Highlands and Islands Regional Economic Strategy
North Ayrshire Council · 3 December 2024
Back to Cabinet — 3 December 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
NORTH AYRSHIRE COUNCIL 3 December 2024 Cabinet Title: Highlands and Islands Regional Economic Strategy Purpose: To seek Cabinet endorsement for the Highlands and Islands Regional Economic Strategy Recommendation: That Cabinet: a) Notes the input provided by Officers to the development of the Highlands and Islands Regional Economic Strategy; b) Notes the constrained fiscal environment within which the Strategy will be delivered and that the requirement to ensure the development of a suitable governance structure and delivery plan, which takes cognisance of the financing and resourcing challenges associated with its delivery will be intimated to HIREP. c) Endorses the Highlands and Islands Regional Economic Strategy as provided at Appendix 1. 1. Executive Summary 1.1 The Highlands and Islands Regional Economic Partnership (HIREP) was established in 2021 to enable inclusive and sustainable economic growth and build resilience throughout the region. It is a partnership of public, private, third sector and academic organisations who are committed to working together to realise the economic potential of the region. 1.2 The Highlands and Islands Regional Economic Strategy (HIRES) has been developed to define the strategic and collaborative approach to economic development for the Highlands and Islands region, including the islands of Arran and Cumbrae. The development of the strategy has been led by Highlands and Islands Enterprise (HIE) with collaboration and input from across the HIREP membership and consultations with businesses, third sector, academic and community organisations in 2023 and 2024. 1.3 North Ayrshire is covered by two Regional Economic Partnerships and therefore two Regional Economic Strategies. Launched in June 2023, the Ayrshire Regional Economic Strategy recognises the importance of and challenges faced by our islands. The Economic Policy Team has actively contributed to the development of the HIRES, promoting the adoption of Community Wealth Building as a cross-cutting theme to achieve synergies with the Ayrshire Regional Economic Strategy.
Page 2
1.4 The HIRES will be formally approved following consideration and endorsement by individual HIREP members through their individual governance processes. It is proposed that Cabinet endorse the HIRES provided as Appendix 1. 2. Background 2.1 The Highlands and Islands region is a unique geography made up of seven local authority areas: Na h-Eileanan Siar, Orkney, Shetland, Highland, Moray, Argyll and Bute and the North Ayrshire Council islands of Arran and Cumbrae. The region covers 52.3% of Scotland’s land mass and is home to a population of 491,600, equating to 9% of Scotland’s total population. 2.2 The Highlands and Islands Regional Economic Partnership (HIREP) was established in 2021 to enable inclusive and sustainable economic growth and build resilience throughout the region. It is a partnership of public, private, third sector and academic organisations who are committed to working together to realise the economic potential of the region. Since inception, HIREP has worked across a range of policy areas including Housing, Population Attraction and Retention, Skills, Childcare, Local Visitor Levy, Community Wealth Building and Community Benefit. Membership of the HIREP includes the following organisations: • Na h-Eileanan Siar • Orkney Council • Shetland Council • Highland Council • Moray Council • Argyll and Bute Council • North Ayrshire Council • Highlands and Islands Enterprise • Skills Development Scotland • Scottish Funding Council • University of the Highlands and Islands • NatureScot • Visit Scotland • Bord na Gaidhlig • Highlands and Islands Transport Partnership (HITRANS) • Cairngorm National Park Authority • Business representatives and third sector organisations 2.3 The purpose of the Highlands and Islands Regional Economic Strategy (HIRES) is to galvanise collaborative partner action in pursuit of shared ambitions, goals and actions to deliver on the economic potential of the region. It has been informed by the National Strategy for Economic Transformation (NSET) and aligns with strategies of member organisations to ensure outcomes are maximised through collaborative action. 2.4 North Ayrshire is covered by two Regional Economic Partnerships and therefore two Regional Economic Strategies, the HIRES and the Ayrshire Regional Economic Strategy (ARES). The ARES recognises the significance of the islands, their key challenges and actions to address and seeks to support alignment with the 10 year Island Plans. Through active engagement in the development of HIRES Officers have
Page 3
sought to reduce the potential for duplication and to achieve synergies with the Ayrshire Regional Economic Strategy 2.5 The HIRES outlines a 10-year vision for the Highlands and Islands and positions a Just Transition to Net Zero as a key opportunity for businesses and communities. The Strategy also recognises the importance of enabling infrastructure, assets and services across the partnership which will be critical to realising our collective ambitions. It is acknowledged that the work of individual partners will continue at a regional or local level, however the Strategy focuses on where collaborative action is necessary for delivering the best outcomes for the region. 2.6 The development of the strategy has been led by Highlands and Islands Enterprise (HIE) with collaboration and input from across the HIREP membership. It has been subject to two rounds of consultation, round one in November/December 2023 and round two in Summer 2024. In round one, HIE undertook a targeted consultation with a cohort of over seventy consultees, including business, third sector, academic and community interests to seek validation of regional opportunities and challenges identified by HIREP. Representatives from Arran and Cumbrae were included as part of the targeted consultation. 2.7 Round two was an open, online consultation, seeking views on the draft strategy document during July / August 2024. NAC publicised the opportunity to engage in the consultation to our island communities through an information email distributed by Community Planning to both the Arran and North Coast and Cumbraes Locality Partnership distribution lists, advising the survey was open and encouraging representatives to review and complete the consultation survey before the closing date. 2.8 The strategy sets out the vision of the Highlands and Islands as a “dynamic, connected, resilient and prosperous region with a balanced and growing population and a vibrant economy, embedding Community Wealth Building, leading Scotland’s transition to net zero, and enhancing our natural environment.” In order to shape the goals and actions of the strategy, HIREP members identified the key economic opportunities and challenges for the region: Key Opportunities: • Renewable energy and energy transition • Sustainable tourism and hospitality • Food & drink and primary sectors including aquaculture • Life, marine and health industries • Heritage and creative industries Key Challenges: • Transport services and infrastructure • Housing availability and affordability • Domestic and business energy costs • Population and shortage of labour • Skills shortages • Digital connectivity • Natural habitat and climate change • Accessible public and private services across the region
Page 4
2.9 The strategy sets out clear goals and associated actions requiring regional collaboration to deliver the vision. The six strategic goals for the region have been identified as follows: 1. Increase the profile and understanding of the Highlands and Islands to support effective policy and unlock regional investment. 2. Become a region which delivers high quality and affordable housing for residents. 3. Enhance the region’s transport and digital infrastructure to become an exemplar of efficient rural connectivity. 4. Build resilience and competitiveness through place-based opportunities and stimulating an active culture of entrepreneurship and innovation. 5. Maximise the economic and community benefits from renewable energy investments and drive the region’s move to net zero and climate resilience/adaptation. 6. Develop a coordinated response to skills and labour requirements across the region. 2.10 Four cross-cutting themes considered fundamental to achieving these collaborative goals have been identified: • Community Wealth Building and Benefit; • Innovation and Entrepreneurship; • Population; and • Just Transition. 2.11 To deliver the strategy and associated strategic goals, HIREP will put appropriate governance arrangements in place, including the alignment of some existing regional specific groups, to provide clear ownership of both development and delivery of agreed actions. A delivery plan is currently under development and will be refreshed every two years. 2.12 The Economic Policy Team has actively contributed to the development of the strategy, in particular promoting the adoption of CWB as a cross-cutting theme to achieve synergies with the Ayrshire Regional Economic Strategy. Officers have also agreed to support HIREP with the development of the governance structure, informed by the experience of progressing the Ayrshire Regional Economic Strategy and will continue to sit on the delivery working group. Through this, they will seek to support the development of a suitable governance structure and delivery plan, which takes cognisance of the financing and resourcing challenges associated with delivering the HIRES. 2.13 The Scottish Government has confirmed that at present, there will be no funding available to deliver on the commitments set out in the Regional Policy Review to support Regional Economic Partnerships or Regional Intelligence Hubs. The wider regional and national funding landscape is unclear at present for example the future of the Shared Prosperity Fund. This will require to be considered in the development of governance and resourcing arrangements and more broadly in any future plans for supporting Regional Economic Partnerships. This is also exacerbated by the nature of NAC’s regional working where the Council is engaged across two Regional Economic Partnerships.
