing activity and help the industry to diversify and communities to thrive and boost incomes. We will invest an additional £1 million in these activities this year.

We have invested £1.5 million to modernise the management of inshore fisheries, including supporting the Scottish Inshore Fisheries Integrated Database programme being led by the University of St Andrews.

In the coming year, we will commence work to modernise the Scottish inshore fisheries fleet, investing a further £1.5 million in inshore technologies such as the deployment of remote electronic monitoring for scallop fishing vessels. This year, we will continue our work to introduce vessel tracking systems across the inshore fleet and, to enable sustainable growth of Scotland's shellfish growing sector, we will set up a shellfish working group with members from both the private and public sectors.

Aquaculture supports the sustainable growth of Scotland's most important food sector, farmed salmon. The aquaculture sector brings new products, facilities and equipment which can be applied to our industry and exported internationally, creating significant economic benefit, often in remote rural areas. We will continue to support Scotland's Aquaculture Innovation Centre to drive investment in innovation and research and development in new technologies and equipment.

Last year, we published a 10-year Farmed Fish Health Framework to address the health and wellbeing of farmed fish, promote innovation in fish health management and reduce fish farm mortality. We have introduced tighter thresholds for sea lice reporting and intervention and, in 2020, will introduce legislation requiring all marine farms to report a weekly sea lice number. We will also provide improved spatial planning advice on fish farming developments to support local authorities to make sound decisions.

We will continue to work with partners to promote the aquaculture sector as an attractive career choice, including supporting the development of the Women in Scottish Aquaculture Initiative to encourage women to take up careers in the sector and remove barriers to their participation.

Farming and food production

Farmers and agriculture businesses in Scotland are at the heart of our rural communities. They manage and protect our countryside, produce high quality food and are a key part of any solution to climate change.

We will deliver agricultural support payment entitlements through the Common Agricultural Policy as it will apply in Scotland should the UK leave the EU, and will maintain the CAP over a period of stability until around 2024. We will continue to press for Scotland to get a fair allocation of funds for farming and food production in the future. We will resist any attempts by the UK Government to apply any conditions or rules on how any monies repatriated from the £160 million due to Scotland should be spent.

Leaving the EU without a deal is likely to have significant adverse impacts on all of Scotland's rural economy but especially on farming and food production. We will continue to work with stakeholders to explore all possible options to mitigate those impacts where we can.

Even though the sector is under unprecedented stress, we must continue to encourage more people into farming. To future-proof the industry, we will release more public sector land in Scotland for new entrants. Since 2016, more than 6,400 hectares of land have been released to help 61 new entrants take their first step onto the farming ladder. Investment of around £24 million has helped 250 new agricultural businesses to launch and supported hundreds of development projects.

In the coming year, we will analyse how our starter farms are growing as businesses. Farms which participate will be provided with detailed specialist advice for their business to help inform future plans.

We will support the establishment of a land matching service to link potential new entrants with current farmers and crofters who wish to retire.

This year, we will seek further opportunities to make land available and will roll out the Ringlink apprenticeship project to new locations, helping to develop a stronger pathway into apprenticeships in farming.

We want more women in agriculture to have opportunities to develop their skills and talents. As well as supporting our Fair Work agenda, ensuring the sector is accessible to women will help to ensure the long-term sustainability and resilience of Scotland's rural economy. Our Women in Agriculture Taskforce will publish its report in the autumn, identifying next steps. We have already committed to fund and support delivery and expansion of the three women-only pilot training programmes. And we will appoint a dedicated co‑ordinator to take forward work in this area.

We established a taskforce to help prioritise our proposals to provide stability and simplify Common Agricultural Policy (CAP) measures between 2021 and 2024. We will publish the taskforce's report this autumn and develop substantive measures ready for implementation in 2021, including the level at which the largest direct payments made to individual recipients will be capped in order to redistribute the funds elsewhere within the CAP support. That includes introducing the Rural Support Bill to Parliament this year which will allow Scotland to amend EU retained law.

