Scotland and the sustainable development goals: a national review to drive action

9 Industry, Innovation and Infrastructure

• Environment
• Fair Work and Business
• Economy
• International
• Communities

A strong economy with growing, competitive and innovative businesses is essential to supporting jobs, incomes and our quality of life. Our economy must also be environmentally sustainable and inclusive – involving and providing benefit and opportunity for all of our people and communities.

Scotland has seen the fastest productivity growth in the UK since 2007. Our exports are growing and we have the highest proportion of employees in the UK paid the living wage. The Scottish Government is committed to investment in new technologies, advanced manufacturing, infrastructure and broadband which will improve our productivity, boost our exports, and help make Scotland the most competitive place to do business. In turn, it will also increase our wellbeing as a nation.

The Scottish Government has set an infrastructure investment mission to steadily increase annual infrastructure investment so it is £1.5 billion per year higher at the end of the next Parliament than in 2019-20. This will increase Scottish Government capital investment by an addition 1% of current Scottish GDP and to achieve it we will need to continue to innovate in our models for investment and work across the public sector. On our current estimates that would mean around £7 billion of extra infrastructure spending by 2026. This is all in line with our commitment articulated in the NPF to:

‘have a globally competitive, entrepreneurial, inclusive and sustainable economy’ and to ‘have thriving and innovative businesses, with quality jobs and fair work for everyone.’

Infrastructure (target 9.1)

Since 2007, Scotland has invested almost £20 billion in Transport Infrastructure and Services, including £8.2 billion on our Motorways and Trunk Road Network, to ensure the strategic road network is safe, available for use, efficient and well maintained. The Transport and Storage industry directly contributes more than £5 billion Gross Value Add annually and employs around 113,000 people.

Since 2007, 26 major improvements projects have been constructed, including the M8 M73 M74 Motorway Improvement Project and the Queensferry Crossing and most recently the £745 million Aberdeen Western Peripheral Route project fully opened to traffic on 19 February 2019.

Since 2011, 330 miles of newly constructed walking and cycling infrastructure were created with a further 95 miles upgraded or resurfaced. Six major cycling infrastructure projects (full segregation) with a total value of £53,204,720 have been started with the first, Glasgow’s South City Way, due for completion in autumn 2019.

The Data Picture: Transport and Travel in Scotland

Overview of travel trends in Scotland - Rail and air passenger numbers, as well as car traffic and distance cycled, are estimated to have increased between 2007 and 2017. Rail showed the greatest percentage increase (31%). Bus passenger numbers showed a substantial decline over ten years (22%)

Traffic and passenger numbers 2012-17:

• Car traffic (m/veh km) 33,777 (2012), 35, 362 (2016), 36, 206 (2017) 2.4% change over 1 year, 7.2% change over 5 years
• Cycle traffic (m/veh km) 310 (2012) 288 (2016) 290 (2017) 0.7% change over 1 year, 6.5% over 5 years
• Rail passengers (millions) (internal) 83.3 (2012), 94.2 (2016) 97.8 (2017) 3.8% change over 1 year, 17.4% change over 5 years
• Bus passengers (millions) 420 (2012), 393 (2016) 380 (2017) -3.3% change over 1 year, 9.5% change over 5 years
• Air passengers (millions) 22.2 (2012) 26.9 (2016) 28.9 (2017) 7.1% change over 1 year, 29.8% change over 5 years
• Ferry passengers (millions) 7.89 (2012) 8.32 (2016) 8.36 (2017) 0.4% change over 1 year, 5.9% change over 5 years

We have invested in excess of £8 billion in rail services and infrastructure since 2007, reflected in an increase in ScotRail passenger numbers by 31% over that same period. This unprecedented level of funding supports a safe network as well as investment in new services, lines, stations and trains across Scotland including 76 km of new railways delivered (for example Airdrie-Bathgate Rail Link and Borders Railway) and 14 new stations opened (for example Conon Bridge, Eskbank, Stow, and Edinburgh Gateway).

Transport Scotland continues to take forward major infrastructure projects to improve Scotland’s road network including the A9 and A96 dualling programmes and to ongoing rail investment and enhancements. We have doubled annual investment in walking and cycling from £39.2 million in 2017-18 to £80 million in 2018-19. The doubling of the active travel budget will allow us to invest in major capital infrastructure projects. We are also taking forward a Strategic Transport Projects Review (STPR), which will identify potential transport investment as part of a Scotland wide appraisal of strategic transport options and is intended to inform investment priorities for the next 20 years. It will consider at a national level the important contribution that transport interventions and infrastructure projects play in enabling and sustaining Scotland’s inclusive economic growth.

