Scottish Government

ISBN 0 7559 1184 9 (this ISBN applies only to online version of document)

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INTRODUCTION

The Partnership Agreement ¹ commits the Scottish Executive to "bring together Scotland's business and Scotland's politicians to develop ideas and maximise the drivers for growth".

To help achieve this, the Scottish Executive and the Scottish Parliament work in partnership to engage with business in the Business in the Parliament Conference. The main aim is to engage the business community in continuing to grow Scotland's economy, focussing on the key themes of A Smart, Successful Scotland and feeding business views into the policy making process.

Following the first conference on 22 and 23 April 2004 the Executive produced a written response to the main issues raised by business. ² The second Business in the Parliament Conference will take place on 8 and 9 September 2005.

This document provides an update on areas where progress has been made and is intended to help inform discussions in September 2005. Questions about the Business in the Parliament Conference or about this report may be sent to businessintheparliament@scotland.gov.uk.

On Scotland planning for growth

The Executive published its Framework for Economic Development in Scotland (or FEDS) ³ in 2000, setting out a strategy for raising productivity in the public and private sectors, and growing the Scottish economy. Just like any good business, we keep our strategy under review. By 2004, the domestic and international economic and policy contexts had moved on and, in recognition of that, we revisited and refined the Framework, bringing the supporting analysis up to date.

The revised Framework identifies the key drivers of economic development as:

• basic education and skills;
• research & development and innovation;
• entrepreneurial dynamism;
• the electronic and physical infrastructure; and
• managing public sector resources more effectively.

Success of this Framework will lead to increased competitiveness, to greater entrepreneurial dynamism, to higher business birth rates and greater business investment. Success will also be measured by high employment rates for all age and skill groups.

Following the refresh of FEDS the Executive published the refreshed ASmart, Successful Scotland (or SSS) ⁴ in November 2004, reworking the key priority areas in FEDS into our enterprise strategy. Within the refreshed SSS the three main themes of growing businesses, skills and learning and global connections remain key.

We have interpreted these themes in the light of changing challenges and opportunities to ask the enterprise networks:

• focus on growing businesses as much as start ups
• have an increased focus on sustainable development
• become more involved in regeneration and recognise city regions as the drivers of economic growth
• work in partnership with other agencies to tackle economic inactivity and get more people into jobs.

We will continue to measure progress towards A Smart, Successful Scotland against the existing set of indicators, together with an additional headline measure, designed to give an indication of the sustainability of economic growth.

On wider buy-in to A Smart, Successful Scotland

The refreshed SSS has broadened from its original role as strategic guidance to the enterprise networks to serve as an enterprise strategy for all of Scotland. Executive agencies and NDPBs will be directed on how they should contribute to SSS to ensure that the whole of the public sector contributes to its aims. SSS emphasises the need to release the potential in our cities and towns through regeneration projects, and Scottish Enterprise and Communities Scotland have been asked to draw up a memorandum of understanding that will enable them to deliver on this aim in an integrated way toward achieving our targets for closing the opportunity gap. Highlands & Islands Enterprise will draw up a similar memorandum suited to the circumstances of their different geography.

In addition, funding for Determined to Succeed ⁵, our strategy for enterprise in education, has been increased by £44m from 2006 to 2008 giving a total of £86m over 5 years.

On business rates in Scotland

Since devolution our policy at revaluations has been to ensure that income from non-domestic rates is maintained in real terms. This time we have gone further and chosen not to maintain the income in real terms, using a below Retail Price Index ( RPI) inflation figure of 2 per cent. The 2005 Revaluation has shown that, on average, rateable values have increased in Scotland by 13.3% and in England by 17.7%.

The increase in average valuation is offset by a reduction in the rate poundage to maintain rates income in cash terms at the revaluation. An allowance for losses on appeals is also factored into the poundage calculation. The effect of the 2005 revaluation is therefore to redistribute the tax burden within Scotland but is effectively a reduction in rates burden overall. This is better than the position in England where the rates income has been maintained in real terms.

