Tài liệu THE SCOTTISH ECONOMIC RECOVERY PLAN: ACCELERATING RECOVERY docx

As the recovery takes hold, there are still uncertainties:growth in Scotland is only in its fragile early stages and the fundamental impacts on the ‘real’ economy of a recession rooted i

w w w s c o t l a n d g o v u k

WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER

3 March 2010

The Scottish Government, 2010

Produced for the Scottish Government by RR Donnelley B63580 03/10

Published by the Scottish Government, February 2010

Further copies of this document are available on request

Please contact 0131 244 3342

or EconomicStrategyDirectorate@scotland.gsi.gov.uk

100% of this document is printed on recycled paper and is 100% recyclable

THE SCOTTISH ECONOMIC RECOVERY PLAN:

Impacts by age group and occupation 15

Future prospects for the Scottish economy 16

3 INVESTING IN INNOVATION AND INDUSTRIES OF THE FUTURE 18

Remaining responsive to business concerns 36

4 STRENGTHENING EDUCATION AND SKILLS 39

Preventing new long-term unemployment 42

Providing additional opportunities for young people 44

Tailored learning support for those furthest from the labour market 45

Managing increased demand for education 45

5 SUPPORTING JOBS AND COMMUNITIES 47

Supporting the regeneration and growth of our town centres 49

Maximising the community and employment impact of new housing 49

This is a time of transformation in global and domestic markets

As economies around the world strengthen, new competitivepressures will shape the structure of our economy The labourmarket pressures that emerged through the deepest recession inliving memory may continue for some time, but the next phase

of the economic cycle also heralds new opportunities for Scottishbusinesses to develop new markets, and grow existing ones.Across the public sector, our task is to remain responsive to thenew conditions We must align behind the task of acceleratingour recovery and meet the challenge of maintaining the most supportive environmentfor a strong recovery

This update to the Economic Recovery Plan sets out a number of priorities for thecoming months

Scotland’s future lies in the development of a low carbon economy We are starting aconversation on what that will mean in practice Our commitments on renewablesand carbon capture and storage will help lead to the development of major newindustries in Scotland, and major new sources of employment

In rapidly developing global markets, Scotland’s competitive exchange rate brings theprospect of developing larger international markets for Scottish goods and services

We will deliver additional support for Scottish businesses to internationalise Building

on the success of Homecoming, we can also capitalise on the current conditions tobring new visitors and new inward investment to Scotland

Development in Scotland will be supported by an improved planning regime to

streamline support for new investment, continuing the major progress made since2007

Contraction in the availability of finance lay at the heart of the recession, and access to

finance will be a necessary condition of a strong recovery The latest Scottish Access to

Finance Survey shows some improvement in conditions for SMEs seeking finance We

will reinforce this improvement through the continued development of the Scottish

Investment Bank this year

Scotland’s natural and intellectual assets are world class, but for some time we have

failed to turn this into commercial success We will scale up our support to

commercialise innovation in Scotland And with our partners across the public sector,

we will place a renewed focus on improving leadership and management skills in

Scottish business

Our major package of skills and training support, ScotAction, has supported flexibility

in the Scottish workforce through the pressures of recession As growth returns to the

Scottish economy, employment risks remain The Scottish Government can achieve a

great deal with the levers at its disposal, but as we attempt to accelerate our recovery,

we are undermined by the UK Government’s decision to remove its fiscal stimulus in

2010 The Treasury has an opportunity to support our Economic Recovery Plan by

releasing funds for further capital acceleration, allowing us to directly support

businesses and jobs across Scotland We will continue to make the case in the run-up

to the UK 2010 Budget

John Swinney MSP

Cabinet Secretary for Finance and Sustainable Growth

1 INTRODUCTION

This update to the Scottish Government’s Economic Recovery Plan is the first to come

at a time of rising UK GDP output The Scottish economy, in common with that ofother developed countries, has not been immune to the stresses of a major recession,with falls in output and increased pressures on employment But as the rate of decline

in output eases and growth begins to return to areas of the economy, we can nowreflect more accurately on the long-term impacts of recession, and on the outlook forthe post-recession economy in Scotland

The Plan has developed through an ongoing dialogue with Scotland’s businesses,academics, community groups and individuals With our partners in local governmentand the Third Sector, we have developed a deeper assessment of the impacts of

recession across Scotland As the public sector aligns behind a central theme of

accelerating recovery, a number of central priorities emerge for the coming year Ourefforts are centred on stimulating lasting improvements in Scotland’s long-term

economic performance – in line with the Government Economic Strategy – throughthree broad themes: Investing in innovation and industries of the future;

Strengthening education and skills; and Supporting jobs and communities

Accelerating recovery

growth generation, a global recovery is now underway In Scotland,

returns growth returned to parts of the economy in the second half of

2009, with signs of further improvement in the last three months

of the year As the recovery takes hold, there are still uncertainties:growth in Scotland is only in its fragile early stages and the

fundamental impacts on the ‘real’ economy of a recession rooted

in financial market turmoil will not be fully apparent for some time.But this is also a time of new dynamism in global and domesticmarkets, where new trading links between partners can be forged.The rebalancing that has already begun across the global

economy, will bring new opportunities for Scottish businesses innew markets And within Scotland, the domestic economy hasalso begun to adapt to the post-recession conditions

