HIGHLANDS & ISLANDS ENTERPRISE HIE 07/12. BOARD MEETING TUESDAY 30 April, 10.00, COWAN HOUSE, INVERNESS

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1 HIGHLANDS & ISLANDS ENTERPRISE HIE 07/12 BOARD MEETING TUESDAY 30 April, 10.00, COWAN HOUSE, INVERNESS DRAFT MINUTES PRESENT: Lorne Crerar (Chairman) Alex Paterson (Chief Executive) Mary Bownes Steve Thomson Craig Spence Donald MacDonald Jim Royan William Swann IN ATTENDANCE: Carroll Buxton Director of Regional Development Forbes Duthie Director of Finance and Corporate Services Charlotte Wright Director of Business and Sector Development Rachael McCormack Director of Strengthening Communities Sandra Dunbar Head of Business Improvement and Internal Audit Karen Moncrieff Head of Human Resources Chris Roberts Head of Communications Alastair Nicolson Head of Planning and Partnerships (Items 3.1 and 4.7) Tony Jarvis Senior Development Manager, Transport (item 4.1) Anne MacColl Chief Executive, Scottish Development International (Item 4.2) Liz Scott Equalities Manager (item 4.6) Elain Macrae Senior Development Manager, Energy (item 4.7) Caoimhe McCarthy Offshore Renewable Graduate (item 4.7) Rachel Forrest Graduate Economic Intelligence Officer (item 4.7) 1 STANDING ITEMS 1.1 Apologies Apologies were received from Iseabail MacTaggart. 1.2 Declaration of interest There were no declarations of interest for this meeting. 1.3 Minutes of the meetings held on 19 February and 21 March 2013 The minute of the meeting of 19 February was approved, with one minor amendment. The minute of the meeting of 21 March was approved. 1.4 Matters arising With reference to the minute of 19 February 2013, the Chief Executive informed the Board that a proposed development at Barmuckity Business Park, Elgin, for which HIE loan funding of 2.7m had been approved subject to due diligence, had been unable to commence as planned before the end of March However HIE has obtained agreement from the Scottish Government to retain shovel ready funding for a future, phased investment at Barmuckity. The project has been rescheduled and work is expected to commence in summer

2 Item removed for reasons of commercial sensitivity There were no matters arising from the minute of the meeting of 21 March UPDATES 2.1 Chairman s and Chief Executive s update The Board welcomed the conclusion of HIE's procurement of a private sector co-investor to enable a planned 146m investment in next generation broadband to roll out across the region over the next three years. The appointment of BT, following competitive dialogue, was a significant milestone towards establishing the Highlands and Islands as a digital region. Following an internal review, HIE expected to announce the appointment of a new contractor to deliver specialist advice to client businesses and social enterprises during week beginning 10 April. No objections had been received during the standstill period. The Chairman reported that he had met the Chairman and Director of HI-Arts, which had recently been awarded an additional three months' funding from HIE and Creative Scotland to enable it to carry out restructuring. The Chief Executive had also met Rob Gibson MSP to discuss this issue, which has been the subject of questions in the Scottish Parliament and media coverage. It was noted with regret that Caithness freezer manufacturer Icetech had gone into liquidation. US life sciences company Daktari Diagnostics Inc has confirmed its intention to locate in the Inverness area, creating around 120 jobs. The Chief Executive paid tribute to HIE staff who had worked for many months to secure this investment, including Kathleen Ryan in the Inner Moray Firth team. News that HIE and SDI had attracted a major investment into Inverness from international outsourcing company Capgemini, creating up to 500 jobs over three years, had generated extensive and positive media coverage. Capgemini will begin moving into HIE's current Inverness premises, Cowan House, shortly, and is expected to occupy the entire building by the end of May The Board sent their congratulations to staff involved in securing Capgemini's commitment to the Highlands, including Vicky Grant, Martin Johnson, Alison Wilson and Charlotte Wright. The Chief Executive had personally briefed HIE staff in Inverness and Dingwall on plans to relocate once Capgemini takes over full occupancy of Cowan House. Following an options appraisal, Inverness Campus had emerged as HIE's preferred location. Positive discussions have taken place with Highland Council and the possibility of a joint build with UHI is being explored. The Scottish Government has established a ministerial group on aquaculture, chaired by Paul Wheelhouse, Minister for Environment and Climate Change. Charlotte Wright is HIE s point of contact, and has set up internal working group to address issues affecting the industry within the region. 2

