Highland Economic Forum Response to the Infrastructure Commission for Scotland Call for Evidence the Highland Economic Forum Is

ICE080.1 - Highland Economic Forum, Response

Highland Economic Forum response to the Infrastructure Commission for Scotland call for evidence

The Highland Economic Forum is the Regional Economic Partnership for the Highland Local Authority area. The membership is made up of both public and private bodies and this response is from the Infrastructure sub group of the partnership.

The response includes input from The Highland Council, Hitrans, SCDI, Inverness Chamber of Commerce, Federation of Small Business, Skills Development Scotland and the University of the Highlands and Islands.

The Highland Council area makes up one third of the land mass of Scotland however has a population of 235,000 around 5% of Scotland. This makes the region unique in terms of its size and rurality and therefore it faces unique challenges in terms of the infrastructure needed to support business, service delivery and economic growth. Over 30 years we see significant impacts from demographic change and also opportunities from the transition to a low carbon economy. The Highlands have the ability to contribute greatly to the Scottish Government’s target of carbon neutrality by 2045, notably through renewable generation but also an expansion in forestry.

This response broadly follows the headings set out in Annex 1 of the call for evidence, but does not seek to answer all the sub headings, instead providing a more general response to the main headings. Specific infrastructure projects have not been discussed.

Highland Economic Forum Response

Annex 1 Part 1

The Highland Economic Forum believes that social inclusion should be included as a strategic driver. In a rural area such as Highland drivers such as technological change could potentially lead to the isolation of some of the most vulnerable and cut off individuals in the region who aren’t able to access modern telecommunications for example. The region is generally always playing catch up with digital infrastructure yet where it is provided take-up is high and the impacts felt to a greater extent than in urban areas.

Due to Highlands rurality we have been left lagging behind large parts of the country in areas such as digital. The drivers must recognise that investment must be made in the region, not just in digital, to simply gain parity with the majority of Scotland in order to deliver inclusive growth for all. Demographic change is a major issue for Highland with a declining youth population and an ageing population creating workforce challenges, particularly in remoter areas. There are exceptions such as the Inner Moray Firth area around Inverness and the Isle of Skye.

In a region the size of Highland sub regional analysis must take place for infrastructure investment. Large investments in rural areas can make significant impacts. As an example, the investment in the Skye Bridge has reversed population decline and brought new industry and increased tourism to the island rejuvenating the economy. The timespan of the impact of this

ICE080.1 - Highland Economic Forum, Response

investment will far exceed a 30 year time frame due to its transformational impact, where in an urban area further investment will be required in a much shorter time period.

The strategic drivers must also be able to recognise changes that have the potential to disproportionally benefit rural areas. An example of this is home working and other changes in working patterns. In rural areas this has the potential to halt population decline and bring young families to remote areas. In an urban context the impact may not be as great so rural areas can show significant returns from such investment.

Annex 1 Part 2

The definition covers the basic headings of infrastructure however it should recognise that while most Scotland has those basics some regions including Highland lack the fundamentals necessary to grow the economy. In order to achieve inclusive growth in Scotland Highland still needs investment to provide the basics, such as an electricity grid which isn’t constrained.

The gas supply network in Highland for example only reaches to Invergordon and there is no gas provision on the west coast settlements, including Fort William a town of 12,000. To deliver inclusive growth it should be recognised that communities that are not in the vicinity of the fixed asset investment should have alternative considerations made for them. This applies to many different asset classes across the region (rail for example), with the West Coast for example seeing limited strategic trunk road investment, despite the large change in numbers using them through tourism, as well as the marine and renewable industries. The move to electric vehicles and autonomous vehicles over the next 30 years will need investment to ensure the area maintains key economic sectors such as tourism.

The Highland Economic Forum feel strongly that there also needs to be a focus on maintenance of exiting assets and that there needs to be a revenue budget to do so. There needs to be a strong emphasis on infrastructure maintenance and rejuvenation in the short term to simply get assets back to an acceptable standard before new investment takes place on a large scale.

Annex 1 Part 3

The opinion of the Economic Forum, backed by evidence from the Highland Council, is that the current quality of infrastructure in the region is poor. In a region with Highlands characteristics we face more barriers to maintain the current stock due the rurality (7000km of local roads for example), particularly in terms of cost and increasingly availability of the necessary skills.

The Economic Forum feels strongly though that investment should be made despite these barriers due to the contribution the region makes to Scottish economy. Highland generates a much larger per capita proportion of Scotland’s Renewable energy and therefore supports the low carbon economy. Without investment in both basic in kefrastructure such as transport, and more specialist investment in terms of skills, this sector cannot continue to grow. Other key sectors such as Food and Drink (whisky, salmon) and Tourism are significant

ICE080.1 - Highland Economic Forum, Response

drivers of the Scottish economy. Investment in infrastructure will be needed to support these sectors along with new industries such as life sciences which are growing in the Highlands.

Highland benefitted greatly from ERDF funding in the past (it is classed as a transitional region currently) and still requires that investment. Without this recognition there is a risk of a drop in the quality and delivery of assets in the future. The Shared Prosperity Fund remains an unknown quantity in terms of its potential impact on Highland.

Priority investment in the future must be region specific and address areas where regions have been left behind. An example of this in Highland is electrification of rail, something that is currently beyond the 30 year timeline in Highland. Investment should be tailored to address the specific needs and be innovative to the region in order to build on their relative advantage. In Highland an example of this is renewable energy, where we have the potential to generate but are constrained by the grid. Innovative solutions such as battery storage could work for the region with investment. Hydrogen powered trains could reduce the need for overhead line construction.

Rural housing is a key priority for Highland. Due to a number of factors current provision is lacking, and prices are high partly due to the impact of second homes. Another area of priority is how the elderly will be looked after in the future. Social inclusion was discussed earlier and it needs to be recognised that the move towards digital health care may be constrained by inadequate broadband.

Annex 1 Part 4

The Economic forum would like to emphasise that current methods of evaluation such as STAG are biased towards urban areas The Forum suggests that looking back at previous appraisals of infrastructure investments in the region and the results that actually materialised would be a useful exercise to demonstrate this. In particular the major bridge investments of the 1980s such as the Cromarty and Kessock Bridges had a transformational impact on the Inner Moray Firth. More recently the Skye Bridge has arguably had a similar impact.

There is also a need to view investment holistically. If there is an investment in a road for example is there recognition that investment will be needed in infrastructure to support the benefits that will bring, such as housing, digital etc.

In rural areas the lifeline nature of infrastructure needs to be taken in to consideration. The closing of a road, for example the Strome Ferry road between Lochcarron and Kyle of Lochalsh results in a diversion of 115 miles. From an economic and service delivery perspective this is not reasonable yet currently the funding available to the local authority means that only maintenance of the existing substandard route which dates from the 1960s is possible.

For Highland, methods that focus on the cost/benefit per capita are not appropriate. Infrastructure will cost more however the lifespan of the asset will be longer due to the lower volume of use. Appraisal periods therefore need to be longer than the 30 year timeline.