Page 5
2.14 Informed by recent experience in relation to the delivery of the Ayrshire Regional Economic Strategy, Officers are cognisant of the significant scale of the undertaking, both in terms of a central resource to coordinate activity but also from those tasked with leading on actions under the strategic goals. Given the constrained fiscal environment and broad geography of the region, it is noted that delivery and resourcing of the strategy will be challenging. The wider regional and national funding landscape is unclear at present for example the future of the Shared Prosperity Fund. This has been raised with HIREP and will require to be considered in the development of governance and resourcing arrangements and more broadly in any future plans for supporting Regional Economic Partnerships. 2.15 The HIRES will be formally approved by HIREP following consideration and endorsement by individual HIREP members through their own governance processes. It is anticipated this process will be completed by the end of the year. 3. Proposals 3.1 That Cabinet: a) Notes the input provided by Officers to the development of the Highlands and Islands Regional Economic Strategy. b) Notes the constrained fiscal environment within which the Strategy will be delivered and that the requirement to ensure the development of a suitable governance structure and delivery plan, which takes cognisance of the financing and resourcing challenges associated with its delivery will be intimated to HIREP. c) Endorses the Highlands and Islands Regional Economic Strategy as provided at Appendix 1. 4. Implications/Socio-economic Duty Financial 4.1 There are no financial implications directly from this report however it is acknowledged the strategy will be challenging to deliver across a large geography in a constrained fiscal environment. Concerns regarding the resourcing and delivery of the HIRES have been raised with HIREP, and will be further advised when confirming North Ayrshire’s endorsement of the Strategy, if agreed. The Scottish Government has confirmed that at present, there is no funding available to deliver on the commitments set out in the Regional Policy Review to support Regional Economic Partnerships and Regional Intelligence Hubs. The wider regional and national funding landscape is unclear at present for example the future of the Shared Prosperity Fund. This will require to be considered in the development of governance and resourcing arrangements and more broadly in any future plans for supporting Regional Economic Partnerships. Human Resources 4.2 Officers have noted concerns with HIREP regarding a lack of resources to deliver the HIRES, including central coordination of the strategy and organisations tasked with delivering actions. Officers have agreed to support with the development of a suitable governance structure and delivery plan which will aim to take cognisance of the resourcing challenges.
Page 6
Legal 4.3 There are no legal implications. Equality/Socio-economic 4.4 The HIREP recognises that the region has a strong and proud history of extensive community-led development and action. It notes that Community Wealth Building (CWB) is pivotal to a successful place-based approach to socio-economic development and actions will be woven into HIREP’s response to regional opportunities and will contribute to addressing, in part, key enablers. It recognises that community-led development is a powerful mechanism for population retention. Climate Change and Carbon 4.5 The HIRES identifies climate change as a key driver for change and aligns with the Sustainable North Ayrshire Strategy. It offers opportunities for engaging in activity around energy transition and renewable energy generation. It identifies a goal to maximise the economic and community benefits from renewable energy investments and drive the region’s move to net zero and climate resilience/adaptation Key Priorities 4.6 The HIRES aligns with and contributes to the Council Plan priorities of Wellbeing and Climate Change, in addition to promoting resilient communities on our islands. Community Wealth Building 4.7 The Economic Policy team has actively contributed to the development of the HIRES to ensure that it was developed in line with Community Wealth Building aspirations. In particular, they have promoted the adoption of Community Wealth Building as a cross- cutting theme to ensure synergies with the Ayrshire Regional Economic Strategy and ensure adoption of CWB principles in delivery. 5. Consultation 5.1 The development of the HIRES was informed by consultation across the HIREP membership as outlined at Sections 2.5 and 2.6. In preparing this Cabinet paper, consultation has been undertaken with the Cabinet Member for Communities, Housing and the Islands. As outlined earlier in this report, engagement has taken place with communities on our islands in terms of developing the HIRES. RUSSELL McCUTCHEON Executive Director (Place) For further information please contact Emma McMullen, Senior Manager- Economic Policy, on 07956 461806. Background Papers Click here to enter text.
Page 7
HIGHLANDS AND ISLANDS REGIONAL ECONOMIC PARTNERSHIP REGIONAL ECONOMIC STRATEGY 2025 - 2035 DRAFT October 2024 DRAFT
Page 8
1 Introduction ...................................................................................................................................4 An Overview of the Highlands and Islands Region .......................................................................7 The role of Highlands and Islands Regional Economic Partnership ............................................13 Overview of the Regional Economic Strategy and its development process ...............................................................................................13 2 Our vision for the region in 2034 ............................................................14 Vision statement ..............................................................................................................................14 Fulfilling our Vision – A Snapshot of the Region in 2034 ............................................................15 3 The rationale for change ............................................................................16 Key Drivers of Change ...................................................................................................................17 Analysis of the Regions Strengths, Weaknesses, Opportunities and Threats ...........................................................................................................................19 Opportunities ..................................................................................................................................20 Enablers and Challenges ...............................................................................................................23 Conclusion .......................................................................................................................................27 Contents Page 2 DRAFT
Page 9
4 Goals and actions ........................................................................................26 Cross cutting themes........................................................................................................................29 Our Strategic Goals and Actions ...................................................................................................32 Goal 1: Increase the profile and understanding of the Highlands and Islands to support effective policy and unlock regional investment ...................................32 Goal 2: Become a region which delivers high quality and affordable housing for residents .......................................................................................................................33 Goal 3: Enhance the region’s transport and digital infrastructure to become an exemplar of efficient rural connectivity .................................................................... 34 Goal 4: Build resilience and competitiveness through place-based opportunities and stimulating an active culture of entrepreneurship and innovation ..............................................................................................35 Goal 5: Maximise the economic and community benefits from renewable energy investments and drive the region’s move to net zero and climate resilience / adaptation ..................................................................................................... 36 Goal 6: Develop a coordinated response to skills and labour requirements across the region .......................................................................................................37 5 Delivering our Strategy ............................................................................ 40 Developing an action plan for delivery ........................................................................................40 Monitoring performance ................................................................................................................40 Page 3 DRAFT
Page 10
1. Introduction Page 4 DRAFT
Page 11
The Highlands and Islands is on the cusp of unprecedented opportunity. Scottish and UK Governments acknowledge that the region is pivotal in terms of meeting climate change targets and supporting the shift to clean, green sources of energy. This will require transformational change, and action to ensure that economic and social benefits are captured for people, communities and businesses in all parts of the region. The Highlands and Islands Regional Economic Strategy sets out where regional scale collaborative actions by HIREP partners will be crucial for realising the once-in-a-generation opportunities present across the Highlands and Islands and addressing the development challenges facing the region. The strategy recognises that HIREP partners will continue to work to their own plans and strategies, delivering at regional or sub regional level. This document recognises the value of that work and enhances and builds on partners’ actions and responsibilities. It is not an aggregation of the vital actions delivering local economic development across the region. In articulating the need for collaborative regional action, the strategy focuses on areas where working together is the most effective and efficient means to generate maximum impact and benefit. Page 5 DRAFT
Page 12