3 It was noted that the winter season at Cairngorm had been excellent, and that HIE's plans to procure a new operator to run skiing and visitor facilities on the mountain were making good progress. The Chief Executive reported that a unit at The Enterprise Park Forres had been handed over to IT specialist Atos, which had established a new development and innovation centre. The pedestrian and cycle bridge spanning the A9 between Inverness Campus and the city's Raigmore district had been installed successfully over the weekend of 6 and 7 April. Operations had taken two nights rather than one, but traffic diversions had worked well and the trunk road reopened before peak travel time on Monday morning. The Board noted that Orkney jewellery firm Ortak had gone into administration, and that the administrator was reportedly confident of obtaining a positive outcome. Item withheld for reasons of commercial sensitivity The Chief Executive and the Director of Finance informed the Board that they were due to appear before the Scottish Parliament Economy, Energy and Tourism Committee on 15 May to discuss budgets. Following OJEU procurement, HIE has entered into a new Prime Contractor framework with four construction companies for infrastructure projects. The framework provides a vehicle to deliver construction projects without the need to go through OJEU every time. The four companies are Robertson, Morrison, Mansell and Kier Scotland. Item withheld as disclosure could potentially harm the effective conduct of public affairs. The Chief Executive welcomed Chris Roberts, Head of Communications, to the meeting. Mr Roberts's presence at the Board was part of a series of changes being made within the Regional Development Directorate, intended to enhance HIE's stakeholder engagement and marketing. 2.2 Review of Chairman s first year and looking forward to 2013/14 The Chairman reported that he had greatly enjoyed his first year in post, and expressed his thanks to colleagues in the HIE Board and staff for their support. Professor Crerar reflected that it had been a good year for the Board, with members taking on a greater range of external tasks and involvement in non-executive issues. All the committees of the Board were working effectively. In the course of the year, the Chairman had been able to fulfil his commitment to visit every area within the Highlands and Islands, and to meet staff in every team. During the year ahead, he would continue to engage with the full range of HIE's key stakeholders, including staff; account managed businesses, social enterprises and communities; local and national politicians, and Scottish and UK Government ministers. A very positive relationship had been established with the Cabinet Secretary for Finance, Employment and Sustainable Growth, and it would be particularly important to sustain this. Highlights of the Chairman's first year had included the revitalisation of the Nigg yard as a major source of skilled jobs, and the re-emergence of Ardersier as a potential centre for energy manufacturing; partner engagement, including the Convention of the Highlands and Islands, and progress with HIE's regionally significant investments including the European Marine Science Park; Storas Uibhist; Scrabster Harbour, and Arnish. 3

4 A visit to the USA had underlined the importance of HIE's collaboration with Massachusetts Institute of Technology, and the recent inward investment successes with Capgemini and Daktari Diagnostics were significant achievements which had drawn praise from the First Minister and others. Looking ahead, the Chairman highlighted the significance of HIE and BT's multi-million pound investment in next generation broadband infrastructure, and the accompanying programme to encourage the business community in particular to take advantage of the opportunities offered by modern digital communications. He also stressed the importance of maintaining strong relations with the banks and promoting investment opportunities in the Highlands and Islands. The theme of 'moving up a gear' would continue to be important across HIE in the years ahead. 3. RESOURCES AND GOVERNANCE Alastair Nicolson, Head of Planning and Partnerships, joined the meeting. 