Scottish Smart Specialisation Strategy Journey Rob Clarke, Highlands and Islands Enterprise Alison Munro, Scottish Enterprise

Presentation objectives Scotland’s Smart Specialisation approach Overview of Scotland Scotland’s economic priorities Insights - Renewable Energy and Food & Drink Next Steps on Scotland’s RIS3 journey Opportunities & Challenges of RIS3

Scotland’s Smart Specialisation Approach Supportive of “Specialisation” concept Part of a DG Regio S3 “pilot assessment; not (yet) on the S3 Platform Driven by a Scottish-wide approach Value in the process - opportunity to learn from others, to share ideas and to refresh our approach Supportive of “Specialisation” - have pursued a cluster/sector approach since the late 1990s. Joined up public sector governance Driven by a Scottish-wide approach – engaging all public agencies.

Overview of Scotland Population: 5.2m (8.5% of UK) Area: 30,420 sq miles (33% of UK) Geography mix of urban & rural Working Population 2.5m GVA (economy) £105 billion (8% of UK) Scottish Parliament Established in 1999 Devolved powers: Education, health, justice, (Scottish controlled) economic development, transport Reserved powers: Defence, tax, (UK controlled) social security, macro-economic, foreign policy, etc

Purpose To focus the Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. GES articulates the purpose of government and whole of public sector to support growth Originally written in 2007, refreshed in 2011 to add objectives around low carbon economy

Growth Sectors Food & Drink Sustainable Tourism Financial & Business Creative Industries (Digital Markets) Energy Life Sciences Financial & Business Services Food & Drink Sustainable Tourism Enabling Technologies Universities

Renewable Energy “Once in a generation” opportunity Harnessing natural advantage; building on existing capability Driven by government policy –100% of electricity demand to be renewable generation by 2020 The challenge: to capture economic and social benefits

Renewable Energy Strategy led by Energy Advisory Board – govt, industry, academia Collaborative approach to: Infrastructure: ports & harbours, R&D, device testing Funding: public (UK, Scottish and EU) and private

Renewable Energy Collaborative approach to: Research: R&D, device testing and deployment Skills: from apprentice to Ph.D

Renewable Energy International Connections are key success factors: Inward Investors Global Supply Chain International Markets

Scotland Food & Drink - The key numbers Primary sector – 69,000 jobs farming, fishing and aquaculture £2.9bn turnover £836m GVA Manufacturing – 44,000 jobs 1200 companies £9bn turnover £5.4bn exports £4bn GVA Retail & Services – 246,000 jobs wholesale, retail and foodservice 13 13

Scotland's Strengths Bakery - 11,300 jobs £1bn turnover £417m GVA Drinks –10,800 jobs £4.4bn turnover £2.7bn GVA Fish & Seafood - 8,300 jobs £1.3bn turnover £278m GVA Meat processing - 5,900 jobs £968m turnover £178m GVA Dairy - 2,700 jobs £524 turnover £134m GVA Fruit & Veg - 2,000 jobs £476m turnover 14 14

Scotland’s strengths Strong research institutes Product and process innovation Positive global brand, identity & consumer image 15 15

The Scottish Food & Drink Strategy Strategy was developed and owned by the Industry – led the development process through Scotland Food & Drink Took 18 months to refresh and engaged a huge amount of the industry in the process. First Strategy to have an accompanying PUBLIC SECTOR ACTION PLAN – brings together all the public agencies who have a hand in making the strategy happen. Sets our clear Roles and Responsibilities 16 16

Strategy Model Grow the Industry to £12.5 bn by 2017 Cememting a global reputation, With products available to match demand Authentic description Scottish where appropriate Romance the image £0.6Bn An inclusive target for our industry £12.5bn includes fishing and agriculture Processing target remains £10bn Adding more value Premium brands Moving up the value stream £1.2Bn Building on the capabilities we have or need to develop Naturally Healthy Better for You Health Enhancing £0.7Bn Core to the strategy is economic and environmental sustainability Reputation as a “Land of Food & Drink” Premium Health Provenance Sustainability Innovation Skills for Growth Collaboration Scale

Delivering the Food and Drink Strategy Meet the Buyer & Buyer Briefings It’s a Team Effort and involves a wide range of interventions : Highlight a few initiatives: INSIGHTS – SKILLS ACADEMY FOOD & HEALTH INNOVATION 18

Key Performance Indicators Measure Target Progress and Comment Turnover £10bn to £12.5bn £11.9bn – Great progress – increased sales in UK and international markets GVA £4.1bn to £6.1bn £4.8bn – Good progress, Continue outperforming GVA of UK & Scottish benchmarks On track – although challenging with variations from quarter to quarter R&D Spend 0.25% to 0.75% of sector GVA 0.25% - No progress to date, and significant growth still required. Innovation and R&D are focus of a number of big new projects in the sector which are just launched and may have a positive impact over time Productivity Equal UK level for food processing Continue outperforming UK level for food & drink processing Particular performance issue with food processing sector The outstanding productivity performance of the scotch whisky industry means the overall performance of the Scottish food & drink Exports £3.7bn to £5.1bn £5.4bn – Great progress – food exports £1.16bn new stretch targets to 2017 in development Real Focus on performance and building future success. All parties – Industry and public bodies are bought into ensuring that Scotland Food & drink is successful Proof that the process is working even in difficult economic times. 19

Next Steps on the Journey Working with our “Assessor” to refresh our S3 approach Tell a better story on the why and how Understand the focus of our specialisation Drawing more on the evidence base Priorities for future EU Funds Using the process to learn and explore new ideas Why – have we focused our approach in certain sectors, what do we hope to achieve and telling the story of the how-development process. Industry led with real understanding of demand and focus on success criteria. Specialism – we are no good at everything in our Key Sectors – over the years we have been drilling down to areas where we have real competitive advantage. e.g. in Food & Drink – focus is not on bulk, commodity items but on premium products in Red Meat, Whisky, Seafood. In Renewables are specialists areas are in Wind, wave and Tidal generation. Evidence Base – say more about how we are using evidence to shape and refresh our approach e.g. Work underway to refresh our Key Sectors which is focussing on better understanding key companies and their competitive position in global markets and value chains. EU Funds – a need to tie the strategy together with a clearer understanding of how we will bring together the “Package” of funding from EU (structural funds, Horizon 2020 programmes and TRES) with UK and Scottish monies to bring about our future ambitions. Biggest opportunity is for learning - building new understanding by engaging with other regions. 20

Smart Specialisation Opportunities / Challenges Learning and peer review Potential for collaboration Enhanced private sector role – leading and funding More Strategic use of EU funding Challenges Demonstrating RIS3 impact on economic growth Matching academic and industry focus

Role for the Commission Lead the process of evaluation to demonstrate the value of RIS3 as a driver of economic growth Maximise the learning potential of RIS3 Identify potential synergies between Regional Policy and Horizon 2020 Don’t adopt a rigid approach to ex-ante conditionality Make clearer the synergies / alignment between SFs and H2020

Questions?