Thank you for the opportunity to come before the committee and, in particular, for allowing me to give this short statement. I am aware that none of the committee members represents any part of the Highlands and Islands and that it might be helpful to give a little bit of background about the area and HIE’s work.
The region is diverse and beautiful, and the economy and geography present us with challenges and great opportunities. It covers half of Scotland’s landmass, but contains only 8 per cent of the population, so the population is quite dispersed, apart from in the main city of Inverness, which is fast-growing. We have more than a hundred inhabited islands, some of which have fewer than 100 residents—Foula, Papa Westray and the Fair Isle, for example.
In the 50 years since our predecessor, the Highlands and Islands Development Board, was established, we have seen significant progress in the region, particularly around population growth. In the late 1960s, when HIDB was formed, the population was in freefall. That situation has been pretty much turned around.
There are areas where population levels give us cause for concern. In Argyll, there is still loss of population and in areas such as the Western Isles, although it has enjoyed population growth, there is concern about the impacts on working-age and young people. We are not complacent about the issue, which continues to be a challenge.
Highlands and Islands Enterprise has a unique remit, combining social and economic development. That attracts a lot of interest from around the world and we host a lot of visits to see what we do and how we do it in the Highlands and Islands.
Our role is to deliver Scotland’s economic strategy. We do that through our four operational priorities—which in turn contribute to one or more of the four Is in Scotland’s economic strategy—and I will briefly describe those.
First, we look to support businesses and social enterprises to achieve their growth aspirations. Within our account management portfolio, we support more than 400 businesses and more than 50 social enterprises, which receive tailored support through dedicated account managers. They have access to a range of programmes and powers on financial investment, leadership and management, innovation and international trade.
We choose who is brought into account management based on who has the greatest opportunity to grow, so the size and scale will vary across the region. In a fragile area, a business growing from three to four or five employees is as significant as one elsewhere that is growing from 20 to 30, for example.
We also look to support the growth sectors. We ensure that we focus in on enterprises that offer place-based distinctiveness that makes the most of our assets, gives us a competitive advantage and contributes to Scotland’s economy. I will give some brief examples of those by sector.
In life sciences, we have recently supported Lifescan—a Johnson & Johnson company, based in Inverness, that employs more than 1,000 people—with research and development. That is helping to anchor that significant company in the Highlands and Islands—it is focusing all of its diabetes research in Scotland.
We also have the world’s leading chemical company, BASF, based on the west coast of Lewis, which is perhaps not the obvious place for it or where one would expect to see such a company operating. It bought over a small business that we had supported for a number of years that produces a very high-quality omega-3 fatty acid. We own and are investing in the site there, which has enabled BASF currently to employ more than 70 people at much higher than the average wage; with the site investment, the number will grow to more than 90. The comparable impact in a city would be many thousands of jobs, so that is really significant for that part of the Western Isles.
Food and drink is clearly an important sector in the Highlands and Islands. I flag the aquaculture industry, which we are currently supporting. It has devised a new strategy to lead aquaculture through to 2030 and has developed a new industry leadership group. There are some great opportunities there to increase the productivity of aquaculture and to support an indigenous supply chain in that sector.
In tourism, naturally there is a focus on the natural environment and our culture and heritage, but we see world-leading niche tourism businesses in areas such as adventure tourism and marine tourism, again building on the assets of our region.
Energy is critically important to us. We are delighted to see that the planned wind towers in Kintyre, which is an area that has had problems and challenges, have been taken over by the Korean company CS Wind, therefore investing and protecting employment in that fragile area. It is also great news that MeyGen is now generating electricity in the Pentland Firth from the world’s first commercial-scale tidal array.
The creative industries are a vibrant sector in the Highlands and Islands. There, our focus is around music, fashion and textiles, which come together in the international showcase XpoNorth.
In business services, there is no financial services sector in the Highlands and Islands but we have developed a niche in business-process outsourcing, with a number of key companies operating there such as Cap Gemini, which now occupies HIE’s former office in Inverness and is expanding there.
Our third operational priority is strengthening local communities, which brings together our social and economic remit. The work that we do on strengthening communities is central to HIE’s inclusive growth approach. We support creative, capable and sustainable communities by helping them to own and manage income-generating assets to develop both services and employment locally. We use our account managed approach with communities, too, and have a relationship with around 50 communities and 115 community organisations to extend that reach.
Our fourth priority area is creating the conditions for a competitive region. The focus there is on some of our main infrastructure investments, the key one of which at the moment is delivery of the £146 million investment to roll out next-generation broadband in the Highlands and Islands. Without that programme, which is led by HIE in partnership with British Telecom and supported by both the Scottish and United Kingdom Governments, next-generation broadband would reach only a percentage in the low 20s of the population across the Highlands and Islands. When that programme is completed, towards spring next year, it will have reached 86 per cent of the population, making a significant difference. However, the work does not stop there; the key thing will be to realise the benefit of that investment with digital skills and digital businesses that are operating effectively. Another example of infrastructure investment is the development of the Inverness campus, which is a flagship investment in the region’s capital.
We are also extending the reach of higher education. Having finally got a university in the region, in the University of the Highlands and Islands, we have been a long-term supporter and are currently working with UHI on a new school of health project.
A number of other universities are operating in the Highlands and Islands. For example, the world-renowned Glasgow School of Art has opened a campus in Moray and it will be fantastic to see students having the opportunity to access Glasgow School of Art from the Highlands. We are also capitalising on the presence of Heriot-Watt University in Stromness in Orkney, alongside the European Marine Energy Centre, to focus on energy developments.
The Audit Scotland report “Supporting Scotland’s Economic Growth”, which we very much welcomed, stated that HIE is performing well, with a clear, well-evidenced strategy and a positive attitude to risk. Naturally, there were some recommendations, and we are actively addressing those which were specific to HIE. We welcome the opportunity to influence and shape positively the next steps of the enterprise and skills review as it moves into phase two.
Finally, we would welcome any member of the committee or the committee itself coming to the Highlands and Islands to see any of HIE’s projects or work. We would be delighted to be your host.