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Response from South of Scotland Enterprise

Pre-Budget 2022-23 Scrutiny: Covid-19 Financial Support - 16 August 2021

Thank you for your letter inviting us to provide input from South of Scotland Enterprise on the scrutiny on the funding allocated to provide Covid-19 business support. 

Though only launched on April 1 2020, SOSE responded quickly to provide support to businesses and communities across the South of Scotland, and quickly adapted and ensured activity was almost entirely focused on mitigating the effects of COVID19. This was in line with the Scottish Government issued interim letter of guidance which all enterprise and skills bodies received in April 2020 indicating that all resources not required to meet contractual commitments should be prioritised to meet the emerging economic and social challenges arising from the pandemic.

SOSE together with SE and HIE were charged with delivering the Pivotal Enterprise Resilience Fund and the Creative Tourism & Hospitality Enterprises Hardship Fund. SOSE also designed and administered the Scottish Wedding Industry Fund which supported over 2,800 businesses in the sector, including 169 businesses in the south of Scotland.

Where businesses were not successful in applications to these particular grant schemes, SOSE contacted each of the businesses concerned, spoke to them and then worked with them to explore other options for support such as business advisory to improve resilience. We have also been able to support a number directly with funding to build resilience and help ready them for restart and recovery.

Whilst our primary focus in our first year was to support our region to respond to and recover from COVID-19, we also started to think about our offer for the future. We established relationships with key Team South of Scotland partners and national agencies, including Skills Development Scotland, the Scottish Funding Council, Visit Scotland and Creative Scotland, and providers to progress joint initiatives on the ground and ensure that our service delivery complements existing support. We also supported businesses and communities to plan for the future, creating a strong pipeline of future activity in the region.

This year we will continue to develop our offer through initiating new services, support and funding focused on addressing the needs and issues of our region and delivering inclusive economic recovery and growth for the South. We will also focus on building our expertise and increasing awareness across the region of what we offer through a place-based approach to service delivery, which is responsive to our rural geography and dispersed population and business base and will continue to collaborate on key regional initiatives. In designing our processes, we have looked to do things differently by not putting too many, if any, criteria in the road of anyone applying to us or making the approach to us too rigid or torturous.

Response

1. How has the pandemic impacted the activities SOSE deliver?

• SOSE assumed our legal powers on 1 April 2020, nine days after the original lockdown measures were implemented. We responded quickly to providing support to businesses and communities across the SOS. We focused on mitigating the immediate impact of the pandemic, working with Scottish Enterprise and Highlands and Islands Enterprise to deliver Scottish Government grant support, helping businesses and communities survive unprecedented challenges.
• We have used our own funds and expertise to support those businesses and community organisations facing immediate challenges to survive and to support those with opportunities to grow. The pandemic has allowed us (by talking to as many as we could) to quickly build a deeper understanding of our economy and the opportunities and challenges facing those who operate here. Our Staff contacted and talked to businesses and communities in the south of Scotland to enable us to do this and the personal engagement we have had has been invaluable in establishing our relationships and we have been able to support a wide range of activity across the region contributing to our economic well-being. Examples of SOSE’s work include:
• Supporting Businesses through COVID – SOSE supported engineering company Turnbull & Scott in the Borders who are UK experts in Industrial Heat Transfer. The business received a grant from the Pivotal Enterprise Resilience Fund (PERF) to help them recover from the impact of COVID-19. The grant radically changed the businesses situation, and they were able to hire and train new members of staff and look at restarting their apprenticeship programme again.
• Supporting Innovation - SOSE has supported Hilltop Leaf Limited to help towards the capital costs associated with the construction of a private medicinal cannabis cultivation and extraction business in Dumfries and Galloway which aims to provide an alternative plant based clinical treatment to synthetic pharmaceuticals.
• Supporting Expansion – SOSE has worked closely with and supported IndiNature to establish Scotland’s first factory producing carbon negative insulation for homes and commercial properties for a considerable time. The sustainable construction materials business plans to open its new Borders manufacturing hub in summer 2022 and grow its workforce to 30. The business was also supported by SNIB and Zero Waste Scotland.
• Supporting Growth and Job Creation - SOSE provided funding to support Scottish PPE firm Alpha Solway to create over 300 jobs and apprenticeship opportunities at a new Dumfries manufacturing centre and to expand its operations in Annan. Our investment is in addition to Alpha Solway’s total investment into the Dumfries and Galloway region of more than £33 million and it shows SOSE’s commitment to secure the long-term future of manufacturing in the South of Scotland.
• Supporting the Environment and Sustainable Communities - in demonstrating SOSE’s commitment to long term collaboration to support the environment and sustainable communities, SOSE will provide five years of funding to The Galloway and Southern Ayrshire UNESCO Biosphere (GSAB), totalling £1.9m, which will help them achieve their sustainability ambitions and allow them to pilot new ideas and ways of working to foster a sustainable economy and society.
• As a new organisation, we have built our capacity over the past 17 months since we were established. From 10 staff on day one, we now have a staffing complement of around 100 staff focused on effectively delivering advice and support across the region and bringing the voice of the rural South of Scotland to policy debate.
• Our overarching remit remains to drive inclusive growth and ensure that the South of Scotland benefits from a new approach that supports a diverse and resilient economy, sustains and grows communities, and harnesses the potential of people and resources. We are looking to the longer-term activity that we want to take forward to ensure that the region recovers effectively. That activity is diverse – from making the most of our opportunities in the South e.g. the transition to net zero, to maximising the use of digital technology and supporting innovation across our sectors, to implementing Fair Work in all we do and our Operating Plan sets out what we are delivering this year.
• We have been working with partners in the region as Team South of Scotland and the Regional Economic Partnership, to develop the first ever region wide economic strategy that develops a clear, collective and compelling vision for the region – that by 2031 will be “green, fair and flourishing”. While the strategy is currently out to consultation, it provides a clear strategic framework for our activity with six key themes that will support the success of the region. This enables us to look to the future and ensure that our immediate recovery activity is seen in the long-term context.