Argyll and Bute Population: 86,000 12.4 people per sq km Arran and Cumbrae Population: 5,900 13.3 people per sq km Highland Population: 235,400 9.2 people per sq km Moray Population: 93,300 41.7 people per sq km Na h-Eileanan Siar Population: 26,100 8.5 people per sq km Orkney Population: 22,000 22.2 people per sq km Shetland Population: 23,000 15.7 people per sq km An Overview of the Highlands and Islands Region* * As far as possible, analysis in this section is based on the HIREP geography. Where data is not available at this level, the regional figure is based on local authority data (so excludes Arran and Cumbrae), or the Highlands and Islands International Territorial Level (ITL) geographic classification (excludes Helensburgh and Lomond). The Highlands and Islands is unique within Scotland and the UK, being a large, sparsely populated region, similar in size to Denmark, with dispersed settlements and all of Scotland’s inhabited offshore islands. Over a fifth of residents live on islands and almost two-fifths in remote rural areas. The region’s complex mountain and coastal geography provides challenges for connectivity and access to services, markets and employment. An extensive transport infrastructure including over a quarter of Scotland’s road network, 60 ferry routes, 10 regional and 10 local authority airports attempts to mitigate these challenges of rurality and peripherality. Conversely, our extensive land and marine assets have, over decades, been powerful drivers of our primary sectors, food and drink and tourism successes and are now shaping the region’s leading role in renewable energy generation and climate change adaptation and mitigation. 40,793 sq km 52% of Scotland’s land mass Page 6
Page 13
0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% Under 1 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100+ Scotland HIREP Scotland 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% Under 1 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100+ Scotland HIREP HIREP -0.04% -2.5% 1.4% 0.00% -5.6% 2.9% -0.8% -1.5% -5.2% -8.0% -3.7% -4.5% -10.6% -3.9% -7.5% -5.5% Population share by age 2022, HIREP and Scotland Percentage change in population, 2011 to 2022 POPULATION Within the context of national growth, the region’s population remained relatively stable between 2011 and 2022. However, this masks considerable sub-regional variation. As with Scotland overall, there is an ageing population with low birth rates and levels of in-migration, although this can be more acute in our region. The working age population is lower than nationally in all areas (ranging from 54% in Arran and Cumbrae to 60% in Highland, Moray and Shetland, compared with 64% nationally) and declining, even where there is overall growth, resulting in higher dependency ratios. With fewer people than jobs, this highlights the importance of population attraction and retention for the Highlands and Islands. 491,600 people 9% of Scotland’s population Scotland 2.7% Scotland -0.9% HIREP Argyll and Bute Highland Moray Na h-Eileanan Siar Orkney Shetland Arran and Cumbrae Total population Working age population (aged 16-64) Scotland – total population change Scotland – working age population change Page 7
Page 14
81% Mobile connectivity Spring 2024: Proportion of landmass predicted to have good outdoor coverage from at least one mobile network: People living in rural parts of Scotland spend £50 more per week on transport than those living in urban areas Median (gross) annual pay of £27,079 in 2023 91% of the Scottish level Around half of residents live in the 20% most deprived areas of Scotland in terms of access to services 19% of children aged under 16 are living in relative low-income families 21% nationally Over 10,300 second homes and 12,600 vacant properties (43% and 14% of the Scottish totals) 5.2% of land is in community ownership 99% of the Scottish total Rises to 50.3% of land in Na h-Eileanan Siar Superfast broadband (>=30mbps) 4G Full Fibre to premises 5G 87% 35% 11% Highlands and Islands Highlands and Islands 96% 85% 60% 23% Scotland Scotland Broadband connectivity May 2024: Proportion of premises with access to: All sectors new build house completions index (base year = 2008) COMMUNITIES AND INFRASTRUCTURE Community, culture and a sense of belonging are powerful assets in the Highlands and Islands. They are evident in extensive community asset ownership and management, strong levels of affinity and pride, and high levels of social capital. However, those living in the region face poorer access to services, higher costs of living, and greater exposure to fuel poverty, along with lower levels of pay than nationally. Transport poverty is evident, and levels of housebuilding lag Scotland, with this most acute in remote rural and islands areas. Realisation of the region’s opportunities is predicated on investment in enabling infrastructure including digital and mobile connectivity, transport, housing, and service provision, to remove barriers to development. 110 100 90 80 70 60 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Highlands and Islands Scotland Page 8
Page 15
Key labour market indicators (of those aged 16-64) % economically inactive 22.5 3.6 10.2 Unemployment rate % in employment who are self employed Scotland 23.4 2.3 14.1 HIREP Share of employment by industry 2022* *Within services, the most dominant sectors are: education, human health and social work (21.5% of regional employment), wholesale and retail (12.9%) and accommodation and food services (10.9%) Services 81.9% 5.6%Construction Manufacturing Scotland 73.0% HIREP 6.3% 6.6% 5.8% 6.3% 14.5% 48% of those aged 16- 64 have a qualification equivalent to SCQF level 7 or above 55% nationally 39% of school leavers went directly into employment or training 28% nationally 4,273 modern apprentices in training at the end of March 2024 11% of the Scottish total Replacement demand (2026-2033) of 53,200 jobs (openings created by people leaving the labour market) 42,000+ unique job postings (August 2023 to July 2024) 8% of all job postings in Scotland Total employment of 256,000 9.8% of the Scottish total SKILLS GROW ING OPPORTUNITY Primary industries LABOUR MARKET AND SKILLS The region has a tight labour market with consistently high levels of participation and low unemployment. The employment rate and economic inactivity levels are similar to nationally, though levels of self-employment are higher. Almost all school leavers enter positive destinations, with a higher proportion than nationally going directly into employment or training. Though public sector and services still dominate, employment in construction and primary industries is higher than nationally, and the employment base is diversifying. Labour and skills shortages persist, but opportunities are increasing to reskill/upskill to meet the needs of new and expanding sectors. Page 9
Page 16
3-year survival rate for businesses of 64% (for those born in 2019) 57% nationally 1,273 social enterprises 21% of the Scottish total Business start-up rate of 8.3% in 2022 10.8% nationally GVA of £13.3 billion 8% of the Scottish total 33% of businesses are innovation active (2020-2022) (32% nationally) 23,095 registered private sector businesses 13% of the Scottish total Share of regional GVA (top three contributors) Education, human health and social work Manufacturing 15.8% 12.2% 11.2%Primary industries Share of Scotland’s private sector business base by growth sector *The growth sectors shown in the chart account for just under half (49%) of the region’s business base, 42% nationally. BUSINESSES AND ENTERPRISES As with Scotland overall, the region’s economy is dominated by small and medium sized enterprises (SMEs) although this accounts for a higher share of employment than nationally. The business base is diversifying, spanning a broad range of sectors including food and drink, sustainable tourism, renewable energy, life sciences (including marine biotechnology), creative industries, and space. In terms of economic contribution, manufacturing and primary industries are regionally significant. Businesses are resilient and innovative, underpinned by a strong entrepreneurial culture. Social enterprises are more prevalent than elsewhere in Scotland, playing an important role in realising local opportunity and supporting service delivery. 31% 17% 14% 8% 8% 8% 13% Food and drink Sustainable tourism Energy (including renewables) All private sector businesses Financial and business services Life sciences Creative industries (including digital) Page 10
Page 17
12.7 tCO2e per capita 7.8 tCO2e nationally 27% of domestic dwellings have an Environmental Impact Rating of C or above 41% nationally 6,236 ktC02e in 2019 15% of the Scottish total Share of territorial GHG emissions by source, 2019 Agriculture: 26% LULUCF: 22% Transport: 19%Domestic: 14% Industry: 13% Waste: 3% Commercial: 2% Public sector: 1% The region accounts for 52% of Scotland’s current installed renewable energy 52% Potential to increase the region’s renewable energy capacity from 6,513MW to 33,205MW Around half of Scotland’s woodland and more than three-quarters of Scotland’s peatland is located in the Highlands and Islands NET ZERO AND CLIMATE ADAPTATION The region is making progress in reducing greenhouse gas (GHG) emissions although the pace of this does lag Scotland overall. Agriculture and Land Use, Land Use Change and Forestry (LULUCF) account for a significantly higher share of emissions in the region than nationally and addressing this is critical for both regional and national ambitions around net zero. Energy transition will be core to lowering transport, domestic and industry emissions, and the scale of retrofit required to bring commercial and domestic properties up to appropriate energy efficiency standards presents both a challenge and an opportunity. The region’s capacity for renewable energy generation, extensive and growing, and the carbon sequestration potential of our natural capital, is pivotal to meeting climate change targets for Scotland and the UK. Page 11
Page 18
Page 12
Page 19
