Part of Enlighten’s mission is to increase the level of debate about policy reform in Scotland. As well as publishing our own work, we seek ways to work with a broad range of individuals and organisations with expertise in all and any sectors, and of all political affiliations and none, to contribute fresh thinking, debate, challenge, and policy proposals.
As part of this work we were delighted to partner once again with Edinburgh University’s SWAY programme. Joe Robinson carried out an MSc dissertation based on our initial research question around regional economic disparities. This article is a summary of his dissertation “Dealing with the gaps: how can Scotland address regional skill issues?”
Regional disparities in Scotland’s productivity persist and have not improved since the advent of Scottish devolution. Skills are a crucial part of this productivity puzzle and can help Scotland and its regions become more economically prosperous and resilient.
Skill gaps are a large concern for productivity and regional growth. Despite having one of the most educated workforces in the OECD, Scotland also has a higher percentage of adults with no qualifications (8.2%), than its neighbour England (6.2%). This is reflected in Scotland’s productivity, which traditionally struggles compared to the UK average. There is also a clear regional dimension to these skill gaps, with Edinburgh’s population having the highest ‘high skill’ percentage with 73.2%, whereas areas like North Lanarkshire lag the UK average at 38.2%.
Considerations of ‘place’ have generally become more prominent in Scottish policymaking, and this has also found its way into skills policy. The idea being that by moving skills policy to a regional level and closer to local actors and expertise it can help integrate skills into coordinated models of economic development that address local and regional challenges.
Concerns over skills and regional disparities are far from new in Scotland and yet a number of policy gaps remain. The rhetoric from the Scottish government suggests that a regional approach to skills has emerged. But there are concerns that Scottish policymaking as a whole suffers from an implementation gap – good at developing strategies but struggles to put policy into practice. Questions therefore persist around what is happening at the regional level, and whether this approach to skills shows any promise in tackling Scotland’s regional issues.
As part of the research for my dissertation, I interviewed 17 actors in the regional skills landscape. The aim was to explore the realities for individuals and organisations at the regional level, and to question if there is a policy gap and if so, where? In the rhetoric at the national level; the implementation at the ground level; or even in the understanding of what an appropriate regional skill approach for Scotland needs to be?
Scotland’s approach to skills
In recent years a new approach to skills has emerged. One that is interventionist, place-based, and focuses on aligning the demand and supply of skills. This requires a consideration of regional context and cooperation with local institutions and their knowledge.
This challenges a more traditional view of skills – an approach that focuses on the supply side and is space-neutral. This approach rests on the market assumption that increasing the supply of skills (by boosting education rates) will in turn encourage demand for high skilled jobs. The market will also decide geographically where this demand will be met – often in cities, where economies of scale can be utilised. This ‘supply-push’ approach was taken by many countries in the 1990s and 2000s, including Scotland and the rest of the UK. These two policy ideas are often conceptualised as ‘place prosperity’ versus ‘people prosperity’.
Scotland appears to be the flagbearer for a place-based approach to skills. The Scottish government have long been aware of the country’s issues with skill gaps, productivity and regional disparities. Back in 2007, the Skills for Scotland report launched the idea of skill utilisation, which highlighted the limits of the ‘supply-push’ approach and called for more engagement with the demand side. The 2010 Skills for Scotland report likewise emphasised the need for “realigning the skills, learning and work system”.
Two key motivations were to encourage collaboration with partners and to gain a better analytical understanding of skills. Since 2014, Skills Development Scotland (SDS) has published annual Regional Skill Assessments (RSAs) for all areas of Scotland, which are then used to formulate regional Skill Investment Plans. The regional landscape in Scotland has also developed with 12 regional growth deals across the country in partnership with the UK and Scottish governments. The more mature regional growth deals, Edinburgh & South East Scotland City Region (ESESCR) and Glasgow City Region (GCR), both have skill programmes, with Edinburgh’s IRES programme perhaps the most established. There are also the 8 Regional Economic Partnerships (REPs) across the country who work with the Scottish government and grew out of the governance arrangements of the growth deals.
These developments suggest a shift towards place-based approaches in both skills and broader Scottish policy. But there are still questions over how place-based approaches can be effective in Scotland. The National Strategy for Economic Transformation (NSET) in 2022 pledged to take ‘full account of regional circumstances’. However, there are a number of trade-offs in practice. How to balance regional and national priorities? How to boost productivity whilst ensuring that the benefits are shared across the region. In his 2023 review of the Scottish skill system, James Withers argued that the system was not fit for purpose at regional or national level. This seems to suggest that these tensions have not been addressed, and that the reality is in fact different to the rhetoric.
Findings
From the interviews, it was clear that success of this regional approach varies, and several structural, institutional and cultural barriers persist at the regional level and in the wider system.
