On February 6th, 2020, then Scottish Minister for Public Finance and Digital Economy, Kate Forbes stepped up to unveil the Scottish Government’s budget for 2020-2021 on short notice. In the process, she became the youngest politician to do so since devolution and the first woman to do so in either Holyrood or Westminster. She earned widespread praise for her performance and has since been appointed Cabinet Secretary for Finance while also keeping digital economy as a key part of her brief.
The budget for this year includes several important announcements for tech, with significant investment in digital connectivity, infrastructure, research and development, and innovation planned.
Three core areas stood out: investing in tech to meet the climate emergency; supporting the digital economy, which means at its foundation improving connectivity; and developing digital skills to meet the needs of a digital economy.
Investing in Tech to Meet the Climate Emergency:
The Scottish Government plans to invest a significant amount of money in response to the global climate crisis and to transition Scotland to a net zero carbon economy. Holyrood has committed to cut emissions to net zero by 2045, five years ahead of the date set for the UK at large. To meet this goal, total low carbon capital investment for 2020-2021 is around £1.8 billion, an increase of £500 million over the previous year’s budget. This is a good step with tech having an important role to play in combating the climate crisis.
The budget calls for £83 million to be invested in a “Future Transport Fund” to put electric buses in place, develop electric vehicle charging points, and incentivise the uptake of electric vehicles and other low carbon transit options across the country.
Additionally, the Scottish Government is spending £5 million to further the decarbonisation of the police fleet and is expanding the low carbon transport loan fund to £35 million, to help drivers cover the cost of switching to low emission or electric vehicles.
Supporting the Digital Economy & Improving Connectivity:
The Finance and Economics Portfolio section of the budget lays out plans for significant investments in digital innovation, research and development, skills, and infrastructure. £200 million will be invested in the Green Growth Accelerator, a multi-year partnership with local authorities to stimulate low carbon innovations. The Scottish Government also plans to increase funding for research and development grants to grow in line with their commitment to double R&D funding between 2015 and 2025. This means business R&D grants will rise from £22 million to £37 million by 2021.
Additional funding will come from the new Scottish National Investment Bank, which will provide £220 million in new direct investment aiming to foster innovation, inclusive growth, and accelerate the transition to a low carbon, high tech economy.
Spending on digital connectivity will increase 93%, from £32.9 million to £63.4 million, in order to invest in innovation, grow the economy sustainably and inclusively, utilise tech to mitigate climate change, and ease the transition to a net zero economy.
This will include the allocation of £600 million to the Reaching 100% (R100) programme to extend superfast broadband to every home and business in Scotland, continuing the Scottish 4G Infill Programme to deploy future-proofed mobile masts to rural areas and maintaining the 100% non-domestic rates relief on new fibre, which techUK strongly supports.
The Scottish Government will also support the Scotland 5G Centre to push 5G strategic development and deployment. techUK has worked closely with the Centre to explore the barriers and opportunities around 5G and the rural economy and believes that this support is vital to ensuring vibrant, digitally enhanced rural economies.
Developing Digital Skills to Meet the Needs of a Digital Economy:
The tech sector faces a skills shortage, which costs the UK £68 billion each year. It is therefore vital that governments across the UK work to bridge the digital skills gap. The Education and Skills Portfolio section of the budget lays out increases in funding for both higher education, with a priority on STEM and apprenticeship programmes.
The Scottish Government is committing £264.1 million to skills and training, with the STEM programme funding encompassing both education and training, providing bursaries for career changers into STEM fields, and working to address gender and other inequities in the field.
Investment into apprenticeships will focus on providing up to 30,000 new apprenticeships through Skills Development Scotland, while the Flexible Workforce Development Fund will provide greater access to funding for employers paying the apprenticeship levy.
In addition to these three core areas, the Scottish Government plans to continue the widespread implementation of digital technology and data to provide improved public services. This ranges from the Crown Office and Procurator Fiscal Service using tech to share evidence and data, to using tablets for casework to increase efficiency, to using digital platforms to share information with NHS Scotland.
The UK tech sector is the largest and most successful in Europe. Across Europe’s five largest tech industries: fintech, enterprise software, health, energy, and transport, the UK was the number largest single destination for capital investment with particular success in fintech, where the UK accounts for 50% of all capital investment in Europe. Scotland is a key part of this success, with the Scottish tech sector generating nearly £4bn in turnover and supporting 58,000 jobs. Figures released by DCMS show that digital tech sector is continuing to grow despite the economic slowdown in the UK and EU, placing even more importance on supporting this high growth sector.
In any further budget negotiations, we would encourage the Scottish Government to seriously review proposals for further investing in and prioritising the Scottish tech sector, particularly in innovation to drive economic and productivity growth, as well as the deployment of digital technologies to combat the global climate crisis.
Building up the Scottish digital economy and the digital tech is not only vital to increasing output from the existing workforce but also to supporting the creation of the digital enterprises that will attract the new talent needed, accelerate growth and improve living standards.
A full copy of the budget is available here.