3.1 End Year Review 2012/13 (HIEA 2012/005533) Mr Nicolson presented the out-turns achieved by HIE at the end of 2012/13 against the range of Key Measures and Regionally Significant Investments identified in the Operating Plan 2012/15, along with an overview of wider operational activity. All out-turns were within or above the range measures specified. HIE's success in helping create over 800 jobs and increasing the turnover of supported businesses by almost 90m (more than half of which came from new international sales) had helped broaden the region s economic base and extended the range of markets within which businesses are trading. Highlights of the year included the takeover of Equateq on Benbecula by BASF and the attraction of Daktari Diagnostics to the Inverness area. Inverness Campus was progressing well and the largest project ever funded by HIE rolling out next generation broadband with public sector investment of 126m was proceeding in partnership with British Telecom. EMEC in Orkney had grown to employ 20 and was developing new expansion plans. The Natural Retreats tourism project at John O Groats had opened for business. A new Scottish Land Fund had been established by the Scottish Government and run by HIE. Communities which had been helped to acquire assets included five Orkney islands earning around 800k in total from selling wind energy to the national grid. HIE had invested 20m in 113 projects which resulted in the creation or retention of 809 jobs, including 158 in fragile areas. Job creation was spread more evenly than in recent years, with only seven interventions creating 20 or more jobs. One third of the businesses supported by HIE were in fragile areas, including major investments such as Raasay Outdoor Centre and the Adelphi Distillery in West Lochaber. The Board agreed that the results demonstrated an excellent performance by HIE, and that the organisation was well placed and prepared for the year ahead. Members agreed that HIE should actively promote these successes which would strengthen its positive reputation with the Scottish Government and other key stakeholders. The Chief Executive informed the Board that plans were under way to achieve this, including the creation of a new post of 4

5 Head of Marketing. Information on a strengthened approach to stakeholder engagement would be presented to the June Board. The Board welcomed the outcomes of the end-year review and the Chairman congratulated the Chief Executive and HIE staff on an outstanding year. Alastair Nicolson left the meeting. 3.2 Financial Statement to 31 March 2013 (HIE 2009/00611) The Director of Finance presented a report summarising the financial position for the 12- month period to 31 st March 2013, which was still subject to final audit by Audit Scotland. The figures demonstrated a very successful year for HIE. Grant-in-aid of 71.3m had been drawn down and delivered in full, even though this element of our budget had increased by 22.5m during the year through additional allocations secured for shovel ready and energy projects. HIE's capital spend target of 42.5m had been achieved and the organisation had met its targets for Block B (management and administration) savings. Block B had reduced from 17.5m in 2009/10 to 15.1m in 2012/13. As had been reported under matters arising from the Board minute of 19 February, the 2.7m plan to develop Barmuckity Business Park in Elgin had been unable to progress before the year end. This case apart, HIE had achieved a balanced resource position for the year, with a total resource spend of 82.1m. Scottish Government shovel ready funding allocated for Barmuckity had been added to HIE reserves for and would be used for the purpose intended. The Board welcomed the statement and again expressed their credit to staff throughout HIE in delivering such a successful year. 3.3 Operational Planning (HIE 2004/02226) The Chief Executive introduced a paper on operational planning, which had been presented at the Board in February and revised to incorporate comments. HIE s Operating Plan for had been intended to be a three-year document which would be updated, but not fully rewritten each year. This approach had been made possible in the context of a refreshed Government Economic Strategy, the outcome of the last Spending Review and HIE s Letter of Guidance from the Cabinet Secretary. HIE's Leadership Team believed the Operating Plan drafted in 2012 remained an appropriate document to set the framework for the organisation's activities. Based on this, the operational planning paper summarised key activities planned for the financial year , in particular reflecting an increased focus on HIE's work in fragile areas and internationalisation. Discussion centred on resources, particularly the need to ensure that HIE had sufficient headcount, expertise and experience to deliver ambitious and complex projects described in the Operating Plan. The Chief Executive confirmed that resource had been increased in particular areas where opportunities had arisen, including new posts in HIE's Broadband and Digital team, and in Community Broadband Scotland, which the organisation is administering on behalf of the Scottish Government. The Head of Human Resources stated that headcount now stood at 260 FTEs, compared with 244 a year ago. Areas which had been allocated greater staffing resource included energy, life sciences and digital. The Board approved the operational planning paper and key actions planned for

