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Scottish Economic Report: March 2004

CHAPTER 2 - Report on Economic Development Initiatives

2.1 INTRODUCTION

The preparation of The Way Forward: Framework for Economic Development in Scotland (FEDS) took place in the latter part of 1999 and early 2000. The report was published in June 2000, and set out the overarching vision of the Scottish Executive:-

"that economic development should raise the quality of life of the Scottish people through increasing economic opportunities for all, on a socially and environmentally sustainable basis. "

In common with analytical conclusions in most other advanced countries, FEDS identified a sustainable improvement in productivity as the key to stimulating competitiveness and growth. FEDS linked this objective to most activities of Government, whilst identifying within this a number of priority areas for action: the basic education system; the transport and electronic infrastructure; enterprise support; and the regional, social and environmental objectives across Scotland.

Since January 2001, a report on progress within the main policy areas relevant to economic development has been published as Chapter 2 of the Scottish Economic Report (SER). As in previous SERs, this chapter provides an ongoing update of the progress made by the Executive in key areas identified in FEDS. In particular, it attempts to bring together, in a single report, the key new initiatives in the economic development sphere. This includes new phases within existing programmes, along with new initiatives undertaken since the last report in September 2003. In order to make this chapter useful both as a stand-alone piece and to new readers there is inevitably a degree of repetition of background material from earlier such reports.

The evolving economic environment, together with developments in strategy and policy over the intervening period and the publication of the Scottish Executive's Partnership Agreement of May 2003, led to Scottish Ministers deciding this would be an appropriate juncture to re-visit the thinking and analysis which underpinned FEDS. At the same time, the overarching strategy which was set out in FEDS was seen as being a long-term one, expected to be robust in the face of most anticipated changes in the economic environment and external shocks.

Scottish Ministers believe that the key principles of FEDS remain valid. Therefore, this 'refreshing' exercise will not be a full-scale reconsideration of the fundamentals of FEDS. However, it will allow the Executive to gauge reactions to the first few years' experience; to consider policy developments and emerging emphases over this period; and to explore any key areas where further consideration is felt desirable. The Executive is currently developing this work in conjunction with external stakeholders and the revised FEDS is expected to be published in the first part of 2004.

Outline

FEDS details the key principles, and priorities that must be addressed, and identifies the enhancement of productivity throughout all Scottish enterprises as the critical element to improve economic growth and living standards. The Key Principles and Priorities for Action identified in FEDS include:

The vision set out in FEDS reflects the overarching vision of the Executive. That vision has not changed, reflecting the longer-term focus of the FEDS structure. It remains the case that the primary contribution of economic development will be through the provision of opportunities for all people to participate in, and benefit from within Scotland.

In addition, the Executive's vision is reflected in the Partnership Agreement, published in summer 2003. The Partnership Agreement (PA) sets out the principles underpinning this administration. The PA notes succinctly that:

"Growing the economy is our top priority. A successful economy is key to our future prosperity and a pre-requisite for building first class public services, social justice and a Scotland of opportunity."¹

The importance of environmental sustainability is clearly acknowledged in the PA:

"We want a Scotland that delivers sustainable development; that puts environmental concerns at the heart of public policy and secures environmental justice for all of Scotland's communities."²

Meeting the vision set out in FEDS and the PA calls for objectives which address the economic growth, social justice and sustainability agendas, while also acknowledging their clear interdependence.

The objectives of FEDS can be seen on more than one level. The focus is on:

• the economic outcomes that enable the Executive's vision to be effectively pursued (the principal outcome objectives); and
• the enabling/intermediate steps that will secure the outcome objectives (the enabling objectives).

The principal outcome objectives of FEDS are that:

• economic growth is secured through international competitiveness;
• all regions contribute and benefit;
• all in society contribute and benefit;
• economic development is sustainable in economic, social and environmental terms.

The first objective highlights the critical role of economic growth. It is central to achieving both the overall vision and the remaining principal outcome objectives. The growth in productivity is the key element here. It is fundamental to stimulating international competitiveness and sustainable growth, and is influenced by a range of factors set out in FEDS.

The remaining outcome objectives highlight the importance of economic equity, and the distributional and sustainability dimensions of the Executive's vision. All four objectives interact and are interdependent.

These principal outcome objectives cannot exist in a vacuum. Their delivery needs a number of enabling objectives. In short, delivery needs the right economic context:

• a stable and supportive macroeconomic environment
• a facilitating national economic context: encompassing the physical, human and electronic infrastructure
• a dynamic competitiveness in Scottish enterprises
• economic policies and programmes to secure the social, regional and environmental objectives.

2.2 SOCIAL JUSTICE

Social Justice cuts across a range of economic development issues, and cause and effect runs both ways. Successful implementation of the Social Justice agenda will help encourage and stimulate economic growth, reinforcing the aim of Closing the Opportunity Gap. Equally, success in economic development initiatives can promote social inclusion.

Given its cross cutting nature, Social Justice is discussed only briefly here, and relevant issues thread through the rest of this chapter.

The PA set out how the Scottish Executive would tackle the social, educational and economic barriers that create inequality; and work to end child poverty by tackling deprivation and social need.

Headline commitments directly relevant to Social Justice from the PA include:

• Reducing the gap in unemployment between the worst 10 per cent of areas and the Scottish average by 2006;
• Providing support for childcare in order to help people in the most deprived areas into work, training or education;
• Ending child poverty through regenerating communities and introducing a quality of life commitment as well as a decent homes standard;
• Extending support for money advice to help people burdened by multiple debt;
• In close partnership with local authorities and other stakeholders, working to help people off the street and prevent others falling into the trap of homelessness.

