14th June 2026
For most of the post‑war era, Scotland’s economic development model was built on a simple idea: if you want jobs, you invest in places. You build infrastructure, support local firms, attract new employers, and anchor work where people already live. In the Highlands and Islands, that philosophy created everything from the early days of Dounreay to the modern footprint of HIE. It was a model rooted in geography, not theory.
Over the last decade, however, Scotland has quietly rebalanced its approach. The centre of gravity has moved away from regional development agencies and towards a national skills‑and‑employability system. The shift has been gradual, wrapped in the language of “inclusive growth”, “just transition” and “national transformation”, but the direction is unmistakable. And nowhere has the impact been felt more sharply than in Caithness, where the distance between policy and lived reality is measured not in abstractions but in empty shops, shrinking services and the long miles to Inverness.
The question is whether this shift has delivered what it promised—or whether Scotland has drifted too far from the place‑based development that once held fragile regions together.
The Long Slide from Regional Development to Skills‑First Policy
The turning point came around the mid‑2010s, when Scottish Government strategy documents began to emphasise people‑based interventions over place‑based ones. The National Strategy for Economic Transformation (NSET) cemented this, making skills one of its five “transformational programmes”. Skills Development Scotland (SDS) became the central actor in this new architecture, producing regional skills assessments, steering training provision, and shaping the labour market narrative.
Meanwhile, the traditional regional agencies—HIE, Scottish Enterprise and later SOSE—found themselves increasingly aligned to national priorities rather than regional autonomy. Their budgets tightened, their remits narrowed, and their work became more about partnership frameworks than direct intervention. HIE’s budget alone fell from £62.8m to £54.8m in 2024‑25, a cut that bites harder in a region where every pound has to travel further.
This is not to say regional development disappeared. It simply stopped being the main engine. The political language shifted from “creating jobs in the Highlands” to “creating opportunities for people wherever they live”. In theory, that sounds fair. In practice, it assumes that opportunities exist within reach—which in Caithness is often not the case.
The Rise of the Skills and Employability State
Over the same decade, Scotland built a dense network of skills and employability programmes. Fair Start Scotland, No One Left Behind, the National Transition Training Fund, expanded apprenticeships, and a strengthened SDS all became pillars of the new model. These programmes have delivered measurable outputs: tens of thousands of training places, high participant satisfaction, and job‑start rates that compare well with similar schemes elsewhere in the UK.
But these are individual outcomes, not regional ones. They measure how many people were trained, not whether the training led to stable, local employment. They track job starts, not whether those jobs were within commuting distance or paid enough to anchor families in rural communities. They record satisfaction, not whether the local economy grew.
For Caithness, this distinction matters. A skills‑first model assumes that labour markets are fluid, that people can move to where the jobs are, and that training naturally leads to opportunity. But in a region where transport is limited, wages are low, and the job base is thin, the model risks becoming circular: train people for jobs that don’t exist locally, then count the training as success.
Has the Shift Worked?
At programme level, yes. Evaluations of Fair Start Scotland show strong satisfaction and meaningful job outcomes. The National Transition Training Fund delivered thousands of opportunities during the pandemic. SDS continues to meet its performance targets. On paper, the system is functioning.
But at regional level, the picture is far less convincing. Independent reviews of Scotland’s inclusive growth agenda repeatedly highlight the difficulty of measuring real economic impact. Audit reports note alignment with national strategy but rarely point to transformational change. Productivity gaps between regions persist. Rural fragility deepens. And in Caithness, the evidence is visible on every high street: fewer employers, fewer services, fewer anchors.
The uncomfortable truth is that Scotland has not yet demonstrated that a skills‑first model can compensate for declining regional investment. Skills help people—but they do not, on their own, create jobs. They do not build factories, attract employers, or replace the economic gravity lost when major industries contract. They do not reverse the long‑term drift of opportunity southwards.
Why Caithness Feels the Consequences More Sharply
In urban Scotland, a skills‑first approach can work because labour markets are dense. A trained worker in Glasgow or Edinburgh has dozens of potential employers within a short commute. In Caithness, the labour market is thin, distances are long, and the loss of even a single employer can distort the entire local economy.
When regional development budgets shrink, the Highlands lose not just money but capacity. HIE’s ability to intervene, attract investment, or support local firms becomes constrained. Local government, already stretched, cannot fill the gap. And the skills system, however well‑intentioned, cannot substitute for the absence of employers.
This is why the shift feels so stark in Caithness. The region has moved from a model that tried to bring jobs to people, to one that trains people for jobs that may be hundreds of miles away. It is a quiet centralisation of economic development—one that hits hardest where distance is greatest.
Has the Balance Gone Too Far?
Scotland needs both: strong regional development and strong skills provision. But the balance has tilted too far towards the latter. Skills matter, but they are not a substitute for anchored employment. They are not a replacement for regional investment. And they cannot, on their own, sustain fragile communities.
For Caithness, the lesson is clear. A skills‑first model without place‑based development risks accelerating the very trends it claims to address: depopulation, declining services, and the slow erosion of economic resilience. The region needs investment that recognises geography, not just demographics. It needs employers, infrastructure, and long‑term commitments—not just training programmes.
Scotland has changed the way it creates jobs. The question now is whether it has the courage to rebalance the system before regions like Caithness slip further into managed decline.