The importance of place to inclusive growth: speech

I'm really delighted to be here with you all today.

The political philosopher John Rawls said, 'A just society is one where if you knew everything about it, you'd be willing to enter it in a random place'. In other words, you'd choose to join this just society no matter where you were born.

This is a tough challenge to us all, and certainly isn't true for us in Scotland just yet. We know that here in Glasgow two children born only a few streets apart can have very different outcomes in life through no fault of their own.

That is why the Scottish Government is focused on delivering economic growth in a way that's more inclusive – and by that I mean inclusive of people, and inclusive of places. What we all want is a country where people can flourish no matter where they are born or who they are.

Those of us here today who can call Scotland home are lucky. We are lucky because:

• we live in a wealthy country – even without oil, GDP per head in Scotland is higher than the UK average (excluding London)
• Scotland's unemployment rate is lower than that of the UK
• we're living longer and healthier lives; a child born today has a life expectancy higher than ever before
• public attitudes towards equality and diversity are improving – we are becoming a more equal country in many respects

Having said that, some of us in Scotland today are less fortunate than others:

• in 2015 and 2016, seven out of ten children in poverty in Scotland were living in a household where someone was in work; in other words, work is no longer a guarantee against poverty
• women still get paid less than men, are less likely to be in full-time employment, and more likely to stay at home due to caring commitments
• more people are in work in Scotland than the pre-recession high but job opportunities vary considerably across regions
• crucially, as I mentioned at the start of my speech, some people and some places have over recent decades benefited much less from economic growth than others

The challenges I raise are not only seen in Scotland, but across the UK and other advanced economies. Inequality has remained stubbornly persistent, with the wealthiest benefitting more from growth than the rest. Barack Obama has called inequality the 'defining challenge of our time'.

The international evidence on this is clear. Inequality harms lives. It leads to poorer educational prospects, wellbeing and health. It limits social mobility across generations – meaning that if you are born poor, you are more likely to grow up poor.

What is also becoming more apparent is that inequality damages economic growth too. Analysis by researchers at the Organisation for Economic Co-operation and Development (OECD) in 2014 estimated that rising income inequality in the UK between 1990 and 2010 had reduced GDP per capita growth by 9% – that's approximately £1,600 for every person in the UK.

So it's in our interests, as a government, and as a country, to grow the economy in a fairer and a more inclusive way. This means putting people at the heart of how we understand, nurture and share our economy. Our Economic Strategy, published two years ago, recognised this need for a more inclusive approach to economic growth, underpinned by the twin pillars of boosting competitiveness and tackling inequalities.

We made it clear that in Scotland, we will put a different emphasis on growth – that we won't pursue growth at any cost or limit its benefits to a just few, but that we will ensure growth means prosperity and opportunity for all, regardless of who you are and what part of Scotland you live in.

We put emphasis on understanding what we need to do to tackle the uncomfortable truths behind some of the positive headline performance, such as tackling regional variation in economic performance and opportunity, addressing the gender pay gap and tackling in-work poverty and issues around pay and progression.

Of course, these words need to be backed up by action.

We are investing in a number of areas to promote inclusive growth:

• improving wages and working conditions through our Fair Work Convention and Business Pledge
• helping more parents back to work by increasing free, high quality childcare for all three and four-year-olds to 1,140 hours by the end of this Parliament
• equipping our young people for the future by increasing the Scottish Attainment Challenge funding to £750 million, increasing the number of Modern Apprenticeship opportunities, and introducing a Job Grant for those aged 16-24 who have been out of work for six months or more
• delivering significant investments in inclusive economic growth across Scotland through the City Region Deals. These investments will create thousands of jobs, raise skills in local labour markets and support inclusive economic growth.

Our approach has been getting international recognition too. The OECD have called Scotland 'a real inclusive growth incubator', and Professor Joseph Stiglitz has said that our Economic Strategy 'leads the way in identifying the challenges [around inequality] and provides a strong vision for change'.

If we succeed, we will all benefit, because a more inclusive economy is good for everyone. And an inclusive economy, where income and wealth are shared more widely, delivers higher long-term growth and reduces inequality.