As rateable values have increased on average by less in Scotland in comparison to England a greater cut is possible to the English poundage rate [41.5p down from 45.6p as opposed to 46.1p down from 48.8p] to maintain the English rates yield in real terms.

To reduce the poundage rate to similar levels in England, and reduce Scottish business rates further, would require substantial additional subsidy from the Executive. Aligning 2004-05 poundage rates would have cost around £122million; for 2005-06 likely to cost around £200million. The Executive is keen to work with, and listen to, the business community to examine the impact of the poundage rate on competitiveness of business in Scotland.

In terms of business competitiveness all costs need to be considered; not just one element of costs. Rates at 2% of Scottish business turnover are a small element of total business costs - unlikely poundage rate will be a decisive factor in many relocation decisions. Employment costs represent a much more significant element of total business costs; such costs are on average lower in Scotland compared to England.

Increased capital investment in public services was a particular feature of the outcome of the Executive's 2004 Spending Review. The Executive has significantly increased its investment in public services such as road maintenance, education and training, much of which benefits business directly or indirectly.

On the claim culture and public and employers' liability insurance levels

This is a reserved matter and the Department for Work and Pensions is the lead Whitehall department for Employers' Liability Compulsory Insurance ( ELCI). A review of ELCI⁶ was published in December 2003 summarising the work the Government has done in this area with the business community and others and sets out areas for further action.

The Government has improved access to guidance and information on ELCI via the Business Link website ⁷ and put in place a number of initiatives aimed at improving the way in which the employers' liability market functions. This includes action on longer renewal periods by insurers and brokers and a scheme called 'Making the Market Work' to help trade associations and others to access the insurance market more easily.

In addition the Health and Safety Executive ( HSE) has developed a Health and Safety Performance Indicator for SMEs. ⁸ A key aim is to help insurers identify good health and safety performers (the ELCI Review identified insurers said they had no previous practicable means of doing so). In turn this enables insurers to recognise good performers when insurance terms are set. In developing the indicator HSE worked closely with key stakeholders including the Small Business Service and the FSB. Hosted by DTI's Small Business Service, ⁹ the indicator was launched in January 2005.

In the longer term, DWP is looking to assess the case for changes to the current system for funding "long-tail diseases" (long-term occupational diseases) and assess the case for extension of ELCI enforcement powers to Local Authorities.

On 23 June 2005 the Office of Fair Trading ( OFT) published a follow-up report to its June 2003 fact-finding study into the UK liability insurance market. The OFT have looked at public, product, professional and employers' liability insurance, and examined why premiums have increased and the way in which the market is working. The 2003 study identified a number of concerns but found no evidence of collusion or anti-competitive practices and concluded that the market had not failed.

The follow-up report has found that the average premium rises in 2004, while still ahead of inflation, have fallen significantly. The number of businesses denied renewal of cover have also fallen significantly, and those sectors identified in the 2003 report as finding difficulties in obtaining adequate cover have experienced improvements in both the availability of cover and lower than expected premium increases. The OFT expect that there will continue to be cost pressures and say that it will be important to continue on work on initiatives to improve the functioning of the market.

The Department for Constitutional Affairs is coordinating a programme of work across Government in response to the Better Regulation Task Force report "Better Routes to Redress" ¹⁰ to tackle perceptions of the existence of a compensation culture and improve the compensation system in relation to all areas of liability, including employers' liability. The key objectives of this work are:

• To tackle perceptions that can lead to a disproportionate fear of litigation and risk-averse behaviour, while finding ways to discourage and resist invalid claims.
• To improve the compensation system for those with a valid claim by providing fair compensation in a more proportionate and cost-effective way.

There will be a wide range of outcomes from this programme of work. These will include a Compensation Bill which will regulate the activities of claims management companies and will clarify the existing common law on negligence to make clear that those who take reasonable care or exercise reasonable skill cannot be held liable for untoward incidents.

On encouraging productivity, economic growth and innovation

The Partnership Agreement notes 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."