THE ROLE OF HIGHLANDS AND ISLANDS REGIONAL ECONOMIC PARTNERSHIP The Highlands and Islands Regional Economic Partnership (HIREP) was established in 2022. It enables inclusive and sustainable economic growth and builds resilience throughout the region, by identifying and focussing on areas of joint strategic purpose. It focuses on co-ordinated action in pursuit of regional growth opportunities and to address shared challenges. HIREP is a partnership of public, private, third sector and academic organisations, working together to realise the region’s economic potential in a sustainable and inclusive way. HIREP fulfils its purpose through: › Identifying opportunities for collaborative and co- ordinated action in pursuit of agreed regional priorities, ensuring, where appropriate, that stakeholders plans are aligned, and resources are deployed efficiently and effectively. › Advocating on agreed regional economic opportunities and challenges and, where appropriate, leading in discussions with Scottish Government, UK Government and other organisations. › Being future focused in looking ahead to identify emerging regional opportunities and challenges where collaborative action can maximise outcomes and impact. › Working to understand evolving approaches to external funding and reacting to maximise impact across all parts of the region. › Understanding sub-regional economic dynamics and, where appropriate, formulating solidarity actions to ensure that no part of the Highlands and Islands is left behind. Membership of the HIREP includes local authorities, Highlands and Islands Enterprise, Skills Development Scotland, Scottish Funding Council, University of the Highlands and Islands, Naturescot, Visit Scotland, Bord na Gaidhlig, HITRANS, Cairngorm National Park Authority, The Crofting Commission, business representatives and third sector organisations. OVERVIEW OF THE REGIONAL ECONOMIC STRATEGY AND ITS DEVELOPMENT PROCESS The Regional Economic Strategy galvanises collaborative partner action in pursuit of shared ambitions, goals and actions to deliver on the region’s potential. It builds on the Scottish Government’s Regional Economic Policy review and is informed by the National Strategy for Economic Transformation (NSET). It brings a regional focus and coherence to a strategic landscape informed by a range of national strategies and plans. These include strategies and plans relating to energy, climate change and just transition, population, housing, digital, innovation, community wealth building, rural and island development, agriculture, land use and biodiversity. This regional strategy also aligns with the strategies of member organisations, focusing where collaborative action will yield the best outcomes. It charts how the region can capitalise on key opportunities and assets to sustainably and inclusively grow the region to reach its economic potential. It has been informed by diverse research, analysis and discussion that has included: › a review of the existing research and strategies produced by Highlands and Islands REP members, as well as other relevant external research; › workshops involving HIREP members; › HIREP sub-groups on population, skills, housing, tourism, childcare and community wealth building; › an online survey of stakeholders across the region in November & December 2023 ensuring good level of representation of business owners and private industry leads, public agencies (at both regional and sub-regional level) and community representatives. › Online consultation on a draft strategy document, during July and August 2024. Page 13
Page 20
2. Our vision for the region in 2035 VISION STATEMENT The Highlands and Islands is a dynamic, connected, resilient and prosperous region with a balanced and growing population and a vibrant economy, embedding community wealth building, leading Scotland’s transition to net zero, and enhancing our natural environment. Page 14
Page 21
Increase in regional attractiveness and investment Improved perceptions and understanding of the region Region is outward looking and well-connected globally Increased regional cohesion and partnership Businesses are more innovative, productive, resilient and adaptable Communities prosper and are more sustainable The region is well connected with good quality and secure services GVA and average incomes are higher than the national averages The region is an international exemplar and has extended economic and community benefit from its transition to net zero Housing quality, affordability and availability supports population and economic growth The region has a more balanced, growing and skilled population FULFILLING OUR VISION – A SNAPSHOT OF THE REGION IN 2035 Page 15 DRAFT
Page 22
3. The rationale for change Establishment of Highlands and Islands Development Board (HIDB) 1965 Local government reform 1975 1970’s Exploitation of North Sea oil 1970/80/90’s Upgrading of transport infrastructure 1970’s onwards Upgrading of telecoms infrastructure 2000’s University of the Highlands and Islands 2010’s onwards Offshore Renewables 2020’s onwards Net Zero Page 16
Page 23
KEY DRIVERS OF CHANGE The Highlands and Islands is an adaptable and resilient region. It has a long history of leading and responding to change, characterised by partnership working to grasp regional opportunities and secure investment in much needed regional infrastructure and services. The next decade and beyond will be no different, with change being a constant. The HIREP strategy and its delivery is informed and guided by an understanding of the drivers of change and their specific, and sometimes unique, impact on the region. Technology and innovation Demographics Land Ownership and Land Use Political and societal change › Data innovation and artificial intelligence › Automation and robotics › Digital transformation › Cyber resilience › Circular economy › Migration › Working age population › Increase in older population › Low birth rates › Geographic disparities › Housing supply and demand › Land use change and natural capital markets › Community ownership and wealth building › Land and agricultural reform › Agriculture and food production › Sustainable tourism › Constitutional reform › Regulation › Community wealth building › Consumer behaviour › Cost of living › Increasing demand for fair work and remote and flexible working › Equalities › Climate adaptation and resilience › Energy transition › Biodiversity › Decarbonisation › Regulation › Community engagement and awareness Climate change Page 17
Page 24
ANALYSIS OF THE REGIONS STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS An honest and timely assessment of the region provides the basis for a clear rationale for change. This is framed by our understanding of the Strengths, Weaknesses, Opportunities and Threats (SWOT) that shapes the goals and actions of the Strategy. HIREP members have drawn on their collective experience to understand the forthcoming decade of change across the whole region and sought to identify the most significant economic opportunities together with enabling infrastructure and services that will realise the region’s potential. This has been tested in consultation with wider stakeholders to ensure that HIREP’s collaborative action is focused where it is most required and will make the most impact. Page 18
Page 25
The Highlands and Islands is at the forefront of Scotland’s economic transformation and transition to a net zero nation. The mix of natural resources, established and emerging sectors, culture, heritage, social capital and business know how combine, to make a lasting impact on the region’s economic performance, the lives of its people and communities, and the natural environment. Working together, the combined expertise, resources and ambition within public, private, academic and third sector partners, can be a catalyst for regional transformation. Through collaboration, our leverage in securing external public and private investment can support development throughout the whole region. Opportunities Just transition to net zero Scotland’s National Population strategy Supply chain opportunites Importance of place Growth Deals and Other External Funding Community lead development Existing green and blue economy Regional transformtonal opportunities Regional Distinctiveness (Cultural and Heritage assets) Growth sectors Natural capital Work anywhere Existing entrepreneurship “Much of Scotland’s renewable energy resource is in this region or its coastal waters. Collective action is required to secure, through influence, a favourable policy and regulatory regime; a strategic approach to infrastructure investments; regional level skills development and region wide community benefits.” “Renewable energy and infrastructure provides a fantastic opportunity for jobs and sustainability, but there is a risk that the local benefit is not maximised and the socio economic potential is not maximised” Sense of place is strong in the Highlands and Islands, with the region’s unique culture, environment and people shaping future opportunities. These manifest themselves in exciting prospects for our key sectors and for community wealth building. Opportunities have been tested through consultation with stakeholders and are those where a collaborative regional approach can deliver the best outcomes. Page 19
Page 26
Renewable energy and Energy transition The region currently accounts for over half of Scotland’s installed renewable energy capacity and this capacity could increase four-fold if all pipeline activity is realised, further still if proposed developments progress. Reflecting this, HIREP members, and the broader consultation process, recognised renewable energy as the primary opportunity for the region. This includes capitalising on renewable energy generation as a means for the region to maximise its future potential, creating highly-skilled and high-paying jobs in a rapidly growing sector. It also means supporting evolution of the sector through technological innovation, and ensuring the infrastructure exists in terms of transport, ports and harbours, housing, academic expertise and supply chain requirements, so that benefits can be retained in the region. Central to this opportunity is not only the expansion of the renewable energy sector but also ensuring that local communities benefit from its growth. Without specific action, there is a risk that local benefits may not be maximised, despite the region being a significant contributor to Scotland and the wider UK’s renewable energy production. Local communities should derive tangible benefits from the renewable energy assets in the region, contributing to more equitable growth and community wealth building, addressing local needs and enhancing community wellbeing. Sustainable tourism and hospitality Sustainable tourism is a key opportunity that could benefit the region across its varied geographies. While the visitor economy is well-established in the region, sustainable tourism has emerged as an opportunity for further growth, bringing potential to support vibrant rural areas, employment creation in rural communities and is key to the region’s just transition to net zero. Visitor demand for the Highlands & Islands is consistently strong, especially in international markets, and is reinforced by a strong brand based on our unique culture, heritage and landscape. Future success will depend on our ability to achieve balanced, sustainable growth of the visitor economy, creating opportunities for communities and businesses to realise benefits, while seeking to protect and enhance the environment on which tourism depends. Food and Drink, and Primary Sectors including Aquaculture The region’s food and drink sector, built on our primary industries, is well-established and has a unique reputation with high value which is associated with our environment, people, culture and provenance. It is rooted in the region’s extensive land and marine assets and the work of farmers, crofters and fishermen. A significant economic contributor, employment stretches across the region. There are, however, location specific clusters. Areas such as Islay and Speyside are renowned for their whisky production, our islands and west coast for aquaculture, while Moray is recognised for its crop and animal production, and fish landings take place around our extensive coastline. To ensure a prosperous future for the sector and maximise benefit to local communities, enterprises will have to adopt new technologies, create higher value jobs and develop sustainable products and business models. Market insights indicate that both future employees and customers will be concerned about the low carbon footprint of food and drink products and enterprises’ efforts to reduce their emissions. As producers of high value products, businesses have the potential to be a forerunner in this. Regional greenhouse gas baselining highlights the scale of opportunity in addressing emissions from agriculture, land use and industry. Life, Marine and Health Industries The Highlands and Islands has multiple niche strengths in life, marine and health sciences, built on unique natural resources, growing academic expertise and innovative businesses. We have anchor life science assets across the region in UHI Shetland, the European Marine Science Park and Inverness Campus, the latter included in the Inverness and Cromarty Firth Green Freeport area. Collaboration between stakeholders and within clusters will be key to creating the conditions for long term high value growth, for enterprises that are focused on a range of markets, overseas and domestically, and tend to pay above average salaries. The Highlands and Islands has advantages in areas including biotechnology, using the regions natural resources, such as seaweed and timber, to create high value products for the food, pharmaceutical and packaging industries; as testbed for remote and sustainable healthcare that delivers for sparse and dispersed population; and leading animal health, aquaculture and agritech research, development and innovation that ensures the sustainable future for the region’s extensive marine and land based farming sectors. 