HIGHLANDS AND ISLANDS DEVELOPMENT BOARD
(1)
AN OUTLINE OF THE POWERS AND WORK OF THE
HIGHLANDS AND ISLANDS DEVELOPMENT BOARD
(2)
ECONOMIC AND SOCIAL BACKGROUND
AN OUTLINE OF THE POWERS AND WORK OF THE
HIGHLANDS AND ISLANDS DEVELOPMENT BOARD
AN OUTLINE OF THE POWERS AND WORK OF THE
HIGHLANDS AND ISLANDS DEVELOPMENT BOARD
THE HIGHLANDS AND ISLANDS OF SCOTLAND
The Highlands and Islands covers approximately one sixth of the land area of the
United Kingdom and just under half the land area of Scotland but contains a
population of only 320,000 people. The area has a wide range of physical and
economic disadvantages including poor environment for agriculture because of
topography and soil of low fertility, distance from established centres of production,
small local market areas. Of equal importance has been the interraction of economic
and social factors; in many parts of the area traditional values are dominant and this
has been further reinforced by the existence of a distinct Gaelic culture in the
Hebridean Islands and parts of the western mainland. Unsuccessful experiments in
development in the past have created resistance to change which can be identified
with outside sources of enterprise and finance.
The potential advantages of the area are: attractive natural beauty of scenery,
winter sports, sheltered deep-water harbours, an established regional centre and
hinterland of 90,000 people based on Inverness, access to existing and new
unexploited fishing grounds, hydro-electric power and, more recently, proximity to
North Sea oilfields. Investment in the trunk road system and selective improvements
in the railway lines have improved access. Roll-on/roll-off ferries have transformed
access to the major islands.
The special circumstances of the area have been recognised in a series of special
measures and legislation dating back into the 19th century. The HIDB was set up by
act of Parliament in 1965 to operate in the area comprising the then seven crofting
counties. In place of the seven County Councils in the area there are two Regional
and three Islands Councils. Local Authorities are Shetland Islands Council, Orkney
Islands Council, Western Isles Islands Council, Highland Region and the western
districts of Strathclyde Region. The principal objects of the HIDB were defined as:
1
to assist the people of the Highlands and Islands to improve their economic and
social conditions;
2
to enable the Highlands and Islands to play a more effective part in the
economic and social development of the nation.
The Board has operated in three main fields:
(a)
the provision of financial assistance to businesses expanding or setting up in
the area;
(b)
undertaking development projects carried out 'at its own hand1;
(c)
advisory functions,
promotion.
social planning, research
and long-term
economic
The staff involved in these activities is approximately two hundred and forty, with an
annual budget of £15.5 million for 1978-79 fiscal year. The Board itself comprises
four executive and three non-executive members appointed, normally for a period of
five years, by the Secretary of State for Scotland and the organisation reports to
Parliament through Scottish Economic Planning Department.
The financial assistance provided by the Board can take the form of loans, grants or,
less commonly, equity participation in businesses.
The aid is selective and
discretionary;
after financial investigation by staff the cases are considered
individually by the Board at meetings which take place normally at two-weekly
intervals. The Board activities here have been described as 'a merchant bank with a
social purpose'. As compared to other regions of the United Kingdom the Board is a
means of injecting capital into businesses in an underdeveloped area on more
favourable terms and over a much wider spread of industries.
The projects which the Board have carried out have normally been the provision of
facilities in advance of need for business, in particular advance factories, and
premises built to the developer's specification. Board projects are also intended to
create development in areas where the normal business risk is so great that, even
with Board assistance, private enterprise would not be expected to operate. Projects
to date have been the construction of hotels on islands where tourism is in the early
stages of development and the construction of a fishing harbour in the Western Isles
in an attempt to exploit new species of fish and new techniques of fishing.