There are grounds for optimism in this new dynamic environment.Scotland can continue to develop and exploit its rich comparativeadvantages We can further expand our international trade, takingadvantage of a newly competitive exchange rate to enter newexport markets Scotland is a world-class destination for visitorsand for new investment – our tourism industry outperformed therest of the world in 2009 – and our education and skills basecontinues to provide a platform for new employment

opportunities

Alignment across the public sector

The private sector will lead Scotlands recovery; the task for thepublic sector is to maintain a flexible, responsive approach aschanges unfold over the coming months Through the alignment

of key services and activities, and by maintaining our focus onthose key sectors that best exploit Scotland’s global competitiveadvantages, we can create a supportive framework for sustainedimprovement in our future economic growth

Priorities as The Economic Recovery Plan has mobilised a range of cross-public

we enter new sector activities, designed to support the Scottish economy

growth through the pressures of a deep global recession The Plan has

supported employment – directly through accelerated publicsector spending, and indirectly through our support for skills – and

it has mitigated some of the worst impacts of recession onScotland’s communities These steps were part of the immediateresponse to recession, but they have been designed to leave alasting positive impact

As we begin to enter a new period of growth, a number of newpriorities emerge for the coming months

Developing a low carbon economy

Scotland’s primary new economic opportunity lies in thedevelopment of a low carbon economy Addressing the majoreconomic costs of climate change is an economic and

environmental imperative We have already taken a lead with themost ambitious emission reduction targets in the world and themove to low carbon is a necessary condition of meeting theseobligations

Opening Scotland’s enviable natural resources, research expertise, and

discussion on industrial base provide the foundations to capitalise on the future

improvements in energy efficiency We will shortly publish adiscussion document on the implications of the move to lowcarbon for the Scottish economy

Renewables The recent consent for the upgrade of electricity infrastructure

from Beauly to Denny releases huge potential to developScotland’s renewables sector, where over 600MW of additionalcapacity has been consented in the past 12 months, with a furtheralmost 2.7GW in the planning pipeline

Offshore Offshore wind is the biggest near-to-market opportunity in

wind Scotland’s low carbon economy The recently published NationalRenewables Infrastructure Plan identifies a range of near-terminfrastructure needs and investment opportunities We are nowdeveloping a comprehensive off-shore wind route map with keyindustry and public sector bodies, which will detail the steps tocreate tens of thousands of new Scottish jobs and over £20 billion

of investment by 2020

Carbon capture The Scottish Government will shortly publish a roadmap for the

storage development of a carbon capture and storage industry in Scotland,

setting key milestones for the creation of thousands of additionaljobs in the future

technologies sector are working together to develop a strategy to support the

development of the environmental and clean technologies sector

in Scotland In the Spring, we will begin engagement with keystakeholders to inform the development of this strategy

Supporting internationalisation

A number of factors now come together to make increasedinternationalisation one of the central priorities for the acceleration

of the Scottish recovery

Correction of It is now apparent that there were major, unsustainable

global imbalances within the world economy as it entered recession

imbalances These were most obvious in the financial sector, but they have also

influenced other globally traded sectors As these imbalances arecorrected, we are likely to see a repositioning of individualeconomies in the global economy, and restructuring of industrialsectors within these economies Financial and trade flows will alter,bringing new opportunities for Scotland to exploit its comparativeadvantages

Developing Pre-recession, demand was supported by relatively cheap credit,

of demand growth Post-recession, we will have to look particularly to foreign

markets to support further growth in the demand for Scotland’sgoods and services

Competitive The movement in exchange rates over the course of the last

markets The competitive exchange rate will act as a platform toattract new visitors to Scotland, and new inward investment Thelatest business surveys suggest that the decline in exports fromScottish firms may have started to bottom out, with some sectorsexperiencing an increase in export activity in the second half of

2009 There was also some encouragement from the smallincrease in manufactured exports in the third quarter of 2009

Scaling-up Across the public sector, we are capitalising on these conditions,

support for scaling-up the promotion of Scottish business abroad, and

exports providing new support for Scottish businesses to look to

international markets

Scottish Development International (SDI), and its partners, willboost its international activity with a focus on raising theinternational aspirations of more Scottish businesses to tradeglobally, a broader engagement with Scottish businesses and amore intense focus on helping Scottish firms to understandinternational market opportunities in their sector This isaccompanied by a renewed strategy to target inward investmentopportunities where Scotland has a strong global position

Tourism The interim evaluation has demonstrated the success of last year’s

Homecoming Scotland initiative in raising tourism revenue anddelivering a range of wider benefits to the Scottish economy

Scotland outperformed the rest of the world in 2009 On averageglobal tourism declined by between 7 and 9% but in Scotland,revenues remained relatively constant with only a 1.6% decline bythe third quarter The movement in exchange rates continues tomake Scotland an attractive destination for overseas visitors toScotland and has also boosted the ‘staycation’ effect, encouragingdomestic UK visitors to Scotland The Scottish Government will rollout a series of further initiatives to ensure a legacy for

Homecoming

Continuing the improvement of Scotland’s planning system

Aligning to Since 2007, the Scottish Government has made a series of

support improvements to the planning system in Scotland, recognising its

to Parliamentary approval, planning fees will rise by 10% in April

2010 in order to ensure planning authorities are appropriatelyresourced to contribute to economic recovery

Continuing improvements to the planning system – including anew brokerage role for the Chief Planner – will seek to ensure thatthe public sector aligns its actions to increase the pace of decision-making on development proposals.