2.86 million hectares of utilised agricultural land, 54% of Scotland’s total Page 20
Page 27
Heritage and Creative Industries With well-established international brand recognition, our region has strengths in heritage, provenance and storytelling, creativity, Gaelic and other languages, and green credentials. The creative industries is the world’s fastest growing sector, largely driven by transformational adoption of technology. In the Highlands and Islands, it spans commercially successful businesses as well community-based organisations, and is buoyant across the whole geography, with clusters in many of our islands. It is often strongly linked to distinctive local culture e.g. Gaelic culture in Innse Gall and visual arts and crafts, textiles and jewellery in Orkney and Shetland. The region has a major opportunity to build on its international reputation and many assets, with strengths in areas of largest growth such as digital content, authentic traditional crafts, digital heritage, environment and sustainability. Proportion of people aged 3+ with at least some Gaelic Skills (2022) Scotland HIREP Na h-Eileanan Siar 2% 9% 57% Page 21
Page 28
HIREP Enablers and Challenges Realising our regional opportunities requires effective policy, investment and service delivery across the region and requires a sharp focus, given the challenges of geography, demography, infrastructure deficiencies and cost of service provision. Each of the enablers, identified by HIREP members and through consultation, is a fundamental requirement for development and presents challenges best addressed through collaborative action. Current factors impacting on cost of living and doing business High rates of domestic and business fuel poverty youth outmigration Housing affordability and availability Low wages and productivity Declining town and village centres Rurality/remoteness Transport and digital infrastructre Extreme weather Lack of economic diversity/sensitivity to economic shocks Declining public sector resorces Shortages in skill & skills provision Perception on compromise to be in the region Ageing population - risk of demographic crunch Page 22
Page 29
Housing Housing provision and availability across the region is a fundamental enabler of development, and the current housing system is not operating in a way that supports economic development, community resilience or population attraction and retention. Fit for purpose and affordable housing, across all types and tenures, in the right locations, underpins realisation of the region’s transformational economic opportunities by ensuring that worker accommodation is available. It supports growth of the region’s SME base through provision of housing in proximity to employment. It is also critical to community cohesion and resilience, given the importance of housing availability for all residents and those providing key services. The need for new housing investment across the region is matched by the need to invest in existing housing stock to improve energy efficiency, address fuel poverty and contribute to a reduction in greenhouse gas emissions. The region’s housing challenge is multifaceted. Collaborative action by HIREP seeks to understand and address barriers in the housing system, leading to investment in housing stock that meets the needs of all parts of the region. Na h-Eileanan Siar Orkney Shetland Arran and Cumbrae HIREP Scotland 6.6%Argyll and Bute Highland Moray 4.7% 3.0% 4.5% 1.7% 3.8% 5.7% 8.0% 4.0% 5.6% 1.5% 7.5% 22.8% 4.9% 4.8% 0.9% 3.9% 3.4% Proportion of dwellings that are vacant or second homes (2023) Page 23
Page 30
Transport services and infrastructure Effective transport infrastructure and services are critical to connecting our businesses, communities and people with each other and with the wider world. There are numerous transport challenges across the region which can result in journeys with low average speeds, low frequency and reliability issues. Transport services are expensive to deliver over a large geography and, in many parts of the region, reliance on private cars exacerbates transport poverty. Specific challenges include poor road networks, including trunk roads and other main routes, limited electric vehicle charging infrastructure requiring public investment to expand; limited public transport options across much of the region including low frequency rail services, infrequent and costly flights from the region’s airports and ferry service challenged by reliability and resilience. These challenges have multiple impacts. They can hamper access to employment and public services, particularly amongst low-income groups and they are a barrier to businesses accessing supplies and markets. Sustained investment in transport infrastructure and connected services is required, not only to enable efficient, timely and resilient services, but also to support the decarbonisation of transport. Digital Connectivity Digitalisation is a proven driver of development, with equity of access, at affordable cost, to high-speed connectivity being a pre-requisite to delivering the ambition in this plan. Such access is not yet universal throughout the region, leading to a geographic digital divide and stifling the realisation of opportunities in some, often remote or island communities. As investment continues nationwide to deliver ever faster broadband speeds, there is a need for continued public investment to ensure that the region keeps pace with other locations. Across a region with dispersed population and lengthy travel times between settlements, mobile connectivity is equally important, while being challenging to deliver effectively. Continued investment is required to deliver 4G and 5G connectivity outwith main settlements. Improving digital access across the region is of paramount importance to businesses, being a strong driver of innovation and productivity. It is also fundamental to delivery of public services, including education and health services which are, increasingly, implementing digital service delivery models to address the challenge of distance. Alongside investment in physical infrastructure, there is a continuing need to maximise the economic and social benefits of digital through supporting business and social innovation. 53% of premises are able to get a 5G signal outdoor from at least one mobile network operator, lower than the share at the Scottish (87%) and UK (92%) levels Page 24
Page 31
Population and Shortage of labour Stable or growing population, particularly of working age is a prerequisite to realising our economic ambitions and sustaining vibrant communities. Depopulation is a significant regional challenge , with decline in working age population exacerbated by outmigration and the impact of Brexit. Population of working age has decreased more rapidly between 2011 and 2022 in the Highlands and Islands than Scotland and almost a quarter of the population in the region are of retirement age. There is also unevenness of population distribution across the region. The opportunity afforded by digital connectivity to “work anywhere” in certain jobs is potentially an opportunity for the region but is heavily dependent on addressing the issues that determine regional attractiveness. Population challenges are acknowledged as cross-cutting and complex, impacted by interlinked factors such as access to affordable housing, available public transport options, effective digital connectivity, access to core services such as health, social care and childcare, education and training options and long term employment and career opportunities Labour shortages have become more prevalent in the past few years, impacted by Brexit and the pandemic, and have been more acute in sectors such as tourism and hospitality, food and drink, construction and health and social care. Challenges are also more persistent in more rural and island areas. Lower wages are an inhibiter to attracting population so increasing fair work and wage rates are key. There is an overriding need to reverse depopulation and thereby increase access to labour, through systemically addressing its causal factors to make the region a more attractive place to live, complemented by a regional effort to support talent attraction, upskilling and reskilling, and reducing economic inactivity. Skills shortages Labour and skill shortages are interlinked but come with their own unique challenges. While labour shortage makes it harder to find people to hire, skills shortage makes it harder to find the right people. The region has long-standing skills gaps and skills shortages which will continue, partly driven by the changing nature of skills in workplace such as digitisation. For our future and current workforce, the skills required to enter and progress in work are also changing. Alongside the possibilities for skills and labour attraction to the region through various sectoral opportunities, for example renewable energy, life sciences and aquaculture, change will be required within the skills system to deliver sufficient numbers of skilled people, not only to realise our economic opportunities but to ensure that service delivery in the foundational economy, for example health and social care, is supported. The gender pay gap was 4.5% in 2023, compared to 1.7% nationally and 7.7% across the UK “Depopulation is often linked to the other challenges listed in this consultation, such as housing, cost of living and employment opportunities. Many younger people, those most likely to be economically active, leave the island for better housing and employment prospects. Reversing the trend of depopulation should be a central focus of any Highlands and Islands Economic Strategy.” Page 25