Joined up working
Difficulties remain with cooperation between regional partners. A recurring frustration from the interviews was the struggle to engage with both the REPs and the growth deals. There is evidence that partners such as colleges have felt “excluded” from the decision-making process of growth deals. Whereas the REPS, are often bypassed as they are not constituted bodies – one interviewee noted that the REPs “could be viewed as a bit toothless” in terms of directing activity.
A key partner that often struggles to be involved are the employers – in particular small and medium sized enterprises (SMEs) which make up 99% of Scotland’s business base. Unlike larger employers, SMEs don’t have the time or resources to engage with skill projects – they are “just literally trying to get through day-to-day”. Engaging with employers is an “unending task…that’s probably never complete”. However, there was general agreement that more needs to be done to improve Scotland’s culture of engaging with employers.
In 2023 the Wither’s review recommended to introduce a network of regional employer boards and a national employer forum. Whilst the Scottish government accepted the basis of the Withers review, there are concerns that it is still “not obvious how the employer voice will be raised in the new structure”. Despite the perceived importance of employers, they still do not have a sufficient platform.
Collaboration depends on funding
Joined up working benefits greatly from time and available resources – in particular, funding. However, a lack of consistent funding has restricted actors’ ability for collaboration and long-term planning. The two most prominent funding streams available are the UK Shared Prosperity Fund (UKSPF) from the UK government and the Flexible Workforce Development Fund (FWDF) from the Scottish government. The FWDF has not had any funding allocated since 2023. Concerns were also noted by interviewees that UKSPF allocations to councils are set to be cut by “40% for 2025/26”, but the allocation for capital spending is higher meaning that the ‘real cut’ is in revenue spending. There was some frustration that the funding from the UK government is focused on capital spending rather than revenue, which can make it difficult to allocate funding for skills projects that involve regional partners. A lack of reliable funding with an appropriate understanding of skill issues is a clear barrier to regional cooperation.
Understanding of regional issues
There were also concerns from the interviewees around having the correct information. In terms of data that can identify skill gaps, there is a “wealth of information that is available”. However, issues remain around sharing and engaging with the data.
The RSAs were seen as useful but limited in several ways – one interviewee noted that the data does not “come down to a granular level and a lot of sectors are missed”. An interviewee from SDS admitted that the RSAs are a “good starting point for discussion” but they need to be supplemented by local actors’ own evidence and insight. Several interviewees for instance praised the Intelligence Hub that provides in-house labour market analysis for the GCR. This has encouraged a tradition of sharing data in the GCR, but not all areas are as lucky to have this. This can potentially dissuade some actors from engaging with the RSAs. An interviewee from SDS remarked that more can be done to ensure the appropriate utilisation of the RSAs. In the past SDS, have tended to “put them out and just left people to interpret them”.
Skills for who and where?
A common perception from the interviewees was that the overall focus of skill policy often struggled to reflect the broader focus needed for a regional approach. There was concern around the lack of direction from the Scottish government. Several interviewees criticised the NSET, one arguing that it “prioritised everything… to keep everyone a little bit happy”.
Several interviewees felt there was tendency to focus on “transformational sectors” with high skilled jobs and attractive growth opportunities, despite, these not necessarily dealing with the main concerns of a region. Actors from more rural areas argued that the “multiplier effect” is often larger in rural areas, and yet funding is often focused on projects of scale in areas closer to cities. Whilst certain practicalities must be considered, this raises questions about how Scotland values certain projects and skills. Investment in less ‘glamorous’ sectors such as social care or jobs that are deemed ‘lower-skilled’ may not see a quick return on investment but will be vital in the long term.
Often, the interviewees felt that skill policy failed to reflect the regional nuances of Scotland’s skill issues. In many rural areas, the main concern is not skill gaps but rather labour shortages – “the youth flight issue is a big, big concern for us”. Another is rates of economic inactivity – areas such as South Ayrshire and Argyl and Bute have significantly higher rates than the Scottish average. These people need steady employment not a job in a new ‘transformational’ industry. Employability cannot be ignored, and a balance needs to be struck between providing opportunities at the regional level for “higher skill, better paid” jobs, and linking in the local employability partnerships. However, again this link needs to be supported by strong regional governance.
Cultural biases
The interviewees also discussed the longstanding cultural biases which were in part skewing the wider views on skills. A key bias that was highlighted is one towards certain educational pathways. The university route is often seen as the gold standard, whilst anything else is seen as “second best”.
Universities are key institutions and Scotland is incredibly fortunate to have more world-class universities than any other country by head of population. But several interviewees felt that colleges and apprenticeships were being wrongly ignored, both as a regional partner and an educational pathway. Arguably, apprenticeships are naturally tuned into employer demand and have a clear assessment of skill demand in each region. Colleges, likewise, were considered to be key as they are “rooted” in the local communities and regions. However, both are limited – colleges by credit allocations, and apprenticeships by the ambiguity of the apprenticeship levy. Not only have colleges in Scotland seen a ‘real term cut’ in funding, but funding through credits restricts their ability to adapt to regional needs, as stressed by the interviewees from Colleges Scotland. Likewise with the apprenticeship levy, employers are keen to have “more transparency with the levy and how it is utilised”. In Scotland, the money from the UK-wide levy was passed onto employers through the FWDF (in cash rather than credits). However, since the FWDF has stopped being funded, there has been a sense of ambiguity.