We have set up a group to advise on future policy for farming and food production. Its work is underway and will be enhanced by advice from the recently-appointed panel of academic advisors. It will provide update reports on its considerations to Scottish Ministers every six months to allow more detailed work and activity to be commissioned where appropriate.

Crofting

Crofting is part of Scotland's cultural heritage and helps to enhance our landscapes and habitats. It contributes to the local economies of remoter rural and island areas and, crucially, helps to sustain people on the land. We want to ensure that crofting continues long into the 21st century and beyond.

We will publish the Crofting National Development Plan to set the long-term strategic direction for crofting and continue to support new entrants to crofting, including for woodland crofts. We will also work with the Crofting Commission and Highlands and Islands Enterprise to enhance the sustainability of crofting communities.

The Crofting Commission will take forward key development priorities such as improving croft occupancy levels, supporting township development and creating opportunities for new entrants.

Animal and plant health and welfare

We are continuing our work to protect the welfare of animals in Scotland. We are now recruiting members to our interim Scottish Animal Welfare Commission, which will provide advice on the welfare of sentient animals.

We have published new Farm Animal Welfare Guidance for the keeping of chickens, improving our reputation for high quality meat production. Similar work for egg-laying hens and other species of livestock will be introduced in the next year as we engage with industry and stakeholders.

We consulted on introducing compulsory video recording of slaughter in abattoirs to make sure it is carried out safely and humanely and will bring forward secondary legislation next year. We will support the industry to introduce CCTV in abattoirs before it becomes compulsory and we will explore the potential for new systems of calf rearing in the dairy sector.

We will continue to work with other administrations in the UK to educate the public and key audiences of disease risks and also to promote the importance of biosecurity to protect Scotland's livestock and wildlife.

We are taking forward our work to ensure a modern licensing system for dog, cat and rabbit breeders, pet sellers and animal sanctuaries and rehoming services, taking the most robust approach in the UK. We intend to use the new licensing system to prevent the sale of puppies and kittens under six months old in the course of business by anyone other than the breeder – known as 'Lucy's Law'.

We will bring forward new legislation to Parliament regarding a range of animal welfare measures including increases to the maximum available penalties for the most serious animal welfare offences. We will also launch a media campaign on puppy farming to improve the wellbeing of animals.

We will begin a review of animal health legislation for livestock to ensure it remains fit for purpose. We will provide funding for Livestock Health Scotland to support activity to trial new animal disease controls and farm practice.

We have funded the Plant Health Centre as a dedicated virtual centre of expertise to tackle plant health challenges in Scotland. Since its launch last year, it has developed resilience and emergency response plans and advised on a range of harmful plant pests.

It will continue its activity this year, including educating the public and industry about plant threats. This will include encouraging more of the nation's gardeners to buy locally-produced plans and shrubs.

A key focus will be on protecting local crop production, forestry, natural environment and the nation's gardens from the threat of new devastating pests and diseases by strengthening Scottish contingency plans. We will also update Scotland's Plant Health Strategy.

The Scottish Government will support the United Nation's International Year of Plant Health in 2020 through a programme of events and actions, with a particular focus on activities for children and young people.

We will work with land managers to reduce reliance on pesticides and adopt an integrated management approach. This activity will be supported by the Plant Health Centre and their work to quantify the impact of pesticide withdrawals.

Food and drink

Our food and drink sector is the second largest contributor to Scotland's economy, with turnover reaching a record £14.8 billion in 2018. Exports in whisky and farmed salmon, our two most significant products economically, continue to grow in 2019. To acknowledge the ongoing importance of food to our economy and society, we will establish a Ministerial working group to co-ordinate action across government.

We supported Phase 1 of Ambition 2030, the national food and drink strategy, to grow the industry. We will independently assess Phase 1 to inform development of the next phase and to identify priorities for action in the next three years.

Over the past year, we have invested £7 million in our Food Processing, Manufacturing and Cooperation grant scheme, supporting 19 projects.