Following on from there, FEDS notes that the primary challenge in the Scottish economy is to establish an accelerated and sustainable rate of economic growth. Achieving this depends fundamentally on raising the underlying productivity of both enterprises and the public sector. FEDS also identifies R&D and innovation as the foundation for improvements in productivity and for sustainable global competitiveness.

Productivity, economic growth and innovation also remain key aspects of the refreshed SSS, which has increased focus on growing existing business so that Scotland has more companies of scale. This aim sits alongside the important work on increasing business start-ups and encouraging entrepreneurship and enterprise. We are clear that all enterprise network activity should have a primary economic rationale, but in driving for economic growth the networks must also seek to close the opportunity gap as an integral part of their activity.

Mechanisms are also in place to ensure public sector agencies support businesses in increasing productivity, economic growth and innovation. These include the Business Gateway ¹¹, providing a single access point, in the Scottish Enterprise area, to public sector business support. Single access to business support in the Highlands and Islands is delivered by Highlands and Islands Enterprise ¹². Local Economic Forums ¹³ bring together public sector agencies and representatives of the business community to focus on issues relating to local economic development including local public sector business support services. This work is continuing.

The public sector is also committed to increase productivity as set out in "Building a Better Scotland: Efficient Government - Securing Efficiency, Effectiveness and Productivity" ¹⁴ published in November 2004.

This plan contains measures to deliver £745million of annually recurring cash-releasing efficiency savings and £300million of recurring time-releasing efficiency savings in the public sector by 2007-08. Our aspiration is to achieve more - £900m of cash releasing savings and £600m of time-releasing efficiencies by 2007-08, but we can only confirm these figures when we have completed our detailed evaluation.

On developing a shared agenda across the public sector

The Framework for Economic Development in Scotland makes clear that the whole of the public sector has to pull in the same direction if we want to achieve our growth objectives. Local government and public agencies are fully aware of the Executive's top priority of growing the economy and it is vital to maintain a culture that is supportive of our economic agenda throughout the Scottish public sector.

The refreshed A Smart, Successful Scotland document is informed by, and dependent on, FEDS. It also makes very clear that the enterprise networks must work in a spirit of partnership to harness the expertise and co-operation of others - both in the private and public sector - so that Scotland's economic players work together to maximise our economic potential.

For example, on 9 February 2005, Ministers announced their objectives for the Water Industry in Scotland for the period 2006 to 2014. These objectives are based on decisions taken in the light of two consultations published in summer 2004: "Investing in Water Services 2006-14" and "Paying for Water Services 2006-10". High level objectives are:

• To achieve the maximum affordable improvements in public health and environment protection standards;
• To support housing and our top priority of economic growth in communities across Scotland through investment in new strategic capacity; and
• To achieve these two outcomes on the basis of charges that are affordable, stable across the period and sustainable in the long term.

Estimates of costs to meet these objectives have been produced by Scottish Water. Scottish Water's economic regulator, the Water Industry Commissioner, is considering these and will publish a draft charges determination on 30 June 2005. Following a period of consultation, the Water Industry Commissioner expects to publish his final charges determination in November 2005.

On improving public sector procurement

The fundamental objective of public procurement is to achieve value for money for the taxpayer.

The Executive recognises the need to ensure that Scottish businesses, particularly SMEs, have the opportunity to compete on an equitable basis for public sector business. Our e-procurement Scotland ( e-PS) programme ¹⁵ continues to provide a single interface between suppliers and participating public bodies which makes it easier (and cheaper) for both suppliers and buyers of goods and services. The e-procurement Scotland service streamlines purchase to pay processes, reduces transaction costs to a minimum and facilitates on-time payment. To date approximately 4000 businesses are connected and conducting business with over 40 Scottish public sector organisations through e-PS.

The Executive, working in partnership with Health and Local authorities and representatives of the business organisations, has developed an Action Plan to make it easier for suppliers, particularly SMEs, to compete for public sector business. We are now in the process of implementing the plan which includes increased advertising of contracts, development of a model questionnaire and of a "Code of Conduct" between public sector procurement and business. We have a section on our website ¹⁶ that provides advice and guidance on selling to the Executive and advertises contracts being let by the Scottish Executive. An electronic form on the site enables those interested in selling to the Executive to register their interest.