More recently, the Cabinet Delivery Group on Closing the Opportunity Gap held its first meeting in December 2003. The Delivery Group was established to take forward the Partnership Agreement commitment to tackle the social, educational and economic barriers that create inequality and work to end child poverty by tackling deprivation and social need.

Housing and Regeneration

Post Offices are often seen as a focal point for communities and lifeline service provider for the residents. Recognising the contribution that Post Offices can make to the social and economic fabric of local communities, Communities Scotland has introduced the Fund to Develop Post Offices in Deprived Urban Areas. Supporting the dual policy goals of urban regeneration and social inclusion, the scheme is targeted at areas where unemployment, single parent families, and people with disabilities tend to be more prevalent. The appraisal of each application considers the viability of the applicant and significance of closure to the local community. It simultaneously looks favourably on improvements that result in positive externalities such as better lighting or enhanced security which may help make the community a more attractive proposition for other local businesses.

Community Ownership

In order to build safe strong communities there is a need to invest in quality housing across Scotland. As a result the Executive, with the assistance of a panel of experts, has been looking at the process of transferring houses into Community Ownership with the aim of recommending ways to build upon and improve the current scheme. As well as addressing the quality of the available housing it is important to consider the local environment and the regeneration needs of the neighbourhood, as these locations tend to suffer to some extent from economic and social exclusion.

Throughout the review of Community Ownership, a key principal has been that tenants must remain at the heart of the decision making process. In the current financial climate, transfers to Community Ownership are not only a way of promoting community empowerment but also of securing significant additional investment in housing. Beyond tackling housing debt and providing a boost to investment, the move to Community Ownership will help provide some tenants in Scotland with better control over the management and maintenance of their homes and local neighbourhood.

Large-scale voluntary stock transfers of local authority housing have recently been completed in Glasgow, Dumfries & Galloway, and Scottish Borders, with the Executive's PA outlining a further commitment to transfer 70,000 houses to community ownership by 2007, subject to approval by tenants. ³ This equates to 17 per cent of the remaining local authority housing stock. The overall policy objective is to ensure that all local authority and housing association stock will achieve the Scottish Social Housing Standard within ten years, that national performance standards for social housing are met, and that both supply/demand mismatch problems and affordability concerns are addressed in a timely manner.

Scottish Housing Quality Standard

The impact of the introduction of the Scottish Housing Quality Standard, as it applies to social rented housing, has moved the debate on to the achievement of the housing standard. This means that each Local Authority must provide a standard 'Delivery Plan' outlining how it will reach and sustain its housing stock at the standard. As part of this requirement, each Local Authority is expected to perform a strategic appraisal of the costs of refurbishing, managing, and maintaining their stock, against a similar assessment of the situation under a partial or full transfer. In this way, the most appropriate route to the achievement of the standard can be adopted and the resources necessary to delivering the housing identified.

2.3 ENTERPRISE SUPPORT AND SKILLS DEVELOPMENT

Achieving dynamic competitiveness in Scottish enterprises was seen in FEDS as a key enabling objective, with a crucial role to play in improving productivity and stimulating growth. Similarly, the PA states that a growing economy is a top priority and is a pre-requisite for building first class services, social justice and a Scotland of opportunity. A Smart, Successful Scotland, the strategy for the Enterprise Networks, set out three key challenges;

• Growing Businesses
• Global Connections
• Learning and Skills

Growing Businesses

Business Gateway

A key feature of recent Executive activity has been a focus on improving the accessibility, quality and consistency of support for existing companies and individuals wishing to start a business. Launched in July 2003, the new Business Gateway provides a first point of contact to all public sector support. This is available both locally and nationally for start-ups and businesses of all sizes within the Scottish Enterprise area. The Business Gateway provides access to a range of services (via a single phone number 0845 601 6611 and website www.bgateway.com or face to face at 42 outlets). Business support provided by local authorities and other partners are embedded in the Business Gateway structure.

A range of new specific support programmes have also been introduced recently. The first two are intended to encourage greater collaboration between Scottish industry and the science base:

Scottish Executive Expertise, Knowledge and Innovation Transfer Programme (SEEKIT)

The SEEKIT programme will provide grant funding for research base-industry interface and outreach activities that are not currently funded by existing mechanisms. It will support projects which encourage productive knowledge transfer activities between Small and Medium Enterprises (SMEs), Research Institutes, Technology Transfer Organisations and Higher & Further Education Institutes. Applications for support can be submitted by eligible public bodies, such as HEIs and FE Colleges and much of the Enterprise Network.

Funding will vary depending on the size and location of each project but, in general terms, the scheme provides up to 70 per cent of the total eligible costs of the project. In the majority of cases, it is expected that the match funding for the project can be sourced through the European Structural Funds, and the criteria for support of projects closely mirrors that of the Structural Funds Programmes.

SME Collaborative Research Programme (SCoRe)

The SCoRe programme is designed to support R&D projects jointly undertaken between public sector research bodies (such as universities, research institutes, NHS Trusts) and Scottish SMEs. Under this scheme, an SME or group of SMEs with a specific technical problem or need can assign a significant part of the required scientific and technological research to a public sector research body. The research base partner must incur and defray at least 40 per cent of the total eligible costs of the project.

