SCOTTISH EXECUTIVE

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Rural Scotland: A New Approach

Chapter 2 Integral, Dynamic and with an Appetite for Change

Jobs and economic prosperity are vital to the well-being of our rural areas. Supporting rural economic development is therefore a key Executive priority. Some parts of the rural economy are doing well, but we need to build on that. We need to recognise rural Scotland's strengths -people who are entrepreneurial and adaptable; industries that have a well deserved reputation for quality; an environment and quality of life which is excellent -and combine them with new opportunities. We must also tackle the problems and barriers which can hinder economic development in rural areas -for example, low pay, seasonality of jobs, distance from markets, a narrow economic base and transport costs.

Future success will be due to the efforts of those who live and work in our rural areas, but the Executive and its agencies will provide better and more tailored support in future.

Framework for Economic Development in Scotland

For the first time, the Executive is developing a Framework for Economic Development in Scotland. We will ensure that the particular opportunities and challenges facing rural Scotland are fully recognised in the Framework to be published later this year.

Role of the Enterprise Network

Highlands and Islands Enterprise (HIE), Scottish Enterprise and their networks of Local Enterprise Companies (LECs) are the Executive's main agents in delivering economic development activities in our rural areas. The increased emphasis on rural development is being driven through them.

HIE is one of the most experienced rural development bodies in Europe. It has played a large part in the rejuvenation of many areas of the Highlands. It is now focusing its efforts on the more remote communities, helping to rebuild them by focusing on traditional strengths as well as using opportunities offered by new technology.

The Scottish Enterprise network has, during the past 2 years, strengthened its efforts in rural areas. The rural LECs now come together to identify the particular needs of the rural economy; evaluate what is being done and ensure that they build on their successes. Examples are set out in the Case Studies on Arran Aromatics and Wigtown - "Scotland's Book Town". Other recent achievements by rural LECs in the Scottish Enterprise areas include the provision of much-needed units for new and small businesses and the funding of college outreach centres in Tayside. In the Borders, the LEC has responded to the problems of the textile industry by offering assistance to encourage businesses to bring forward investment plans. Recognising the importance of tourism, Scottish Enterprise Dunbartonshire is supporting a £60 million project aimed at creating a world-class visitor attraction on the shores of Loch Lomond. And in March this year, Scottish Enterprise Forth Valley and Scottish Enterprise Dunbartonshire announced a joint project which will channel £1.2 million to develop sustainable businesses within the forthcoming Loch Lomond and the Trossachs National Park.

Within Locate in Scotland, its Rural Investment Team has had a successful first year of operations, with 6 project successes involving a planned expenditure of £3.3 million and the expected creation or safeguarding of 286 jobs. One of these successes was the attraction of Clanawley Kilmore International, an Irish fish and shellfish processor, to locate in Eyemouth.

If we are to build on these achievements, we must have an Enterprise Network attuned to the needs of the rural economy. This will be one of the main objectives of the current review of the Enterprise Network.

Information and Communications Technology (ict)

Developments in information and communications technology (ICT) are already bringing new opportunities to rural areas, and there is huge potential for further development. The new technology enables knowledge workers, who are generally in well-paid and secure employment, to choose to combine work with a high quality physical environment. Examples include Iomart in Stornoway, employing 60 people on call centre and web site design work; and 800 Hampers in Ballachulish, selling quality food products over the Web to the world.

But to succeed, we must move quickly and harness the expertise needed. That is why we

• set up the Digital Scotland initiative - with experts drawn from a wide range of fields. Digital Scotland has the objective of maximising the economic and social benefits for all of Scotland. The report of the Digital Scotland Task Force will be published shortly for consultation.
• are working with Scottish Enterprise, HIE, and private partners to produce an e-commerce strategy for Scotland.

Telecommunications

We recognise that the telecommunications infrastructure has improved considerably in rural Scotland, but in order to grasp the business opportunities which exist, there is a need to ensure that this improvement continues. We shall be working with Scottish Enterprise and HIE to ensure that rural Scotland can take advantage of those telecommunications developments from which it can gain economic benefits.

Key Sectors

While, generally speaking, rural Scotland's employment pattern is not fundamentally different from Scotland as a whole, across different rural areas, particular sectors are more dominant than others. Services and manufacturing are important throughout the country, with the main differences being the significance of the primary sector to the rural economy. Other key sectors include tourism, health and social work, education, wholesale/retailing services and knowledge-based industries. The Executive is working directly with a number of these key sectors.