Our Scottish Procurement Directorate Toolkit ¹⁷ has just been published. This must be followed by the Executive's Departments, Agencies and sponsored bodies and sets out procurement policy and procedural guidance closely aligned to the wider Executive's policy ambitions including those on quality, sustainability, equality and health and safety.

Within its procurement guidance, the Toolkit includes clear direction to public sector clients about whole-life value for money assessment, design and sustainability, health and safety responsibilities and workforce-related selection criteria.

The Toolkit also promotes the use of trained workforces and encourages procurers to take this into account in their selection procedures. To help ensure appropriate quality issues are addressed, it advises public sector clients to seek evidence of appropriate accreditation schemes during selection processes

Our Infrastructure Investment Plan, published in February this year, gives Scottish business sight of the nature, value, and timing of all investments requiring a market response. It identifies the priorities for infrastructure investment in Scotland and how, what, why and when the major investments in Scotland's future are taking place for each Ministerial Portfolio.

It also explains how the Executive intends to deliver this significant increase in infrastructure investment including: improved coordination between the public and private sectors in terms of construction and project delivery, funding methods; and commitment to development throughout all of Scotland.

The Infrastructure Investment Plan shows a consistent high level of investment over the next ten years. The Executive will increase capital spending by more than five per cent, in real terms each year, from 2005 to 2008. The Plan will be implemented through a "mixed economy" of funding - public sector capital spending, partnership arrangements, PPPs and a prudential regime.

On Scottish regulation

The Executive continues to work to control the impact of regulatory measures on business and, in doing so to work closely with Cabinet Office who are responsible for these matters at UK level.

The Executive's Improving Regulation Unit continues to work closely with businesses and their representative organisations ensuring their needs, particularly small firms, are kept to the forefront of policy making across the Executive. We have introduced a Regulatory MOT and the micro business test. The Regulatory MOT ensures each regulation remains fit for its purpose and its continuation is justified. The micro business test is a refinement of the small business test which forms part of the Cabinet Office basic requirements and was introduced in recognition of the dominance of very small companies in the Scottish economy. This work will continue.

The Subordinate Legislation Committee of the Scottish Parliament launched its first inquiry into Regulation early in 2004 - entitled "An inquiry into the regulatory framework in Scotland" to look at the overall structure and operation of the regulatory system in Scotland. The formal remit of the inquiry is: - "To examine the regulatory system in Scotland in its devolved, UK and EU aspects, to determine its main characteristics and compare it to the best regulatory practice elsewhere. The committee wants to learn what scope there may be to improve devolved regulation and to consider the implications for parliamentary scrutiny."

Initial plans are that the first element of the inquiry will take a year to complete. It is anticipated that the first stage of the inquiry will concentrate on the regulatory framework for Scotland while the second year-long stage is expected to focus on Statutory Instrument work.

The Small Business Consultative Group, which consists of representatives from the five major business organisations, meets quarterly and is chaired by the Deputy First Minister. The group aims to ensure regular collective dialogue between the Executive and the small business community. A sub-group has now been formed to look in greater depth at regulation. This involves selecting specific areas of regulatory activity and examining their purpose, objective, implementation and enforcement, the impact on business costs, and overall effectiveness. This information is then used to inform the bigger de-regulation picture which is fed back to the SBCG meetings. This work will continue.

On Westminster and European regulation

The Executive is committed to ensuring that Scottish interests, including those of the business community are taken into account in the development of policies in Europe and Westminster. We also support the principle of Central and Local Government and their agencies being open to business. The Executive's Improving Regulation unit produced its first annual report, published in December 2004, which sets out the activities of the Improving Regulation unit and the recognition given to the interests of the business community in the wider Executive.

The Hampton Review is a UK wide initiative to co-ordinate regulators across a number of Agencies. The Chancellor of the Exchequer asked Philip Hampton (June 2004) to examine the scope for promoting more efficient approaches to regulatory inspection and enforcement.