Eligible partnerships can receive financial support of up to 50 per cent of eligible project costs up to a maximum grant of 35,000. For a partnership to be eligible for support, it must contain at least one Scottish-based SME, and one public sector research body (e.g. university, research institute or NHS Trust)

SCoRe provides funding for pre-competitive development activities in R&D and most technology sectors are eligible for support (apart from defence projects and certain industry sectors with restrictions on state aid for R&D). Projects must be a minimum duration of 6 months and a maximum of 18 months.

National Intellectual Assets Centre

The Executive has also announced that it is establishing a National Intellectual Assets Centre to promote awareness of the importance of Intellectual Assets (IA) and provide direction and advice to Scottish businesses on their identification, protection and exploitation. The Centre will be funded by the Executive at a cost of around 1 million a year.

Working closely with the Enterprise Networks, private sector intermediaries and the Executive, the National Intellectual Asset Centre aims to:

• Raise awareness and understanding of IA amongst Scottish businesses and other organisations, enterprise agencies and private sector intermediaries through events, seminars, training and information provision;
• Enable Scottish businesses to manage and exploit the untapped potential of their IA for competitive advantage;
• Encourage the development of a strong private sector-led supply of IA management services;
• Provide signposting for companies seeking IA management services;
• Develop Scotland's international profile as a leading exponent of IA management and exploitation.

Proposal Assistance for Co-ordination of European Research

Finally, to complement the Scottish Proposal Assistance Fund (SPAF), which assists SMEs in Scotland to access European Framework 6 Funds for collaborative, pre-competitive research and development, the Executive announced in November 2003 the establishment of PACER (Proposal Assistance for Co-ordination of European Research) which will assist universities with the up-front costs of bidding to become a main co-ordinator for projects.

Global Connections

The Global Connections Strategy, published by the Executive in October 2001, set out four key strands of action:

• Digital connectivity.
• Increased involvement in global markets.
• Scotland to be a globally attractive location.
• More people choosing to live and work in Scotland.

Scottish Development International (SDI) was established in 2001 to play a key part in taking forward several of these strands. The focus is to support the fullest possible Scottish participation in the global economy by supporting the internationalisation of Scottish companies; the attraction of high value economic activity to Scotland; and the exchange of skills, ideas, intellectual capital and networks of people.

SDI has established a new pattern of overseas office locations and services in line with the principles of the Global Connections Strategy, taking account of opportunities to interact with international investors in key industries for Scotland and of emerging markets for Scottish knowledge around the world. SDI has also remodelled the delivery of a more streamlined, tailored and consistent range of services to Scottish clients through the Business Gateway International Trade Partnerships. This was launched in September 2003 to provide a local 'front door' across Scotland for businesses looking to trade in world markets. The focus of activity is increasingly on fostering international knowledge flows and on helping companies with deeper overseas engagements. Work continues to develop and maintain strategic relationships with existing investors in Scotland, to help move their Scottish operations up the value chain and create higher-skill, higher-wage functions.

Skills and Learning

Helping every Scot to be ready for tomorrow's jobs and making a reality of the promise of lifelong learning.

Individual Learning Accounts (ILAs)

The introduction of ILAs was successful in helping to bring down the financial barriers to learning. During its first year of operation the scheme attracted nearly 270,000 members, around 127,000 of whom used their ILA to undertake learning.

Although the scheme in Scotland was closed in December 2001 as a precautionary measure to protect the public purse and the interests of learners, Scottish Ministers remain committed to encouraging the widest possible participation in lifelong learning. Specific commitment to a successor ILA scheme was announced in the context of Scottish Ministers' strategy for lifelong learning in February 2003. Progress is being made with development of the new scheme, to be known as ILA Scotland, to build on the considerable success of the first ILA programme while tackling the concerns raised. Launch of ILA Scotland, which will be targeted more towards learners on low income, is anticipated for mid-2004.

Adult Literacy and Numeracy

Raising the levels of literacy and numeracy skills is crucial to improving the competitiveness of the economy as well as meeting wider goals on social justice and helping individuals to lead fulfilling lives. It is estimated that poor basic skills cost the UK economy 4.8 billion per year with the overall cost including health service and welfare benefits rising to 10 billion per year. 51 million of new funding was allocated over 5 years from April 2001 to tackle this issue, with 40 million being invested in community learning and development strategy partnerships to help at least 150,000 people locally during this period.

In January 2003, Learning Connections, part of the Regeneration Division of Communities Scotland, was set up to drive the creation of quality adult literacy and numeracy through training, research and development. Learning Connections are tasked with implementing the 21 recommendations contained in the Adult Literacy and Numeracy in Scotland report. www.lc.communitiesscotland.gov.uk

On 19 January 2004 an awareness raising campaign, ' The Big Plus' was launched to help reduce the stigma that can often be associated with low levels of literacy and numeracy, and encourage people to seek support in improving their reading, writing and number skills. The TV and radio adverts are based on genuine case studies and are designed to focus on crisis points in people's lives where their lack of confidence with words or numbers is suddenly exposed. This first national campaign for almost 30 years has been welcomed by the local partnerships because of its anticipated impact not only in directly engaging learners, but also indirectly engaging through securing further support from local intermediaries like Job Centre Plus, Careers Scotland, NHS Trusts, LECs etc.

Business Learning Accounts (BLAs)

The Executive's Lifelong Learning Strategy contains a commitment to pilot BLAs as a means of stimulating learning and business growth in small businesses. The driver for BLAs is the disappointingly poor level of investment in training by Scottish small businesses. The primary policy objective of BLAs is therefore to test a means of encouraging more small businesses to invest in training linked to business growth. The Enterprise Networks, along with Learndirect Scotland, are running four BLA pilots across Scotland, targeting 300 small businesses over two years from November 2003.