“National control freakery”
Overall, the interviewees showed concern at the lack of progress on regional skills. Skill gaps have been discussed for several years, yet perceptions were that it was unclear whether “it really led to much change”. Many of the issues raised in the Withers review seem to remain. One interviewee even went as far to say that there was no clear “overarching” skills policy – “there is a series of initiatives and programmes, but they’re all fighting for space”.
The rhetoric of regional skill policy is not necessarily translating into action. There was agreement that progress was being hindered by concerns from the Scottish government about handing over power to regional institutions – there is “still too much sort of national control freakery going on”.
Reflections
Overall, in Scotland regional skills face several structural, institutional and cultural barriers. Joined up working is limited by weak governance structures, lack of funding, and a limited culture of working together. There is still a lack of understanding around why a regional presence is needed. The power of certain institutions and a cultural bias towards certain educational pathways and procedures restricts any progress. There does appear to be a gap with implementation, but also perhaps a gap with how the regional reality is understood and what an effective regional skill approach means.
It is clear that the regions need more control and flexibility. For this to be effective they need a clearer governance framework. Whether Scotland could or should follow the mayoral combined authority route being taken in England is debateable. But amongst the interviewees there was a recognition that at least the combined authorities have a clearer structure and leader. For Scotland’s regions, these leaders do not necessarily have to be the same type of institution. Although a common theme has been the important role that colleges can play – perhaps they could take more of a central role. The interviewees from Colleges Scotland noted that colleges “can help deliver both the skills planning, but then actually join up the skills planning with skills delivery”. Northern Ireland has their colleges in a more prominent role answering to their Department for the Economy, rather than a separate funding body. Admittedly Northern Ireland only has six further education colleges which is far fewer than Scotland. However, it demonstrates that even a small organisational change could potentially encourage joined up regional working.
In terms of regional working, it is essential that SMEs and employers play a larger role. Institutional and structural changes could be a starting point, by giving these partners a platform and a recognised role in the system. The Withers report reflected this, highlighting the need for employers to have a stronger national and regional platform. Naturally it will take time to move forward with this, but the lack of action currently is concerning.
Once the regional institutes are in place, they need appropriate funding and decision-making control. The regional institutes currently are limited in power and ultimately rely on the central agencies who control the funding. There is a risk that Scotland currently does not have the appropriate levers to address regional skill issues and is simply reinforcing “some of the things that are already happening in the system”.
Regional control is key but must be complemented by a strong national role. This will help create a clearer balance between the regional and the national elements. There has been a strong consensus that the NSET lacks clarity. It needs to be considered what the role of each region is in the national plan. A possible comparison could be to Skills England and their key sectors within their strategy. A place-based approach can focus on the key sectors that will help push national aims but also consider how to benefit regions and play to their strengths.
Alongside this, there needs to be a greater recognition of the benefits of working at the regional level. Additionally, there needs to be an acceptance that it is unrealistic to expect everywhere to benefit equally. Take for example, work done by the Resolution Foundation on what levelling up meant to people in Yorkshire – what people really wanted was to feel like they are connected to opportunities but also to retain a sense of pride in their local area.
This must also be accompanied by a reconsideration of how Scotland values certain skills, sectors, and educational pathways. It must be acknowledged in each region what will have the most impact on the people who live there. This in turn can encourage a more flexible approach to skills and learning – one that can properly engage with demand.
The current understanding and perceived value of skills are in part cultural but are reinforced by the structures and funding in place. Even slight changes to these could help improve the parity of esteem between the different skill providers. Colleges and apprenticeships are often seen as lesser than universities, but they can prove to be more effective regional partners. The Tertiary Education and Training Bill promises to establish a single funding body for tertiary education. This could potentially help shift the cultural bias but is still being discussed in the Scottish parliament. Greater parity of esteem would help give a larger role to colleges and apprenticeships, which arguably are more in tune with the regional needs.
Several gaps are present in the ideas and understanding of a regional skills approach in Scotland, but also between the rhetoric and the reality. These are enforced by large structural, institutional and cultural barriers, that are ingrained in Scottish policy. These will not be easy to address, but even small changes or reconsiderations of values could benefit greatly. One thing that is certain is that there is a strong appetite for regional working, and a desire to tackle skill issues and regional disparities. The regions would benefit greatly from more control and flexibility, but this must be accompanied by clear and decisive action from the Scottish government.
Joe Robinson is a recent graduate from the University of Edinburgh, with an MSc in Public Policy. His dissertation can be viewed here.