Page 32
Energy While the regional opportunities from energy transition are evident, there are also challenges. The transition to net zero will require a mix of public and private investment in enabling infrastructure. The scale of such investment is beyond the capacity of the REP and its members. There is, however, a crucial role to play in identifying and evidencing the need for infrastructure, working collectively to aggregate data, and advocating for investment. Such investments have the potential to generate considerable community benefit, the challenge being to secure benefits of appropriate scale and maximise resulting community and regional impacts. Furthermore, the cost of energy presents a substantial issue for both local communities and private businesses, especially for those without access to mains gas. Consequently, these individuals and businesses are often reliant on more expensive energy sources for heat, such as oil and electricity. High energy costs are a particular issue for business. While the cost of energy is outwith its direct control, there is a potential advocacy role for the REP. Natural habitat and climate change The Highlands and Islands faces substantial challenges as a result of climate change, and the potential impact on the natural environment, local communities, transport and infrastructure and local businesses. Key risks as a result of climate change include loss of coastal communities and natural resources as a result of rising sea levels and coastal erosion; increased frequency and intensity of extreme weather events; and loss of biodiversity and habitat degradation, with impact on fragile ecosystems such as peatlands and marine environments We need to take action to reduce the region’s carbon footprint. Research details the scale of emissions from land use and agriculture. It points to the need for changing agricultural practices and investment in restoration of natural habitats (particularly peatlands and native woodlands). Whilst clearly a challenge, carbon reduction also presents opportunity in the form of environmental enhancement and nature-based business and job opportunities. There is also potential for significant community benefit to be derived from natural capital investment at regional scale over the long term. Even if the region can collectively deliver net zero, our climate is likely to continue to change with warmer drier summers, warmer wetter winters, and more extreme weather events – storms, floods, droughts. A risk-based approach to climate change adaptation will be essential. This is a cross-cutting challenge which not only has potential consequences for the opportunities identified such as for sustainable tourism and life, marine and health sciences, but also the potential to exacerbate other challenges including disrupting transport and infrastructure and contributing to further depopulation. The Highalnds and Islands has 86% of Scotland’s coastline, 61% of the UK’s Page 26
Page 33
Accessible public and private services across the region The availability of services across all parts of the region is central to the ability to retain and attract population. Delivering such services across the Highlands and Islands is logistically challenging and costly. The need to deliver over distance and the lack of scale economies, given small and dispersed populations, requires innovation, partnership and significant resources. Services include childcare, social care, cultural and leisure services, along with education and health services. While these are often the responsibility of individual HIREP partners, there is merit in regional learning and potential collaboration to develop and deliver services using new and innovative models. We need to build on our improving connectivity and recognised expertise in partnership delivery of services. The OECD in its rural innovation work has recognised the healthy state of social innovation and role of social enterprises in service provision, especially across remote mainland and island communities. Such partnerships should be enhanced, with HIREP having a role in building partnerships and sharing good practice across the region. A collective regional voice articulating what works most effectively in service delivery across the HIREP geography and the investment required to deliver is needed. CONCLUSION Focusing on these opportunities and enablers is key to achieving our vision, alongside a need to ensure these are clearly understood by governments and investors. Infrastructure investment is fundamental, requiring a long-term approach and innovation, especially to be appropriate for our geography and dispersed populations and businesses. Whilst our goals and actions are shaped around where we can combine our efforts to do more and achieve more for the region, there is an overarching requirement for collective and consistent promotion of the benefits and evidence of the needs of the region to help secure its vital continued contribution to the sustainable and inclusive growth of Scotland and the UK. ‘It is important to maintain, and preferably expand on, the current provision of services which are viewed as key to sustaining a viable community. If the island’s population falls further it could jeopardise key services and further accelerate the process of depopulation, with the school, GP surgery, shops and businesses potentially shutting as a result.” Page 27
Page 34
4. Goals and actions Page 28
Page 35
Introduction The Strategy sets out clear goals and associated actions requiring regional collaboration to deliver our Vision. Actions considered best delivered at a local level are not incorporated but HIREP will remain agile and consider additional actions if required as part of biennial delivery plans. Page 29
Page 36
HIREP Vision Statement The Highlands and Islands is a dynamic, connected, resilient and prosperous region with a balanced and growing population and a vibrant economy, embedding community wealth building, leading Scotland’s transition to net zero, and enhancing our natural environment. Our Goals Cross Cutting Themes Increase the profile and understanding of the Highlands and Islands to support effective policy and unlock regional investment • Enhance the regional evidence base to support advocacy and business case development • Bolster advocacy efforts with national government to better highlight the region’s unique needs • Identify new ways to deliver public services across the region, including through use of technology and innovative partnership delivery models Become a region which delivers high quality and affordable housing for residents • Improve the functioning and responsiveness of the housing “system” to emerging needs in the Highlands and Islands • Support the revitalisation of rural areas by increasing access to high-quality housing across the entire region Enhance the region’s transport and digital infrastructure to become an exemplar of efficient rural connectivity • Improve transport connectivity for local residents, businesses and visitors by increasing the availability, reliability and affordability of public transport • Pursue innovation in technology and service provision to deliver enhanced and more resilient and sustainable transport connectivity across the region • Increase the level of access to high-speed connectivity across the region Build resilience and competitiveness through place- based opportunities and stimulating an active culture of entrepreneurship and innovation • Stimulate an entrepreneurial and innovation-active culture within the region • Support new opportunities to enable growth and resilience in our priority sectors Maximise the economic and community benefits from renewable energy investments and drive the region’s move to net zero and climate resilience/adaptation • Maximising the economic and community benefits from renewable energy development • Actively work towards safeguarding and enhancing the region’s natural capital Community W ealth Building / Benefit Innovation and Entrepreneurship Population Just Transition Develop a coordinated response to skills and labour requirements across the region • Develop a shared understanding of labour and skills needs • Protect and build on the best of provision • Workforce Attraction and Retention Page 30
Page 37
To deliver these goals, HIREP will put appropriate governance arrangements in place, including the alignment of some existing regional specific groups, to provide clear ownership of both development and delivery of agreed actions. CROSS CUTTING THEMES The Strategy has identified four cross-cutting themes considered fundamental to meeting our goals and adding value to our actions: Community Wealth Building and Benefit › The region has a strong and proud history of extensive community-led development and action. Community Wealth Building (CWB) is pivotal to a successful place- based approach to socio-economic development and actions will be woven into HIREP’s response to regional opportunities and will contribute to addressing, in part, key enablers. It is recognised that community-led development is a powerful mechanism for population retention. › The understanding of CWB principles differs within HIREP partners and implementation across the region is at different stages. Building on development of a common understanding, HIREP’s focus will be on the identification of CWB actions that are most effectively delivered at regional scale, for example community benefit from energy and other investments, natural capital benefits, and procurement approaches. › Sharing strategic community benefits is a core component of CWB. The potential scale of community benefits arising from major investments, including onshore and offshore wind developments, transmission infrastructure investments, and, in the longer term, natural capital, could yield considerable sums across the region. Considering common objectives and guiding principles in securing, managing and investing strategic community benefit funds, at the local authority level, can support long lasting and sustainable impact. Page 31
Page 38
Innovation and Entrepreneurship › The region has embraced innovation and championed entrepreneurship over decades, wielding it to respond to both the challenges and the distinct opportunities created by our geography and natural and cultural assets. › Extensive social innovation, aided by the region’s high levels of social capital and number of inclusive, democratic business models, has been impactful in finding novel ways of delivering community services and benefits. The OECD, in its recent work on innovation in rural areas, highlighted the powerful impact of social innovation on development in the Highlands and Islands and recognised the solid foundation on which to build. › Innovation is key to improving productivity, competitiveness, profitability and entrepreneurship. The drivers of change will require the region to adopt and exploit technology, data, artificial intelligence and advanced innovation. Embedding these across the strategy, diversifying, and developing entrepreneurial skills and knowledge will increase resilience and broaden the economic base. 550 businesses and 31 social enterprises per 10,000 resident adults (380 and 13 nationally) Page 32