Across the public sector we will look for opportunities to aligninvestment in new infrastructure with new development proposalsand identify where spare capacity in infrastructure could be used

to accommodate new development A planning and economicrecovery summit in May will develop these issues further

Access to finance

New evidence Contraction in the availability of finance lay at the heart of the

on access to recession, and improved access to finance will be a necessary

finance condition for a strong recovery We have new insight into the

availability of finance for Scottish businesses, through the Scottish

Access to Finance Survey, that brings evidence to our future

activity While conditions have eased and banks are more willing tolend to viable business propositions, the survey suggests thatlower amounts of finance are being obtained and that the costs ofobtaining finance remain an issue for the majority of SMEs

Implementing This year, we will continue to develop the Scottish Investment Bank

the SIB (SIB) so that it targets support to those businesses that can

contribute most to the Scottish economy in the future We havealready allocated an additional £10 million towards the SIB throughnew savings from across the Scottish Government This reinforcesour commitment to build on the existing £150 million of resourcethat already supports Scotland’s most innovative early stagecompanies More detail will follow in the next few months

Supporting Lack of debt and equity financing has had a major impact on the

Urban viability of urban regeneration schemes throughout Scotland

Regeneration To address this, we are working with our partners in the European

Investment Bank and the European Commission to create aJESSICA Holding Fund We anticipate that JESSICA will supportprojects that can make an immediate impact; and supporteconomic recovery and growth in key regeneration areas

Commercialisation

Scotland has long-held comparative advantages in its skills andresearch base The key to translating this into future economicsuccess is to stimulate the desire and ability in Scottish businesses

to commercialise these key intellectual assets

Innovation Through the innovation framework published last year, we will

support focus our innovation support on improving links between

businesses and the research base and encouraging morebusinesses to create more competitive products and services Wewill deliver additional advisory support through the new innovationsupport service with Scottish Enterprise (SE) and the partnershipbetween Highlands and Islands Enterprise (HIE) and the

Massachusetts Institute of Technology (MIT) which will helpbusinesses implement innovative opportunities

skills Scottish businesses – to ensure managers have knowledge and

comprehension of the new opportunities in the post-recessioneconomy, and to support the development of their leadership skills

to implement new business strategies The Council of EconomicAdvisers, and others, have identified this as a priority area for theimprovement of productivity levels in Scotland To achieve this ourEnterprise Agencies will focus on organisational development tosupport companies to grow in scale, size and ambition

Maintaining a strong labour market

A flexible In recent years, flexibility has become a hallmark of the Scottish

labour market labour market Reductions in hours, reductions in salaries and

increased use of part-time working have meant that falls inScottish employment in this recession have been smaller than theassociated fall in Scotland’s total output We have not witnessed,for example, the large increases in unemployment seen in some EUcountries or in the United States

There are ongoing challenges The flexible labour market responseleaves spare capacity in the Scottish economy, and new growth maynot immediately be accompanied by new employment Recessionhas also had a disproportionate impact on younger people, andsome regions have seen larger employment impacts than others

Summer 2010 Chapter four highlights the Scottish Government’s efforts to

pressures support the labour market through the critical period in summer

2010, as new entrants to the labour market emerge from Scottishschools, colleges and higher education institutions

We are managing this pressure by providing opportunities tovolunteer or retrain, and improving skills and vocational trainingfor young people And we continue to address the ongoing labourmarket pressures through our support for learning and skills acrossthe public sector more broadly

Over the course of the coming year, we will continue to alignpublic sector activity towards employability and the maximisation

of employment opportunities We will build on the recent success

of the Integrating Employment and Skills pilots – which havebrought together the services of Skills Development Scotland(SDS) and Jobcentre Plus Since the pilots began in February 2009,over 1,200 unemployed people have received quick access to skillsassessments, careers advice and guidance from SDS Plans arenow underway to roll out this service across Scotland before theend of the year

The need for a continued public sector stimulus

Uncertainty in The recent developments in the UK and Scottish labour markets

the Scottish highlight the uncertainty of the current economic conditions

economy The UK Government’s decision to withdraw its fiscal stimulus

package in 2010 risks undermining the fragile early stages of ourrecovery

Above all, the latest unemployment figures demonstrate thecompelling case for a continued economic stimulus package in the