The Board's advisory function covers a wide range of topics. In the field of
government policy the Board provides advice on questions affecting the long-term
future of the area, usually either to the Scottish Office on one hand or to local
authorities on the other. Its role in advising the Secretary of State for Scotland has
been formalised most clearly in the appointment of the Board as principal adviser to
the Secretary of State on transport within the Highlands and Islands. - Since that
appointment there has been decentralisation of transport planning to new local
authorities who now prepare Transport Policies and Programmes (TPPs) upon which
the Board also comments and frequently in their preparation. The Board does not
restrict itself to responding to other policy initiatives but will prepare the case for
developments such as recently the proposals for a new sea ferry system to the
islands. Specialist Board staff provide advice to developers on marketing, training,
transport services, techniques of production, professional services and the wide range
of problems common to small businesses. For difficult areas or areas of special need
the Board will prepare or commission local development plans either on its own or in
association with local authorities; these are sometimes followed by the appointment
of local development officers or a local development committee. In recent years the
Board has created more local offices as a means of making its assistance and services
more accessible. These studies often include social aspects of development,
particularly housing, and more recently the effects of immigration on local
communities affected by oil-related development.
THE BOARD'S DEVELOPMENT PRIORITIES
A recent Annual Report will give details of the wide range of activities which are
covered by the Board, but it may be useful to summarise some of the more important
recent developments and relate them to the Board's long-term strategy. From its
early years, the Board has opted for an informative report which combines details of
its work during the year together with full statistics on its financial aid and the social
and economic background of the Region for which it is responsible. It will be clear
from the report that a very wide range of activities is covered in any year but unless
one reads the series of reports, very little comes through on the Board's long-term
strategy.
Development planning involves choosing certain policy directions and deciding how
far to pursue these directions. Compared to other development agencies, HIDB
strategy is marked by a very wide range of activities and an even wider range of
issues with which the Board becomes involved. This broadly based strategy is
essential to the immediate preservation of social/community life in many parts of our
area. Looking to the long term, the strategy can be justified on two grounds:
(a)
it keeps options open for more major developments when opportunities to
secure them occur in the future, and
(b)
it recognises that employment levels are primarily dependent upon the
aggregation of small scale decisions, a view that is now playing an increasingly
important role elsewhere in Regional planning and even in national economic
policy.
The greatest single element in the workload of Board staff is the appraisal of
applications which are made for grant and loan assistance under the terms of Section
8 of the HIDB Act. The need to form a balanced judgement on the worth of each
case requires a combination of investigation by specialist staff supported by
accounting staff. The appraisal of cases must take into account the special
circumstances of particular localities and communities which require advice on
planning and social development; investigating staff must develop an awareness not
only of the financial, industrial and marketing factors, but also of local factors and
the personal background of the applicants. In 1977 we reorganised our staff of
accountants into Area Teams to help meet these requirements.
A development agency should complement its function of support for the existing
economy with projects which will (a) fundamentally alter the traditional structures
and relationships within the Region and between the Region and the rest of the
economy, (b) remove the constraints which will limit the development which can be
expected from being responsive to the private sector.
In no area has this been more important than in the proposals which the Board has
recently announced to improve land use. The solution for each designated area will
depend first upon the wishes of the affected communities and then upon the views of
technical experts and the Board's own staff who now have wide experience of
practical improvements and new types of cultivation gained in dealing with grant and
loan cases.
In Fisheries we have the example of a direct Board project being developed for
strategic purposes. The Breasclete development has required the longest period of
advanced planning of any Board project so far. The first stage of this project was to
establish the Hebridean Fisheries Strategy which took into account the major changes
in the availability of fish stocks available to the UK fishing industry; the second stage
was to identify the major sites for the development of two new fishing piers at Loch
Roag in Lewis and Northbay in Barra; the third stage was the detailed planning and
construction of the pier and fish processing plant together with ancillary installations
at Breasclete on Loch Roag. The role of this development in stimulating new
investment and techniques in the local fishing industry has already been demonstrated
in a number of approaches to purchase large vessels and new equipment.
In contrast to the highly localised sea fishing strategy, our development of fish
farming is ubiquitous and on a rather small scale at most locations. Nevertheless
total employment in fish farming is growing fast and likely to reach one thousand by
the early 1980's.