Two pilots are geographical in nature with the remaining two targeting the Tourism and Manufacturing sectors. Although there is no commitment at this stage to proceed with a national roll out, there is a detailed evaluation process in place to establish the effectiveness of BLAs. Characteristics of the pilots are:

• Small businesses (under 50 employees);
• Funding must be matched by an equal employer's contribution;
• Advice, information & guidance will be used to help employers identify training needs and develop an appropriate training plan;
• Qualifications are not to be a prerequisite outcome but training should demonstrate business growth;
• BLAs cannot be used to help offset existing employer contributions to existing national training programmes i.e. Skillseekers, Modern Apprenticeships etc;
• A BLA expires after 2 years.

Skillseekers/Pre-Modern Apprenticeships

All young people aged 16-17 are entitled, under the Youth Training Guarantee, to Skillseekers training. Local Enterprise Companies (LECs) also have discretion to fund 18-24 year olds. Since the programme was introduced in the mid 1990s, it has helped increase employer participation in training, and 75 per cent of Skillseekers participants are now employed while undertaking their training.

The Scottish Executive are currently working with the Enterprise Networks and Sector Skills Councils to re-engineer the Skillseeker programme. The programme will become part of a more clearly defined set of post-16 vocational and learning pathways, with closer links and improved progression from school education, and better articulation with further learning opportunities. A number of pilots are being implemented across a range of sectors to test alternative delivery models, training and learning content and duration. The pilots will be evaluated over 2 years and the outcome will inform future training policy.

Higher Education

Higher Education has come to be widely recognised as a key contributor to the economic development of Scotland. The Scottish Executive published its Framework for Higher Education in Scotland in March 2003, which sets out the Executive's vision for developments in the sector for the next ten years.

Amongst other key priorities for the HE sector, the Framework seeks to promote the ability of Higher Education Institutions to respond to demand from students and to the wider needs of the Scottish economy and society, and focuses on the central importance of HE in developing the skills and knowledge for a Smart, Successful Scotland. A specific target in this regard is to increase the number of graduates as a proportion of the workforce.

The Framework recognises that knowledge transfer through teaching and research gives HE a crucial role in providing the skills needed to develop and benefit from new technologies. The Executive is working with Scottish Higher Education & Funding Council (SHEFC) and the institutions to encourage:

• the development of links between Future Skills Scotland, the Sector Skills Council, the labour market and careers services, to provide the skills and knowledge mix needed to maximise economic growth;
• more effective exploitation of research activity for the benefit of the Scottish economy and quality of life;
• collaboration between research teams across institutional, subject area and international boundaries to maximise its potential benefits; and
• the attraction of international students to support the further development of global connections between individuals, institutions and enterprises.

A Framework for Higher Education in Scotland can be found on the following link, http://www.scotland.gov.uk/library5/lifelong/herp2-00.asp

2.4 INFRASTRUCTURE

One of the Priorities for Action in FEDS is to ensure that Scotland has the appropriate transportation, physical and electronic infrastructures, focusing on the access, speed, and cost of communications.

Transport

The Scottish Executive recognises the close links between transport, business and the wider economy. Integrated transport policy aims to reduce road traffic growth and congestion which, in addition to damaging the environment, affects the efficient movement of goods and people. The Executive also aims to improve journey times in and between Scotland's major metropolitan areas and, importantly for business, to improve journey time reliability.

Building Better Transport was published in March 2003 and was an update of the Transport Delivery Report, Scotland's Transport: Delivering Improvements, published one year earlier. Building Better Transport reported on progress across the range of transport projects with regard to: economic growth; greater accessibility; better integration; new ways of working; and future developments. Building Better Transport does not view transport by mode (road, rail, sea, air), instead but focuses on the effect on people, businesses and the environment.

Tender documents for the next Scottish rail passenger franchise were issued in July 2003 to the four companies short-listed by the Strategic Rail Authority. The documents highlighted the Scottish Executive's ambitious plans for developing the Scottish rail network.

Draft Orders were published in August for the proposed new Upper Forth crossing at Kincardine, and a series of public exhibitions held. Subject to the satisfactory completion of the statutory procedures, contractors will be invited to bid for the 89.5 million project by summer 2005. The new crossing will transform transport links in the area and open up new economic opportunities.

The 21.6 million contract to replace the A80 Auchenkilns Roundabout in Cumbernauld was awarded in September 2003. The work is due to be completed by summer 2005, and will remove one of the major congestion points in the central Scotland trunk road network. This will bring benefits to local communities and to the Scottish economy.

Further to this, work started in September 2003 on the new 34 million A78 bypass for the Ayrshire towns of Ardrossan, Saltcoats and Stevenston, and will be completed by Spring 2005. Traffic congestion in the centre of the three towns will be reduced as a result of the bypass, leading to a better, safer environment and improved journey times.

The PA also promised proposals for a new transport agency to help deliver significant improvements such as extending the concessionary fares scheme, supporting direct air routes to Scotland, and integrating improvements to roads and public transport. A consultation paper Scotland's Transport - proposals for a New Approach to Transport in Scotland was launched in September 2003.

The Minister for Transport confirmed in October 2003 an investment of more than 100 million in rolling stock, bringing 22 new trains to the Scottish rail network by spring 2005. The new trains will help tackle overcrowding and improve the quality of passenger journeys across the network, and will help in securing the long-term future of rail in Scotland.