UK Analysis by the International Monetary Fund (IMF) indicatesthat the UK is the only country among the G7 to withdraw itsfiscal stimulus measures in 2010 We will continue to make thecase, supported by the economic evidence, for a further targetedeconomic stimulus in the forthcoming UK Budget to help protectjobs and businesses in Scotland

2 THE ECONOMY

The global economy emerged from the deepest, most synchronised downturn in recent

memory in the second half of 2009 with many advanced economies returning to

growth The Scottish economy has performed broadly in line with the UK throughout

the downturn and the latest evidence suggests that the economy was close to

emerging from recession in the final quarter of 2009

The recovery in the Scottish and global economies is expected to gain further

momentum in 2010, although significant risks still remain

The global economy

economy recession towards the end of 2009 with a return to growth in output

The size and timing of the recovery phase has varied acrosscountries The UK was the last G7 country to come out ofrecession, following 0.3% growth in Q4 2009 after six consecutivequarters of falling output This contrasts with the US, whichrecovered strongly in the second half of 2009 with growth of 0.6%

in Q3 2009 and 1.4% in Q4 2009 However, the sharpestrecoveries have been in Emerging and Developing economies,particularly in Asia These economies were not affected to thesame extent by the international financial crisis

Output remains Despite the welcome return to growth, the level of output in many

below pre-crisis economies still remains significantly below pre-crisis levels In the

pre-recession levels Despite moving out of pre-recession, the effects arelikely to still be felt by businesses and households

86 88 90 92 94 96 98 100 102 104

US UK Japan Germany

Q4-2009 Q3-2009 Q2-2009 Q1-2009 Q4-2008 Q3-2008 Q2-2008 Q1-2008 Q4-2007 Q3-2007 Q2-2007 Q1-2007 Q4-2006 Q3-2006 Q2-2006 Q1-2006 Q4-2005 Q3-2005 Q2-2005 Q1-2005

Quarterly GDP Index (Q2 2008=100)

Start of Synchronised Downturn

Continued The rate of change in labour market conditions has also varied

weakening in considerably across countries, although the most recent figures

the labour indicate a general easing in the rate of increase in unemployment

market rates across most countries The US has witnessed one of the

sharpest increases in unemployment, with the unemployment ratemore than doubling from 4.7% in November 2007 to 9.7% inJanuary 2010

The increase in unemployment has not been as sharp in the EuroArea, although this partly reflects a much higher base

unemployment rate Although the Euro Area unemployment rate

in December 2009 was 10.0%, the increase has been from 7.2% inMarch 2008 However, there has been considerable divergencewithin the Euro Area, with German unemployment rates remainingrelatively unchanged at around 7.5%, and Spanish unemploymentmore than doubling to 19.5%

Volatile Global inflation has been particularly volatile in recent months,

inflation with temporary factors such as the rise in energy prices (relative to

the same point in the previous year) resulting in a sharp rise ininflation In the UK, the depreciation of sterling and thesubsequent upward effect this had on the price of imported goodsand services meant that inflation fell to a lesser extent throughout

2009 compared to other economies The reversal of the VAT rate,along with other temporary factors, has led to a sharp rise ininflationary pressures in January 2010, with CPI rising to 3.5%.These inflationary pressures are expected to fade in the comingmonths as the excess capacity in the global economy created bythe recession is predicted to have a downward effect on pricepressures in the second half of 2010 and into 2011

The Scottish economy1

Scotland The Scottish economy has been in recession since the middle of

remains in 2008, although the rate of decline has eased substantially in

recession recent quarters following the sharp declines in Q4 2008 and Q1

2009 In Q3 2009 the Scottish economy contracted by 0.2%,while the UK economy declined by 0.3% over the same period

1 Details of the latest performance of the Scottish Economy are published quarterly in the Chief Economic Adviser’s “State of the Economy Presentation”: http://www.scotland.gov.uk/Topics/Economy/state-economy

Although the UK entered recession a quarter earlier, following a0.1% contraction in Q2 2008, the overall decline in output inScotland has been broadly in line with the UK with botheconomies contracting by around 6% from their previous peaks.

The latest evidence from the Scottish business surveys suggest thatthe Scottish economy is close to moving out of recession, with themonthly PMI survey for January 2010 reporting that private sectoroutput in Scotland has grown for the seventh consecutive month

Further rise in The rate of decline in Scottish labour markets conditions – which

accelerated towards the end of 2009 following a period ofmoderation in the middle of the year The Scottish unemploymentrate rose by 0.4 percentage points to 7.6% in Q4 2009 Over theyear to Q4 2009 Scottish unemployment levels increased by65,000 There was a corresponding decline in the Scottishemployment rate which fell to 73.5% in Q4 2009, and a fall inworking age employment of 51,000 over the year

71 72 73 74 75 76 77 78

UK Scotland

Scottish & UK Employment Rate

Scottish & UK GDP Growth (Quarter-on-Quarter)