Hampton asked businesses' views on inspection and enforcement regimes - with a view to making improvements. The Executive maintains close contact with the UK Government and met the Hampton Team on several occasions. The Report largely relates to UK reserved areas or to England. Some of the reserved issues are however of vital importance to Scottish businesses.

All studies show that vast majority of red tape burden on Scottish businesses falls in areas which have EU or UK legislative base, therefore we warmly welcome measures which help business in these areas. We will work closely with Whitehall colleagues to ensure Scottish business needs are reflected as these proposals are worked through. This work will continue.

On public sector impact on the economy

Public policy can support the dynamism of the private sector in a number of ways, including: targeted business support; the provision of education, training and skills; the creation of incentives to raise productivity and competitiveness; and investment in the physical and electronic infrastructure that is necessary to support and enhance economic growth.

The Scottish Executive's Efficient Government Plan is aimed at making government more efficient - having the right staff with the right skills and in the right numbers working in the right way.

On developing labour market skills and information

There are hard-to-fill vacancies in SMEs, but it is not likely that this is as a result of skills shortages. According to the Scottish Employer Skills Survey 2004 ¹⁸ (or SESS), carried out by Futureskills Scotland, some 25% of vacancies were hard to fill due to skills shortages, which is a slight increase on last year but still represents only 1.7% of employees in Scotland. Businesses themselves recognise that many positions are hard to fill for other reasons such as poor pay or conditions offered.

Some industries have more hard-to-fill vacancies than others and SMEs feel the effects more acutely. We are continuing to work to ensure that labour supply is more closely matched to labour demand, including:

• Scotland's labour market intelligence unit, Futureskills Scotland, working with Careers Scotland to match the right people to the right jobs at the right time.
• Sector Skills Councils - playing a role in reducing skills gaps and shortages by working in partnership with their sector's employers, Futureskills Scotland and partner organisations to help identify and address current and future skills needs of their sectors.
• Some 34,000 Modern Apprentices training in Scotland.

Reports on the Supply and Demand of Further Education in Scotland ¹⁹ - at national and area level were published in April 2005 on behalf of the Scottish Further Education Funding Council ( SFEFC). The reports represent the most comprehensive analysis of FE demand, need and supply since the formation of SFEFC in 1999. An Advisory Group of key stakeholders supported the study.

The report found that:

• employers are satisfied with provision by FE colleges;
• demand for FE is buoyant and is outstripping supply in some areas;
• demand for FE comes from many competing groups and individuals with different interests, including the skills needs of employers, people seeking access to adult numeracy and literacy programmes and school-leavers; and
• since the 2002 study FE colleges have successfully collaborated, resulting in significant changes in the way colleges work together.
• The report also highlights challenges that the merged Funding Council, colleges and other partners will need to address, including:
• what the role of FE colleges and other providers will be in meeting the needs of people from deprived groups and communities;
• what the role of further education is in preparing Scotland for demographic change;
• how far the FE system should grow to meet Scotland's economic and social needs; and
• what kinds of provision should be the priority for public funding.

SFEFC is now working on the issues arising from the report with colleges and other stakeholders.

A significant proportion of higher education is focussed on developing skills to meet labour market demands, delivering specialist degree and other courses ranging across all industry and professional groups, These range from engineering and construction to hospitality and the performing arts, architectural technology and computing to journalism and communication studies.

More generally, higher education enables learners to develop a range of high level transferable skills and abilities which are much valued in the workplace. Higher Education Institutions also make a direct contribution to the debate on public policy on skills and education through a range of research activities.

On average, those with an HE qualification benefit from significantly higher levels of lifetime earnings than those who do not hold such a qualification. We are looking for improvements in the numbers accessing higher education from all sectors of society especially those from the most economically disadvantaged groups, including those not in employment but who wish to participate in the labour market.

As well as providing newly qualified individuals who can be recruited by employers, HEIs and colleges can provide employers with a range of HE options for improving the skills of their existing workforce. These include flexible postgraduate study options and more general continuing professional development courses. In addition much of the thinking about the benefits of and approaches to upskilling emerge from HE research.