Our focus in Government is on making real improvements to the lives of people. This means people from across all parts of Scotland and from all our communities – which brings me to the centrality of 'place' to inclusive growth.

So what does inclusive growth mean for communities across Scotland?

It means we're living in successful communities which are economically, physically and socially strong. To achieve this, communities themselves need to be actively involved in, and leading, decision-making. Inclusive growth can only be truly long-lasting and effective if it is 'done by people' and not 'to' them.

It also means partners working in a joined-up way with communities, particularly in areas like economic development, planning, housing, education and skills.

And it means delivering growth in a way that helps build community cohesion. We know that inclusive and cohesive communities that embrace diversity provide a better quality of life for everyone. Communities thrive when they feel a shared sense of belonging, when they learn and grow together, and when they feel able to live their lives in peace.

Finally, it means that the benefits of our economy are spread across different communities. We want to ensure that all parts of Scotland have the potential to thrive equally, in a truly balanced economy.

The geographic concentration and segregation of industries, jobs, poverty and wealth means that different parts of Scotland face specific challenges that require tailored responses. We must ensure social and economic progress is felt throughout the country. From Selkirk to Stornoway, Aberdeen to Arran, all parts of Scotland must be able to keep building sustainable communities and to prosper.

So how will we achieve this?

The Community Empowerment Act, passed in 2015, sets out in legislation how we will help to empower community bodies through the ownership of land and buildings, and by strengthening their voices in the decisions that matter to them. This is backed by significant funding that supports communities to take decisions about funding priorities and tackle poverty and inequality on their own terms – including the Aspiring Communities Fund and the Empowering Communities Fund. By giving communities the power and confidence to shape their own futures, we can tackle poverty and address inequalities much more effectively.

Stronger community empowerment is also a key part of our Planning work. It is a cornerstone of the forthcoming Planning Bill. Our work with the place standard and community involvement in planning will continue to ensure that communities are empowered to play an active role in designing how their places will work and grow in the future.

We are also taking action to drive a more inclusive and balanced economy across all parts of Scotland.

Our approach to regeneration – working in partnership with local government and communities – makes a big contribution to delivering this. One example I'd like to highlight is our ongoing support for Clyde Gateway, which is transforming one of the most deprived areas in Scotland. The work of Clyde Gateway is tackling inequalities, creating jobs and opportunities, and most importantly is improving outcomes and chances for local people and communities. This work was recognised by the Royal Institution of Chartered Surveyors and awarded the top regeneration project in the UK in 2013.

We will work with our agencies and partners to ensure that our enterprise and skills support works in a way that helps deliver the skills that Scotland's people and economy need to progress our inclusive growth ambitions. Our recommendations, published last Thursday, have highlighted a particular focus on regional partnership approaches – bringing the agenda firmly back to the importance of place.

Increasingly we are seeing local authorities across Scotland coming together and working collaboratively with our national agencies, the private sector and other partners. These partnerships have evolved for different reasons but all are focused on strengthening regional economies across Scotland and delivering better outcomes for the individuals, communities and businesses within the area.

For example, in order to tackle the unique challenges facing the south of Scotland, we are going to create a new enterprise agency in the heart of the region. This will aim to support inclusive growth and increased productivity, helping the area to thrive.

This decentralisation of economic decision-making extends across the country. The Scottish Government is a full partner in all three of the City Region Deals agreed in Scotland so far, and has committed to investing £760 million over the next 10 to 20 years for City Region Deals in Glasgow, Aberdeen and Inverness. We are also fully committed to delivering City Region Deals for Edinburgh and South East Scotland, Stirling and Clackmannanshire, and the Tay Cities. These investments will create thousands of jobs, raise skills in local labour markets and support inclusive economic growth.

If we are to meet John Rawls' challenge for a just society, we have a long way to go. The actions I've outlined are just the foundations for building a more inclusive economy across Scotland, where people have the opportunity to flourish no matter where they are born or who they are.

My challenge to you as you move into the second half of this conference is to think about what you can do, with others, to help deliver inclusive growth in Scotland.