2005

Scotland UK

Impact on industry sectors

Broad-based The recession has impacted on most sectors of the Scottish

decline in economy, with the majority experiencing a decline in output

output The sectors, which have experienced the largest falls in output

have been the manufacturing and construction sectors, whereoutput has declined by 11.3% and 13.1% respectively since theScottish economy entered recession – broadly matching the scale

of decline witnessed in the UK as a whole The service sector hasexperienced a less marked decline – 4.8% since the start of therecession There has been an easing in the rate of decline inoutput across most sectors in Q3 2009, with a return to growth inthe production sector where output increased by 0.9% over thequarter

The changes in employee jobs by sector have broadly followed thepattern of the decline in output The most rapid rates of declinehave been in the manufacturing and construction sectors, falling

by 6.3% and 7.9% over the year to September 2009 respectively,

in line with reductions at the UK level The largest falls in thenumber of employee jobs were in Distribution, Transport, Financeand Business Services (down 34,000 over the year), and

Manufacturing (down 14,000)

-10 -8 -6 -4 -2 0 2

Education, Health, Public Admin

& Other Services

Dist, Transport, Finance &

Business Services Construction

Manufacturing Mining, Energy &

Water Supplies Industry

All Jobs (seasonally adj)

Change in Employee Jobs in Scotland September 2008 to September 2009

Impacts by age group and occupation

Rise in youth The recession has had a disproportionate effect on certain groups

the first to experience deterioration in labour market conditions asemployment opportunities become more limited Over the year tothe three-month period October-December 2009 the ILO

unemployment rate for the 16-24 age group has increased from13.1% to 17.1%, accounting for around a quarter of the totalincrease in ILO unemployment over this period Despite thisincrease Scotland still maintains the lowest youth unemploymentrate of the UK countries, with the UK average for the same periodstanding at 18.9%

Rise in The impacts have also varied by occupation The latest claimant

for low-skilled is reported on a monthly basis – show that in January 2010 the

lower skilled occupational groups, with the highest rates in theElementary Occupations (15.6%), Sales and customer serviceoccupations (10.7%), and Process, Plant & Machine Operatives(9.1%) However, over the year, the largest percentage increase inclaimant count unemployment levels has occurred in some of thehigher skilled occupations Professional occupations increased by55% and Associated Professional and Technical Occupationsincreased by 40%, although these increases reflect relatively lowstarting positions

2008 2009

Source: LFS, Oct-Dec quarter, seasonally adjusted

non-Impact on the regions of Scotland

All local The claimant count data set provides an indication of the relative

authorities nature of the labour market adjustment across local authority

affected areas Every Scottish region has experienced a rise in the number

of people claiming unemployment benefit, with the rate ofincrease particularly sharp in areas such as East Renfrewshire,Aberdeen City, and Midlothian However, the higher rate ofincrease in these areas generally reflects a relatively low startingposition

The areas where pre-recession unemployment levels were abovethe national average have also experienced increases in thenumber of people on the claimant count Data covering the period

to January 2010 shows that the highest claimant countunemployment rates were in the following areas: North Ayrshire;West Dunbartonshire; Glasgow City; and East Ayrshire

Future prospects for the Scottish economy

Accelerated The pace of the global recovery accelerated towards the end of

in 2010 strong rates of growth With every G7 country now out of

recession, the prospects for 2010 have improved This is reflected

in the latest forecasts from the International Monetary Fund (IMF),published in January 2010, which predict a stronger global

recovery compared to their previous forecasts back in October2009

Despite this, the IMF predict the recovery to be at different speeds

in various parts of the global economy Emerging and Developingcountries are still expected to drive global growth in the comingyears, although the IMF now predict a stronger recovery foradvanced economies

The consensus forecast for the UK is of modest growth in 2010 ofaround 1% to 1.5%, with the recovery gaining further momentum

in 2011 However, significant risks remain, including restrictivecredit conditions and the withdrawal of fiscal stimulus measureswhich will act to constrain recovery

The latest evidence suggests that the Scottish economy was close

to emerging from recession in the final quarter of 2009 Therecovery is expected to gather pace in 2010, as business surveysreport an improved outlook for the first half of the year Like the

UK, the recovery is expected to be modest, with independentforecasts suggesting growth of between 0.3% to 1.0% in 2010 –considerably below average rates of growth in the years before therecession

Relatively modest economic growth rates are likely to result in

labour market conditions remaining weak, even as growth returns

to the economy For example, the latest claimant count data for

both Scotland and the UK showed a sharp increase in the number

of people claiming Jobseekers Allowance in January This, along

with evidence on employment intentions in the private sector from

the Scottish PMI survey data in January, suggests that we must

prepare for a potential further deterioration in labour market

conditions in the coming months

3 INVESTING IN INNOVATION AND INDUSTRIES OF THE FUTURE

One of the major impacts of recession is to reveal the extent of imbalance within theglobal economy As these imbalances are corrected, we are likely to see the

repositioning of economies within the global economy, and restructuring of industrialsectors within these economies In Scotland, there will be new competitive pressures

to alter the pattern of trade, sector mix, and spatial pattern of economic activity Thisdynamic environment creates exciting opportunities for Scotland to exploit its

comparative advantages As we emerge from recession, the restructuring in the

Scottish economy can accelerate the productivity improvements targeted in the

Government Economic Strategy.