On ensuring school curricula make the experience of education business relevant and effective for pupils

The curriculum in Scotland is currently being reviewed. The first stage of the review culminated in the publication of A Curriculum for Excellence ²⁰ in November 2004. This established the principles and purposes for a single coherent curriculum for ages 3-18. The commitments arising from A Curriculum for Excellence will be taken forward in a phased programme of work during the 2004/05 to 2006/07 academic years.

The programme of work will include: a critical analysis of existing guidelines against the principles and purposes identified in A Curriculum for Excellence; development of initial outline guidelines for the 3-15 curriculum, with an eye to the implications for ages 15-18; and engagement with schools and others (which may include employers) to test the assumptions made in creation of the initial outline guidelines and to provide a basis for improvement and the development of appropriate support materials. ²¹

In addition, Determined to Succeed, the Executive's strategy for enterprise in education, is being delivered through the curriculum to ensure that young people have the skills, knowledge and confidence needed to be ready for work. Business and education working together is a key element in the success of this strategy.

On access to/take up of broadband

The Executive is committed to extending broadband connectivity across Scotland. Great progress has been made - increasing coverage from just 43% in late 2001 to 96% now, with that figure to reach around 97-98% by July 2005. We are keen to ensure that broadband opportunities are extended to businesses and households across the country, even where it is not feasible to provide it commercially. In April 2005 we completed an open procurement exercise - and signed a contract with a supplier ( BT) - which will deliver affordable broadband access to every Scottish community by the end of this year. ²² This intervention will help to maintain our global competitive advantage and prevent a digital divide in Scotland.

The Executive recognises that take-up and effective use are key factors to maximising actual broadband benefits. We have implemented substantial demand-side measures targeted at small and medium sized businesses including a Scotland-wide award-winning marketing campaign, an impartial information website ²³ and a broadband business incentive/grant scheme. These have greatly increased interest in broadband and contributed to an estimated trebling in business take-up from 13% two years ago to around 37% now.

On usage, the Enterprise Networks e-demo centres ²⁴ continue to provide SMEs with free and impartial broadband advice and demos of equipment, software and technology, and there is extensive online support - including a self-assessment tool, available through the enterprise agencies' websites.

On transport infrastructure

We have set out a major £3bn programme of investment in roads and rail in detail in the White Paper of June 2004, Scotland's Transport Future. This includes new rail links to Edinburgh and Glasgow airports, reopening the Stirling-Alloa-Kincardine rail link, trams in Edinburgh, completion of the central Scotland motorway network and targeted trunk road improvements. The new transport agency, which will be up and running by the end of 2005, will have responsibility for driving these forward to delivery.

Our current plan for transport infrastructure investment was set out in the White Paper of June 2004, Scotland's Transport Future and runs into the first half of the next decade. The Strategic Projects Review will commence before 2007, and provide the Executive with the opportunity to consider the next long-term transport investment plan, which will prioritise the transport infrastructure requirements to support Scotland's growing economy far beyond 2010.

On projecting Scotland in the world marketplace

There have been some encouraging independent studies in recent months rating Scotland highly against European and global competitors. FDI Magazine, published by the Financial Times, awarded Scotland the title of 'European Region of the Future' in October 2004 among 140 entries from across Europe. In early 2005 Scottish Development International ( SDI) was also declared the 'world's most consistently high performing investment promotion agency' in a survey of 178 agencies conducted by leading business consultancy GDP Global Development on behalf of the Multilateral Investment Guarantee Agency of the World Bank.

More generally, the Executive continues to work to build strong and effective connections with international partners. We have developed European and International Strategies, framework documents which set out the context of our international activities, which initiatives are being taken forward to promote Scottish interests, and to ensure Scotland plays its part in the international community. We continue to strengthen the emphasis we place on coordination between agencies and in strengthening the delivery of initiatives. We aim to establish multi-year delivery plans for international activity to ensure that agencies are well informed about Executive intentions and that their plans can be coordinated with the Executive's where opportunities allow.