The Data Picture: Passenger and freight volumes, by mode of transport in Scotland

Road:

• In 2017, an estimated 107.6 million tonnes of goods were lifted within Scotland by UK HGVs and transported to destinations within Scotland
• About 15 million tonnes of goods from Scotland were delivered to destinations elsewhere in the UK, and around 19 million tonnes were brought into Scotland from elsewhere in the UK. In comparison, the volume of international road freight by UK HGVs travelling to and from Scotland is very small: less than 1 million tonnes in 2017

Rail:

• In 2012-13, 8.4 million tonnes of freight was lifted in Scotland by rail, 15% less than the previous year, and 41% less than the 2005-06 peak. Since 2005-06 minerals and coal have fallen by 63% while other goods have increased by 25%. Of all freight lifted in Scotland, 34% was delivered elsewhere within the UK and about 5% was delivered out with the UK (because of the way that the statistics are compiled, this figure includes freight)
• Passenger journeys on ScotRail services increased by 4% to 97.8 million in the 2017-18 financial year, an increase of 31% since 2007-08
• There were 94.2 million rail passenger journeys originating in Scotland in the 2016-17 financial year. This was 0.8 million (0.8%) more than the previous year

The Scottish Government’s Economic Action Plan 2018-20 announced plans for a new Infrastructure Commission to identify infrastructure needs. This is part of a wider set of actions to increase investment and collaborate with the construction sector, branded a “National Infrastructure Mission”.

The Scottish Government made energy efficiency a national infrastructure priority in 2015, in recognition of the many benefits of improving the energy performance of Scotland’s buildings. Through our Energy Efficient Scotland programme, the Scottish Government is taking direct and supporting actions to improve the use and management of energy in Scotland’s buildings, transportation, industrial processes and manufacturing. The Energy Efficient Scotland route map sets out the journey we will take to achieve this.

Manufacturing (target 9.2)

The Scottish manufacturing sector had a total employment of 183,000 in 2017, an increase of 4% compared to 2016, and accounted for 7.4% of total employment in Scotland (indicator 9.2.2). In 2016 Scotland launched its Manufacturing Action Plan. A Manufacturing Future in Scotland outlines how the Scottish Government will work with industry, our Enterprise Agencies and other key stakeholders to increase investment, innovation and productivity in the sector. It commits Scotland to delivering concrete initiatives to boost productivity including leadership, employee engagement and skills, energy efficiency and the adoption of circular economy approaches across the manufacturing sector. We will stimulate innovation and investment in Scottish manufacturing sectors to better compete globally. To deliver these ambitions, the Scottish Government, the Enterprise Agencies and other public agencies will launch an enhanced programme of support to enable companies to capture new opportunities presented by the circular economy - and its impact on product design, manufacturing process and supply chains - through Zero Waste Scotland’s new European Regional Development Fund Circular Economy Programme.

The strategy outlines the Governments support to manufacturing SMEs to help them keep pace with technology and process developments by working in partnership with industry to develop and deliver a Smart Manufacturing Excellence Programme, and to support more Scottish companies to achieve supply chain excellence by reviewing sector and cross-sector supply chain capabilities.

The National Manufacturing Institute for Scotland, a new joint centre for manufacturing excellence, is under construction in Renfrewshire. NMIS will be delivered in partnership through Scottish Enterprise. Partners include the Scottish Government, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, Scottish Funding Council, Renfrewshire Council and University of Strathclyde.The Institute will help manufacturing businesses in Scotland become world leaders in innovation.

Sustainable Industries (target 9.4)

There are linkages with Goal 7: Clean and Affordable Energy in this area. Scotland’s businesses and industries are working with local and central government to identify sustainable practices, supply chains, and energy usage. In 2018, Construction Scotland (a leadership organisations for the construction industry in Scotland) launched its new strategy, which aims to make the industry more sustainable, productive, innovative and profitable, enhancing its contribution to Scotland’s economy.