Agriculture remains a cornerstone of the rural economy, its social fabric and its environment. Global competition, the recent weakness of the Euro, and the loss of important beef export markets have combined to reduce the level of farm incomes in recent years. The Executive provides almost £500 million of support to the industry each year, and, more recently, offered substantial short term assistance to farmers. It is also helping to tackle the underlying problems. Recent actions include:

• publication in April of a discussion paper as a first step towards agreeing
  a strategic direction for Scottish agriculture.
• funding of studies aimed at identifying future opportunities for the sheep and dairy sectors.
• using technology to reduce the bureaucratic burden on farmers and provide new opportunities for the cattle sector.
• providing some £100 million each year under the European Rural Development Regulation, to assist with investment in rural development projects in areas particularly dependent on farming, and
• spending £5 million each year on the Veterinary and Advisory Services of the Scottish Agricultural College, providing farmers with advice on up-to-date techniques and methods of improving their business

Food and drink are a real strength of the Scottish economy. Scottish exports of £2.4 billion are largely made up of products - fish, whisky, meat, confectionery - which originate in rural areas. The Executive is working with the industry, enterprise bodies and research institutes through the Scottish Food Strategy to maximise the industry's potential and to build on our reputation for quality and integrity. Assistance towards food processing and marketing projects will be an integral element of the Executive's work. Other actions include supporting organisations which promote Scotland's quality food products (e.g. Seafood Scotland and Quality Meat Scotland).

Fisheries provides more than 20% of jobs in some rural areas of Scotland (Banff and Buchan, Berwickshire, Shetland and Western Isles). Some £350 million worth of sea fish was landed into Scotland last year. Much of these landings were in rural areas. We increasingly acknowledge its social and economic role and are working with fishermen's organisations

• to provide a strategic framework for the industry in Scotland.
• to extend local control of inshore fisheries by rural communities.
• to support initiatives aimed at adding value in the marketing and processing of fish landed in Scotland.
• to promote Scotland's interests in the review of the Common Fisheries Policy due in 2002.

Fish farming provides around 6,300 jobs, directly and indirectly throughout Scotland, with roughly 75% in the Highlands and Islands. It is particularly important in the remoter areas. There are new exciting developments in this sector, including farming of species such as halibut and cod. We will continue to support the development of aquaculture, including new species, within a framework which has proper regard for the environment and in particular the protection of wild fish. Our support includes issuing locational guidelines for fish farming, proposals to introduce legislation assigning planning responsibility for fish farming to local authorities, applying (since March 1999) more stringent environmental assessment requirements, and providing financial support for aquaculture development under the new FIFG scheme.

Forestry covers one sixth of Scotland's landmass. 10,000 Scots are employed in the forestry and wood-processing industries, often in the more remote areas. We have an efficient, internationally competitive wood-processing industry, poised for expansion as timber production doubles over the next 15 years. An action plan is being drawn up to ensure Scotland takes maximum advantage of this growth. A Scottish Forestry Strategy, to be published in the Autumn, will set out how the industry can contribute more to rural development.

Tourism is a major industry in much of rural Scotland, and a sector where there is great potential for growth. We are determined to promote rural Scotland as a tourism destination and to enhance the tourism product that it offers. In February of this year, we published "A New Strategy for Scottish Tourism", setting out actions to grow Scotland's tourism industry. While tourism in Scotland as a whole has generally increased in recent years, the less accessible and less well known areas, particularly our rural areas, have not enjoyed the same benefits as other parts of the country. The actions agreed will be of particular benefit to rural areas.

• We propose a change of emphasis in the marketing of Scotland, giving more attention to the identification and marketing of niche products, such as golf, sailing, wildlife watching, green tourism, culture and language.
• Our proposals for developing IT throughout the industry will also particularly help rural businesses, offering a small tourism business in the remotest part of Scotland the same exposure on the world-wide web as a top hotel in Edinburgh.
• A career in the tourism industry will become more attractive and offer greater opportunities through investment in training, taken forward by a new industry-led training organisation which will promote the uptake of Modern Apprenticeships and Individual Learning Accounts, and work with others to identify and develop centres of training excellence in the tourism industry, and to provide a mentoring scheme for tourism businesses.