In industrial development we place considerable emphasis on retaining a balance
between large scale development which we would normally expect to be located in
the eastern part of the Highlands around Inverness and the Inner Moray Firth and the
provision of small scale factories and sites in association with local authorities which
will ensure the diversification of other medium sized and smaller communities into
the manufacturing sector.. We also devote considerable attention to encouraging
existing enterprises to expand. Our concern for this balance can be illustrated from
our recent promotion effort on petrochemicals and the proposal to establish with the
Scottish Development Agency a "Highland Craftpoint". "Craftpoint" will provide
support (eg in marketing, design and technicai training) for the rapidly expanding
number of small and medium size craft firms in Scotland, and provides a further
example of the Board using a project investment to further a strategy for the
development of a particular industry.
Our promotional work for a major oil and gas related development on the Cromarty
Firth included at an early stage an examination of the industrial economics of
petrochemical industries to ensure that a plant located in our area could be
competitive in selling into the European market. We have also related this industrial
effort to a broader concern with oil developments in the Moray Firth Basin and
adjacent blocks. This is particularly important in view of the inter-relationship
between the industrial developments and the supply of feedstock to a gas gathering
pipeline or a joint user pipeline from fields centred around Block 16.
Our work in tourism is now well established in a pattern which combines financial aid,
often to private individuals, to provide tourist accommodation which creates a
significant flow of additional income complementary to many traditional occupations
(including that of housewife) with promotional work in association with other tourist
bodies and the creation of tourism projects in areas where it is necessary to increase
capacity in advance of a commercial interest.
Because of its social and
environmental impact the development of tourism is perhaps the most contentious of
the major strands of our policy. In certain areas it is clear that the local view and
the Board view is agreed that tourism is as yet underdeveloped.
Our scheme to develop multifunctional community co-operatives has also received
wide publicity. Although we are anxious not to encourage over-optimism we believe
that interest to be justified on a number of grounds. Irish experience demonstrates
that this approach can engage communities in a practical series of projects which
together will help support the often fragile basis for their survival. This co-operative
experiment is an important pointer to wider possibilities for self-help in wide areas of
the Highlands which do not display so acutely the problems of community survival and
fragility as those in the Western Isles where we are pioneering the scheme. Our
experience points to limitations both of relying on private sector initiatives (which
we support), or on wholly public sector sponsored projects. We therefore think it
important to investigate the very considerable middle ground between these
alternative models of enterprise and are complementing the practical co-operative
development programme with research on how adaptations of the co-operative
formula can help in bridging the gap in bringing together finance, managerial
expertise, local skills and type of organisation which will survive the recurring
threats to survival.
It is perhaps inevitable that the report of a development agency such as ours is based
on perennial optimism about the future but we are equally concerned to establish the
effects of our policy now that, uniquely in the field of regional development, we have
a long enough track record to be able to form a reasonable judgement. There are
many problems in evaluating the effects of social and economic policies when so
many other factors are changing. The impact of oil on the Highlands and Islands has
certainly been an unexpected major change but its impact can be over-estimated.
A look at the long-term statistics shows that around 1967/68 there was a change
which has led to a significant improvement in the employment, unemployment and
population trends of the Highlands and Islands relative to Scotland and Great Britain.
More recently the employment situation has deteriorated slightly but figures of
migration to mid 1977 represent a continuing substantial inflow of population to the
Region; in many areas the inflow of population outweighed a decline caused by excess
of deaths over births in the resident population. The other hopeful indicator of
continuing buoyancy in many parts of our area are the increases in the number of
applications for Section 8 assistance in recent years. A recent independent study of
long-term trends in unemployment from 1954 to date has established that the
improvement from 1967/68 is unique in the post-war period. Although it would be
foolish to claim the credit for this improvement entirely for the Board, it
demonstrates not only the impact of the Board's work and financial assistance, but
also the enhanced expectations which the existence of the Board has created in the
Highlands and Islands. It also emphasises the improvement in the area before the
impact of oil-related development, an improvement enjoyed in many areas which
have not experienced major oil impact.
