Scotland's National Strategy for Economic Transformation - Delivery Plans October 2022

Introduction

An equality impact assessment has been produced for each delivery plan. See the full list of associated documents.

The National Strategy for Economic Transformation (NSET), published in March 2022, set out the need for a new culture of delivery where partners come together as 'Team Scotland' to deliver the actions needed to transform the Scottish economy. This includes ensuring that business joins us in our pursuit of the strategy's ambition of a fairer, wealthier and greener country, with many of the projects supporting the priorities set out in the landmark agreement with the Scottish Green Party.

A key commitment in NSET was to publish delivery plans setting out how we will work with partners to implement the strategy.

The next 10 years will be a period of incredible change and extraordinary opportunity. However, as the past few years and months have illustrated, with a Brexit deal agreed by the UK Government that removes Scotland from the European Single Market, hitting jobs and the economy at the worst possible time; COVID-19; the economic and inflationary consequences of Russia's invasion of Ukraine; and the economic turmoil we are currently experiencing as a result of recent UK Government policy announcements, economic conditions can change rapidly.

In response to the cost crisis and immediate challenges facing households and business we have engaged with a wide range of businesses and sector organisations to understand their needs, and we will do all we reasonably can to support them through these challenging times. However, we have also been clear that the fiscal constraints of devolution mean that most of the levers needed to address this crisis are reserved and we will continue to relentlessly press the UK Government to take the action that is so urgently needed.

Our recently published independence economy prospectus 'Building a New Scotland: A stronger economy with independence', sets out how with independence we can build greater prosperity over the long term, making the economy work for everyone and preventing further economic damage being inflicted by Westminster governments.

The causes of the current crisis and the uncertainty created by the UK Government in recent weeks only strengthen the need for us to take action now to transform our economy: seizing the opportunities of meeting our Net Zero ambitions; building economic resilience, with Scottish businesses taking full advantage of new supply chains; and ensuring that our education and skills systems support people to adapt to a rapidly changing economic environment. So, while delivery plans for our six economic programmes prioritise and bring forward actions to support people and businesses through this crisis, the programmes we set out in the Economic Strategy in March remain the right foundations upon which to transform the Scottish economy over the next 10 years. Through a phased approach we will also be able to adapt to changing economic and fiscal circumstances as well as evidence of what will make the biggest difference.

It will be vital that the NSET delivers for the whole of Scotland. These delivery plans take full account of regional circumstances, especially in rural and island areas which face particular challenges. All NSET activity is looked at through a rural and island lens to ensure this happens. And our commitment to Community Wealth Building legislation will support us in tackling economic inequality in urban and rural Scotland

While these plans have been developing alongside delivery partners over the past 6 months, significant progress has also been made in delivering the six NSET programmes:

• Entrepreneurial People and Culture programme: we have appointed Mark Logan as the Scottish Government's first ever Chief Entrepreneur to encourage an entrepreneurial mind-set in every sector of the economy; we launched CivTech 7 and extended the CivTech International Alliance; CodeBase has been awarded the contract for delivering the Tech Scaler hubs, to be in place from November 2022;
• New Market Opportunities programme: we have launched a £10 million Hydrogen Innovation Scheme to support the development and demonstration of renewable hydrogen technologies and products; all 17 successful ScotWind applications have option agreements in place; we have announced signatories of the Scottish Offshore Wind Energy Council Collaborative Framework; we have expanded our Trade and Investment Envoys to the United States and London; we published our Scottish Hydrogen Investment Proposition; we have published and are delivering our Technology Sector Export Plan;
• Productive Businesses and Regions programme: we have extended the work of the Productivity Clubs led by the Scottish Council for Development and Industry (SCDI), started the procurement process for the Digital Productivity Loan; signed the contract for delivery of the Digital Productivity Pilot programme and completed the Regional Economic Strategy Review which will enable us to embed regional partnerships and priorities at the heart of economic development;
• Skilled Workforce programme: we published the National Strategy on Adult Learning in May; progress has been made in taking forward actions on talent attraction and retention with our Industry Advisory Group; in response to the Scottish Funding Council Review, we published the scope and approach to the Purpose and Principles for post-school education, research, and skills, ahead of planned publication of the final Purpose and Principles in Spring 2023; our commitment to publish an update to the Climate Emergency Skills Action Plan by end of 2023 was announced in Programme for Government 2022; an independent review of the Skills Delivery Landscape, led by James Withers, was launched in September 2022; we established a Shared Outcomes Assurance Group for delivery of the projects including Pathfinders by the Scottish Funding Council and Skills Development Scotland; a Skilled Workforce Programme Board has been established and met for the first time in early October; a cross-Ministerial Skills Working Group has been established; and we have launched and evaluated the Skills Action Plan for Rural Scotland to tackle the particular skills shortages amongst workers in rural areas;
• Fairer and More Equal Society programme: we published the contract notice for the National Civil Engineering Framework, a flagship procurement programme demonstrating our commitment to the real Living Wage;
• A Culture of Delivery programme: we established the new NSET Delivery Board and set out strategic guidance to agencies aligned with NSET priorities; we developed a new Wellbeing Economy Monitor which was published in June; we established the new Centre of Expertise in Equality and Human Rights, which was announced in May; a new Economic Strategy Directorate was established in the Scottish Government; the Resource Spending Review committed to investing almost £880 million to support the economy.

