Regional economic policy review: paper 2 – the regional perspective

3. Regional Economic Partnerships

3.1 Overview

3.1.1 The success of the regional approach to economic development was evident from the early Deals which was the basis for the commitment in the Phase 2 report of the Enterprise and Skills Review (2017). The review committed the Scottish Government to enable a network of Regional Economic Partnerships (REPs) across Scotland. It's important to note that whilst we refer to REPs at a national level, this is a blanket term with each partnership having its own terminology.

3.1.2 The REPs that are in place today have grown and developed from the governance arrangements put in place for the City and Regional Growth Deal Programme. Given that Deals in themselves are regional collaborations and offer the region the opportunity to build on substantial investment, this regional structure has been seen by partners as the most logical to build on in order to retain the evident benefits around coordinated investment and a collaborative forum for Government to engage with.

3.1.3 Despite this being the case, there are slight geographical splits between the City and Growth Deal geography and the REP geography. Where there are 12 Deals, there are only eight REPs. The rationale for differentiation has typically been due to close links to other local authorities not included in a region's Deal whether this be similar economic strengths and challenges or travel-to-work overlaps. The eight REPs are as follows:

• Ayrshire
• Edinburgh and the South East of Scotland
• Forth Valley
• Glasgow City Region
• Highlands & Islands
• North East
• South of Scotland
• Tay

3.1.4 The map below shows the REP split.

3.1.5 Just as the Deals programme developed over an extended period of time, REPs have also evolved over time. Those Deals that have been in place longest typically have the most mature REPs but many are still in their infancy.

Regional Economic Strategies and Recovery Plans

3.1.6 The Coronavirus pandemic affected the development and priorities of REPs. Those that were more mature at the time of the pandemic were able to utilise the shared resources within the region to develop economic recovery plans. These were generally short-term plans including a focus on employment, business support and skills development to assist those who had lost employment find work in the region and/or retrain in key sectors such as green technologies.

3.1.7 Following on from the initial emergency responses to the pandemic, the established REPs then committed to refreshing Regional Economic Strategies (RES) ^[2]. These are longer-term strategic approaches to ensuring inclusive growth within regions, with most recent publications taking account of the impact that the pandemic has had on the economy.

3.1.8 Although many regional partners were able to attend to the economic impacts of the pandemic and develop strategies that could help recovery and growth, the formation of a REP takes time and resource. Therefore the REPs that were still to emerge at the time of the pandemic were delayed in doing so.

3.1.9 The current landscape is that every region has a partnership or regional collaboration in place with the majority having the development of a RES high on the priority list. REPs recognise that by setting out their strategic aims, and providing evidence for their inclusion, they are able to proactively demonstrate to central Government where they wish to use inward investment, both public and private.

Role of Scottish Government

3.1.10 The Scottish Government supports and endorses the development of REPs, and are involved in all partnerships to varying degrees (according to the ask or REPs themselves). However, it does not prescribe membership nor does it set objectives, instead leaving it to regional partners to establish a partnership that best serves the priorities and existing governance structures of that region. REPAG believe that this is the right approach which respects the trust that ought to exist between local and central Government.

3.1.11 However, there is a fine line to take here, and whilst leaning into the autonomy of regions has genuine merit, consultees have noted that it has meant that the Scottish Government has not always been explicit in their expectations in a way that may have been useful for regional partners where greater clarity would could introduce welcome guidance. Paper one stated two conclusions that would help to provide a clearer steer to REPs as they come together and develop the strategies, which are worth reiterating here. These conclusions are:

Horizontal Accountability

3.1.12 By making a stronger and more explicit statement around regional structures, the overarching aim is to support a greater degree of horizontal accountability between economic actors across each region. The absence of legislation for REPs is an advantage here as it lessens the requirement for traditional vertical accountability to Government, and instead permits responsibility, accountability, problem solving and ambitions to be shared in a collaborative manner between SG, agencies and regional partners.

Permission to be Regional

3.1.13 Signal to regional partners an explicit and justified support for regional economic development, empowering regional partners to work and make decisions at this level. This may help unlock political barriers where working across boundaries has been viewed with some degree of scepticism, and allow officials within the region to take forward regional work with more confidence.

3.1.14 Helping to make the case for the value added from sharing resource (e.g., staff within an Intelligence Hub, or sharing procurement) and the benefit from the scale of ambition (e.g., the ability to share risk to deliver much larger projects on a transformative scale).

Regional Policy Clarity

3.1.15 Through this review REPAG believe that there is a clear rationale for considering certain policy areas in Regional Economic Strategies e.g., Net Zero, Just Transition, Population and Population Heath, Child Poverty, Community Wealth Building, Transport, Land Use and Planning, Skills, Higher and Further Education. This clarity can help empower REPs to ensure a holistic approach to strategic economic planning is taken, looking at enablers and levers, constraints and barriers as much as developing statements of intent.

3.1.16 Much like Deals that have differing themes and priorities to tackle regional inequalities and build on strengths, REP membership and priorities differ greatly. Typically REPs involve the local authorities within the region, private sector representation, the relevant enterprise agencies, education and skills providers, and the third sector.