Export of food and drink is particularly important to our economy, with turnover reaching a record £6.3 billion in 2018. This year, we launched Phase 2 of our Food and Drink Export Plan, backed by £4.5 million of funding of which £2.7 million comes directly from Scottish Government. This funding will help the Scottish companies take their products into new and existing markets, supported by expert advice, to build relationships with buyers and offer encouragement to develop new products. In the coming year, we will also maximise opportunities to showcase and promote Scottish food and drink internationally and to the UK market.

Scotland already produces sustainable, climate-friendly and healthy food, but there is more that we can do to reduce food miles and waste, enable innovation and ensure that more people have the opportunity to benefit from the food we produce. Through our funding of the Food for Life programme we will continue to promote and encourage more local sourcing through public sector contracts. We will also build on the good work already underway to enable more Scottish produce to be served in our schools, colleges and universities, hospitals, care settings and prisons; including organic food.

We will also:

• create a Food and Drink Academy to support around 20 businesses with high growth potential, providing targeted support and advice and offering a range of cross-sector products to fast-track growth
• launch a new food and drink ecommerce platform for Scottish suppliers to showcase and sell their products in international markets
• work with local government to develop local food and drink action plans, aligning work at a national level to local circumstances

We will continue to roll out our Regional Food Fund which has supported 78 projects over the last year. We will also enhance our Food to Go scheme to allow more small and independent food retail businesses to invest in equipment and activity that allows them to provide fresh, healthy food products, locally produced and sourced food. This also contributes to reduced food waste and improved environmental efficiency.

Our Sector Plans continue to deliver, with the Craft Beer Sector Plan launched last year and the Seafood Sector Plan launched in May this year. This year, we will launch a Beef Sector Plan and work with industry to develop a Poultry Sector Plan, with a Scottish quality mark for poultry to drive growth.

We will also launch a Dairy Sector Plan which will focus on industry proposals to drive efficiency, productivity and growth. We will support this plan with a whole sector approach to industry development. This will include examining the potential for new systems of calf rearing in dairy systems and operating a pilot project to record usage of veterinary medicines to inform whether and how to encourage more efficient usage in all livestock sectors.

We will also continue our work with the industry to strengthen the position of primary producers in the supply chain. We will consult on the option of introducing mandatory written contracts for the dairy sector and will consider measures to tackle unfair trading practices. We will share data with participants in the beef efficiency scheme and publish an interim general report outlining findings to date.

We have worked this year to protect Scotland's food and drink Protected Geographical Indications (PGIs) and to encourage new applications. Ayrshire Earlies potatoes gained PGI status in July and new applications have been prepared for Hebridean Native Salmon, Forfar Bridies and Wild Venison. We will continue to support marketing and promotion of Scottish red meat, including Scotch Lamb PGI and Scotch Beef PGI and we will seek opportunities to showcase all our PGI producers and products to wider audiences.

We have made sure that Scotland will be able to opt-out of cultivating GM crops in the future and we will do all we can to resist this status being threatened by the terms of future UK Government trade deals.

Our landscape and climate mean Scotland has an unrivalled natural larder and we will seek to strengthen our reputation as a producer of high quality food. The provenance of Scotland's food and drink products generates a unique premium for producers which we must work collectively to protect. That means everyone playing their part to protect the environment which creates that provenance.

We will work with stakeholders to develop a Food and Drink Environmental Action Plan to strengthen the industry's contribution to tackling climate change. As a first step, we will host a sustainability summit by the end of the year to identify priorities for action. This will create impetus for businesses and producers to play their part in responding to our climate emergency and give them the opportunity to share current good practice.

Good Food Nation

We are already delivering on our ambition to become a Good Food Nation, working towards a Scotland where everyone takes pride and pleasure in, as well as benefits from, the food we produce, buy, cook, serve and eat every day. We will lay before Parliament a Good Food Nation Bill to provide a statutory framework to support this ambition.

We will publish a progress report on our work later this year as well as explore how to maximise the global impact of our brand by working with the Scotland is Now campaign.