6 3.4 Budgets 2013/14 (HIE 2004/02226) The Director of Finance presented a report setting out the proposed budget allocation for 2013/14, together with the key risks to be managed and resolved. A total income of 83.8m was expected, made up of Scottish Government funding of 67m (including 12.7m noncash), 2.7m from release of reserves, 5m European funds, 3.3m capital receipts including Inverness Campus, and revenue receipts of 5.8m. The basis for budget settings followed a pattern used for previous years, with Block B, Development Support Costs, Regionally Significant Investments (RSIs), top sliced, ring fenced and other 'money in/money out' items such as ERDF and AME/DEL all top sliced from the available income to highlight the net discretionary resources remaining for final allocation. The Director highlighted that 2.7m of reserves had been earmarked for release, relating to an underspend in 2012/13 involving a specific shovel ready project (Barmuckity Business Park, Elgin). This amount reflected the release of these reserves to support that project once approved. The exact mechanism for release of reserves still needed to be clarified and agreed with the Scottish Government s Finance Team. Property sales had proved very challenging in the previous year and the target for 2013/14 had been adjusted to reflect this. For 2014/15 and beyond, however, the figures reflected the previously agreed Operating Plan. HIE would be receiving ring fenced funding from the Scottish Government for Community Broadband Scotland and Scottish Land Fund national initiatives which it is leading. Broadband and energy funds were not yet reflected in the 2013/14 budget as funding components and cashflow profile had not been concluded. These would be 'money in/money out' projects which would have a neutral impact on spending plans. HIE's Block B management and administration budget had been set at 14.9m, approximately 1.3% lower than 2012/13, continuing the trend of reducing the operating costs year on year. Future Block B savings would focus on non-payroll costs such as premises and administration. The indicative commitment ceiling of 27.9m was based on 160%. A similar start position in had converted to 126% spend, broadly in line with previous years. Commitment at local level would be scrutinised through individual unit controls and monthly monitoring meetings as well as the weekly Vital Signs report to Leadership Team. As in previous years, HIE's budgets were flexible and would be reviewed and amended through the year, in particular to meet urgent or emerging key priority projects. The Board agreed to: 1. Approve the budgets proposed above for 2013/14 2. Note the release of reserves of 2.7m and that the mechanism for this was under discussion with the Scottish Government. 3. Note the risk management arrangements which would be monitored through the Risk and Assurance Committee. 3.5 Inverness Campus update (HIE 2004/02226) Item withheld as disclosure could potentially harm the effective conduct of public affairs. 6

7 3.6 Risk register (HIEA 2012/00218) Item withheld for reasons of commercial sensitivity. 3.7 Draft Risk and Assurance Committee Minute, 5 March 2013 (HIE 2004/02226) The Board noted the draft minute of the Risk and Assurance Committee. On the subject of HIE's procurement of a new operator for visitor facilities at Cairngorm Mountain, the Director of Business and Sector Development informed members that four submissions had been received before the pre-qualification deadline. One was non-compliant, and the other three were being taken forward to competitive dialogue. 4. DISCUSSION PAPERS Tony Jarvis, Senior Development Manager, Transport, and Anne MacColl, Chief Executive, Scottish Development International, joined the meeting. 4.1 Transport Update (HIE 2004/02226) Tony Jarvis presented a paper to update the Board on key issues concerning transport across the Highlands and Islands, including: Scottish Government investment plans in trunk road and rail connectivity for the Highlands and Islands; The Scottish Ferries Plan and review of commercial vehicle fares; HIE ambitions for aviation connectivity to 2020, plus progress regarding international air connectivity at Inverness and the development of a Scottish strategic framework for international air connectivity ; Regional air network developments, and Proposals to improve road transport infrastructure in fragile areas Mr Jarvis also described current transport priorities for economic development in the Highlands and Islands. There was a need to improve the A82 and A83 trunk roads, with landslide protection measures and other A83 improvements costed at 20-30m. Upgrading strategic single-track roads to modern carriageway standards was also