Our focus is on alignment across the public sector to create a flexible, supportivebusiness environment We have placed a special focus on the development of the KeySectors, which utilise Scotland’s competitive assets and have the potential to drivesustainable economic growth in the longer term Over the course of the comingmonths, we will maintain close links with the Scottish business community to informour approach

The low carbon economy

Climate change will have a major influence over the long-termeconomic growth and stability of the world economy Scotland hasalready taken a lead with the most ambitious emission reductiontargets in the world It is an economic imperative that we nowsupport these efforts with a move to a low carbon economy Thisalso offers perhaps the best opportunity to develop new industries

in Scotland – exploiting Scotland’s natural and intellectual assets

Delivery Group ensure that all sectors of Scotland’s economy and civic society

contribute fully to achieving the Climate Change Delivery Planwhich includes the target of a 42% reduction in emissions over thenext decade

The Group has a wide membership from both the public andprivate sectors and has the remit to provide strong and visibleleadership to all sectors of Scotland and inspire them to do more

to reduce carbon emissions through innovation, partnership andcollaboration

Towards a Low Carbon Economy for Scotland: Discussion Paper

Scotland must adapt to the uncertain, yet inevitable physical andeconomic consequences of climate change – impacts which arealready unavoidable

This transition presents a range of low carbon global marketopportunities, not just in the renewables industry but in everysector and business across Scotland As we emerge fromrecession, we have an opportunity to develop new, low carbonand environmental products and services to help accelerateeconomic recovery in the short term as well as drive long-termsustainable economic growth These include exploiting newmarket opportunities in the low carbon environmental goods andservices sector as well as ensuring that existing sectors andbusinesses are able to adapt effectively to a changing climate

The Scottish Government will shortly publish a low carbondiscussion document, which aims to raise awareness of theeconomic opportunities and challenges that Scotland faces in thetransition to low carbon Together, with our key partners, we willdraw on the responses to this consultation to shape a Low CarbonStrategy for publication later this year To enable an effectivetransition to a low carbon economy the discussion paper willexplore:

■ the strategic priorities and mechanisms to help Scotland realisethe scale of potential market opportunities in a global context;

■ the challenges and opportunities of helping existing firms andindustries adapt to a changing climate;

■ how to increase the support in innovation, investment and skillsnecessary to drive change;

■ the need to assist behavioural changes among firms andindividuals; and

■ the need for a strategic and coherent approach across the publicsector, aligned with the low carbon market opportunities withthe greatest economic potential for Scotland

Beauly-Denny The Beauly to Denny upgrade is the most significant and important

electricity infrastructure reinforcement project in Scotland for ageneration This development will help unlock Scotland’s onshoreand offshore green energy potential The improved transmissioncapacity the development will bring is crucial to help Scotlandmeet our 2020 renewable electricity demand targets, and enableScotland to export renewable energy to the rest of the UK andEurope

Action of Energy efficiency is the most cost effective way to achieve

energy emissions savings Measures to improve Scotland’s energy use will

efficiency be detailed in our Energy Efficiency Action Plan which will be

published in the Spring

Carbon Capture Our vision is for Scotland to become a leader in the

(CCS) technology, utilising Scotland’s advantages and strengths

We will shortly publish a CCS roadmap and we are aiming to seethe development of a number of CCS demonstration and researchprojects in Scotland The Scottish Government was the largestcontributor to the Scottish CCS Joint Study, launched by the FirstMinister in May 2009, highlighting the offshore potential of theNorth Sea Scottish sector to store emissions for the next 200 years

A successor to this project has since been developed and is due to

be completed by the end of 2010

National Our National Renewable Infrastructure Plan sets out a framework

Renewables for action by the Scottish Government, agencies, and partners to

Infrastructure ensure at least 20% of total Scottish energy use comes from

Plan – offshore renewable sources by 2020 Scotland is leading the world in the

construction and has the potential to do the same in marine andtidal energy generation The scale of opportunity is enormous

In order to realise the potential of its natural resources, supplychain and innovation strengths, it is vital that Scotland develops itsports and adjacent manufacturing hubs in tandem Stage one ofthe National Renewables Infrastructure Plan, launched in February,identifies sites required for large-scale infrastructure investment inthe offshore wind, wave and tidal sectors Not only will these helpharness economic opportunities in relation to Scottish offshoredevelopments but they will also enable Scotland’s renewablesindustry to capture a share of the over £100 billion investment inwider UK and North Sea wind farms Scottish Enterprise (SE) andHighlands and Islands Enterprise (HIE) will now work moreintensively with key port owners, the Crown Estate, renewableenergy developers and the Scottish Government to develop robustinvestment plans

As part of this work, discussions have already taken place with theEuropean Investment Bank (EIB) on the opportunities for the EIB tobecome involved The Scottish Government also intends to host alarge-scale finance conference in Scotland later in the summer,which will stimulate new investment models and ideas for thefunding of offshore infrastructure and Scotland’s low carbontransition more widely