Scotland's voluntary Regional Transport Partnerships (RTPs) all benefited from funding for public transport improvements in November 2003. Connecting people to each other through improved public transport can help build strong communities and tackle poverty, and key to that is a co-ordinated regional approach. WESTRANS in the west were awarded 6.7 million; HITRANS in the Highlands and Islands were awarded 1.3 million; NESTRANS in the north-east were awarded 1.3 million; and SESTRAN in the south-east were awarded 4.5 million. Those of Scotland's local authorities which are not members of RTPs also benefited: Angus Council, Dundee Council and Perth and Kinross Council were awarded 1.1 million between them.

Consultants were appointed in November 2003 to complete design work and environmental assessments on the Aberdeen Western Peripheral Route, and a dedicated website unveiled. The new route will bring environmental, economic and safety benefits to north-east Scotland, providing better access to the area. The benefits include: reduced congestion; improvements in air pollution; improved journey times; improved safety; and better business opportunities.

In addition, in December 2003 the Scottish Executive contributed 25 million from the Integrated Transport Fund towards the new rail link between Larkhall and Milngavie. It is anticipated that the new link will bring real economic benefits to Larkhall and surrounding communities, attracting new business to the area and increased access to jobs, education and leisure.

Also, the opening in December 2003 of the new Edinburgh Park railway station marked the completion of the Edinburgh Crossrail service linking passenger services between Dunblane and Bathgate and the new Edinburgh Newcraighall station. The new station will open up public transport to the five thousand people who work at the park - the heart of the capital's business and financial districts.

The Executive's Route Development Fund has had continued success in attracting new air routes to Scotland. The scope of the fund has been expanded to include inter-continental routes, which has enabled the support of routes to Dubai and New York (due to start in spring and summer 2004). Preliminary evaluation of the new routes indicate a very positive return on funds invested.

Broadband

An update to the Executive's broadband strategy Connecting Scotland - Our Broadband Future was published in December 2002, highlighting the mixture of demand and supply-side activities being supported. These activities included projects raising awareness of broadband and its benefits, as well as trials of alternative technologies to ascertain their potential to delivering access, particularly to more remote areas.

Since the update, the Executive has been developing its new 24 million broadband initiative. Measures currently implemented under this additional package are, firstly, the Scotland-wide 'business broadband incentive', which is providing a grant to businesses wishing to take up a broadband connection; and, secondly, a generic marketing campaign on broadband which is raising demand for broadband and thereby strengthening the commercial case for supply. These measures helped to achieve our aim of at least 70 per cent ADSL-equivalent broadband coverage in Scotland by March 2004, a target that was reached in February 2004. We are also examining opportunities for extending coverage beyond this.

Scottish Schools Digital Network (SSDN)

This is an ambitious and innovative project that builds on the achievements of the National Grid for Learning (NGfL) and forms an integral component of the Executive's broadband strategy - Connecting Scotland, Our Broadband Future. The project is in two phases: the first phase, which has just been completed, has delivered a national broadband interconnect. This brings together all 32 education authorities and a number of national education agencies. The second phase, now under way, aims to procure a national education intranet that will deliver a range of applications, services and resources to teachers, pupils and education managers, all within a secure online environment. Underpinning this commitment to schools broadband is the recognition of the importance of ICT to skills development and the importance of maintaining and developing these skills through lifetime learning

Sustainable Development

The Executive and its partners have actively promoted the incorporation of sustainable development within the business community. The recent initiatives are:

• Energy Efficiency: The Scottish Energy Efficiency Office, in a joint project with the Federation of Small Businesses in Scotland, have produced an 'Energy and Environment Toolkit' for small and medium enterprises. The 'Toolkit' is aimed at businesses with small energy bills, typically less than 10,000, and brings together a range of advice in one place. The 'Toolkit' includes chapters on energy, water, waste, and transport. Over 36,000 copies have been produced to meet demand;
• Sustainable Action Grants: These grants are part of a 6 million three-year Research and Sustainable Action programme and aim to support national and regional projects promoting sustainable development. On 18 November 2003 awards were given to five projects run by, amongst others, the Business Environment Partnership, the Business Council for Sustainable Development and the World Wildlife Fund Scotland;
• Green Jobs Strategy: The PA committed the Executive to "work with business to develop and implement a Green Jobs Strategy" ⁴. Officials are currently working on a consultation document for publication in 2004.

The Green Jobs Strategy is likely to cover two main strands. The first of these is highlighting the opportunities available to new and existing Scottish companies in developing environmental sectors like renewable energy and recycling technology. Diversifying into these sectors could help stimulate the national economy, create and sustain new and skilled jobs, and secure new customers for existing industries like manufacturing.

The second strand is likely to be a focus on supporting businesses to adopt greener working practices - encouraging greater resource efficiency and higher productivity. This will allow Scottish businesses to increase their competitiveness and sustain jobs, while minimising the impact of economic activity on the environment.

The Renewable Energy Challenge

In March 2003, the Executive published its policy document, Securing a Renewable Future. This confirmed that Scottish Ministers had set a target, following consultation, of 40 per cent electricity generation from renewable sources in Scotland by 2020, and outlined a number of actions that would be taken in order to support this ambitious objective. Principal amongst these was the establishment of a Forum to build a partnership between industry, academia and Government, which will enable Scotland to capitalise on its huge renewable energy resource and secure significant economic development opportunities for Scotland. The Forum for Renewable Energy Development in Scotland (FREDS) subsequently met for the first time in October 2003. It will focus initially (via the work of sub groups) on the production of strategies to support the development of wave, tidal and biomass technology in Scotland.