3 T Hughes/FMM
August 1980
ECONOMIC AND SOCIAL BACKGROUND
THE HIGHLANDS AND ISLANDS
ECONOMIC AND SOCIAL BACKGROUND
INTRODUCTION
1.1
The Highlands and Island of Scotland (which includes the former 7 Crofting
Counties) is one of the most sparsely populated and remote regions of the
EEC. Its socio-economic characteristics reflect this geographical and indeed
cultural separation from the mainstream of European development. The
Region is primarily rural and the economy dependent on a large primary sector
and a relatively undeveloped manufacturing base. Indeed it sustains a society
with a markedly different rural/urban balance to the rest of Scotland, and a
fortiori to the rest of the UK. The rural population of 172,798 (197lT
represents some 60 per cent of the total population and agriculture is roughly
three times as inportant in the Highlands as in Scotland - measured in terms of
occupational structure. In terms of full job equivalents, around 15 per cent of
the region's employment depends directly on agriculture, forestry and fishing.
However around 20,000 families in the region obtain at least part of their
income from agriculture, reflecting the predominance of part-time and sparetime holdings in the Highlands and Islands compared with elsewhere in the UK.
On the other hand only 14.2% of the employed population were working in
manufacturing industry in 1976 or less than half the national proportion of
32.2%.
POPULATION
1.2
The population is highly dispersed and there are few large urban centres.
Although the Board's area covers some 36,300 square kilometres and makes up
some 48% of the land area of Scotland it contains only 6.2% of the total
population. A comparison with Britain provides an even greater contrast; the
average population density is 8.6 persons per sq kilometre in the Highlands and
Islands, 66 in Scotland as a whole and 237 in Great Britain. The largest town is
Inverness, whose population was estimated at 39,500 in 1974, and there are
only seven other towns with populations of more than 5,000. As an approximation it may be stated that 40% of the population are urban dwellers, 20%
live in crofting townships and the remaining 40% inhabit rural villages and
farms. The bulk of the population is concentrated in the east, but about fifty
Scottish islands are still inhabited, stretching from the Shetland (or Zetland)
Islands in the far north to the Argyll islands in the south west, and together
they contain about thirty per cent (90,000) of the total Highland population.
1.3
The long-established trend of net out-migration from the area continued
during the period 1961 to 1966, but from 1966 the decline began to reverse,
albeit at a fairly low per annum rate. This influx has been given new impetus
since 1971 with the advent of oil-related development in the Highlands and
Islands. Between 1971 and 1978, population in the area has increased at an
annual average rate of 1.12%. These aggregate figures disguise important
intra-regional variations in migration rates, and their resultant effects on
population change. The general trend has been towards net growth of
population in the more accessible urbanised areas, but net decline or, at best,
no change in the rural and more remote areas. Yet even in the remoter parts,
the process of urbanisation is continuing, with the larger settlements growing
at the expense of their rural hinterlands. The largest gains have been
generated by a number of key major developments (eg the pulp mill in
Lochaber, and the aluminium smelter and oil-related activity in East Ross,
Inverness and Nairn) although, in some areas, notably Shetland, population
growth began in the late-1960s as a result of the expansion of traditional
industries such as fish-processing and knitwear, prior to the arrival of oilrelated developments. Even within the "oil-affected" areas, experience is by
no means uniform. In Orkney, for example, the net growth in population over
the last few years associated with the construction of the pipeline terminal
and tank farm at Flotta contrasts with the continuing out-migration from the
more isolated North Isles. It should be noted that in-migration, in itself,
should not be seen as a simple solution to the Highland Problem, since the
form which it takes is crucial. Thus, in parts of the western seaboard and in
some of the islands, the influx of retired persons has become a demographic
feature which exacerbates the already imbalanced age-structure. Moreover,
many of the larger ventures in the area are very insecure, particularly the oilrelated developments but also such ventures as the pulp and paper mill at Fort
William which recently announced the cessation of pulping operations, with
major direct and indirect consequences for employment and incomes.