These delivery plans set out the phases of delivery, recognising the different nature of the actions needed to transform our economy. As a result, there is rightly more short-term detail with the plans setting out the steps to be taken to deliver longer-term commitments. The plans represent a 'point in time' and as such will remain dynamic and flexible, and will be updated throughout the lifetime of the 10 year strategy.

To reflect the various stages of NSET delivery, we have set out the four NSET delivery phases which are referenced to across this document:

• Phase 1: DELIVERED – What we have delivered to date
• Phase 2: IN DELIVERY – What is already underway/What we are already doing
• Phase 3: DELIVERY PENDING – What we are planning to deliver
• Phase 4: IN DEVELOPMENT – What we are developing or planning/beginning to develop

These programme plans demonstrate the progress we have made and how we plan to maintain this momentum in delivering the strategy. We are sincerely grateful to our partners in the public, private, third sector and trade unions who have played a key role in the delivery of this Strategy to date, and who we will continue to work hand in hand with as we progress with this national endeavour.

Governance

At the same time, we have put in place robust governance structures to successfully and collectively deliver the interconnected programmes of action set out in NSET and transform the way in which the Government and business listen to, support and work with each other.

The NSET Delivery Board, co-chaired by Cabinet Secretary for Finance & Economy and Barry White, is responsible for ensuring the successful delivery of the interconnected policy programmes of action set out in the national strategy.

The Economic Leadership Group, chaired by the First Minister, will ensure the public sector is delivering on its contribution to the strategy and provide ultimate political accountability for NSET. The Group brings together the Cabinet Secretaries directly responsible for delivering key parts of NSET and the COSLA President given local government's crucial role as a delivery partner for NSET.

Beneath the NSET Delivery Board sits the NSET Portfolio Board. Chaired by the Scottish Government's Director General Economy, the Accountable Officer for NSET, its role is to ensure programmes are on track, make cross-portfolio connections and resolve issues before progress is reported to the NSET Delivery Board.

Each NSET programme has a Senior Responsible Owner (SRO) who is responsible for the successful delivery of the programme. The SROs have put in place appropriate governance arrangements to track progress, address issues of delivery and ensure a collaborative 'Team Scotland' approach where key partners are involved in both the design and implementation.

Measuring Success

As set out in NSET, monitoring our progress on delivery is absolutely key to our success. These plans, therefore, also include the metrics we will use to monitor the extent to which the strategy is successfully transforming the Scottish economy. Progress on these metrics, along with other key data and evidence, will be reported annually to the NSET Delivery Board to continually test whether the actions within the strategy are having the impact necessary to transform the Scottish economy, and where necessary, the programmes and their delivery plans will be revised to ensure we remain on track to achieve our ambitions for a wellbeing economy.

We have identified a number of measures across the NSET programmes which will allow us to: (1) quantify our impact in achieving the overall vision for NSET; (2) track the wider economic context; and, (3) ensure delivery of NSET actions.

