1. Introduction

Scottish Enterprise (SE) is pleased to provide written evidence to the Scottish Affairs Committee Inquiry Our Borderlands, Our Future.

In line with the call for evidence, we have focused this submission on SE's role in delivering economic growth. In particular, the paper will highlight the strong contribution that SE makes to supporting the South of Scotland economy, as well as providing some detail on the range of actions SE undertakes with national and local partners to stimulate economic growth across the region.

As the Scottish Government's (SG) main agency for economic development for lowland Scotland, we are focused on those areas of economic development that can help grow the economy and increase Scotland’s international competitiveness.   Key to this is maximising Scotland's key assets and inherent strengths in particular sectors and working directly with companies to achieve international growth. We work very closely with our partners in Highlands & Islands Enterprise and together we offer a range of pan-Scotland services to assist their companies with their growth ambitions.

2. Our Approach

SE's Business Plan sets out five operational themes to help focus and prioritise activity.  These align with the Government's Economic Strategy, the principal goal being to maximise our contribution to the Strategy's objective of delivering faster, sustainable economic growth.  The five themes are:

1. Growth Companies - helping to raise growth performance.
2. Innovation - helping companies succeed in international markets.
3. Internationalisation - increasing our trade and exports and attracting more investment.
4. Low Carbon - taking advantage of market opportunities, increasing our resource efficiency.
5. Renewables - building on Scotland's significant natural advantages.

In addition to the above, we have a critical role in supporting the growth of internationally competitive sectors and the development of a globally competitive business environment.

This focus and approach ensures that resources at our disposal can be deployed flexibly to address opportunities and challenges as they arise across all geographies including the South of Scotland.  The programmes and services we deliver are evidence based, resulting from robust assessment and evaluation of what works, and are based on an informed understanding of the economic opportunity, ensuring greatest impact for the public purse.

Regional equity is very important to SE and, along with partners, we seek to address the challenges faced by less advantaged areas, helping identify local growth potential and helping to connect people and businesses to opportunities in the wider economy. 

In rural Scotland, our work with partners aims to ensure businesses in these areas optimise the unique growth opportunities related to natural assets and resources. We work with growth companies across sectors which are particularly prominent in these areas, eg food and drink, renewable energy and tourism, to help them unlock and exploit their growth potential. 

3. Supporting Company Growth in Rural Scotland

SE has 13 offices across Scotland, two of which are in the South of Scotland.  Staff in these offices including our Director of Rural and Head of Textiles, work across the region and beyond, to support and grow business. The advantage of SE's national approach is staff in each region can draw upon the full breadth of SE's services and expertise. Some of these services are highlighted in the section.

The South of Scotland (constituting the two local authority areas of Scottish Borders and Dumfries and Galloway) has a relatively large number of registered businesses relative to the population (7.3% of Scottish registered businesses vs 4.9% of the population)[1].  However, these businesses are, on average, smaller in turnover terms than the average (3.1% of Scottish total for registered businesses).

The Business Gateway (BG), which since 2007 has been managed by local authorities, plays a critical role in signposting companies to the most appropriate sources of support available, including the wide variety of business growth services we offer.

These services include a range of innovation, leadership and enterprise support programmes such as the Scottish Manufacturing Advisory Service (SMAS) which supports companies to improve the efficiency of their operations, and Co-operative Development Scotland (CDS) which supports company growth through collaborative and employee-owned enterprises.  Of 120 companies supported by CDS since 2011, nine were in the South of Scotland (7.5%).

Our GlobalScot network, comprising 600 international senior business people with an affinity for Scotland in over 50 countries, provides advice, support and networks to Scottish business.  In 2013-14, eight rural business leaders took part in a learning journey to London including two roundtable sessions with leading figures from the global banking sector, who shared their experience of leadership which was of practical value to the group.

Effective leadership is critically important to company growth and the Scottish Enterprise Rural Leadership Programme has been created to support this in rural areas.  It is open to ambitious farmers or mangers of any rural businesses within the SE area.  The Programme helps inform participants about rural economic issues, helping them make more informed decisions and identify and capitalise on future rural economy and business opportunities.  Of 44 participants in 2013/14, five were in the South of Scotland (11%, more than double the population share).

