Highlands and Islands Enterprise (HIE) lacks the financial resources to mount a “comprehensive response” to the Covid-19 crisis, the north development agency’s chief executive has admitted.
Charlotte Wright said that, with the financial outlook for Scotland’s public sector “challenging” before the onset of the pandemic, leading to cuts in its budget, the sum HIE was able to make available to respond to the problems facing the region’s economy amounted to £1 million.
“Substantial” additional Scottish Government funding had allowed the quango to distribute £28m to address immediate impacts on businesses and communities between April and August, she added.
Ms Wright said the economic impact of the coronavirus represented a “key risk” for the agency, both in terms of its funding and of expectations of its level of response during the recovery phase.
Her comments came as HIE published its annual report and accounts for the year to the end of March,
Last month, a report commissioned by HIE revealed that up to £2.6 billion is expected to be wiped off the economy of the Highlands and Islands and Moray by the Covid-19 crisis.
The analysis also forecast economic conditions in the area would recover more slowly than in other parts of the country, with a return to pre-crisis levels “unlikely until 2023 at the earliest”.
Researchers said the area was faring worse than others because it has a greater share of employment in sectors most affected by the pandemic, with tourism, creative industries and construction hardest hit.
The region also has a higher proportion of self-employment and micro-businesses than the Scottish average.
Writing in the introduction to the annual report, Ms Wright said: “Since early 2020, the pandemic has altered the path of economic progress for our region, as it has for countries around the world.
“We remain committed to the principles and priorities outlined in our 2019-22 strategy to develop all parts of the Highlands and Islands, and maximise our region’s impact on Scotland’s progress.
“However, our role in the coming years needs to focus on recovery from the economic shock of Covid-19, and building resilience in our communities and businesses.”
Ms Wright noted in the report that HIE’s baseline resource budget for 2020-21 had been cut by £4m to £2.5m, and, following a review, its board had agreed for £1m to be made available “to facilitate response to the challenges facing the region”.
Last night, she added: “Thanks to substantial additional funding from the Scottish Government, HIE has been able to address some of the immediate economic impacts of Covid-19 on a scale that our baseline budget could never have supported.
“Between April and August we were able to distribute over £28m of much-needed assistance to help pivotal and hard-hit businesses and communities across the Highlands and Islands through the Pivotal Enterprises Resilience Fund, the Creative, Tourism and Hospitality Enterprises Hardship Fund and the Supporting Communities Fund.”
Ms Wright said HIE had “delivered a strong performance” across most of its benchmarks during 2019-20, awarding a total of £50.4m of investment.
She added: “This ensured the progress of some highly ambitious projects, including Orkney Research and Innovation Campus, Cairngorm Mountain and Space Hub Sutherland, and helped support or retain almost 650 jobs, including 80 in our most fragile communities.”
HIE also announced yesterday that a business support programme aimed at developing the next generation of entrepreneurs is to be extended across the Highlands and Islands.
The Impact30 scheme is currently run only in the Highland Council area, as part of the Inverness and Highland City-Region Deal.
HIE’s board has approved a further investment of £100,000 to make the programme, which is open to people aged 35 and under, accessible to firms in the Northern and Western Isles, Moray, Argyll and Bute, and North Ayrshire.
The initiative, delivered on HIE’s behalf by AAB Consulting, offers coaching and mentoring for a year.