Page 39
Population › The Highlands and Islands has experienced periods of significant population decline throughout its history which have resulted in successive governments and the European Union recognising the need for strategic support. With the 2022 Census indicating that every part of the region has experienced a decline in working age population, although more keenly felt in the islands and the North mainland, the strategy recognises the core need for significant investment in people, infrastructure, businesses to tackle this challenge. The region's greatest asset is its people. They are intrinsic to realising our ambitions and creating the conditions for population growth requires actions across all the goals in the strategy. Just Transition › Scotland’s ambition to achieve net zero emissions by 2045 has far reaching implications for the Highlands and Islands and its people, communities and businesses. The positives include the renewable energy opportunities that are evident in the region are critical to achieving national ambition, and the extent and capacity of our natural capital both to sequester carbon whilst generating economic opportunity and good biodiversity outcomes. › The challenges are illustrated by the need to reduce the emissions impact of agriculture and land use, and the scale or work required to decarbonise domestic and commercial heating. › The change required will require good data, collaboration, careful planning and delivery to ensure that benefits are shared across all geographic areas and interest groups and that costs do not fall disproportionately on particular areas or groups. Each of the regional opportunities and enablers / challenges includes a net zero component to be addressed in a “just” way. 31% of domestic properties are reliant on high carbon fuels for heating, 8% nationally Page 33
Page 40
OUR STRATEGIC GOALS AND ACTIONS Goal 1: Increase the profile and understanding of the Highlands and Islands to support effective policy and unlock regional investment A powerful regional voice, supported by robust evidence detailing the opportunities and challenges in all parts of the region, is needed to exert effective policy influence and secure external public and private funding to further our regional ambitions. Using our collective knowledge and resources to shape innovative solutions, responding to unique situations across the region will demonstrate the value of place-based approaches. Sub-goal 1.a: Enhance the regional evidence base to support advocacy and business case development Actions › Progress a regional economic intelligence hub to increase access to. and use of. regional data and intelligence. › Collectively strengthen the evidence base through research, analysis and evaluation, to support and inform action across all strategic goals, with initial focus on housing, transport and transition to net zero. › Develop a new regional approach to attracting investment through promotion of the region’s assets and opportunities, working collaboratively to identify and progress inward investment opportunities. Sub-goal 1.b: Bolster advocacy efforts with national government to better highlight the region’s unique needs Actions › Advocate for and develop alternative ways of funding and providing key public and private services in the region (e.g. childcare) › Develop and communicate a clear HIREP position in regional, rural and island policy and funding discussions with governments, to secure effective policy and maximise resources to realise regional opportunities › Advocate for the region on key issues impacting on realisation of our regional vision and achievement of strategic goals, strengthening and ensuring a common and consistent voice for the region. Sub-goal 1.c: Identify new ways to deliver public services across the region, including through use of technology and innovative partnership delivery models Actions › Reflect on existing national systems and policies which impact on the implementation of the strategy and identify those which are not currently delivering for the region, developing alternative proposals for wider consideration. › Design and implement innovative service delivery models, building on the region’s high levels of social capital, expertise in social innovation and existing public / private delivery model collaborations › Recognising the creation of a new national Planning Hub, identify where regional partner collaboration can further support HIREP Planning Authorities in making timely decisions that support key economic drivers such as housing, transport and renewable energy. Page 34
Page 41
Goal 2: Become a region which delivers high quality and affordable housing for residents Enhancing local housing options is crucial for community sustainability and resilience. Providing residents with a quality home creates a foundation for long-term wellbeing, fosters stronger communities and is critical for attracting population. Sub-goal 2.a: Improve the functioning and responsiveness of the housing “system” to emerging needs in the Highlands and Islands Actions › Working with Local Authorities and Housing Associations, empower and support community housing trusts to build capacity to take forward feasibility work and develop propositions for community led housing developments. › Explore the establishment of a regional demonstration project to test new approaches to addressing housing in rural locations, governed by a committed partnership of public, private and community representatives. Use the learning to inform region-wide solutions › Consider and raise awareness on where housing policy and regulation could usefully be rural proofed and adjusted to allow local authorities to more flexibly use their funding to respond to island and rural needs. Sub-goal 2.b: Support the revitalisation of rural areas by increasing access to high-quality housing across the entire region Actions: › Increase the construction of more affordable housing of all tenures, ensuring dispersal of provision across rural areas, and consider how publicly owned and crofting land can contribute to this. › Repurpose vacant homes and holiday rentals by encouraging occupancy / utilisation as permanent primary homes and exploring different mechanisms, including new tax models, to promote change. › Champion energy-efficiency by encouraging the construction of energy efficient housing as well as upgrading the existing housing stock. › Recognising the challenges faced by SMEs in the construction sector operating in rural areas, work with the sector to build its resilience, aided by a more certain pipeline of proven housing developments. › Consider the need to pilot short-term accommodation solutions to alleviate pressures in key locations. Page 35
Page 42
Goal 3: Enhance the region’s transport and digital infrastructure to become an exemplar of efficient rural connectivity Connecting people, communities and businesses to employment, services and markets, physically and virtually, is a prerequisite for development. Transport that is reliable, resilient and affordable, provides effective connections across the region and connects the region to the wider world. Digital connectivity is a gamechanger, for access to services and markets. Both open up business opportunities and makes the region an attractive place to live, work and visit. Sub-goal 3.a: Improve transport connectivity for local residents, businesses and visitors by increasing the availability, reliability and affordability of public transport across the region. Action(s): › Work with HITRANS, ZetTrans and SPT to support the development and delivery of their RTS Action/Delivery Plans, which include road, rail and ferry infrastructure and service enhancements, improved integration across travel modes and exploration of fixed link options › Revitalise efforts to deliver against commitments made regarding strategic road enhancements, including A9 and A96 dualling and A82, A83 and A85, and to improve road quality and safety, unlocking regional economic potential. › Support the case for improvements to air and ferry services to meet the needs of communities and businesses, considering new and enhanced services and future infrastructure investment requirements. Sub-goal 3.b: Pursue innovation in technology and service provision to deliver enhanced and more resilient and sustainable transport connectivity across the region. Actions: › Future-proof regional car infrastructure by developing electric and low carbon opportunities, ensuring that funding and delivery models are reflective of the challenges in rural parts of the Highlands and Islands. Ensure that the necessary skills are in place within the local supply chain to deliver and maintain infrastructure. › Build on the success of the Sustainable Aviation Test Environment (SATE) project, to capitalise on emerging decarbonisation opportunities in the aviation sector positioning the region as an early adopter of new technologies for the movement of people and goods. Consider how the specification of PSOs can be critical in the transition to the Highlands and Islands becoming a net zero aviation region. › Widen the use and awareness of Demand Responsive Transport (DRT), particularly for rural communities which currently have limited or no regular scheduled bus services, taking learning from projects such as Moray Council’s m.connect DRT service using an app-based booking system. › Widen understanding and application of hybrid and electric ferry operation within the region, building on existing and emerging investments. Sub-goal 3.c: Increase the level of access to high- speed connectivity across the region Actions: › Maximise delivery of Scottish Government (R100) and UK Government (Project Gigabit) programmes to increase availability of high-speed connectivity to all parts of the region › Proactively encourage more private and public sector collaboration to develop better digital infrastructure across the region. › Identify ways of facilitating access to affordable and fast internet connectivity in communities that are not in current rollout plans and enact these within a reasonable time frame. Page 36
Page 43
