Scottish Budget: draft budget 2018-2019

Chapter 4: Enterprise and Skills Bodies

Our ambition is for Scotland to rank among the top quartile of OECD countries for productivity, equality, wellbeing and sustainability.

Through an investment of almost £2.4 billion this year, the enterprise and skills support system is key to achieving this ambition. The bodies who run the system are vital in creating the conditions for businesses to increase productivity and growth, and help deliver the skills that Scotland’s people and economy need.

Our Priorities

Our enterprise and skills bodies are fundamental to delivering the economic vision set out in our Economic Strategy and the Programme for Government. That is why, for the first time, this budget brings together commentary on our investments in those key bodies in one place. This is a first step towards implementing the Budget Process Review Group’s recommendation to pilot the presentation of budgets by programme rather than portfolio.

The new Enterprise and Skills Strategic Board, led by Nora Senior, will be tasked with maximising the impact of our investment in enterprise and skills development in Scotland. The full Board has been appointed and met for the first time on 13 December 2017.

It will enable our agencies, including the precursor of the new South of Scotland Enterprise Agency, to come together to deliver greater collaboration, alignment and strategic purpose. Through collective responsibility, it will ensure hard alignment across the agencies in delivering the Board’s aims and objectives to drive improvement in Scottish productivity, and to better support business and users of the skills system. A key priority for the Strategic Board will be the development in 2018 of a Strategic Plan and a measurement and performance framework to underpin it.

As the strategic plan and performance framework of the Strategic Board develop, it will help to inform the decision-making process for budget allocations in future years.

Within this, it will adopt a sharp focus on a number of specific areas including:

• boosting levels of innovation, including research and development and workplace innovation, among Scottish businesses to achieve our ambition of doubling business research and development by 2025. We must replicate in our businesses the global success of our research and development within our universities;
• increasing entrepreneurial skills through greater collaboration both within the enterprise system but also with business communities and sectors;
• helping our sectors with the potential to be globally competitive to win on the global stage. Sectors like life sciences, advanced manufacturing, sensors, fintech, oil and gas, tourism, food and drink and data science already compete globally but we can help them do more;
• enhancing our skills system, increasing the match between demand and supply, in pursuit of a high-performing, inclusive labour market. A key outcome from this will be a skilled, productive and engaged workforce that can access higher quality, higher-wage jobs;
• building stronger links between business, recognising their needs for skills and talent, and the training bodies, universities and colleges that provide them;
• ensuring that investment enables every region across Scotland to maximise its potential. This can take the form of targeted infrastructure investment, increased inward investment and specific regional skills gaps;
• encouraging an outward-looking, global mindset among many more businesses and enhance support for more businesses to internationalise; and
• making the right business support accessible to businesses, and to ensure those with the potential to grow to scale get the support they need. In particular, we want to maximise the economic potential of under-represented groups and places.

The Enterprise And Skills Bodies

Each body will contribute to these goals and in 2018-19 their specific contributions will include the following.

Skills Development Scotland

Skills Development Scotland’s ( SDS) £193 million budget will deliver interventions including Modern Apprenticeships, pre-employment training and careers services, and will play a central role in the implementation of Developing the Young Workforce ( DYW).

In 2018-19 Skills Development Scotland will:

• work with the Scottish Funding Council ( SFC) to align skills investment and ensure that Scotland’s people and businesses are equipped with the right skills to succeed, contributing to the Strategic Board’s objectives to enhance both productivity and inclusion;
• continue to expaned Modern Apprenticeships, supporting the economic priority to invest in skills, as a next step towards providing 30,000 starts by 2020, including new graduate level opportunities, and increase the roll-out of Foundation Apprenticeship;
• continue to deliver support for unemployed people through the Employability Fund and skills development opportunities through Individual Training Account supporting our aim to create a more inclusive labour market in which everyone is able to develop their skills and fulfil their potential;
• contribute to the implementation of the STEM Strategy, in particular taking forward the actions around improved STEM-related careers advice and guidance and increased participation in STEM-related apprenticeships;
• provide careers advice and guidance to allow young people to make informed decisions as they journey towards and into work;
• administer National Occupational Standards on behalf of the devolved administrations; and
• continue as the lead delivery partner for Partnership Action for Continuing Employment ( PACE), and continue to work collectively with PACE partners to increase the reach of PACE activity and support for individuals facing redundancy situations.

Scottish Funding Council

Through the Scottish Funding Council, we invest around £1.8 billion in Scotland’s colleges and universities to fund teaching, research and innovation activities for Scotland’s learners.