a priority. On air connectivity, it was important that measures being developed by the Scottish Government were sufficient to enable the development of a sustainable level of international activity at Inverness Airport. HIE supported the Scottish Government s view that air passenger duty (APD) should be devolved, allowing charges at Aberdeen, Edinburgh and Glasgow airports to be reduced or removed. Reducing or removing APD from airports in the rest of the UK would also allow airlines to improve cross-border connectivity at Inverness. The re-opening of Skye (Broadford) Airport and establishment of a public service obligation (PSO) air service between Glasgow and Skye could be beneficial overall, but would require an annual subsidy of around 1m. The paper confirmed that HIE supports proposals for a commercial vehicle fares policy for ferry services, and recognised the importance of modern vessels serving the CalMac routes and Orkney outer isles in particular. It was noted that businesses have expressed a strong desire to see improvement of rail services (timetables and rolling stock) on both Highland Main Line and Aberdeen-Inverness 7

8 line, alongside the dualling of the A9 and A96. Beyond current commitments (to 2019), further improvements to these routes are being sought, including plans for new rolling stock and electrification. The Board discussed issues arising from the report, including the potential impacts of disruptions to road traffic as A9 improvements are carried out, and the importance of effective transport infrastructure in fragile areas in particular. It was recognised that the region's transport infrastructure needs to keep pace with modern expectations, just as HIE and BT's broadband investment is designed to deliver up to date digital connectivity. The Chairman thanked Mr Jarvis for a comprehensive report. Tony Jarvis left the meeting. 4.2 Scottish Development International a) Business and Operating Plan The Chairman welcomed Anne MacColl, Chief Executive, Scottish Development International, to the meeting. Anne MacColl presented SDI's draft Business and Operating Plan, which was to be circulated to staff and partners before finalisation over the coming weeks, then published. SDI and HIE had worked closely together in refreshing the strategic trade and investment priorities and developing operational plans to deliver these. The SDI Business Plan included progress in developing sector priorities, as well as reflecting the strategic measures in delivering Scotland s Trade and Investment Strategy. Content of the plan had been developed collaboratively, incorporating the objectives in HIE and SE operating plans as well as overall Government priorities. It reflected wider joint work conducted with Strategic Forum partners to support integrated business planning. Responding to questions on opportunities for HIE in new markets, the SDI Chief Executive confirmed that troubles in the Eurozone had led exports to dip slightly, but that growth had been seen in Asia and other world markets, including Brazil. There was a need to debunk some myths around exporting, and enable more Scottish businesses to become exporters. A key element of SDI's strategy was to establish and maintain 'touch points' overseas which were accessible to Scottish companies. Taking Scottish businesses overseas to experience new markets at first hand could have a transformational effect on their outlook. HIE's Director of Business and Sector Development explained that HIE would be working with SDI to focus specifically on target markets which were most likely to benefit our account managed businesses. Support from SDI overseas was exceptional and HIE client companies were enthusiastic about the quality of service they received. Anne MacColl stressed the importance of HIE, Scottish Enterprise and SDI sharing a 'Team Scotland' mindset. The SDI staff and offices worldwide should be seen as an integral part of what HIE was able to offer to the region's businesses. b) Year End Review Anne MacColl presented SDI's year end review, which showed positive increases in international trade and inward investment. Overall, the national outlook was optimistic, despite the tough macro-economic environment. Scotland still ranked highly as a key destination for foreign direct investment. While UK exports as a whole had dipped, with 8