The Executive also recognises the value of interpersonal contact in effective influencing and the creation of sustainable relationships. We continue to co-operate closely with our four partner regions in Europe (Catalonia, Tuscany, Bavaria and North Rhine-Westphalia) and within the networks of regional organisations to which we belong, notably REGLEG, the Group of Regions with Legislative Powers. The Scottish Executive EU Office in Brussels is well placed to interact with all the EU Institutions, diplomatic missions, and the network of regional offices and other organisations who have a Brussels base. The Executive is also represented in Washington and will soon open an office in China.

We are also working to improve Scotland's image and perception to the international community. To complement the skills base and experience that already exists, Scotland aims to attract people from overseas to live, work and study here. This will not only ensure the population stays buoyant but help ensure we have the cultural diversity, innovation, ideas and new ways of thinking to help stimulate the economy and make Scotland the best small country in the world.

SDI, through its global network of offices, is working to build constructive and long term relationships with decision makers in those global companies that are most important for Scotland, because they have major existing links or high potential for future business links. SDI is continuing to develop its network of offices and to enable an increased focus on this activity and enhance market coverage it is significantly increasing its staffing resources in Europe, the Middle East and Africa; the Americas and Asia Pacific.

To help achieve a presence in key organisations overseas the Scottish Enterprise globalscot international network continues to work to harness the talents, expertise and experience of Scots and allies of Scotland throughout the world, and connecting influential people who have links to Scotland and want to contribute to and share in its economic success. Globalscots have made a wide variety of contributions to companies and individuals in Scotland including working directly with Scottish companies to help them access new markets, locate opportunities and gain advice and feedback on their plans and activities. The number of contributions from globalscots is continuing to grow and recruitment has increasingly focused on important growth markets such as China.

The Global Friends of Scotland project also has a diverse network of people who continue to promote Scotland's successful activities internationally - both through personal efforts and through their involvement in other networks - spreading the message of Scotland's current achievements. The involvement of these individuals has helped develop working relationships which are of benefit to Scotland.

Complementing the human network is the Scotlandistheplace.com website which delivers information about contemporary Scotland - its culture, education and business environment to an even wider audience. Emphasis is put on demonstrating that Scotland is a leading small nation to visit, live, learn, work, do business and invest in, with a thriving and dynamic economy; and to encourage and support Scotland's contribution to international development. People seeking specific information and advice about living and working in Scotland can email their enquiries and get a tailored response from the Relocation Advisory Service, including specialist immigration advice.

On renewables and recycling

The Executive believes waste minimisation brings both economic and environmental opportunities and benefits to businesses by cutting costs and improving efficiency. We are keen for Scottish businesses to seize opportunities in providing goods and services to meet the growing demand for recycling and greater waste minimisation. We published Going for green growth: a green jobs strategy for Scotland ²⁵ on 16 June 2005 to highlight the business and employment opportunities arising from the global shift towards sustainability.

To help businesses we support organisations such as Envirowise ²⁶ and the Business Environment Partnership ( BEP) ²⁷. These bodies can provide businesses with free, impartial and confidential help and advice on environmental issues, resource efficiency and sustainable energy solutions. As well as providing tailored on-site advice other initiatives have included a Resource Efficiency toolkit for SMEs, developed in collaboration with the FSB in Scotland.

The UK government will increase landfill tax and the cost of waste disposal for businesses will rise. The Executive acknowledges the need to ensure infrastructure is in place to provide businesses with the opportunity to minimise, reuse and recycle their waste. To ensure that support is available to businesses the Executive has allocated £1.5million in 2005-06 and £1.6m/£2.3m in 2006/07 and 2007/08 to business resource efficiency. To make sure this meets the needs of business the Executive and SEPA have established a business waste minimisation steering group which includes representatives from the business community.

The Executive works very closely with other stakeholders, particularly the DTI and the regulator, Ofgem. Although matters such as the regulation of the electricity industry are reserved to Westminster, the Executive is represented on all key groups that consider issues that impact on Scotland and the energy sector here.