Goal 4: Build resilience and competitiveness through place-based opportunities and stimulating an active culture of entrepreneurship and innovation A place-based approach focusing on areas of opportunity and supporting clusters, recognises and builds on our regional competitive advantage. Enhancing entrepreneurship and encouraging business innovation builds resilience, increases productivity and results in more competitive businesses able to offer higher paying jobs. There are benefits from focusing on the untapped potential of under-represented groups such as women and young people. Sub-goal 4.a: Stimulate an entrepreneurial and innovation-active culture within the region Actions: › Develop and facilitate new opportunities for peer-to- peer learning and networking across the region, and nationally/internationally through learning journeys, to support entrepreneurs in all stages of their journey. › Consider regional campaigns and programmes to promote entrepreneurship in education. › Increase regional alignment from external funding to increase effectiveness and efficiency of enterprise support and innovation. › Build on the national innovation strategy to support opportunities where the region has a distinctive competitive advantage, increasing the number of spin outs, and extending the adoption and diffusion of innovation › Maximise the regional benefit of national innovation projects such as NMIS, enhancing their visibility, reach and impact across the region Sub-goal 4.b: Support new opportunities to enable growth and resilience in our priority sectors Actions: › Enable enterprises to capitalise on opportunities, especially from digital technology, international markets, and supporting the transition to Net Zero. › Explore the benefits and delivery models for regional cluster approaches which are appropriate for the region’s unique geography and can stimulate innovation to support our regional transformational opportunities, › Ensure delivery of wider economic and community benefits to the visitor economy around the investment in growth deals. Seek to identify a pipeline of potential future strategic investments. › Support key Gaelic speaking communities with interventions to promote socio-economic opportunities and enhance resilience. Page 37
Page 44
Goal 5: Maximise the economic and community benefits from renewable energy investments and drive the region’s move to net zero and climate resilience/adaptation The region is at the forefront of Scotland’s transition to net zero, being home to much of Scotland’s renewable energy resource and natural capital. Safeguarding and strategic use of this natural resource will generate long-term value, retained in the region, with actions to ensure that businesses, communities and individuals across the whole region benefit. Sub-goal 5.a: Maximising the economic and community benefits from renewable energy development Actions: › Develop and implement common regional objectives and guiding principles to securing and distributing strategic community benefit funds at a local authority level. Support the scaling and growth of local supply chains through the aggregation of place-based demand/sharing of data, to ensure that existing businesses can pivot positively whilst also attracting new entrants to the market. › Identify and fill capacity and capability gaps through targeted inward investment and diversification to capture benefits within the region › Secure investment in our ports and harbours and advocate for investment in other enabling infrastructure ensuring that the region can fully and robustly contribute to decarbonisation targets and maximise the regional benefit of doing so. Ensure that all investments are proactively screened for climate risks, both current and future. › Support innovation and the development of new technologies such as marine energy technology and floating offshore wind, where the area has a natural advantage and opportunity to take a leading role. › Seek to influence a regulatory, market and consenting framework that recognises the strategic importance of our region, supports all renewable energy sectors, reduces project delivery risks and increases private sector finance. Sub-goal 5.b: Actively work towards safeguarding and enhancing the region’s natural capital Actions: › Incorporating a natural capital approach to regional and local decision making by enhancing public awareness of its natural resources and understanding the risks and benefits of nature-based solutions e.g. flood management, coastal and marine management, naturalising watercourses, peatland restoration, native woodland protection and enhancement. › Increase awareness of the existing natural capital of the region as a source of growth and build on existing work to identify ways in which local communities benefit from this investment, › Place special emphasis on the restoration and conservation of local peatlands, and protecting, enhancing and creating extensive native woodlands. Championing this proactively enables the safeguarding the region’s natural habitat and makes a major contribution to delivering our net zero ambition. › Proactively anticipate and strategically plan for the possible impact on communities of flooding and rising sea levels. Where feasible, the use of innovative adaptation solutions which preserve communities and services should be prioritised. Page 38
Page 45
Goal 6: Develop a coordinated response to skills and labour requirements across the region Our region requires people with the right skills to realise regional opportunities and support the foundational economy. Understanding and responding to future skills and labour needs gives businesses confidence they can access the skills they need, enables effective provision of services and provides individuals with pathways to well-paid work and career fulfilment in the region. Sub Goal 6.a: Develop a shared understanding of labour and skills needs Actions › Develop and communicate a greater understanding of need and emerging economic opportunities through a shared evidence base developed to inform regional / local provision. › Develop proposals to align Investment in skills with socio economic need, prioritising agreed economic and foundational economy requirements, working with the skills system to respond. Our combined investment in post school skills should focus on both supporting skills development and economic growth. Sub-goal 6.b: Protect and build on the best of provision Actions › Maintain and expand the best of provision capitalising on growing the workforce in response to short and medium term employment opportunities and supporting workforce development. › Support and grow the best of our Academic Pathways, reflecting regional/local strengths and opportunities. › A greater commitment to Work Based Learning in response to employer needs, resulting in greater access locally. › Develop the current workforce through upskilling and reskilling, ensuring our people and businesses thrive. › In response to the working age population challenge, changing nature of work and business models, focus our efforts in addressing need through work-based learning in a number of agreed priority sectors, important to the regional economy. Sub-goal 6.c: Workforce Attraction and Retention Actions › Commitment of regional partners commit to adopting work-based learning into workforce planning, providing a step change in opportunities across the region with the public sector to earn and learn. › Develop proposals to build on existing strengths of partners, including FE/HE alumni, Graduate Apprenticeships and co-delivery of provision with industry to promote regional opportunities and attract talent. › Work with UHI to ensure they are ably resourced to support the regional skills and education requirements (e.g. of the generational opportunities presented by the Green Freeport, offshore wind, and wider infrastructure investments, as well the potential development of a gateway programme to support recruitment in medical professions in remote and rural areas of the Highlands and Islands). Page 39
Page 46
5. Delivering Our Strategy DEVELOPING AN ACTION PLAN FOR DELIVERY Our regional strategy will guide the collaborative work of HIREP, working to a ten year timeframe with wider partners and stakeholders. Sitting alongside this strategy, a detailed delivery plan, refreshed every two years, sets out the key steps and the milestones to progress our goals and associated actions. It includes: › Roles and responsibilities for the HIREP, officers’ group and HIREP subgroups, aligned to the Strategy’s goals. › The role of the regional intelligence hub in providing research, analysis and evaluation support to evidence the case for action and “measure” progress. › The potential role that external investment may play in realising our collective goals. › The role that advocacy will play – the HIREP as a powerful voice for the region, in discussion with governments and others. MONITORING PERFORMANCE We have identified a number of high-level indicators which, taken together, will demonstrate progress over the long term. These have been chosen to help support monitoring of our goals and actions and progress towards realising our vision. They will assist HIREP in understanding the region’s progress in relation to the National Performance Framework. Complementing these will be further milestones and measures detailed in the two-year delivery plan. Page 40
Page 47
The region has a m ore balanced, grow ing and skilled population Com m unities prosper and are m ore sustainable GVA and average incom es are higher than national averages Housing quality, affordability and availability supports population and econom ic grow th Businesses are m ore innovative, productive, resilient and adaptable The region is w ell connected w ith good quality and secure services The region is an international exem plar and has extended econom ic and com m unity benefit from its transition to net zero Increase in regional population ✓ ✓ Increase in working age population (16 - 64) ✓ ✓ Increase in those aged 16-64 with at least the equivalent of a higher national diploma qualification (SCQF level 8) ✓ Access to services ✓ ✓ Community satisfaction – sense of belonging ✓ Increased no. of enterprises with inclusive business models ✓ ✓ Increase in regional GVA ✓ Increase in regional average incomes (relative to national averages) ✓ ✓ Increase in jobs paying above Real Living Wage ✓ Decrease in second homes and vacant properties ✓ No. of dwellings above a selected threshold of ‘Housing quality’ ✓ Energy efficiency – No. of dwellings with environmental impact rating of C or above ✓ ✓ Proportion of house completions (HIREP:Scotland) ✓ Proportion of businesses which are innovation active ✓ Increase in BERD and HERD ✓ Increase in GVA per hour worked (or per FTE) ✓ Business start-up / survival rates ✓ Residents’ satisfaction with public transport ✓ Passenger journeys by region for local bus services ✓ Access to full fibre broadband (residents and business) ✓ Access to 5G mobile ✓ Overall emissions declining by source (e.g. agri, land use, domestic…etc) ✓ Renewable energy generation (mega, giga watts) ✓ Developer contributions to community benefit re- offshore wind ✓ ✓ Natural Capital Asset Index (NCAI) (monitors the quality and quantity of terrestrial habitats in Scotland) ✓ Page 41
Page 48
HIREP Members Page 42
Page 49
Page 43
Page 50
DRAFT