Power The Power Networks Demonstration Centre (PNDC) at

Networks Cumbernauld is expected to play a central role in accelerating the

Centre expansion of Scotland’s renewable energy industry

A collaborative venture between the University of Strathclyde, SE,Scottish Power and Scottish and Southern Energy, the PNDC willprovide a world class facility to support the development andvalidation of distributed electricity generation technologies SE hasapproved a £7 million grant to the University of Strathclyde tosupport the capital costs of establishing the PNDC

Key objectives for the PNDC are:

■ to establish a facility that will overcome the safety, operationaland capacity issues associated with the increasing amount ofrenewable and distributed energy connected to the grid;

■ to facilitate the faster development and adoption of newtechnologies and practices by enabling rigorous testing inrealistic environments;

■ to establish a facility that is an ideal platform and provingground for system integrators, manufacturers, networkoperators and researchers alike; and

■ to provide opportunities for industry to engage with academiaand major users of technologies across various sectors

The Centre will be owned and managed by the University ofStrathclyde, under the direction of member organisations

Members will pay an annual membership fee in return for servicesincluding access to the ‘live’ grid environment, laboratory,

equipment and expert staff for research, development anddemonstration projects The PNDC will help drive entrepreneurialactivity in this advanced technology sector with a global reach Itwill offer the opportunity for creating an R&D cluster, provide acompelling proposition for attracting high quality jobs to Scotlandand opportunities for the development of skilled engineers

Environmental SE, HlE, the Scottish Environmental Protection Agency (SEPA) and

and clean the Scottish Funding Council (SFC) launched an action plan in

technologies (ECT) There is now cross public-sector alignment, inpartnership with the business and the research communities todevelop a strategy for ECT that identifies global market

opportunities within five sub-sectors:

■ Sustainable transport;

■ Building technologies;

■ Water and waste water treatment;

■ Recovery and recycling; and

■ Environmental monitoring and instrumentation

The ECT strategy will integrate with the development of a broaderlow carbon strategy for Scotland and provide a framework to alignpublic sector support behind the areas of greatest potential

economic opportunity

Scotland’s Key Sectors

The Scottish Government is working across the public sector tosupport the development of the key sectors identified in the

Government Economic Strategy (tourism, creative industries,

energy, financial and business services, food and drink, lifesciences and universities) These sectors have the potential to drivesustainable growth in the long-term through their exploitation ofScotland’s key assets

Tourism – the Tourism is among the largest contributors to the Scottish economy

legacy of In 2008, total tourist expenditure in Scotland was £4 billion

Homecoming The sector is traditionally sensitive to global economic fluctuations:

movements in the exchange rate or in the performance of aforeign economy can directly impact on visitor numbers Scotland’sappeal is broader than many other destinations, however, drawingvisitors from a large number of markets The Scottish tourismsector is generally resilient to a fall in visitors from any one countryand VisitScotland has the flexibility to focus on target markets ascircumstances change

Despite a particularly difficult trading period for the sector, theinterim evaluation of Homecoming in 2009 has demonstrated itssuccess in generating additional returns for the Scottish

economy Plans to build on the success of Homecoming are nowunderway, with the establishment of a Ministerial task forceover 2009, the single theme of Homecoming helped to alignevery sector, business and organisation towards the moreconsistent promotion of Scotland globally We will continue thisapproach and sustain the momentum built during 2009 We willfocus on a variety of Scotland’s assets and from May 2010 toApril 2011 there will be a national celebration focusing on Foodand drink, with plans for further themed years in the promotion

of Scotland

To capitalise on the ‘staycation’ effect that was clearly visibleduring 2009, VisitScotland has realigned its marketing activity andestablished a dedicated Scotland Marketing team which will becharged with encouraging those living in Scotland to visit orholiday in their country more A key element of this activity will bearound promoting the day trip market and converting day tripsinto overnight stays Visit Scotland recently launched its new

£1.25 million European marketing campaign for 2010 based on aseries of Scots people who represent the friendly face across thetourism industry

The Scottish Tourism Forum has also recently established a newindustry leadership group to develop a new action plan for

implementation of the Tourism Framework for Change tourism

strategy

The creative The Scottish Creative Industries Partnership was established in

industries June 2009 and brought together the key public sector agencies

supporting creative industries It ensures effective engagement withpractitioners through a number of targeted reference groups

Considerable investment has been made in the development ofskills in the sector – including almost £5 million to AbertayUniversity from the SFC, the European Regional Development Fund(ERDF) and the UK’s Strategic Investment Fund which will supportnew and emerging games companies as well as support the

development of prototypes

Support has also been directed towards the development ofleadership skills with funding for a Creative and Cultural Skillsbespoke leadership programme Creative Scotland’s £5 millionInnovation Fund has been targeted to support artists and creativepractitioners The fund includes £1.5 million for a Digital Mediainitiative in partnership with SE (who have committed £1.5 millionmatch funding) and other investors and £1 million for an

enterprise support programme for start up creative entrepreneurs

In the next quarter of 2010, we will publish an action plan for thecreative industries – setting out how the public sector will align itsactivity to create a better framework for the sector’s future growth