9 Eurozone troubles affecting food and drink in particular, the dip in Scotland had been less pronounced. Inward investment was becoming more competitive, however, with other countries entering the market, and the prospect of the Regional Aid map changing next year. The Global Connections Survey (2011), published in January 2013, estimated the country's international exports at 23.9 billion, an increase in overall estimated exports of 1.6 billion (7.0%) since To meet the Scottish Government's 50% target, an average of 7% growth annually was required, so the result showed the country on track. However the latest official figures suggest a weakening in export growth through In , the number of Scottish companies achieving significant turnover growth from exporting was provisionally calculated at 341, against a target range of Twenty-one of these companies were based in the Highlands and Islands. A further 1,208 high potential companies had been assisted by SDI (target range: 800-1,000), 158 of them in the HIE region. The provisional number of jobs supported through attracting inward investment was 6,166, of which 331 were in the Highlands and Islands. Key regional successes included LifeScan (Inverness), BASF (Lewis) and Daktari Diagnostics (Inverness). The Board discussed the need to ensure that the Highlands and Islands is represented proportionately in SDI's out-turns, and highlighted the challenge of meeting short-term targets while also investing in projects designed to achieve long-term growth. Renewable energy and life sciences were important growth sectors which would remain priorities for HIE this year. The Chief Executing highlighted the importance of working to expand foreign-owned businesses which are already located in the region, and which had been a prime source of inward investment activity over the past year. The Board welcomed the report and thanked the SDI Chief Executive. Anne MacColl left the meeting. 4.3 Community Renewable Energy (HIEA 2013/00322) The Director of Strengthening Communities presented an update on HIE s support to the community renewable energy sector, focusing on lessons learned over the last five years and recommending next steps. It included achievements to date associated with HIE s support, and acknowledged increasing level of investment by the Scottish Government during this period, particularly through the extensive Community and Renewable Energy Support loan scheme (CARES) and the Renewable Energy Investment Fund (REIF). HIE had recognised at an early stage the potential presented by the sector to contribute to community sustainability, and had been at the forefront of developments since the inception of its Community Energy Team in Since July 2009, HIE s main support to the sector had been through the Community Renewable Energy Support Programme (CRESP) delivered by Community Energy Scotland (CES). Over 16% (81.4MW) of the Scottish Government s 2020 ambition for 500MW of renewable energy to be community or locally owned projects is currently being generated or under development in the Highlands and Islands. Revenue generated from these projects over 25 years will be around 330m, with approximately 125m being available for community investment, after financing and operation costs. Research carried out by Sneddon Economics and published in February 2012 suggests that the development of community renewables should result in job opportunities at a rate of 4-5FTE per MW generated. Other outcomes are increased community confidence, skills and knowledge which can be exchanged between groups, building capacity across the region. 9

10 The paper stressed the importance of HIE's influencing role with the Scottish Government, and the need to strengthen our relationships with key organisations operating in the sector. There should also be a specific focus on realising community benefit from offshore developments. Actions under consideration include a new grant fund to stimulate pipeline projects and accelerate delivery of current projects; prioritising new projects in Community Account Management (CAM) areas; developing a policy for HIE support to communities wishing to deliver tidal/marine offshore projects, and exploring HIE s role in supporting local use of power and energy storage methods which would enhance grid connectivity or enable non-grid systems. The Board endorsed the achievements to date, noting that a key strength has been HIE's role as an enabling agency, helping communities do things for themselves. As the organisation continues to enable communities to achieve sustainability and confidence, it will be important that staff focus on supporting local groups not just through delivery of an energy project, but also post-implementation. The Director was commended on the successes achieved through HIE's pioneering role in community energy, and urged to explore ways in which expertise built up within communities which had successfully implemented their own energy projects could be shared with others which were at an earlier stage in the process. The Board welcomed the paper and endorsed its recommendations. 