SOCIAL CHARACTERISTICS
1.*
In terms of cultural characteristics, it is possible to recognise three "core"
areas within the region. One of these is centred on the Moray Firth, and
although identifiably part of the Highlands and Islands, it has a number of
social and cultural features in common with the lowlands of Scotland. This
area has recently seen a large influx of labour from outside the region,
associated firstly with the aluminium smelter and latterly with oil-related
activities. Another core area comprises the so-called "Norse" counties of
Caithness, Orkney and Shetland, whose distinctive place-names and dialects
reflect their historical affinity with Scandinavia*. Society here is relatively
outward-looking, and independence and a degree of egalitarianism are
distinguishing features. The third core area covers the "Highland" settlements
of the west mainland and the Hebrides, in much of which Gaelic traditions
persist, Gaelic is still spoken (as well as English) by most of the people in the
Wester Isles, and to a lesser extent elsewhere. Socially and culturally these
communities are not dissimilar to those of the Northern Isles, particularly
Shetland, with whom they share a strong egalitarian tradition. The Highland
areas are further characterised by a more "closed" society in certain respects,
and marked religious adherence, especially in the Western Isles. As in other
anciently and continuously settled parts of the region (such as the Northern
Isles), kinship and reciprocity remain significant. Clearly the features
referred to are not found in equal measure throughout the three main areas
concerned: in some places (eg the larger nucleated settlements) they may have
little relevance. Parts of Argyll and Lochaber may be similar to the Moray
Firth, in combining Highland characteristics with many of the features of
"Lowland" society.
1.5
The social infrastructure of the region although fairly good by comparison with
some other peripheral areas of the developed world are still far from
adequate. Health services are fairly good for remote parts and even the
smaller islands often have their own doctor. Housing is less satisfactory with
19% of dwellings in 1970 (mostly in the crofting areas classified as sub-
*Economic traditions, however, have differed in these areas. Shetland has
concentrated on far more fish than Orkney which is largely dependent on
agriculture.
Caithness has combined these two activities and added a
significant degree of modern manufacturing industry.
standard and some of the more remote communities stili lack piped water and
electricity supplies. Education is of a high level, academically if not always
vocationally, and a greater proportion of children are said to proceed to
tertiary education from some parts of the Highlands than from the urban areas
of Central Scotland. While community organisations are relatively numerous
and well-supported provision of recreational and other social facilities,
particularly for young people, is inadequate and alcoholism is a major problem
in the region.
ECONOMIC ACTIVITY
1.6
Description of the structure of employment in the Highlands and Islands is
made difficult by the wide range and geographical dispersion of small-scale
activities, and the prevalence, particularly in the crofting areas, of
"occupational pluralism", whereby a person's employment may be derived from
a number of part-time sources such as agriculture, public services and tourism.
While it may be held that agriculture provides a common element, at least in
the rural areas, variations from place to place are such as to preclude much
generalisation. In the area as a whole, employment in the primary industries
has declined, although it is still much higher than the average for Scotland in
each of agriculture, forestry and fishing. The manufacturing sector may be
under-represented but recent industrial development has helped to increase
and diversify employment. In compensation for the small manufacturing
sector, construction work has tended to employ a large proportion of the
labour force by national standards, reflecting continuing government attempts
to improve infrastructure and foster employment in public works, including a
substantial amount of road-building. The services sector has a diverse
employment structure, with education, tourism and retail distribution the
leading sources of employment.
1.7
The danger of applying these regional averages to small areas must, however,
be re-emphasised. In north-west Sutherland, for example, the manufacturing
sector hardly exists. The same kind of cautionary note must also be heeded as
far as unemployment figures are concerned. Thus the average rate for the
Highlands and Islands in 1978 was 8.4%, but sub-regional rates varied from
4.1% in Shetland, to 18.3% in Bute (Clyde Islands). A distinctive feature of
unemployment in the Highlands is seasonal!ty, partly a reflection of the
significance of the tourist industry in providing employment.
1.8
The fishing industry is being revitalised and numbers employed increased by
45% between 1967 and 1975 while the volume of catches rose by a factor of
between 3 and 4 over the fourteen-year period from 1961 to 1975. The HIDB
has played an important part in helping to revive the Western Isles fishing
fleet. Nevertheless, the industry faces considerable structural and cyclical
problems and only in Shetland has there been an adequate number of on-shore
enterprises to take advantage of the potential for fish-processing within the
region. Recently, the Board itself has established a fish drying factory at
Breasclete, Lewis to help develop the fishing resources west of the Hebrides,
including relatively "new" species such as the blue whiting.