2.5 EDUCATION

One of the Priorities for Action identified in FEDS and the PA is strengthening the basic education system in order to better equip children for the demands of the global economy, particularly through promoting the skills required for lifelong learning and the use of Information and Communication Technology. This reflects the critical contribution education makes towards the enhancement of productivity and hence to the development of the Scottish economy. Education also contributes to another three of the Priorities for Action, namely encouraging a culture of enterprise, reducing social deprivation and improving health by focussing on the opportunities, access and capacity of all people to participate in economic activity.

A number of recent policy developments are outlined below.

Enterprise in Education - Update

The Scottish Executive's Response to Determined to Succeed, published in March 2003, sets out the Executive's strategy to promote Enterprise in Education (E in E). E in E aims to support the transition from education to the workplace and is key to the Executive's commitment to promote an entrepreneurial culture, beginning in schools.

Key features of the E in E initiative are:

• annual enterprise activities for all pupils from P1 to S6;
• every pupil has the opportunity to learn entrepreneurial skills at school;
• work-based vocational learning opportunities for pupils over 14;
• strengthening the links between schools, colleges and workplaces.

The Executive has made available 40 million over three years to deliver E in E: 5 million in 2003-04; 13 million in 2004-05; and 22 million in 2005-06. The bulk of this money will be distributed to local authorities as the key delivery agents.

Delivery of E in E will be supported by various agencies, including Careers Scotland, Learning and Teaching Scotland and the Scottish Qualifications Authority. These agencies will advise on, among other things, a national awards scheme for E in E, a review of curriculum materials, and the development of relevant qualifications.

Additionally, the Executive is working with the private sector - the Tom Hunter Foundation (THF) and Schools Enterprise Scotland - to develop a series of pilot programmes in E in E. An additional 4 million will fund these programmes - 2 million committed by THF and a further 2 million from the Executive.

Working for Families Fund

In December 2003, the Minister for Communities launched the Working for Families fund which aims to assist parents from disadvantaged communities and groups who find childcare a barrier to employment and training. The 20 million fund will be run across 2 years (2004-06) and has been allocated to ten local authorities.

Three target groups for assistance have been highlighted:

• Parents on low income (maximum Child Tax Credit and Working Tax Credit);
• Parents with other stresses in the household leading to difficulties entering employment or training, such as disability, mental health issues, drug and alcohol problems;
• Lone parents pre New Deal; entering employment; trying to retain jobs or improve their hours/earnings; and/or going into further and higher education.

The purpose of the fund is to enable local authorities - through their economic development channels - and their partners to tackle poverty and worklessness in selected areas by ensuring that childcare is not a barrier to parents entering education, training or employment. It is expected that they will achieve this through consultation with partner agencies, including Childcare Partnerships, Jobcentre Plus, enterprise agencies, Registered Social Landlords, and the involvement of organisations representing users and potential users of the services to be provided. The resources available are to be used to develop the quality and/or quantity of local services to deliver real and substantial improvements for the target group which can be set out and measured against baseline information, and focus upon movement into, or towards, employment.

The Future Learning and Teaching (FLaT) Programme

The programme aims to encourage schools and education authorities to create a learning and teaching environment for the future. The programme should be sensitive to individual needs, promote attainment, and tackle the barriers to inclusive learning and teaching in the community. It has been established to support and encourage pilot projects that challenge the current concepts of schools and explore new ways of learning and teaching. Pilot projects currently receiving support include those dealing with curriculum flexibility, ICT innovation, school design, enterprise and EQ (Emotional Intelligence).

Integrated Children's Services

Good quality, easily available childcare is critical not only to the development of children but also in assisting parents to return to work or to develop their career. In addition to the money invested through the Executive, parents will also benefit from an increase of 180 per year in the child element of Child Tax Credit, to 1,625 per child per year, and the promotion of provision of employer supported childcare with new measures to be implemented in April 2005, both of which were announced by the Chancellor in the Pre-Budget Report .

For Scotland's Children, launched in October 2001, reported the findings of a multi-disciplinary Action Team seconded to the Executive to look at ways to better integrate children's services. The Scottish Executive has reaffirmed its commitment to work with local statutory and non-statutory agencies to tackle the barriers to effective joint working and to aim to deliver world class services for children. Funding through the Changing Children's Services Fund to assist local agencies to re-configure and enhance their services for children will increase from 44.5 million this year to 65.5 million by 2005-06.

The Executive has also consulted on a draft Integrated Early Years Strategy, which aims to draw together and enhance existing support for children and families during the crucial early years from pre-birth to age 5. The Scottish Budget 2003-06 provides substantially increased funding for early years services through Sure Start Scotland, rising from 23 million this year to 50 million by 2005-06, and the Childcare Strategy, with funding rising from 19.3 million this year to 40.7 million in 2005-06.

School Estate - Update

The three PA commitments touching on the school estate are:

• The Executive will develop the largest ever school building programme in Scotland's history, renewing 200 more schools by 2006, rising to 300 by 2009;
• These schools should be available to the whole community and include high quality facilities for drama, music, sport, IT and in secondary schools, science laboratories;
• New schools should demonstrate commitment to the highest design and environmental standards. ⁵

The strategy is complemented by the biggest ever school building programme in Scotland which includes Executive financial support as follows:

• school Public Private Partnership projects offered revenue support in 1998 which have provided 79 new or refurbished schools at a capital value of around 530 million;
• revenue support announced in 2 tranches in June 2002 and March 2003 for further school Public Private Partnership projects with a capital value of some 2 billion;
• the Schools Fund capital grant of 36.7 million in 2003/2004 and 76.7 million in each of the financial years 2004/2005 and 2005/2006;
• 3 million to local authorities to develop school estate management plans in 2003;
• the general capital resources available to authorities under traditional funding arrangements.