In addition to this, there are a number of other programmes aimed specifically at supporting rural businesses and the growth of the rural economy.  These include:

• The South of Scotland Loan Scheme which has provided over 81 loans at a value of nearly £2 million to assist rural SMEs grow;

• The Rural Petrol Station Grant Scheme was established following a study which identified rural petrol stations as particularly vulnerable to closure.  The grant supports required upgrading where, if the work was not carried out, the business would most likely close.  Of the three grants issued in 2013/14, two were in the South of Scotland;

• Rural Innovation Programme developed in response to our rural areas being distant from traditional innovation networks. This programme helps rural businesses access academic expertise and knowledge;

• Planning to Succeed works with groups of business leaders in targeted sectors - such as agriculture, fishing, tourism, food & drink - to raise their awareness of the market and business environment in which they operate and provide them with the necessary knowledge, skills and confidence to assist them to move towards more sustainable and market focused businesses. Of 77 participants in 2013/14, 18 were in the South of Scotland (23%, over four times population share).

Account Management

The core of SE's business support is the Account Management service[2].  This is an intensive service where the company is assigned a dedicated Account Manager who will work with them in identifying their opportunity for growth and what support they need.  Different companies have different needs at different stages of growth and scale and our Account Management service is structured in such a way as to ensure that we match our resources, skills and expertise (and that of our partners) to provide a tailored programme of support in line with our customers' requirements.

Our current Account Management portfolio of 2,205 companies includes 120 in the South of Scotland[3] (5.4% of the total).  However, of that number, the companies which met the criteria for "important to the economy"[4] (30 companies) represented 8% of the Scottish total.

Support for Account Managed companies is an integrated programme, tailored to their specific needs and opportunities.  In doing this, the Account Manager can draw upon specialists from across the entire SE network.  A good example is ERIBÉ Knitwear, a Galashiels-based knitwear design house and manufacturer.  SE supported ERIBÉ in its rapid growth through a programme of technical support, leadership development, export market support, and networking and, as a result, export sales have increased by 154% over the last five years and its products currently reach 15 countries.

SE works with the Business Gateway to identify companies with the growth potential and ambition that would benefit from the Account Management service.

Supporting Sector Opportunities

Working with industry leaders and public sector partners, we identify and support sector opportunities.  Sectors such as food & drink, tourism, and renewables are of particular importance to Scotland's rural economy, and tourism in particular represents a unique opportunity for the South of Scotland.  Some examples include:

Mountain Biking

Mountain biking is a key opportunity for the South of Scotland.  SE has been the lead partner, alongside a broad group of national and local partners[5], in setting up the 7stanes Community Interest Company (CIC) which opened in January 2010.  Its role is to promote the 7stanes mountain biking trail centres which are spread across the South of Scotland (400,000 visitors per annum).  The aim of the CIC is to develop new funding streams to support further promotion of the 7stanes and brand management and make it less reliant on public sector funding.

Laggan Outdoor Activity Centre

Agritourism Monitor Farm, family business consisting of a working beef and sheep farm and outdoor "adrenalin" and adventure activities, self-catering accommodation, caravan site and café.  The project will run until Autumn 2015 and the outputs will include 18 on-farm meetings across two Monitor Farms (the other farm is in Perthshire).  Two core business groups sharing data and information will be established.  An interactive Monitor Farms website at www.goruralforbusiness.com/monitorfarm will share meeting reports and other publications.  The aims of the project will be to improve the business performance and offering of the two Monitor Farm businesses and encourage participation by attendees which will lead to measurable improvements in their own rural tourism businesses.

4. Investing in the Business Environment

SE and partners, in particular local authorities, invest in the improvement of the business environment, which is vital to economic competitiveness.  Some examples in the South of Scotland which will help to unlock growth and attract investment are as follows:

Rural Property Support Programme

Helps to address rural property market failures to assist companies to expand.

South of Scotland Local Broadband Plan

SE is working with the South of Scotland Alliance (SOSA) to promote Next Generation Broadband availability throughout the region.  This project is now linked to the Scottish Government's Digital Future strategy and action plan.

Local Business Infrastructure

              Cargenbridge Industry Park - plots in phase 1 now being actively marketed for development by local growth or inward investor businesses, with serious enquiries from six companies under negotiation.

Annan Industry Park - detailed planning application in progress.  Serviced plots expected to be available by end of year.  The development will unlock development space in support of the wider Annan Regeneration Masterplan.  One plot provisionally pre-sold and early stage enquiries from three other businesses.

Gretna & Annan Business Space Project - Gretna site is under construction with the Annan site tied to industry park development.  Both developments will provide small office/light industrial units for small/start-up businesses and units will be available by end of year.

5. Partnerships

Collaboration and partnership with the public and private sectors is critical in ensuring that we maximise the economic impact from our expenditure. 