A number of representations on key issues affecting the Scottish energy sector have been made to UK government colleagues which have led to changes being made in the arrangements originally proposed. For example, the Executive successfully influenced the outcome of significant aspects of the new British Electricity Transmission and Trading Arrangements, announced in March 2005. This helped ensure agreement to a "cap" on charges to protect renewables developments in the Islands and parts of the Highlands. The DTI will be consulting on the level of that cap.

The Executive has introduced a £5million fund for community waste sector organisations called the INCREASE Programme ²⁸ which aims to deliver projects in line with the National Waste Plan. There are many opportunities for social enterprise organisations to deliver waste reduction, reuse, recycling and composting initiatives. The Executive is also providing £500,000 per year to the Community Recycling Network for Scotland ²⁹ to allow them to assist the development of such initiatives.

On planning

The Executive published the White Paper "Modernising the Planning System" on 29 June 2005 ³⁰. This set out a package of proposals for thorough and far-reaching reform of the planning system, making the system more efficient and effective, and guaranteeing more opportunities for public participation. Comments on the White Paper were invited prior to the Executive introducing a Planning Bill later in the Parliamentary session.

The proposals set out in the White Paper aimed - in part - to respond to criticisms from business that the planning system was too bureaucratic and inefficient. The proposed measures included introducing a new hierarchy into the planning system, to ensure that applications are treated differently, according to their relative importance. It proposed, for example, that applications of major economic significance could in future be dealt with according to specific timetables agreed between applicants and local authorities. The White Paper also set out a raft of proposals to revitalise development plans and ensure that, suitably up to date and relevant, they could fulfil their potential as the bedrock of the planning system.

In 2001 the Executive issued its first ever Policy Statement for Scotland,Designing Places ³¹. It aims to promote high quality design in the built environment - both in urban and rural areas. This was followed by Planning Advice Notes on Housing Quality ³² and Design Statements ³³ published in 2003. A revision of PAN 36 on Housing in the Countryside has also been carried out (see below). This addressed rural design issues.

On planning in rural areas

As part of the Executive's strategy, in February this year Scottish Planning Policy 15 Planning for Rural Development ³⁴ was published. This was published as part of a package of measures which included Planning Advice Note 73 Rural Diversification, which provides examples of rural diversification projects, a research report on rural typologies and the above mentioned PAN 72 Housing in the Countryside. This policy document sets out a planning vision for rural Scotland to help meet the Executive's overarching policy aim, as published in Rural Scotland - A New Approach ³⁵ aimed at helping create and maintain prosperous rural economies, with a stable or increasing population - balanced in terms of age structure - and with reasonable access to good quality services. The SPP highlights that the economic structure of rural Scotland has changed rapidly in recent years and makes it clear that the differences in the way people earn their living between town and country are becoming less distinct. It draws attention to the fact that more people now live and work in rural areas without being part of, for example, the agricultural economy

Planning's role in advancing the rural vision is to enable and help create opportunities in sustainable locations. The SPP states that planning authorities should support a wide range of economic activity in rural areas. The SPP was prepared in consultation with a core group and wider sounding group of key stakeholders including the Federation of Small Businesses and other business interests. The White Paper proposals will also have relevance for rural areas.

On Fresh Talent

The Executive, in co-operation with the UK Government, has launched the Fresh Talent initiative to encourage talented and motivated people from overseas to come to Scotland to live, work and study. The report New Scots: Attracting Fresh Talentto Meet the Challenge of Growth ³⁶ published in February 2004, sets out the initiative in detail. Since then we have implemented a range of measures to assist individuals aiming to live and work in Scotland including establishing a Relocation Advisory Service, launching the Fresh Talent: Working in Scotland Scheme making it easier for international students to remain and work after they complete their studies, and establishing a dedicated web-site. ³⁷ Enlargement of the European Union from 1 May 2004 has increased the number of foreign nationals with easy access to Scotland and the rest of the UK to work. Where people from overseas are successful in finding legal employment in the UK their rights as employees will generally not differ from those of indigenous employees.