Review of Scotland’s Enterprise Areas

This review was commissioned jointly by SE, Scottish Government, HIE and SDS to formulate options for Government, based on the evidence of performance to dated. Given that earlier work had found that companies based within the EAs were likely to have received a range of other public support, for example many being Account Managed, no attempt was made to assess the economic impact of the Areas. The current round of Enterprise Areas (EAs) in Scotland was designated in April 2012, with some later additions in response to changing economic circumstances. In total there are 16 sites across Scotland that have EA status. These fall into 3 sectoral designations: Life Sciences, Low Carbon/Renewables and General Manufacturing/Growth Sectors. Companies falling into these sectors are eligible to receive Non-Domestic Rates Relief or Enhanced Capital Allowances depending on which EA they want to locate on. Of the sites, 7 are within the HIE area. EA status is due to end in March 2020.

Desk research, comparative analysis of EA approaches elsewhere in the world, and a range of interviews with stakeholders and companies based within the EAs.

Since the EAs were designated they have seen increases in employment of 3,125 and an additional 88 companies. However, this is not necessarily a reflection of the EA incentives. Several of the EAs have been the beneficiaries of considerable public sector infrastructure investment, whilst others are in locations where there is development interest. Accordingly, it seems likely that these localities would have experience growth regardless of EA status. Of the 16 sites, 4 have seen no additional activity (3 in the HIE area). This is felt to be mainly due to the failure of the renewables manufacturing sector to grow as anticipated. Most stakeholders did not attribute any success solely to EA status, with many suggesting that the same outcomes would probably have been achieved anyway. This is similar to the experiences from other EAs in England, Wales and overseas where direct economic benefits have been challenging to quantify. For the majority of stakeholders EAs were recognised as part of the intervention package working alongside other incentives. As such it was not felt that they were intended to be a solution in isolation to other incentives that were to address market failure and growth potential.

Three options were put forward for consideration: to end EA designation as currently planned in March 2020: to extend the designation in its current form; or to extend the designation but with a number of evidence driven modifications. The advantages and disadvantages of each option were outlined whilst several sub-options were outlined that should be considered if it was decided to continue designation with modifications. These dealt with such things as the degree of local flexibility that should be provided.