2. What additional activities are SOSE now delivering to:

a) to provide Covid-19 related support to businesses:

• Working alongside Team South of Scotland partners, in particular the local authorities, to ensure communication is shared around the support available to businesses.
• Continuation of SOSE Crisis Fund monies specifically looking at supporting businesses in danger of closing or making redundancies because of change in trading conditions caused by COVID restrictions.
• Specific support provided by the Business Development Specialists to the businesses suffering trading difficulties. This includes advice on finding new markets or products/services as well as facilitating applications for SOSE Crisis Funding or other sources of emergency funding from public and private sources.
• Providing crucial support and direction to the Scottish Wedding Industry Fund (working with SE and HIE), both for the original applications and also for the top-up element.
• Preparation for Furlough Scheme coming to an end, including keeping up to date on the situation in the South of Scotland and ensuring resource will be available to work with clients requiring guidance on implications.
• Alongside SDS and other PACE partners, monitoring movements in redundancies and being alert to any local intelligence which may lead to larger scale redundancy announcements.
• At the start of the COVID-19 crisis it was predicted there would be a collapsed economy and high unemployment at the end. However, as we come through the crisis, there has been strong demand in many sectors and the challenge for businesses is the lack of staff to meet those demands.

b) to support the economic recovery:

• Instrumental in the creation of the Regional Economic Partnership, pulling partner resources to create a new Regional Economic Strategy for the South of Scotland.
• Our Operating Plan for 2021/22 states that SOSE will continue to provide support and expertise of all kinds to empower organisations to achieve their objectives and ambitions. Working side by side in engaging, coaching, providing advice and access to specialist services in a tailored way. Provision of support to entrepreneurs to start new businesses and existing businesses to position themselves to respond to new and emerging opportunities.
• Ensuring funding is available for those businesses and communities looking to innovate and improve - leading to opportunities for employment and development in the South of Scotland including:
• Business Innovation and Improvement Fund – providing businesses opportunity for funding for growth and diversification, focus on those increasing employment and innovation in their business.
• Green Jobs Fund: Specially supporting businesses who are creating or sustaining jobs while developing projects that will directly affect our Just Transition to Net Zero. o Enterprising Communities Ideas Fund: Funding for initiating new enterprising community ideas. This Fund covers activities such as testing new ideas, designing new services, developing investment and delivery-ready business and project plans and contributions to start-up costs.
• Enterprising Communities Development and Opportunities Fund: This Fund recognises that beyond the ‘ideas’ stage community organisations and social enterprises require a range of support to accelerate projects, develop organisations and service delivery, increase trading activity, etc. The fund provides grant funding to contribute towards costs such as people resources, access to professional advice, sales and marketing activity and business improvement spend.
• SOSE Loan Fund: In addition to grant funding, we are able to provide loan funding to assist with growth and development of business and community enterprises, especially those where low collateral limit what profitable businesses can borrow and also where speed of turnaround of the loan process are key.
• SOSE is committed to working with and supporting businesses and communities in the longer term to allow them the investment and time to develop and deliver on their objectives. SOSE committed just over £2.7m over five years to support the new tourism, marketing and destination development programme to be delivered by a new industry-led leadership body called South of Scotland Destination Alliance (SSDA). In demonstrating SOSE’s commitment to long term collaboration to support the environment and sustainable communities, SOSE will provide five years of funding to The Galloway and Southern Ayrshire UNESCO Biosphere (GSAB), totalling £1.9m. The funding will provide valuable support to help the organisation develop, strength their standing as a key influencer in the region and help them achieve their sustainability ambitions. The funding will create full time jobs to allow them to pilot new ideas and ways of working to foster a sustainable economy and society.

