Chapter 3 Inclusive Growth
This chapter provides an overview of the Scottish Government's approach to Inclusive Growth, and what it means for policy and spending decisions.
Inclusive growth is a key priority of the Scottish Government, and the priority which best encapsulates Scotland's Economic Strategy's twin objectives of boosting competitiveness whilst tackling inequality. The strategy (2015) defined inclusive growth as:
'Growth that combines increased prosperity with greater equity; that creates opportunities for all and distributes the dividends of increased prosperity fairly'.
Crucially, we recognise that increasing growth and promoting equality are mutually supportive in making Scotland a more successful country with opportunities for all to flourish. This concept grows from the recognition and growing body of international evidence that shows high levels of inequality can adversely affect economic performance  . Making growth more inclusive is important for improving Scotland's economic competitiveness and wellbeing, reducing wider inequalities, and improving opportunities for all. Inclusive Growth therefore recognises that tackling inequality and supporting economic growth are interdependent and not competing objectives.
Achieving inclusive growth is a long-term aspiration, characterised by the following mutually supportive outcomes:
- Economic Performance: Economic growth is resilient, sustainable, and inclusive.
- Fair Work: Fulfilling, secure and well-paid jobs, where employees' contributions are encouraged, respected and valued.
- Labour Market Access: Improved access to labour markets and jobs, inequality of opportunity to access work is addressed, and everyone is able to maximise their potential.
- People: Economic benefits and opportunities are spread more widely across Scotland's population, with lower poverty levels, and more equal income and wealth distribution.
- Place: More economic opportunities across Scotland's cities, towns, regions and rural areas, ensuring sustainable communities.
What Does it Mean for Policy and Equality?
Within this approach, there are a number of principles that will underpin the development of policies targeted at achieving inclusive growth including:
- A long-term focal point and ambition for government and other stakeholders, but one that starts in the short term.
- An imaginative focus on creating the right environment for much more inclusive employment opportunities to flourish.
- Driving competitiveness and more responsible business behaviour through investment, innovation, internationalisation and fairer work.
- Tackling inequalities and barriers that prevent individuals from participating in the economy in areas such as skills, health, social capital, networks, access and opportunities.
- A sustainable approach that strengthens the social contract through more equal distribution of gains by tackling social and economic exclusion, and considers the environmental impact of policies.
- Promoting more equal growth across cities, regions and rural areas, embracing joint working with local actors.
In its approach to policy making, the Scottish Government has been developing tools for improving government planning and policy across the different dimensions of inclusive growth. For example, the policy framework pictured overleaf  has been used to assist policy makers to consider the impact of their policies across inclusive growth.
Draft Budget 2017-18 - Alignment with Inclusive Growth
All government portfolios have considered their potential impacts on inclusive growth and key policy highlights have been included in the Draft Budget strategic chapter. These cut across a broad range of areas from policies to drive an inclusive and sustainable economy - such as innovation, investment and fair work policies - to policies that promote inclusion and tackle poverty - such as expanding early years provision, tackling health and education inequalities - to those that encourage more equal growth across cities, regions and rural areas - such as regeneration and promoting communities.
The following case studies highlight some of the most equality enhancing aspects of inclusive growth announcements made in the draft budget which exemplify the principles of inclusive growth policy making.
Box 1. Attainment Scotland Fund
The £750 million Attainment Scotland Fund is targeted at closing the poverty-related attainment gap in schools that sees pupils from more deprived areas performing less well than their peers from less deprived areas in Scotland. The fund supports the delivery of the Scottish Attainment Challenge, providing targeted support for those authorities and schools supporting children and young people in greatest need.
Closing the attainment gap in education has the potential to make positive improvements in both inclusion and growth through the following channels:
- By intervening early in pupils' school careers, the fund will help to address inequality of opportunity later in life, such as in access to Higher Education, and in entering good quality, well-paid employment.
- Supporting the improved performance of school pupils raises the general skill level of the population which can lead to a larger pool of skilled individuals for local areas to draw from, as well as improving the productive capacity of Scotland as a whole.
- By targeting schools with the highest concentrations of pupils in deprivation, the fund can support reductions in spatial inequality between different parts of the country, allowing growth to be shared more equally across regions.
- Evidence shows that some equality groups are disproportionately affected by deprivation, and that children and young people living in areas of multiple deprivation perform less well than the general school population. Targeting resources at children living in poverty is therefore likely to have a positive impact on some equality groups.
Box 2. Early Learning and Childcare
The Scottish Government is further expanding the Early Learning and Childcare ( ELC) entitlement giving more parents, particularly women, the choice to move into employment, increase their hours of work, or to study. Evidence suggests that women's ability to participate in the labour market is primarily constrained by inequality of caring responsibilities and the high cost of childcare. In Scotland, more women provide unpaid care than men, across all lengths of provision. Deeper structural issues, such as social norms and gender segregation in education and employment, also play a role.
In addition, whilst high quality ELC provision will benefit all children, for young children who face the greatest disadvantages, additional support may be required to further our ambition to close the attainment gap. That is why we have committed to ensuring that, by 2018, nurseries in our most deprived areas will benefit from an additional qualified teacher or graduate. This commitment will mark an important step in our ambition to increase the overall skills and qualifications profile of the sector, providing opportunities for current practitioners to up skill. By helping to close the attainment gap and contributing to our preventative actions to reduce child poverty, the expansion has the potential to generate longer-term benefits to public finances as well as advancing equality.
What Next for Inclusive Growth?
Different parts of Scotland face very distinct challenges to achieving inclusive growth, and making the transition to a more inclusive and productive society therefore requires an understanding of issues not only at a national level, but also at regional, local authority and community level. Taking a place-based approach to inclusive growth to address the distinct barriers to growth and inclusion that individuals in different parts of the country face will be important to ensuring that equality is advanced across all parts of Scotland.
To gauge progress towards the desired inclusive growth outcomes, a set of metrics will be developed that capture developments across a range of dimensions that drive inclusive growth, such as economic performance, fair work, access to jobs, people and place. This will include consideration of the relative performance of some key equality groups. These measures are under development. They will link to existing frameworks for measuring progress, including through Scotland's Economic Strategy.
Email: Paul Tyrer