Energy The Scottish Government’s Climate Change Delivery Plan2and

associated Renewables Action Plan3(RAP), published June 2009, act asdrivers for the development of the renewable energy sector in Scotland

As Scotland’s response to the EU’s Renewable Energy Directive and aspart of a Scottish Climate Change commitment, the RAP will serve todrive activity to fulfil a series of key challenging targets:

■ 80% reduction CO2emissions by 2050 (42% by 2020);

■ 20% renewable energy by 2020 (currently c.6%);

■ 50% of Scottish electricity demand from renewable sources by

2020 (currently c.17%), with 31% by 2011;

■ 11% renewable heat by 2020 (currently 1.4%);

■ 10% biofuel content in transport fuels by 2020;

■ 6GW offshore wind generating capacity in Scottish TerritorialWaters by 2020; and

■ 25GW offshore wind generating capacity UK Round 3 sites by2020

A new transformation programme has been designed by the Oiland Gas Academy, OPITO, supported by Skills DevelopmentScotland (SDS) and Forth Valley College It will assist the oil andgas industry to meet its needs for recruiting competent core crewtechnicians The programme aims to attract skilled workers intothe industry who have gained knowledge and experience in otherindustries Learners will receive training to develop their existingskills and provide a foundation of knowledge and practice allowingthem to become a skilled worker in the oil and gas industry.

Financial and Scotland’s financial sector has not been immune to the pressures

Business of a global financial crisis, but it has shown resilience The Royal Bank

Services of Scotland (RBS) remains headquartered in Scotland and the Lloyds

Banking Group has committed to retaining the headquarters of itsmajor Scottish brands in this country In other parts of the

industry, fund management and insurance, there have also beenencouraging announcements from several financial servicescompanies which have buoyed prospects for the future

In November 2009, the European Commission approved plans byRBS and Lloyds Banking Group to divest parts of their

organisations to meet EU State Aid Rules Divestments from eachbank – which will take place over the next four years – willrepresent a viable stand-alone entity, together representing nearly10% of the UK retail banking market To ensure they increasediversity and competition in the UK banking market, the assets canonly be sold to small or new players in the market This presents anopportunity for Scotland’s financial services industry The FinancialServices Advisory Board (FiSAB), in recognising these issues, hasalready initiated work on a number of fronts, including developing

a strategy on the future of the banking sector and a discussionpaper on IT infrastructure and faster data transmission issueswhich could be of benefit to the industry in Scotland

Food and drink The recently refreshed food and drink strategy provides strong

direction for longer-term expansion of the sector, aiming to growthe industry from £10 billion to £12.5 billion by 2017 The newstrategy provides an enhanced focus on exploiting growth marketopportunities in premium, health and provenance, and providesthe framework to allow private and public sector stakeholders toalign their activity around common industry goals Following,Homecoming, 2010 will be the year of food and drink, using two

of Scotland’s key assets to attract new visitors

Life sciences Life sciences offers Scotland significant opportunities for growth

within a global context, steered by the Scottish life sciencesstrategy4 The strategy aims to achieve critical mass, creating ‘aglobally oriented, sustainable, fully connected life sciences sectorbuilt on collaborative action that exploits strengths in scientificexcellence, financial services and innovative business models anddevelops, retains and builds upon Scotland’s talents’ Delivery of thestrategy is actively supported by the key public sector partners whoare collaborating to provide a coordinated action plan to driveactivities

To support the industry’s need for technical skills the ScottishGovernment has introduced new Life Sciences Modern

Apprenticeship frameworks at SVQ Level 2 and 3 This will have apositive impact on Scottish recruitment, retention and upskilling,whilst attracting younger people, from schools and colleges, intothe sector The Scottish Government and SDS are providing 50%

wage subsidies to private sector companies in the life sciencessector in 2009-10 as part of the ‘Innovate with an Apprentice’

scheme which allows employers to take on two apprentices for thecost of one

The ‘Science Graduates for Work’ programme, launched on 1 March

2010, is an innovative pilot initiative designed to help unemployedscience graduates become ‘work ready’ by providing them withtechnical laboratory skills and industrial awareness The pilot will

be run initially for 12-16 individuals in the Forth Valley College Anumber of other colleges are also interested in offering the course

to meet demand in their areas

Universities New Horizons, the report from the Joint Future Thinking Taskforce

on Universities5, led to universities being recognised as Scotland’s7th Key Sector in their own right A range of recent research hasalso confirmed the substantial contribution Scotland’s highereducation sector makes to the Scottish economy

The Scottish Government now invests over £1 billion a year inScotland’s universities to develop higher level skills, research andknowledge exchange that will help drive forward innovation andhigher rates of economic growth The Budget for 2010-11 shows afurther increase of 2% in real terms and over 4% in cash termsnext financial year Universities’ share of Scottish Governmentspend remains higher, at over 3.85%, compared to the pre-2007level of 3.73%

4 http://www.scottish-enterprise.com/lifesciences-strategy