What does Muscatelli's report mean for rural economic growth?
Last month, Sir Anton Muscatelli published his independent report on ‘Regional Economic Development in Scotland’. Drawing on current work in the Scottish Government’s Strategic Research Programme (in particular the NISRIE and ReRIC projects), the Rural Policy Centre’s Jane Atterton reflects on some of its key messages for rural Scotland.
Sir Muscatelli’s report was commissioned by Scottish Labour Leader Anas Sarwar in February 2025 to address the “need for much greater consistency, clarity of purpose, and sustained focus on the objective to drive economic and productivity growth” (p3). The report aimed to propose solutions for regional growth including through shifting power to the regions, prioritising growth and tackling skills gaps.
The report is particularly interesting from a rural perspective as it calls for a development strategy in Scotland that differentiates between the needs of rural and urban areas (p12). Indeed, the report goes further than this, arguing for a separate strategy for rural economic development, with greater joining up and co-operation between the major city regions in the central belt, and greater coordination between the adjacent rural economies in the South of Scotland and the Highlands and Islands (p13). In short, the report calls for greater recognition of the functional economic geographies that exist in Scotland, which often transcend other governance boundaries.
The report calls for a bespoke place-based approach to development in Scotland’s rural economies as a result of their “unique and remarkable strengths”, but also their challenges, such as low productivity and the dominance of low pay and low skill jobs and sectors in some areas (p25). It acknowledges that rural success stories have focused on building on an area’s assets and empowering local people, with government support also critical for infrastructure and training, for example; Wigtown’s redevelopment as Scotland’s National Book Town is cited as one of these success stories (p25).
The report also mentions the OECD’s work on rural innovation which needs to be fostered in a tailored way in rural places (p26). Of particular interest to SRUC and other colleges, the report also highlights their role as critical drivers of innovation, skills, and local economic growth. Given SRUC’s presence in many locations outside Scotland’s cities, there is real potential for the organisation to act as a catalyst for innovation, inclusive growth, place-making and skills development in rural locations.
So what are the pros and cons of having a separate rural economic development strategy in Scotland? This question gets to the heart of the ongoing debate about how to approach rural areas and issues in policy-making. Should rural be treated with focused, separate policy interventions which are tailored to rural specificities as Sir Muscatelli recommends, or should mainstreaming be the approach?
The latter has been the Scottish Government’s explicit approach to rural issues since 2011. The rationale is that mainstreaming ensures that interventions are adapted to suit the needs of all local places, including rural communities, rather than setting rural aside as something different. However, there have been calls for separate rural strategies in Scotland previously. For example, in its review of rural policy in Scotland in 2008, the OECD called for a strong vision and an all-encompassing strategy for rural Scotland, though this didn’t come to fruition as the SNP Government elected in 2011 pursued its mainstreaming approach. Interestingly, in the context of Sir Muscatelli’s call for strengthening Scotland’s city regions, debates around the extent to which investment in these regions benefits the rural areas close to them (and indeed further away), the OECD also called for more attention to be paid to urban-rural interactions in Scotland but this has never been translated into actions on the ground.
More recently, the National Council of Rural Advisers (NCRA) in their 2018 report argued that national policy making processes had not always effectively represented rural interests and therefore not delivered the best outcomes for the whole of Scotland. They set out a bold and ambitious future for Scotland’s rural economy and recommended developing a Rural Economic Framework in the short-term. In the long-term, however, the Advisers argued that the rural economy should be mainstreamed within all policy and decision-making processes. In response to the NCRA’s recommendations, the Scottish Government set up the Rural Economy Advisory Group but the Group’s work was curtailed by the Covid-19 pandemic and no separate Rural Framework has been published.
Since then, the Scottish Government has published its National Strategy for Economic Transformation for all of Scotland, which included a commitment to apply a rural lens to projects funded under the Strategy. In 2023, the Cabinet Secretary for Rural Affairs and Islands Mairi Gougeon confirmed that the Scottish Government would apply a rural lens to all areas of policy in support of mainstreaming. A commitment was also made to publish a Rural Delivery Plan demonstrating how all areas of Government are delivering for rural Scotland, and in April 2025, the Scottish Government (internally) launched a Rural Assessment Toolkit for policy-makers to (voluntarily) use to support this rural lens application. SRUC researchers have helped to inform both the Rural Delivery Plan and Rural Assessment Toolkit drawing on work being undertaken in the Strategic Research Programme on how rural policy has evolved in Scotland and how a rural lens could be applied in Scottish policy-making, and for the European Network for Rural Development and Rural Pact in relation to rural proofing.
So what is the best approach for the future of rural Scotland? A separate strategy could be tailored to its specific needs and opportunities – but these are hugely variable across rural areas, from remote communities experiencing long-term population decline and economic fragility, to those close to cities experiencing development pressures as populations increase. Can one rural economic strategy really do justice to rural Scotland’s diversity?
There are many opportunities arising for many parts of rural Scotland, including remote areas, in terms of significant community benefit funding, new digitally-driven entrepreneurship, home working and enterprise hub possibilities, and new employment demands relating to nature-based activities and regenerative agriculture. These opportunities could form the basis of a very positive, forward-looking and bespoke rural development strategy which would also set out how rural areas contribute to Scotland’s just transition to net zero. It could also grasp the opportunities arising from alternative routes to generating wealth in rural areas. Community Wealth Building is one example which has been present in one form or another – though not necessarily labelled as such - in rural areas for centuries (see SRUC’s work on different aspects of Community Wealth Building recently). The Scottish Government’s Community Wealth Building Bill, which sets out a strategic foundation for this approach across Scotland - is currently at Stage 2 in the Scottish Parliament.
However, there are also risks to having a separate rural economic strategy, not least that this sidelines rural issues, and separates rural areas, losing sight of the importance and mutual benefits of rural-urban interactions.
So is the best strategy to rely on the use of the voluntary Rural Assessment Toolkit to ensure that rural mainstreaming happens? In other words, to ensure that the national economic strategy and associated interventions are appropriately tailored to rural areas. Certainly alongside use of the Toolkit, a positive narrative about rural areas and issues is critical, one which emphasises the assets and emerging opportunities of Scotland’s rural areas and their potential to contribute substantially to the economic development, wellbeing and net zero transition of Scotland’s population as a whole. Time will tell if the Rural Assessment Toolkit does ‘enough’ to overcome some of the mainstreaming challenges and limitations that the NCRA identified back in 2018. Early in 2026, the findings of the Scottish Rural Communities Policy Review, which SRUC researchers are leading, will also help to shape the future of support for rural communities in Scotland.