Implementation will be based on continued SE/LA partnership over the long term. Central to this process will be the development of school estate management plans by local authorities, which set out realistic and prioritised options for improving the school estate. The Scottish Executive, in taking national decisions, will take account of wider priorities and available resources, and be informed by the picture of the school estate identified in the management plans.

Tackling Youth Crime - Update

Youth crime creates significant costs for society. Not only are people directly affected by becoming victims of crime but the wider community also suffers if people live in fear of crime. High levels of crime will inhibit investment and reduce property values. Moreover, these costs fall disproportionately on disadvantaged communities.

The Executive aims to lower the number of persistent young offenders by 10 per cent by 2006 from the 2000-01 levels. The Executive has launched a Ten-Point Action Plan to tackle youth crime in Scotland. The plan recognises the strength of the existing youth justice system and identifies areas for further improvement, in particular combating persistent offenders, enhancing community safety and improving the effectiveness of the system.

As a result of the Scottish Budget the allocated funds rise to 33 million by 2005-06. Ministers and officials are working with key external players - including the police, local authorities, victims groups and voluntary sector - to ensure that targets to reduce the number of persistent young offenders are met. The Executive has now introduced an Anti-Social Behaviour Bill into Parliament which contains measures which will help to reduce anti-social behaviour in Scotland's communities, with some measures aimed particularly at the small minority of young people who contribute significantly to these problems. These include:

• extending the Youth Court initiative to a second sheriff court;
• doubling to 6,000 the number of young people who will have to face up to their offending through 'restorative justice' projects;
• ensuring that support is given to implement national standards by 2006 so that every children's hearing can achieve 'fast track' performance.

Closing the Gap - Update

The Scottish Executive is committed to Closing the Gap by promoting equality, inclusion and diversity and reducing structural inequalities of opportunities, expectations and outcomes. Initiatives which contribute towards this priority are described below:

• Reducing class sizes: The Partnership Agreement contains a commitment to increase teacher numbers to 53,000 by 2007. The additional teachers are to be targeted on reducing class sizes to a maximum of 25 in P1, to reduce class sizes in S1/S2 maths and English to a maximum of 20 and to increase the number of specialists working across the primary/secondary boundary;
• Mainstreaming and Accessibility: A key feature of the national priorities for education in Scotland is to promote equality and help every pupil benefit from education, with particular regard paid to pupils with disabilities and Special Educational Needs (SEN). The Executive is consequently committed to maximising participation of children with SEN in mainstream schools with funding being made available through the National Priorities Action Fund Inclusion Programme of 20 million in 2003/04, 25 million in 2004/05 and 25 million in 2005/06.

In addition, to enable more children with SEN to participate in mainstream education, many schools will have to be made more accessible. To enable these adaptations, the Scottish Budget 2003-06 provides funding for Accessibility Strategies of 9 million in 2003-04, 17 million in 2004-05 and 17 million in 2005-06. Education authorities can also use other funding sources for the purposes of mainstreaming. For example, capital resources for school buildings' refurbishment and improvement along with Public Private Partnerships (PPPs) projects can also be used. Access can be improved by taking SEN into consideration when planning and designing the layout of refurbished areas or new buildings.

National Cultural Strategy

The National Cultural Strategy was launched in August 2000 to:

• Promote creativity, the arts and other cultural activity;
• Celebrate Scotland's cultural heritage in its full diversity;
• Realise culture's potential contribution to education, promoting inclusion and enhancing people's quality of life;
• Assure an effective national support framework for culture.

The third annual report of the National Cultural Strategy was published on 28 November 2003 ⁶. It reported a wide range of announcements, investments and projects, right across the cultural spectrum. These included the promotion of Scotland, through its culture; the launch of a new major events body, EventScotland, signalling more high profile showcases coming to Scotland; the successful completion of the first phase of the 30 million Royal Scottish Academy refurbishment in Edinburgh, a world standard venue now able to stage exhibitions on a grand scale; and record-breaking audience figures for the capital city's 2003 Summer festivals.

2.6 RURAL SCOTLAND

Rural Scotland is one of the key thematic areas highlighted in the original FEDS report. The preferred definition of Rural Scotland is the Core Definitio ⁷, where settlements with a population under 3000 are classed as rural. This can then be extended to allow distinctions between accessible and remote rural areas. Under the Core Definition, Rural Scotland accounts for 98 per cent of the nation's land, and 19 per cent of the population.

Events in recent years have helped to highlight the relationships and linkages between the rural and urban economies, as well as providing further evidence of the diversity within Rural Scotland. Rural Scotland is far from being a homogenous area, and the Executive is continuously improving its understanding of intra-rural differences, by improving the rural evidence base to inform our understanding of the numerous linkages. Building this understanding is essential to continue the work that started in the inaugural term of the Scottish parliament to deliver the policies and programmes necessary to support and enhance the rural way of life within the framework of a modern Scotland.