1.9
This move is, in part, a response to changes in the pattern of deep-sea fishing
off the British Isles, consequent on the new EEC arrangements on fishing
limits. However, success is by no means assured and this and other
developments in the fishing industry will require considerable adaptations and
investment by both fishermen and fish processors. There have also been
developments in fish-farming making use of the numerous suitable sites on the
west coast which offer the necessary sheltered marine conditions. However,
there have been considerable technological and marketing problems involved in
these developments.
1.10
Mining and quarrying (with the exception of offshore oil) is now of little
significance in terms of employment in the Highlands and Islands, although
coal, lead and some other minerals were once mined in small quantities. The
only extractive enterprises of note are local quarries for building aggregates
and roadstone, and the silica-sand mine at Lochaline.
Although the
construction sector is large by national standards, the region has few big
contracting firms. Consequently, much of the employment in construction
work is provided by national building and civil engineering firms engaged on
major projects such as the reconstruction of the A9 trunk road. Without doubt
the biggest problem facing local firms is the high level of costs which they
have to bear - a result of a number of adverse factors, including the high cost
of raw materials, difficult physical conditions and a lack of economies of scale
on small contracts.
1.11
The manufacturing sector of the Highlands and Islands economy is not large,
yet it is diverse, with an interesting history, often of technological innovation
in the exploitation of the region's distinctive natural resources. A good
example of this was the harnessing of the water power of the Falls of Foyers
in 1894 by Lord Kelvin, to create the world's first hydro-electric power (HEP)
station. Further development of HEP was rather slow until 1943, when the
North of Scotland Hydro-Electric Board (NSHEB) was set up to capitalise on
the huge potential for power-generation within the Highlands. The NSHEB has
also been charged with assisting both the economic and the social development
of its area, and, during the 1950's especially, it proved to be a most important
source of employment in many remote areas.
1.12
Lord Kelvin's pioneering 19th century scheme at Foyers provided the power
source for the first aluminium smelting operation in the Highlands. The
suitability of the region for this activity was soon recognised, and in 1909, a
new and much larger smelter was opened at Kinlochleven. This was to be
followed in 1929 by a third plant at Fort William, bringing the combined output
for the Highland works, by stages, up to 30,000 tons per annum. In the 1960's
demand for aluminium began to expand fairly rapidly, and as part of the
programme to increase production in this country, the British Aluminium
Company decided to build its large new smelter, in response to Government
directives and HIDB promotion, at Invergordon on the Cromarty Firth. The
smelter has been operational since 1971 and has an output capacity of around
100,000 tons per annum.
1.13
From the first, the Moray Firth sub-region was recognised and promoted
(although without preferential assistance over other areas) by the HIDB as a
major industrial growth area. Two other growth areas were similarly
recognised, but they to some extent reflected the presence of existing large
employers. The first was in Caithness, where the building of the experimental
nuclear reactor at Dounreay near Thurso in the 1950's provided a substantial
infusion of new, highly-skilled employment opportunities. The continuing
research programme thereafter, based on the development of the prototype
advanced fast-breeder reactor, has reasonably maintained the impetus
achieved by the area's economy. The other growth centre was in Lochaber,
centred on the Fort William district, in which the two major sources of
industrial employment are the smelter, and the pulp and paper mills at
Corpach, the latter complex opening in 1966 with financial aid from
Government to tap the maturing timber resources of the Highlands. The
difficulties of maintaining viable industry in a remote area are well illustrated
by the recent announcement by the owners that the pulp section will close in
the near future, jeopardising more than 400 jobs.