Case Study: ONE The North East Collaboration

3.1.17 It is worth highlighting one of the more mature and positive functioning collaborations in the north east, which has a unique level of involvement from the private sector in the form of Opportunity North East (ONE), a key private delivery partner who work in partnership with both Aberdeen City and Aberdeenshire Councils to catalyse public and private sector partnership and driving economic development in the region.

3.1.18 There is an opportunity to learn from the model led by ONE in the north east, and identify how similar positive public/private relationships can be built elsewhere in Scotland, to support regional economic growth. The partnership have focussed on setting out a clear vision for diversifying the north east economy, building resilience against price fluctuations in the oil and gas sector, and enhancing other regional strengths.

3.1.19 Established in 2015 and with a £62 million 10-year funding commitment from The Wood Foundation, ONE work in partnership with the public sector to develop and deliver projects aimed at accelerating economic diversification and energy transition – always in line with the vision set out for the region.

3.1.20 The strength, consistency and clarity in that vision is a real asset for the north east, leaving investors (whether central Government or private sector) in no doubt as to how funding will be used and the benefits it will realise. It is something the partnership can coalesce around, offering a recognised regional identity that other regions can learn from.

3.1.21 The north east focus is on businesses in the key industry sectors: digital; energy; food, drink, agriculture; fishing; life sciences and tourism to help them develop and grow at home and internationally. ONE works in partnership to achieve this and uses its resources and funding to secure co-investment and expertise from public and private sector sources ^[3].

3.1.22 These priority sectors are reflected in the projects delivered via the Aberdeen City Region Deal ^[4]; BioHub, and Seedpod (both of which are led on by ONE), the Net Zero Technology Centre, Aberdeen South Harbour Expansion, Digital infrastructure and enabling transport links.

3.1.23 What has been evidenced in the north east, that other regions can learn from, has been the manner in which they have used their vision to catalyse further investment opportunities. This is exemplified in the Energy Transition Zone, which connects to the Aberdeen South Harbour Expansion's additional capacity. Receiving £26.3 million as part of the Scottish Government's Energy Transition Fund ^[5], The ETZ aligns with the wider north east regional strategy ^[6]. Interestingly, regional partners opted to layer in a Community Wealth Building approach, ensuring that local firms and workers directly benefit from the opportunities of these investments and the related supply chains.

3.1.24 In terms of regional skills and innovation, ONE noted that they consider digital to underpin and play an integral part in the future of the north east in their response to Mark Logan's request for input to the Independent Review on Technology Sectors Role in Economic Recovery.

3.1.25 This was articulated across three categories; 1) Stimulating a vibrant start-up ecosystem, drawing on expertise from the region and beyond to create the best possible environment for success, 2) supporting established digital companies through growth and diversification, and 3) enabling existing businesses in our key sectors of energy, food and drink, life sciences and tourism, to embrace digital and new working practices to continue to thrive into the future.

3.1.26 ONE then allocated £6.14m of the £14.3m North East Economic Recovery & Skills Fund ^[7] to deliver projects with a focus on entrepreneurship; accelerated business start-ups, development and growth; and across a range of sectors including hospitality and tourism, once more demonstrating how the strategic vision guides investment towards tangible economic benefits.

3.1.27 To enhance the investment offer Aberdeen City and Aberdeenshire Council's formed a joint venture Invest Aberdeen ^[8] to showcase regional investment opportunities for inward investors and businesses, setting out the economic vision for the region and providing a central source of information relating all the various economic interventions across the region.

3.1.28 This is underpinned by the report ^[9], issued each year by the independent Aberdeen Economic Policy Panel and giving an analysis of the regional economy. Interestingly, in the most recent 2020/21 report it is noted that:

The future success of the North East is critical for the long-term health of the Scottish and UK economies and the region cannot be expected to meet the complex challenges ahead alone. A more joined up and coordinated approach across the Council, UK Government and Scottish Government on all issues that impact on regional economic development would aid long-term planning in Aberdeen.

Aberdeen Economic Policy Panel Report, Dec 2021

3.1.29 This perspective is entirely consistent with the views and findings in this review, and marks a welcome agreement for future culture of delivery. The report also stated that the economic shocks of Brexit and Covid made it the right time to develop a new Regional Economic Strategy, noting the role of the north east in taking a regional lead on managing natural assets in the transition to Net Zero, building on the recognition in the current Regional Economic Strategy which stated the region's natural assets and clean environment are vital to its economic success.

3.1.30 Finally, it is worth highlighting the regional economic analysis carried out by North East Performs ^[10] which provides the monitoring framework for the north east. It includes key economic indicators against which progress can be assessed covering economic, productivity and inclusive and sustainable growth. It also includes analysis of the type of diversification that will be required to achieve the Regional Economic Strategy objectives, and links with the content and conclusions of the Aberdeen Economic Panel Report. This provides another example of the value of nuanced regional data and intelligence, and is worth ensuring coordination with the Wellbeing Economy Monitor.