Rural Scotland: A New Approach

This was published in May 2000, and set out Ministers' vision for Scotland's rural areas. It identified support for rural economic development and improved access to services as key themes for all Departments and Agencies. In addition, the PA reaffirmed the Executive's commitment to rural Scotland and contained the overarching commitment that,

" We will ensure that rural and remote communities have their distinct needs reflected across Government policy and initiatives". ⁸

The Executive's first report on progress towards the achievement of Ministers' vision for rural areas was published as Rural Scotland: Taking Stock in March 2003. It contains details of action taken - by all Departments and Agencies - that enhances rural life, rural communities and the rural economy. The report includes examples of action taken to support business growth, to connect rural businesses with customers and suppliers, to improve the accessibility of lifelong learning, and to support key sectors of the rural economy such as farming, fishing and tourism.

Efforts to improve access to services continue, and September 2003 saw the publication of Innovative Methods of Service Delivery in Rural Scotland: A Good Practice Guide containing information about examples of best practice in the provision of services to remote and rural communities. Examples of innovative service provision from across Scotland were included in the guide, grouped under the four themes of: mobile service provision; the use of new technology; the development of community run services; and the sharing of premises.

All of these reports are now available from the Rural Community Gateway Website ( www.ruralgateway.org.uk) - a new website, funded by the Executive, that enables rural communities across the country to stay in touch with the latest news and to share their experiences of tackling local issues.

Evaluation of Scottish Rural Development Plan

As part of European Council Rural Development Regulation, the Scottish Rural Development Programme was approved on 6 December 2000 and runs from 2000 until the end of 2006. The programme has schemes to support less favoured areas, afforestation, and agri-environment and over its lifetime will be worth around 685 million (funded by the Scottish Executive and the European Commission). One of the requirements laid out in the Rural Development Regulation is that member states must evaluate their programmes. The mid-term evaluation was completed in December 2003.

Following the publication of A National Strategy for Farm Business Advice and Skills in February 2003, a new system of farm business support is being developed with the aim of being launched by summer 2004. There will be two strands to the support; a system for conducting Whole Farm Reviews aimed at improving farm business performance is being piloted. Alongside local and national partners SEERAD had active involvement in the development of a Farm Benchmarking Activity. The overall aim of the scheme is to offer practical assistance to farmers to identify strengths and weaknesses of their current business and to identify areas where business performance can be enhanced.

Reform of the Common Agricultural Policy

In June 2003 the EU Agriculture Council agreed a package of reforms to the Common Agricultural Policy (CAP). The objectives of the deal are to make agriculture more responsive to the market place and reflect the wider environmental and rural aims of the EU. The main elements of the package are decoupling and modulation. Decoupling is designed to break the link between subsidies and production, while modulation moves funds from agricultural activities towards supporting environmental and rural schemes.

Following a three month consultation process the Executive announced on 12 February 2004 how the reform of the CAP will be implemented in Scotland. The three key decisions on high-level implementation issues are:

• Full decoupling with the new single farm payment based on historic payments in the reference period 2000-2002;
• The use, in principle, of a national envelope for the beef sector - to address short-term market issues and the environmental and social concerns from loss of cattle in certain areas;
• The intention to have a combined EU and national modulation rate of at least 10 per cent by the end of 2007 - subject to review later this year once the provisions of match funding are known.

The reform package will help the Executive achieve its objectives of a market-oriented, sustainable agriculture sector, by allowing Scottish farmers to do what they deem appropriate for their own business circumstances. Though this will be subject to meeting environmental and good farming practice standards.

England, Wales and Northern Ireland have also announced how they will implement the reform package. The decisions vary by each of the agricultural departments, reflecting their own strategic objectives, priorities and the individual characteristics of the agricultural sector in each country.

Animal Health and Welfare Strategy

Major outbreaks of animal disease, and the control policies used to contain them, have widespread adverse implications for animal health, welfare and productivity. In conjunction with DEFRA and the Welsh Assembly Government, the Scottish Executive is working to produce an Animal Health and Welfare Strategy for Great Britain. As part of this process the Executive published on 12 December 2003 the Scottish Implementation Plan.

One of the key items of new work emerging from the Implementation Plan is the commissioning of research on the costs and benefits of disease control. The outcome of this research will feed in to a wider programme of work aimed at promoting animal health planning and will be an invaluable contribution to support farmer decision-making.

In terms of broader rural development, the Land Reform (Scotland) Act will remove land-based barriers to sustainable development of rural communities. This will be achieved via increased diversity in the way land is owned and used and through increased community involvement, providing opportunities for crofting and other rural communities to purchase land if they wish to do so. The objective is that the transfer of ownership to those with a vested interest in the sustainability of the community will allow local decisions to be taken for broader economic, rather than purely commercial motives and in turn this should lead to economic benefits. The Community and Crofting Community Rights to Buy, in Parts 2 and 3 respectively of the Act, are expected to be commenced during the Spring of 2004.

In December 2003, Scottish Ministers launched the Review of Land Managed by Forestry Commission Scotland, "…to take stock of our national forest estate and ask whether its current size, nature and geographical distribution are appropriate for the 21 ^st century."

Footnotes to Chapter 2

1. A Partnership for a Better Scotland - Scottish Executive May 2003; p5

2. Ibid. p4

3. Ibid. p37

4. Ibid. p6

5. Ibid. p25

6. Scotland's National Cultural Strategy - Annual Report 2003, Scottish Executive (www.scotland.gov.uk/library5/culture/sncs03-00.asp

7. An article outlining why the Core Definition has been adopted as the preferred definition was published in the Scottish Economic Report in June 2001 and can be found at http://www.scotland.gov.uk/library3/economics/2/ser-36.asp.

8. PA. p14

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