We have created opportunities for young people to learn more about where their food comes from and the role farms play in that. Our £1 million Good Food Futures programme will give more school children from more communities the opportunity to visit and learn about farms, as well as providing an end-to-end approach to food education, including healthy cooking lessons, putting more locally-produced healthy food on school menus and encouraging young people to consider a career in the food and drink sector. We will expand the programme further and work with business, the public and the third sector to develop guidance so that more people are encouraged to eat more locally-produced, sustainable and healthy food that supports our aims to tackle climate change.

Since he was appointed, our National Chef has played a significant role in supporting government to showcase Scotland as a Good Food Nation internationally and at home. In particular, he has increased awareness of the benefits of healthy, sustainable food and the importance of using locally-sourced products to minimise food miles and reduce carbon footprints. We will work with him to develop a fresh programme of activity over the coming year.

We will continue to support the Andrew Fairlie scholarship for two young chefs, one female and male, and we will also support Scotland's chefs to take part in the World Culinary Championships.

Water

The water sector in Scotland is, according to a recent report commissioned by Scottish Enterprise, the fastest growing sector in our economy. Scottish Water, our publicly-owned utility, has recently recorded its highest ever customer satisfaction levels and is among Scotland's most trusted companies.

This year it is investing around £600 million to maintain and improve the provision of high quality drinking water and waste water management. In 2020, we will run a competition across Scotland's universities to establish a Hydro Nation Chair to help our water industry manage the challenges of climate change, including innovative approaches to surface water management and managing changes to organic matter levels in raw water. We are also reviewing our approach to Blue-Green cities and will bring forward proposals by the end of this year.

Last year, we piloted water refill points in a small number of locations across the country. Hundreds of people are topping up each day, reducing plastic waste and keeping healthy and hydrated. This year we will make more refill points available and will run events across the country to encourage people to use refillable bottles and use water wisely in their homes.

Transport

Our commitments on climate change include radical steps to decarbonise transport and put us on a path to net zero by 2045. We will publish a new National Transport strategy later this year which will redefine investment priorities to put sustainable transport at the heart of decision-making and ensure that transport plays a key role in delivering net zero emissions by 2045.

Work is underway on the second Strategic Transport Projects Review which will identify and prioritise the strategic transport interventions across all of Scotland to deliver the vision set out in the National Transport Strategy for the next 20 years. It will shape our ambitious plans for strategic transport investment that will deliver real benefits for communities and businesses all over Scotland. It will embed sustainable travel principles and review investment priorities in light of the climate change emergency.

We welcome the Glasgow Connectivity Commission report and the ambitious vision it sets out for the Glasgow City Region for creating an inclusive, thriving and liveable city. We are committed to working with partners to consider the Commission's recommendations, and as part of the second Strategic Transport Projects Review, we will consider the potential for a Glasgow Metro, which builds on the planned City Region Deal investment to link Glasgow Airport and the new National Manufacturing Institute for Scotland to Paisley Gilmour Street.

Ferries

Ferries play a crucial role in the socio-economic development of Scotland's remote and island communities. We invest over £10 million each year to make sure that inter-island ferries serve the needs of these communities.

To safeguard ferry services for the future, we have invested £3.5 million in the past year in upgrades and replacements of key systems and equipment on board ferries, making vessels less likely to break down.

We will provide an additional £4 million this year to continue this important work, as well as progress upgrades to major port infrastructure, making sure that ferries continue to be available for those who need them. We will set out the second Scottish Ferries Plan by the end of 2022. Where evidenced, we will continue to enhance both the Northern Isles and the Clyde and Hebrides ferry services in response to the challenges ahead. We will continue to work with local authorities in the Northern Isles on improving intra-island services and we will shortly confirm the outcome of the tender for Northern Isles ferry services.

The Scottish Government is committed to securing a future for the Ferguson Marine shipyard in Port Glasgow. That is why we have agreed with administrators to take the yard into public control. This is providing continued employment for the yard's skilled workforce and ensuring the completion of two ferries which will provide vital support for our island communities.