Our high level 'measures of success' are presented below. These are representative of the key areas where NSET seeks to shift the dial and were selected based on: (1) the detailed NSET evidence base which underpinned creation of the strategy itself; (2) mapping of priority NSET actions to outcomes; and (3) ongoing engagement with programme leads, delivery partners, the NSET Portfolio and Delivery Boards.

The indicators are complementary to those in the Wellbeing Economy Monitor and the National Performance Framework^[1] (indeed where appropriate we have used the same measure). The Wellbeing Economy Monitor^[2] (WEM) provides a baseline for assessing progress towards the development of a wellbeing economy in Scotland. The monitor is based on the National Performance Framework's monitoring of wider societal wellbeing, with the aim of broadening how we measure economic success.

Indicators will be disaggregated where possible to capture a range of characteristics (e.g. demographic, geography, sectors) to provide insight into cross-cutting issues and themes.

* - measure is consistent with that used in the Wellbeing Economy Monitor

The indicators will be disaggregated where possible to capture a range of characteristics (e.g. demographic, geography, gender, sectors) to provide insight into cross-cutting issues or to show how the experience of NSET activity may differ between groups or regions in Scotland. This will include a focus on Scotland's rural and island areas, which face particular challenges and opportunities.

As the detail on programme delivery refines or changes across the 10 year delivery programme, and as we continue our engagement with delivery partners and stakeholders to better understand impacts, we will be flexible and continue to develop the measures. In some cases this may mean that there are more detailed programme level measures which allow for greater input and ownership at programme delivery level. These programme level measures need not be identical to the high level 'measures of success' but we will ensure that they are compatible, complementary and aligned to programme delivery.

Additionally, it is expected that some measures will be impacted by the activity of more than one programme. For example, activity to increase exporting or levels of inward investment (Programme 2) would also be expected to improve productivity (Programme 3). We will draw out this nuance and the inter-connectedness of actions and impacts as part of our annual reporting.

Vision

A Wellbeing Economy

Ambition

Fairer

Palma ratio*

Regional inequality in GDP per head

Wealthier

Real GDP

Income tax receipts

Working age population

Greener

GHG emissions*

Natural Capital*

Programmes of Action

Entrepreneurial People and Culture

1. Early-stage entrepeneurial activity

2. Number of businesses surviving (3yrs)

3. Number of high growth registered businesses

4. Number of spin-offs

New Market Opportunities

1. Level of capital investment*

2. Exports (as a share of GDP)

3. Number of green jobs

4. Number of inward investment jobs

Productive Businesses and Regions

1. Productivity (GVA per hour worked)

2. Business R&D spend

3. Proportion of businesses that are innovation active

4. Digital skills in businesses

5. Social enterprise GVA

Skilled Workforce

1. Skills shortages (reported by businesses)

2. Number of young people participating in education, training or employment*

3. Number of people with low/no qualifications*

4. Skills utilisation

5. Job related training

A Fairer and More Equal Society

1. Number of workers earning above real living Wage*

2. Employment rate

3. Gender pay gap*

4. Disability employment gap

5. Employee voice

6. Number of workers in contractually secure employment

Indicators will be disaggregated where possible to capture a range of characteristics (e.g. demographic, geography, sectors) to provide insight into cross-cutting issues and themes.

* - measure is consistent with that used in the Wellbeing Economy Monitor

Finance

The Scottish Government's Resource Spending Review (RSR), published in May 2022, set out the high level parameters for resource spending to 2026-27 and outlined our spending plans to deliver Programme for Government and Bute House commitments. Since the publication of the RSR in May, the cost crisis has meant that Scotland has faced both a significant reduction in the Scottish Government's spending power alongside the impact of the cost crisis on households, families, businesses, public services and the third sector. These restrictions both limit the Scottish Government's ability to respond to the cost crisis in-year, not least due to restrictions on borrowing powers, but also present challenges in future years. Those challenges are not just restrictions on overall expenditure, but also uncertainty over expenditure plans in the future, exacerbated by UK-wide economic and political volatility. Given this context, we are by necessity consistent with good practice prioritising and developing NSET projects which can support the cost of living crisis in the short-term, as well as NSET projects that are well developed and will be the biggest contribution to sustainable and inclusive economic growth.