The strategy outlines Construction Scotland’s intention to promote the uptake of digital technologies and automation by the industry, demonstrating the positive impact on both the productivity and profitability of companies who are prepared to embrace change and new ways of working. Construction Scotland are working collaboratively with the industry, the public sector and financial institutions to identify new and innovative procurement and business models, including ways of financing for future construction projects and ways in which growth companies in the industry can access development finance.

There are also examples in the food and drink industry of collaboration to improve sustainability and drive innovation. In 2017, Scotland Food & Drink and the Scotch Whisky Association became the latest signatories to the Courtauld 2025 commitment, which sees leading industry bodies and businesses working together to produce food and drink products more efficiently, make best use of residues and by-products, and tackling food waste.

The commitment is led by The Waste and Resources Action Programme (WRAP) and backed with funding from the Scottish Government through Zero Waste Scotland. It is just one part of a range of activities set to drive progress against the Scottish Government’s target to cut food waste by one third by 2025. WRAP and Zero Waste Scotland have collaborated with partners across the food and hospitality industries to make progress and lay the groundwork for future action.

Zero Waste Scotland also delivered the successful Love Food Hate Waste campaign as well as launching a free food waste audit and improvement service for small businesses. It is also evaluating potential new measures to help Scotland achieve its EU-first target to reduce food waste. That includes action under four key themes:

• Encouraging organisations to show leadership on food waste
• Empowering people to make better choices
• Improving standards and regulation
• Supporting new technology and innovation

Closer Look - FUTUREquipped in Scotland’s colleges

Colleges are a key part of our innovation system; supporting businesses to improve their innovation performance and developing the workforce of the future. The FUTUREquipped project saw thirteen colleges and four innovation centres work in partnership with industry to develop an innovative new training programme for people working in the Smart housing sector. The project saw ICT, Construction and Health disciplines working together for the first time collaborating to create a large portfolio of Online Library content that will be accessible by all college staff across curriculum areas. The content was piloted with students to teach them about the three disciplines and how they interact in this new sector. Students were also made aware of the innovation centres and the support they provide. The project also worked with industry partners to research the use of smart technologies in areas such as energy efficiency in housing. As well as the tangible outcome of the Online Library content, the project has developed an appetite in the college sector to develop innovative programmes to support emerging sectors.

Scientific research (target 9.5)

Scotland has a high level of research excellence combined with an extensive network of knowledge exchange and innovation activities, which includes partnerships with developing countries. Private investment in research and development (R&D) in Scotland is low but increasing with the Scottish Government aim to double it by 2025. Public investment in R&D is relatively high, and spend on R&D has increased consistently between 2012 and 2017.

The Data Picture: Spend on Research and Development

Target 9.5 (Indicator 9.5.1): Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries by 2030.

Total research and development spending as a share of GDP was 1.63% for Scotland in 2017.

Line chart showing a gradual increase in gross expenditure on research and development as a percentage of gross domestic product. The figure rises from 1.35% in 2012 to 1.63% in 2017.

Source: Office for National Statistics (ONS)

Research and development spend in Scotland as a share of GDP has increased both over the last year and over the longer term, with targets in place to double the investment in business research and development between 2015 and 2025.

The Scottish Government has recognised the economic challenges associated with historically low business R&D and committed £15 million per annum to support additional business R&D activity since 18/19. The latest figures show that Business Enterprise R&D (BERD) expenditure in Scotland is at a record high and we are on target to increase BERD expenditure to £1.75 billion by 2025.

Closer Look - Inclusive Science

The science engagement sector in Scotland is making science accessible to a wide public audience including under-served audiences. An example of this is work between the four Scottish Science Centres (Glasgow Science Centre, Dynamic Earth in Edinburgh, Dundee Science Centre, Aberdeen Science Centre). The Scottish Government provides annual funding specifically to enable better engagement between the science centres and under-served audiences. This includes events for women and girls, people from BAME backgrounds, people with disabilities, vulnerable adults and their families, and adult literacy groups. A big part of this work is about co-production, with the Science Centres finding out what science-related topics are of particular interest to the audience concerned, and then working with the communities to develop and deliver activities and events that meet their needs. In this way, science is made more accessible and the events have a bigger impact on the audience, and are therefore more likely to lead to positive behaviour change (an example – a climate change activity being presented through the lens of fuel poverty, a much more tangible approach than focusing on the more abstract science involved).