3. What activities have been suspended, deferred, or scaled back?

• Activities have been prioritised towards COVID -19 recovery as well as supporting economic recovery as detailed above.
• Given that SOSE only begun operations in April 20 we have less fixed commitments than might normally have been the case in a more mature agency and therefore have been able to minimise the suspension, deferral and scaling back of activity thus far during the crisis.
• Scaling up of the agency at the pace that was planned has been the main impact given all SOSE focus over the last 18 months has been primarily, as directed, aimed squarely towards recovery.
• SOSE in the current operating plan for 21/22 is now pushing that scale up at pace.

4. If activities were suspended, deferred or scaled back, how was this budget used?

• As the previous answer above describes there has been minimal impact.

5. How has the SOSE budget been impacted?

There were two main impacts:

• Staffing required to be directly working on COVID recovery.
• Core funding in both last year and this year was directed towards COVID recovery.

6. Was SOSE allocated additional funding by the Scottish Government to cover

a) Covid-19 related business support; and

b) Covid-19 related economic recovery.

• Yes, SOSE was allocated £1m and directed it to both a) and b) above.

See Annex A: 2020/21 Investment (78KB, pdf) posted 14 September 2021

7. How much of any Covid-19 budget has been allocated? Has there been any underspend and, if so, what are the details of this?

• In relation to COVID related funding there were no underspends in either 20/21 or indeed forecast for 21/22 at present date.

8. What have been the costs to SOSE of administering Covid-19 related support and how were these costs covered?

• As described previously due to SOSE starting operations as COVID emerged, our staff resource in 20/21 was largely directed towards COVID support and recovery. A contribution was received from Scottish Government for administration of the Scottish Wedding Industry Fund. Our total staff costs for 20/21, funded by core grant in aid, were £3.787m.
• For 21/22 we still have staff delivering the additional COVID funding given to SOSE by SG but cannot at this time put a final figure on it given we are only four months through the financial year

9. How has SOSE been engaging and communicating with businesses to understand their business support needs?

• Regular communication between SOSE client facing staff and businesses
• Regular outreach, communication and (when allowed) site visits by SOSE Chair, CEO and other appropriate team members.
• Liaison with business groups such as Chambers of Commerce, FSB, and Industry specific groups such as D&G Engineering Forum, Scottish Tourism Alliance, Scotland Food and Drink and Association of Scotland's Self-Caterers.
• Business Questionnaire developed and issued in conjunction with HIE.
• Ongoing sector links with a number of organisations including South of Scotland Destination Alliance, Scottish Wedding Industry Alliance, SRUC etc.

10. What engagement has SOSE had with the Scottish National Investment Bank since its launch?

• There has been regular meetings and dialogue at Board and Executive level as well as Operational collaboration. This has not only been since its launch but prior to that, to share experience of agency set up in common areas.
• We have also seen some early success with organisations that SOSE worked with during the first year now being supported by SNIB.

We will continue to build strong relationships and work in collaboration with SNIB.

I hope this information is helpful in informing the work of the Committee, and we look forward to updating you further at our forthcoming evidence session.

Yours sincerely

Jane Morrison-Ross
Chief Executive
South of Scotland Enterprise

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