By David Clelland, Research Associate, School of Interdisciplinary Studies, University of Glasgow
While the COVID-19 pandemic is primarily a public health crisis, increasingly attention is moving towards the short- and long-term economic impacts, and what any recovery might look like. It is no surprise that the new South of Scotland Enterprise Agency (SoSE) – operational since April 1st – has made supporting the region’s economy through the crisis its top priority.
All sectors of the economy are obviously being affected, but the crisis is perhaps particularly grim for businesses in tourism and hospitality. For workers in these sectors, who are more likely than most to be in part-time and relatively low-paid jobs, the immediate future is equally uncertain. This highlights a more general weakness in the South of Scotland’s economy. Like the rest of Scotland, the South has experienced a succession of closures and redundancies in manufacturing over the past few decades, alongside a long-term decline in agricultural employment. Although there are successful and innovative businesses in the region, the public sector is the largest source of secure and well paid jobs – and this has been eroded by a decade of austerity, particularly for local government. Growth in tourism has been one of the few sources of new employment in some parts of the region, sometimes through the diversification of farm businesses, and supported by programmes like LEADER. Overall, however, average wages in the South have fallen further behind the Scottish average, a succession of significant employers have closed, downsized or relocated, and the demographic challenges of an ageing population have become more apparent.
The new agency is intended to help address some of these long-standing challenges. For many in Dumfries and Galloway and the Scottish Borders, over the past decade, the national focus of Scottish Enterprise (SE) has reduced the capacity to support economic development in the region. This has contributed to a perception that it has been ‘forgotten’ in comparison with the central belt and the more familiar issues of the Highlands and Islands. The creation of SoSE represents one of the biggest changes in the economic development landscape in Scotland for many years – and, alongside the creation of Regional Economic Partnerships and Growth Deals, signals a shift towards a greater concern with what the Scottish Government calls ‘regional equity’.
The remit of the new agency is to ‘do things differently for the South of Scotland’s distinctive rural economy’. This represents a tacit recognition that the previous way of ‘doing’ economic development under the Scottish Enterprise wasn’t working well for the South, but also raises the question of what might be different in the longer term. One way in which SoSE’s approach might be different is in its delivery of business support. SE’s focus over the past decade on high growth potential, large firms and national growth sectors has led to those firms that do not fit these criteria – over-represented in the South’s business base – perhaps being neglected. For now the agency will be administering the various national emergency programmes put in place, but as time goes on there will be more scope to tailor support to the region’s needs. The crisis might also accelerate shifts in markets or behaviours – for example towards remote working – that open up opportunities for rural places; strategic interventions to help the South exploit these could be a priority in the longer term.
Another way in which the agency is likely to take a different tack is in a focus on ‘communities’. Many advocates for change have long looked enviously at the wider remit of Highlands and Islands Enterprise (HIE) that encompasses ‘social’ as well as economic development, and SoSE has been given an overarching aim to sustain and grow communities as well as businesses. This is likely to see a greater concentration on ‘placed-based’ approaches that seek to build on local assets in a more holistic way. This in turn will depend to an extent on the ability of people in those places to identify and pursue opportunities, and there is likely to be a focus on local capacity-building to facilitate this, perhaps supporting voluntary or third sector groups in a way that SE would not have.
While the creation of SoSE has been widely welcomed, there are a range of challenges and possible tensions Although the budget of the new agency – equivalent to HIE on a per capita basis – represents a significant increase in resources for economic development, this must be seen in the context of years of real-term reductions in local government funding. As councils have broadly tried to protect essential services such as education, non-statutory activities such as economic development have been cut back.
The budget will also be spread across a large geographical area – around 180 miles from east to west – with a large number of relatively small, and sometimes quite isolated, settlements, which can’t really be considered a coherent economic region. Both Dumfries and Galloway and the Scottish Borders have large rural elements, with similarly low average population densities, but linkages between the two are weak; main roads and rail connections run north-south, rather than east-west. To an extent this might not matter – after all, the Highlands and Islands is not a single economic region either. There may however be pressure to share funding or projects across the region, already evident in the decision to not have a single headquarters, and the stated intention to be ‘everywhere for everyone’. If the agency is also attempting to support a more diverse set of interventions, its resources might be spread too thinly.
These issues are likely to be in the background for now, as the focus is on weathering the current crisis. A dedicated economic development agency is likely to be a significant asset as places across the South try to get back to business. Along with the two councils, the agency is promoting a ‘Team South of Scotland’ approach to the response, and to act as a single voice for the region. But in the longer term the economic and policy landscape that the new agency finds itself operating in, whenever Scotland finally emerges from the current crisis, may be significantly different to that envisioned throughout the process of its creation.
Cite this article: Clelland, David, South of Scotland Enterprise – A new approach, in the midst of a crisis, Policy Scotland, 24 April 2020, https://policyscotland.gla.ac.uk/south-of-scotland-enterprise-a-new-approach-in-a-crisis/
Written content is published under a Creative Commons BY-NC-SA 4.0 licence.