SE engages with a wide range of partners at national, regional and local level including, for example the SG's Strategic Forum, various Industry Leadership Groups and Community Planning Partnerships (CPPs).

Our Chief Executive plays an active role on the National Community Planning Group, which provides strategic leadership to community planning reform, consider opportunities and challenges and find an appropriate balance between local and national priorities. 

This is supported at a local level through engagement with each of the 27 CPPs and various local economic fora in the SE geography and we are working alongside local authority partners to bring new investment, new jobs, and greater opportunities for growth.

In the South of Scotland, there are a number of local partnerships that are crucial to the success of economic development activity.  These are:

The Regional Advisory Board[6] for the South of Scotland is the South of Scotland Economic Forum (SOSEF).  SOSEF is private sector led and has representatives from both the public and private sector, including two senior elected Members from each local authority, a regional college representative, and four SME/micro-business representatives.  This Forum reflects the large numbers of SME's and micro-businesses in the area.

The South of Scotland Alliance (SOSA) is a partnership between the two local authorities and SE.  SOSA works to raise awareness and understanding of the challenges and opportunities to grow the regional economy and increase its contribution to the national economy. 

SOSA, SOSEF and both CPPs have worked together to prepare a South of Scotland Economic Development Programme with four key strategic projects designed to grow the South of Scotland economy and have impact at the national level.

This Programme is a result of collaborative work, bringing forward an economic programme for the South of Scotland, building on key strategic opportunities and aligning nationally to the GES and locally to both CPP Economic Strategies.  This Programme is ambitious and aims for greater and more sustainable economic growth in the South of Scotland and for the South to play an increased role in the Scottish economy.

The four strategic projects are:

1. The Central Borders Business Park seeks to re-develop the existing Tweedbank industrial estate into a modern, 21st century business park.  This project is located next to the terminus of the Borders Railway and will create a high quality asset that will be a key economic driver for the local area.  It will create more and better jobs and allow local businesses to fulfil their potential while remaining in the Scottish Borders.  This project also includes support for inward investment marketing and SE is leading on a tourism feasibility study which will seek to exploit the tourism potential of the Railway. 

2. Mountain Biking is one of the major successes in the South of Scotland.  In order to continue the success of the 7stanes, it is necessary for the mountain biking product to be refreshed.  The addition of a mountain bike uplift and wider resort development will cement the South as a premium mountain biking location, providing greater riding facilities and accommodation facilities to cater for the growth in visitors.  Developing the Tweed Valley as a mountain biking resort will boost the wider tourism product in the South of Scotland and help to increase both visitor nights and spend in the area.  This development will also enhance the opportunity for the South of Scotland to host further international mountain biking events.

3. The M74 Corridor is a key transport asset for the Dumfries and Galloway area and has great potential which is currently being underutilised.  The area along the M74 is within two hours travelling distance for 20 million people.  The Strategic Masterplan will investigate the opportunities along the M74 corridor and deliver a vision for sustainable development of the area over the next 20 years.  This project will also investigate future energy sector developments to mitigate the loss of jobs at the Chapelcross Nuclear Power Station site by examining options for a Centre of Excellence in multiple energy generation and storage techniques.  This will build on work already being done through the Crichton Campus and allow Dumfries and Galloway to position itself as an area of international recognition in the area of energy production.

4. Stranraer is a key priority area for Dumfries and Galloway council as they seek to strengthen it as a key hub and service centre for the South West and build on its growing reputation as a sailing gateway.  The project will deliver new marina infrastructure to supplement the wider Stranraer Waterfront project as well as site servicing for the East Pier.  By strengthening Stranraer's identity as a sailing destination, it will help underpin the local economy by attracting increased numbers of visitors to the area, creating new jobs and providing an improved environment.

SE is a member of a number of other local partnerships, eg LEADER LAG (locally-led community and rural economic development), EFF Axis 4 FLAG (fisheries community sustainability and economic development) in both Dumfries and Galloway and Scottish Borders, the Crichton Campus Leadership Group, the Crichton Institute Partnership Board and SWESTRANS.

6. Conclusion

We trust that this submission provides the Committee a helpful overview of the SE's strategic focus and activities in the South of Scotland region.  For the full economic development picture, it must be taken in context alongside that of our partners such as the two local authorities and SDS.  Our actions, in partnership, take into account the opportunities and challenges for the South of Scotland region and are generating real results.  We hope this is of use to the Committee in its deliberations. 

If you have any questions or would like further information on any matter discussed in this submission, please do not hesitate to contact us.

September 2014