Rail

Our work on the rail network is delivering more seats, more services and faster journey times. Passengers are already benefiting from an additional 25,000 seats every day across 2,400 services, reducing overcrowding and meeting our aim to increase seating capacity across the network by 23% by the end of 2019.

We will decarbonise Scotland's rail services by 2035, ahead of the UK's target of 2040. The Stirling, Dunblane and Alloa and Shotts routes are now served by electric trains, and the new electrified route between Glasgow and Edinburgh is reducing journey times on this busy line.

We are also developing proposals to introduce greener, faster, more comfortable and more reliable services for communities on the East Kilbride to Glasgow line, including options for electrification.

We are moving to the design and development phase for re-opening the Levenmouth rail link. We will promote an integrated plan including bus and active travel, as well as working with partners to maximise the benefits of our investment.

We are investing £4.85 billion between this year and 2024 to support a high performing, more resilient rail infrastructure, as well as a range of improvements identified in and through the Rail Investment strategy. These include completion of the Glasgow Queen Street station redevelopment by spring 2020, the new station at Robroyston by December this year and the new station at Kintore in May next year, as well as the introduction of a new and improved service between Aberdeen and Inverness by the end of the year.

We will continue to work with the UK Government on its review of the structure of the rail industry and the way passenger rail services are delivered, pushing for further devolution of rail powers to ensure our railway and its integrated operation is accountable to the Scottish Parliament.

Buses

The Transport Bill will provide tools for local authorities to improve bus services in their area. It includes the power for councils to franchise or even run bus services, but ownership is not the key issue. At its heart, the Bill provides a new model for partnership between local authorities and bus operators.

We will bring forward a step change in investment with over £500 million for improved bus infrastructure to tackle the impacts of congestion on bus services and raise bus usage. This work will make bus travel a more attractive and reliable option and reduce emissions.

This year we are also working to extend the National Concessionary Travel Scheme, providing free bus travel for people accompanying eligible disabled children under the age of 5.

We will work with stakeholders to review the option of extending public transport concessions to people under 26, reporting on progress in the coming year.

Safe roads

Safe and efficient transport links are essential to sustaining economic growth by improving access to markets and increasing productivity, as well as making sure that our country is accessible to tourists. Our road infrastructure also needs to be compatible with our ambitions to tackle climate change.

In the past year, we have continued to maintain our trunk road network, fully opened the Aberdeen Western Peripheral Route and begun work on the A77 Maybole Bypass.

We will continue to maintain the trunk road network in line with international best practice. In addition, we will make further improvements in key transport infrastructure this year, focusing on securing the investment needed to complete the dualling of the A9 between Perth and Inverness – as we do that, we will continue to invest in facilities for walkers, cyclists and equestrians on this route.

Transport of the future

Transport is undergoing a period of rapid technological transformation which is an enormous opportunity for innovation.

We want Scotland to be at the forefront of developments in Connected and Autonomous Vehicles and are well positioned to offer high quality test and demonstrator opportunities to developers and industry. We will publish a roadmap for adoption of these technologies later this year and support an autonomous bus trial on trunk roads between Fife and Edinburgh starting in summer 2020.

We have also been driving innovation on payment and journey planning. Building on our ongoing work to introduce smart ticketing across Scotland's bus, rail, ferry, subway and tram networks, we will procure the digital technology needed for users to plan their journey across all public transport types and active travel, see different cost options and find out journey duration.

In the coming year, we will carry out a study on 'tap in tap out' fares services and begin feasibility work for concessionary ticketing on mobile technology.

Our £2 million Mobility as a Service Investment Fund launched in summer this year and funding will be awarded to successful projects in November. The Fund will help develop innovative solutions to reduce reliance on private cars by:

• supporting our rural and island communities' future transport needs
• tackling inequalities and improve accessibility and mobility on the public transport network
• providing tourists with smarter ways to access public transport