1.14
With the discovery of commercially-viable oil fields in the British sector of
the North Sea, and the subsequent development of the on-shore activities to
exploit the resource, the Highlands and Islands have experienced industrial
expansion, particularly in the Moray Firth and in Shetland. The critical
advantages of proximity to the off-shore fields, and the availability of
sheltered deep water, which is essential for the construction and floating-out
of large off-shore structures, have allowed the region to attract many oilrelated industries. The largest employers have been the five yards engaged in
the construction of production-platforms and modules: Highland Fabricators
at Nigg Bay, McDermott at Ardersier, McAlpine Seatank at Ardyne Point,
Howard Doris at Loch Kishorn and Lewis Offshore at Stornoway. Large
pipeline and tanker terminals are being built at Sullom Voe in Shetland, and
several off-shore supply bases are located in these islands, especially around
the main town of Lerwick; while in Orkney, a pipeline terminal and tank farm
have been completed on the island of Flotta. The oil-related industries, which
employed around 12,500 persons in 1976 may appear to offer the solution to
the problem of unemployment in the Highlands, yet this is simplistic in that
the speed of employment build-up, its concentration in specific locations and
its requirement of specialist skills comparatively unknown in the area have
resulted in considerable in-migration of labour. Although unemployment in the
Board's area fell initially, it has since risen, and periodic lay-offs, arising from
the fluctuating labour demands of the various phases of production involved in
the fabrication of structures, have produced violent fluctuations in
unemployment in small areas. In Shetland, the presence of the terminal and
its construction workforce of more than 5,000 men, mostly incomers, has
totally transformed the local economy, placed heavy demands on already
inadequate social infrastructure and inevitably affected social life.
1.15
Notwithstanding the significance of large-scale industry in the Highlands and
Islands, the smaller indigenous industries such as textiles, distilling,
chemicals, boat-building and food production are also important, a function of
their greater dispersion throughout the area and generally higher level of local
ownership. The smaller enterprises therefore often generate higher income
and employment multipliers within the regional and sub-regional economies
than the larger ones. On the other hand, the high risks normally associated
with small businesses tend to increase with distance from the market.
Attempts to diversify employment include glass making in Caithness, the
production of alginates from seaweed at a factory near Oban, boat-building at
Campbeltown and elsewhere, general engineering in Inverness and East Ross and
the more ubiquitous activities of baking, bottling of mineral waters and
printing in the few sizeable towns. Craft industries have been stimulated by
increasing sales to tourists both through retail outlets and at the premises of
the craftsman. The whisky industry which produces Scotland's second largest
export (after oil), is going through a period of expansion and is a significant
provider of employment in the Highlands and Islands, the greatest
concentrations of distilleries being found in the districts of Inverness,
Badenoch and Nairn, and in the island of Islay in Argyll.
1.16
Around 60% of all employment in the Highlands and Islands is provided by
service industries which, although diverse, include a few large sectors such as
tourism. This sector has been strongly promoted by the HIDB which has
assisted in the construction, extension or modernisation of hotels and other
accommodation and, so far, has built two hotels at its own hand (on the islands
of Barra in the Western Isles and Mull) in areas where shortages of suitable
provision were not being met. Further hotels are planned for Harris in the
Western Isles and Raasay near Skye. Assistance has also been given to the
construction of new self-catering holiday chalets, partly in response to the
growing demand for this type of accommodation, and partly to ease the
pressure exerted on the existing housing stock by the "second-home" market.
However, there are major problems associated with seasonality of tourism and
stability of demand. The remoteness of the Highlands and Islands from British
population centres has been effectively increased by rising fuel costs, while
the overseas market is periodically affected by exchange rate fluctuations.
1.17
In terms of employment, the other major service sectors are distribution,
medical services, education and other public services. Manpower in these
sectors tends to be high per head of the area's population, since it requires a
large labour-force to provide services for a dispersed rural community than for
a similar urban population. Employment in services, besides being the main
source of female employment, is an important component of occupational
pluralism, and can contribute towards the viability of rural communities.
1.18
Over the last decade, both the number and range of jobs available within the
Highlands and Islands have undoubtedly improved, a result of the development
efforts of the HIDB, the local authorities, other public and private bodies and
the people of the area. The arrival of oil-related industry has of course played
a major part. Incomes have increased accordingly but remain below the
national average in many occupations especially in the West. Recent price
surveys supported by the HIDB have shown that prices in the area tend to be
higher than those in urban areas such as Aberdeen, particularly for food, and
tend to be highest in the most remote villages and islands.