Agricultural, Biological and Related Research

The Executive's £40 million per annum programme of agricultural, biological and related research supports Scotland's high quality, world class science base, bringing benefits to the food and bioindustries, environment and natural heritage, nutrition and human health as well as sustainable agriculture and rural communities and development more generally. This work represents an important asset to the Scottish economy, helping to maintain and improve the competitiveness of indigenous industries. In addition, the science base funded by the research programme, particularly the five Scottish Agricultural and Biological Research Institutes, and the Scottish Agricultural College, contributes by identifying innovative products and technologies which could be exploited commercially. We will implement by Summer 2002 a strategy to exploit the output of our world class research base in agricultural, biological and related sciences to the greater benefit of the rural economy.

BUILDING COMMUNITIES

The Executive is determined to work with communities in our most fragile rural areas. A number of programmes and activities offer support to local people in realising their ambitions.

Crofting

Crofting provides a foundation for rural communities in areas of relatively poor agricultural land and in remote areas of the Highlands and Islands. It provides low cost land and housing as a basis for other economic activity. The Executive provides approximately £7 million of assistance for special schemes for crofters.

• The Croft Entrant Scheme will encourage 260 young entrants into crofting by April 2002.
• We will publish a White Paper in December 2000 setting out our plans for new crofting legislation.
• A Crofting community right to buy will be included in the Land Reform Bill.

Initiative at the Edge

Initiative at the Edge (Iomairt aig an Oir) is a good example of co-operation amongst public agencies targeted on the needs of the remote communities of Colonsay, Uig, Bays, Lochboisdale, Eriskay, North Sutherland, Westray and Papa Westray, and Ardnamurchan. A large number of ideas have sprung from these communities and many, with the support of the enterprise agencies, are now developing into hard projects. We are committed to building on the Initiative's activity, to help other remote communities.

Land Reform

Land - its use and ownership - underpins much of the rural economy and can make a special contribution to the sustainability of local communities. That is why it is a key part of the Executive's legislative programme. The land reform agenda is an integrated programme of action and legislation over the next 4 or 5 years, set out in the Land Reform Action Plan. (This is available on the Executive's land reform website: www.scotland.gov.uk/landreform).

Our proposals for a community right to buy will provide new and enhanced opportunities for communities in rural Scotland - along with the significant challenge of land ownership, where communities have the motivation and will to embark on that course. At the same time, our broader land reform agenda will encourage the kind of dialogue and consultation at local level that will best help rural communities and landowners to go forward in partnership to address the challenges ahead.

• We have published this month a White Paper specifying plans for new Agricultural Holdings legislation.
• We will bring forward legislative proposals to provide a community right to purchase when land in rural Scotland comes to be sold and also to provide a crofting community right to buy. These proposals will be launched in draft for consultation by the summer of 2000.

Impact of European Funding

European Structural Funds have been a significant source of funding for rural areas. Following reform of the Structural Funds in 1999, the Highlands and Islands have a special transitional programme, worth £200 million, to promote economic growth and social cohesion, whilst the rural areas of Lowland Scotland will benefit from Objective 2. Objective 2 funds will be used to enable social and economic conversion, providing support for small businesses and measures to increase social inclusion and community development. Additionally, rural areas will benefit from LEADER + which is aimed at encouraging and supporting high quality and ambitious integrated strategies for local rural development. There will be a strong emphasis on co-operation and networking between rural areas.

Our Approach

Our rural economy has tremendous strengths, but it also faces particular challenges. We need to understand both, becoming better at using our strengths to offset the difficulties; we need to find imaginative ways of harnessing new opportunities to the benefit of the rural economy. The Executive is determined to play its part in that process. We are beginning by

• publishing a Framework for Economic Development in Scotland which will recognise the particular opportunities in rural Scotland;

• reviewing our promotion of economic development in rural Scotland as part of our review of the Enterprise Network;

• maximising the opportunities for rural areas emerging from "A New Strategy for Scottish Tourism";

• through Digital Scotland, and our work on an e-commerce strategy, ensuring rural Scotland maximises the potential of modern technology;

• working with Scottish Enterprise and HIE to ensure that rural Scotland can take advantage of those telecommunications developments from which it can gain economic benefits;

• working with Scotland's farmers to develop a sustainable industry contributing to rural life;

• recognising the potential of forestry and publishing a Strategy and action plan later this year to provide a strategic direction for the Scottish industry; and

• encouraging 260 young entrants into crofting in our more remote areas by April 2002.

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