The ambitions of the Enterprise and Skills Review, particularly in relation to skills alignment, innovation, internationalisation and securing an improved learner journey post-15 will be driven by the Council’s investment and activity in:

• working in partnership with our colleges and universities to improve Scotland’s skills base by providing accessible, high quality learning opportunities, with good outcomes for learners which are aligned to industry needs;
• enhancing knowledge exchange and delivering impactful research and innovation;
• supporting our universities and colleges to work collaboratively in developing international partnerships, to attract international students, and to ensure Scotland has the right skills to secure inward investment;
• focusing efforts in growth employment areas, including through the implementation of the STEM strategy and the expansion of the Early Learning and Childcare workforce;
• promoting a partnership approach between employers and education, to improve skills alignment and deliver high quality training opportunities to up-skill and re-skill the workforce through the Flexible Workforce Development Fund and other routes; and
• to support an improved, more coherent learner journey post-15 by improving the alignment of our learning and skills system.

Scottish Enterprise

A budget of around £256 million supports Scottish Enterprise ( SE) including Scottish Development International ( SDI) to provide practical support and opportunities for sectors and businesses to grow and invest in Scotland. SE aims to support growth business, provide productivity advice and support, share fair work best practice, secure inward investments and help Scotland’s businesses internationalise.

In 2018-19 Scottish Enterprise will:

• drive up business innovation levels, supporting companies to start innovating and invest more in research and development;
• work with companies across Scotland to develop fair and more productive business practices, encouraging diversity in the workforce by supporting high-value jobs, youth employment and more women into leadership roles;
• encourage companies to take a sustainable approach to growing their business and improving performance;
• positively influence the growth finance market in Scotland, helping businesses access loan, grant and equity finance;
• support commercialisation of leading-edge technologies emerging from Scotland’s universities, research institutes and NHS Boards helping researchers to export their ideas and inventions from the lab to the global marketplace;
• respond to emerging global growth opportunities in areas where Scotland has an innovative edge and competitive advantage; and
• maintain and grow Scottish exports, including making it easier for Scottish companies to access services to start or increase sales to the EU.

Highlands and Islands Enterprise

The Highlands and Islands Enterprise ( HIE) budget of £71 million provides regional leadership and works to secure inclusive growth across the Highlands and Islands. The budget supports HIE to work corroboratively with partners in delivering investment in digital and transport connectivity; education and skills; economic and quality employment opportunities; sustainable communities with a focus on population growth and investment in communities and regional infrastructure.

The benefits of reducing geographical disadvantages through digital innovation and improved connectivity create huge opportunities for our rural communities that we are determined to seize.

In 2018-19 Highlands and Islands Enterprise will:

• invest in the people and skills needs of the region, through collaboration with partners to implement an agreed Talent Attraction Strategy and the Highlands and Islands Skills Investment Plan;
• strengthen communities through development of community-owned income generating assets; embedding a place-based approach to development, collaborating closely with key partners focusing on the regeneration of more remote and rural areas; and supporting social enterprises to grow their operations, create employment and increase their social impact;
• invest in regional infrastructure by supporting the provision of serviced sites and premises in locations where there is no prospect of the private sector doing so; promoting delivery of high quality, reliable digital and transport connectivity; working with partners ensuring that Higher Education and Further Education provision and development of specialisms are aligned to regional economy needs;
• accelerate business growth focusing on productivity, entrepreneurship, leadership internationalisation and innovation;
• encourage fair work practices and promote the Scottish Business Pledge; continue to work with retail banks to increase business lending; and support businesses to exploit digital opportunities; and
• develop Growth sectors, particularly those offering distinctive regional opportunities through working with SDI to explore new market opportunities for Highlands and Islands products and services; attracting inward investment; considering strategic clusters of competence and opportunity to drive up productivity, shorten supply chains and build scale through collaboration.

South of Scotland Enterprise Agency

It is recognised that there are unique challenges facing the south of Scotland area and a fresh approach is required to drive inclusive growth across the area. We will introduce legislation to establish a South of Scotland Enterprise Agency in 2018 with the intention that it is operational by 2020-21. Until then interim arrangements have been put in place to create an economic partnership. A £10 million budget will support this Government’s ambition to drive forward inclusive growth and support communities across the south of Scotland.

In 2018-19 we will:

• invest in the south of Scotland through the economic partnership to provide support for businesses, business infrastructure and support communities;
• bring forward primary legislation to establish the South of Scotland Enterprise Agency; and
• support increased alignment and stronger relationships with local and national organisations to benefit the south of Scotland area.