4.4 Community Account Management: Review of implementation (HIE 2008/00384) The Director of Strengthening Communities presented the findings of an internal review of community account management (CAM), undertaken between August 2012 and March The review demonstrated the significant impact which CAM had achieved as an approach which mirrors, at community level, HIE account management practices in support of businesses and social enterprises. It recognised that funding for a local development officer (LDO) was only one tool available to account managers that there were wider benefits to be achieved from a broader approach to account management for communities. CAM, as delivered by HIE, was seen to be a model which maximises all available resources, both from within HIE and from partners and stakeholders who have an interest in developing resilient rural communities within the Highlands and Islands. The review noted remarkable progress by communities supported through CAM, including demonstrable steps towards building cohesion and ambition, leading to significant delivery of capital projects generating positive outcomes. Many of the identified challenges concerned the programme of LEADER funding for local development officers, in particular the complexity of the application procedure. It was recommended that HIE continue account management with the majority of currently engaged communities, with opportunities to bring in new entrants as communities exited or lessened the level of support they required. Further work should be carried out to develop the LDO support programme, ensuring that a customised approach towards meeting individual local needs and opportunities, is balanced by centralised management and administration. Greater collaboration should also take place with partners, including local authorities, Development Trusts Association Scotland (DTAS), Scottish Community Voluntary Organisation (SCVO), Community Woodland Association (CWA) and others, to ensure HIE maintains a strong pipeline of communities which could benefit from account management. 10

11 The Board noted the achievements of HIE's community account management since 2009, acknowledged its success in the development of resilient rural communities within the Highlands and Islands, and supported the recommendations contained in the review. 4.5 A minimum income standard for remote and rural Scotland (HIE 2012/00536) The Director of Strengthening Communities reported that a group of agencies led by HIE had commissioned the Centre for Research in Social Policy (CRSP) at Loughborough University to establish a Minimum Income Standard (MIS) for remote and rural Scotland. MIS is an ongoing programme of research to define what level of income is needed to allow a minimum acceptable standard of living in the UK today. The research provides an evidence base that can be used by public sector partners to develop policy and target resources at the types of investment that will mitigate the increased cost burden of living in such areas, raise income levels and contribute to improved prosperity and quality of life. The income required to reach a minimum acceptable standard of living is significantly higher in remote and rural Scotland than elsewhere in the UK. The size of this living cost premium has an impact on the sustainability of communities as it restricts who can afford to live there. Many remote areas of rural Scotland are naturally fragile communities, where it is a real challenge to make living affordable for a demographically and socially mixed population. Among a range of important findings, the research shows that food costs about 10 per cent more in supermarkets in remote rural Scotland. In the most remote island communities, reliance only on local stores can add over 50% to the food budget. Clothing and household goods cost between 20-30% more, and items such as warm outdoor clothing and chest freezers are considered essential. Longer commutes to work combined with more expensive petrol typically add a week to costs, compared to rural areas of England. In towns, minimum fuel bills are estimated to be 50-90% higher, while households without children in remote settlements pay more than twice as much as elsewhere in the UK. On the positive side, rents, council tax and water bills tend to be lower and, as in other parts of Scotland but not England, prescriptions and eye tests are free. The findings of this research provide HIE and partners with a much clearer picture of the way in which household expenditure patterns vary across different parts of Scotland. This evidence base will help inform new policies or new priorities for investment and support to improve the attractiveness of rural communities as places to live, work, study and invest. The Board welcomed the research as excellent data which should inform national and local policy affecting remote and rural communities. Liz Scott, Equalities Manager, joined the meeting. 