Digital infrastructure

By the end of 2017 Scotland had over 95% fibre broadband coverage. To ensure that we continue to be at the forefront of the digital revolution, we are awarding contracts for the first phase of our Reaching 100% programme. Our £600 million investment will unlock superfast broadband of 30 Mbps for all homes and business by the end of 2021.

Superfast broadband coverage in Scotland is improving, in large part due to Scottish Government investment via the Digital Scotland Superfast Broadband programme. Thinkbroadband figures from January 2019 show that superfast broadband coverage in Scotland has increased from 59.3% in 2014 to 93.4% now – 34 percentage points up in Scotland, compared to 19 percentage points in England over the same period.

In July 2018, the Scottish Government awarded the contract for the Scottish 4G Infill Programme to WHP Telecoms Ltd. In this programme, the Scottish Government is investing up to £25 million to deliver 4G infrastructure and services to selected 4G “notspots” over the four years from 2018/19-2021/22. The programme launched with an initial 16 mast sites, and following a public consultation conducted in autumn 2018, we are currently progressing the delivery of 45 sites – with an expectation that the programme will deliver 50-60 sites in total. We are currently in discussion with mobile network operators to secure their commitment to delivering services over these masts – this is an important pre-requisite to any of the masts entering build phase. Initial mast build activity in the project will commence during 2019, whilst regular updates to the programme are being communicated on the Scottish Government’s website.

Our digital infrastructure will create greater opportunities for education, work and leisure as well as enabling economic growth – particularly in rural Scotland.

The Data Picture: Access to superfast broadband

Target 9c (Indicator 9.c.1): Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in least developed countries by 2020.

The percentage of residential and non-residential premises where superfast broadband is available increased from 73 per cent in 2015 to 92 per cent in 2018.

Line chart showing the proportion of residential and non-residential addresses where superfast broadband is available, with the figure rising from 61% in 2014 to 92% in 2018.

Source: Ofcom Connected Nations Report

Challenges and next steps

The impact of the EU Exit on Scotland’s industry, infrastructure and capacity for innovation is unclear. There is significant concern that it will limit funding for regeneration projects, research and development, and infrastructure. Much scientific research in Scotland is funded through European research initiatives, such as the Horizon 2020 programme. By coupling research and innovation, Horizon 2020 emphasizes excellent science, industrial leadership and tackling societal challenges. The goal is to ensure Europe produces world-class science, removes barriers to innovation and makes it easier for the public and private sectors to work together in delivering innovation. Continued funding in this programme for Scottish universities beyond EU Exit is unclear.

There are more than 4,500 staff of EU nationality working in our 19 universities (more than one in every ten members of the university workforce), and Scottish higher education is home to another 22,400 EU students. This presents huge risks for the Higher Education sector in the face on EU Exit.

The University sector in Scotland is continuing to work with the Scottish Government to maximise the impact of the funding they provide and to ensure that our universities remain attractive, competitive and truly excellent in global terms. Since 2012-13, the Scottish Government have provided over £1 billion of funding each year to universities.

Universities Scotland – the representative body of Scotland’s 19 Higher Education institution – continues to engage with the Scottish Government through the Strategic Futures Group on a variety of issues of importance to the sector. They have been working closely through the University Forum on Brexit to identify ways to mitigate the impact of Brexit on students, staff and institutions.

Transport Scotland are committed to providing an update to the Strategic Transport Projects Review conducting an examination of the strategic transport infrastructure interventions required to support the delivery of Scotland’s Economic Strategy, in the context of the new priorities to be set out in our successor National Transport Strategy. Transport Scotland are currently undertaking a collaborative review of the National Transport Strategy and are committed to a consultation later this year and publication post consultation by the end of 2019.

Commitments in the Scottish Government’s 2019-20 Programme for Government that relate to this Goal

• Following the Infrastructure Investment Commission for Scotland publishing its advice on priorities by the end of this year, the Scottish Government will set out its plans for the next five years, including the Infrastructure Investment Plan early in 2020 – this will have low carbon infrastructure as its key priority
• Following the establishment of the Scottish National Investment Bank, it will invest a minimum of £2 billion over 10 years, with its primary mission being securing the transition to net zero
• The Scottish Government will establish the Scotland 5G centre to help deliver social, economic and environmental benefits by reducing travel and addressing isolation and remoteness
• The first wave of new or refurbished schools through the Scottish Government’s £1 billion school investment programme