TRANSPORT
1.19
Given the vast area of the Highlands and Islands, and its distance from the
economic "heartlands" of Great Britain and Europe, transport is of vital
importance to the well-being of the region. Operating conditions are difficult
both on land and at sea, and in view of the distances involved, the costs of
providing the public and private transport systems are correspondingly high.
The scattered population structure ensures that profitable public transport
services are few and there is a resultant need for subsidies. Nevertheless,
improvements have been made in recent years including the upgrading of part
of the road system, the development of short sea crossings using roll-on/rolloff car ferries and the growth of "third-level" (local and feeder) air services
employing small aircraft, as in Orkney. The transport requirements of oilrelated developments have imposed a heavy burden on the transport system of
the Highlands, and to cope with the increased volumes of both freight and
passenger traffic, several large-scale investments in transport infrastructure
have been given Government approval and financial backing. The most
striking example is the programme of works to rebuild the A9 trunk road
between Perth and Easter Ross, at an estimated cost in excess of £ 150m. The
corresponding rail link has also been improved, for the more modest sum of
£4m, to increase line capacity. In Shetland, the virtual reconstruction of the
airport at Sumburgh has been necessitated by an increase in aircraft
movements which has made it the busiest in the Highlands and Islands. The
EEC Regional Development Fund has contributed towards this £30m
development.
PUBLIC POLICY
1.20
Since the passing of the Crofters Holdings (Scotland) Act 1886, successive
governments have introduced a variety of measures aimed at tackling the
distinctive social and economic difficulties which have faced the Highlands
and Islands. These efforts culminated in 1965 with the setting up of the
Highlands and Islands Development Board. The Board was charged with the
task of "Assisting the people of the Highlands and Islands to improve their
economic and social conditions", while at the same time "enabling the
Highlands and Islands to play a more effective part in the economic and social
development of the nation". In essence the HIDB is an economic development
agency, (albeit with a social role) and by far the largest part of its budget is
devoted to its discretionary grants and loans scheme, which provides financial
assistance to developers wishing to start or expand commercially viable
enterprises in the Highlands and Islands.
1.21
Such development aid is provided on four broad fronts by the "operating" divisions
of the Board - Land Development, Fisheries, Industrial Development and
Tourism. The Land Development Division helps to finance a diverse range of
agricultural projects, such as livestock improvements, machinery cooperatives and market gardening, while the Fisheries Division concentrates its
assistance on the provision of boats and fish-process ing facilities and the
development of fish farming. A wide variety of enterprises is aided by the
Industrial Development and Marketing Division, covering manufacturing and
processing activities from pottery to electronics and from sawmills to
bakeries. The Tourism Division concentrates its efforts on increasing both the
quantity and quality of accommodation and catering, lengthening the season
and improving recreational and other facilities. The Board can, in addition,
employ funds directly, either to promote development (eg by the building of
advance factories) or to engage in research and publicity.
SUMMARY
1.22
The relative economic improvement in the Highlands and Islands stems from
the mid 1960's, since when the net regional depopulation which had been
endemic for over a century has been halted. Factors contributing to this
improvement included the arrival of a number of large employers and the
setting up of the HIDB. The advent of oil-related industry in the 1970's, also
helped to prevent further decline in the region's population. Yet oil will not
last forever, and the current problems faced by some of the construction yards
in winning orders serve only to underline the ephemeral nature of this type of
employment. The long-term prospects for the Highlands and Islands may seem
uncertain in many ways, but progress has been made in the last ten years and
the experiences of the Scandinavian countries show that the problems of
climate, relief and isolation can be overcome and a healthy economy
developed, given appropriate financial help and sensitive development
programmes.
1.23
The remit of the HIDB recognises that the Highland Problem is as much social
as economic and increasingly the Board is trying to promote development in
the more difficult parts of its areas on a broad socio-economic front (eg by
encouraging local communities to form multi-functional co-operatives). This
approach can, of course, offer no overall "solution", since each local area
requires sympathetic consideration. Indeed, within the integrating framework
provided by their remote location and the harshness of their physical
environment, it is the characteristic spatial variation in both the natural and
man-made landscapes which give the Highlands and Islands of Scotland that
"unity in diversity", marking them as a unique region of the British Isles.