4.6 Delivering HIE s commitments in relation to the Public Sector Equality Duty (HIE 2013/ A ) The Chairman welcomed Liz Scott, HIE Equalities Manager, who presented this report. The Public Sector Equality Duty (PSED) requires HIE to publish by 30 April 2013 a suite of equality outcomes and a report setting out progress in mainstreaming equality across HIE s functions. The outcomes will be published online alongside HIE s Operating Plan and incorporated within 'Equality, Diversity and HIE: a framework for action' which sets out HIE s strategic approach to equality and diversity. HIE s equality outcomes articulate how the organisation can maximise strategic impact through realising economic, social and community benefits for groups of people, particularly women and young people. They also illustrate how the use of employee data helps develop 11

12 HIE s role as an exemplar employer. A shared outcome with Highland public sector partners enables HIE to contribute to increasing the resilience of our communities as welcoming and inclusive environments in which to live and work. Associated actions and measures will be further developed and progress reported in The Board welcomed the report. Liz Scott left the meeting. Elain MacRae, Senior Development Manager, and Caoimhe McCarthy, Offshore Renewables Graduate, joined the meeting. 4.7 Graduate presentations: a) Energy map Caoimhe McCarthy, Offshore Renewable Graduate in the Energy team, presented a new interactive map which HIE has published online to show employment figures within the energy sector in the Highlands and Islands. The map shows that there are currently more than 15,347 FTEs working in the region's energy industry. The figures include employment within approximately 130 HIE account managed businesses working in renewables, oil and gas and nuclear decommissioning. It provides figures for each area within the Highlands and Islands, and takes into account employment at different stages of the project lifecycle. The figures reflect the region's reputation as a global leader in renewable energy, its strong legacy in the oil and gas industry, abundance of renewable resources, excellent infrastructure and skilled workforce. The map also details planned and operational offshore wind, wave, tidal and demonstration projects around Scottish waters. Since it was published in April, page views on the HI-Energy website had multiplied from around 200 a day to more than 1,000. The Board discussed the potential to develop the map for use as a tool to attract inward investment to the Highlands and Islands, and thanked Caoimhe for her presentation. Elain MacRae and Caoimhe McCarthy left the meeting. Alastair Nicolson, Head of Planning and Partnerships, and Rachel Forrest, Graduate Economic Intelligence Officer, joined the meeting. b) Census Results Population Structures Rachel Forrest, Graduate Economic Intelligence Officer in the Planning and Partnerships team, gave a short presentation and led discussion on the most recent census data released for local authority geographies. This showed that the Highlands and Islands had a higher proportion of the population aged 0-14 than Scotland as a whole. However, the region had a lower proportion of working age people and a higher proportion of people of a pensionable age, findings which reflect the attraction of the area as a retirement location. All Highlands and Islands areas had a lower proportion of younger workers and a higher proportion of older workers than Scotland as a whole. The total population of the Highlands and Islands grew by 7.3% between 2001 and 2011, from 433,487 to 465,220, while Scotland's growth overall was 4.3%. The Board thanked Rachel for her presentation. 12

13 5. PAPERS FOR INFORMATION 5.1 HIElights (HIE 2004/02226) The Board welcomed the latest edition of HIE's newsletter, HIElights, which would be distributed online and in hard copy in May. 5.2 SDB Phase 2 (HIEA 2006/02552) The Board noted a paper, approved by the HIE Leadership Team, on progress with an ERDF application for funding under Strategic Delivery Body (SDB) Phase HIE Ambitious for Culture (HIEA 2013/00090) The Board had approved HIE's new Ambitious for Culture policy at its meeting on 19 February, but had requested further information on the detailed routemap and actual activities undertaken. This had been provided in an amended paper from the Director of Strengthening Communities, which the Board accepted. 5.4 AOB (HIE 2004/02226) It was noted that positive Board to Board meetings had taken place with partner organisations including Skills Development Scotland, VisitScotland and Scottish Natural Heritage. 5.4 Forthcoming Board dates: The Board plans to visit Shetland on 28 and 29 May. The Risk and Assurance Committee is due to meet in Inverness on 4 June. The next formal meeting of the full Board is on 25 June, in Cowan House, Inverness. Chris Roberts 18 June,