Cabinet Secretary for Finance and Sustainable Growth
John Swinney
Scottish Parliament
September 26, 2007
Presiding Officer,
Next month, the Government will publish its economic strategy for Scotland. That strategy will guide and direct the Government's efforts - and the efforts of those agencies and organisations that work on the Government's behalf - to achieve our purpose of increasing sustainable economic growth for Scotland.
Today the Government will set out the structures and mechanisms that will be employed to support the implementation of our economic strategy.
Before I set out the specifics of our proposals, I first want to make clear this Government's ongoing support for Scottish Enterprise, Highlands & Islands Enterprise and Visit Scotland.
Scottish Enterprise, in particular, has been the subject of some fairly heavy criticism in recent times - some of it justified, some of it not.
But I also recognise that while it is important to address what has gone wrong, it is equally important to focus on what has gone right. There have been significant successes including:
- The Edinburgh BioQuarter
- The Proof of Concept programme
- The Scottish Manufacturing Advisory Servic
- The Centre for Health Science in Inverness
- The development of the Fife Energy Park
None of these projects would have been realised without commitment and hard work from our economic development agencies and the staff who provide advice and support to businesses. Nor would they have been achieved without co-operation involving local authorities and other public bodies. I am acutely aware that this has been an uncertain time for the staff in the enterprise networks and for that reason I have been keen to come to Parliament to make a statement at the earliest possible opportunity.
This Government has been absolutely clear and consistent in its commitment to eliminate duplication and unnecessary bureaucracy, in addition to improving efficiency and effectiveness in all elements of the structures of Government. Those considerations have been applied in our approach to reform of the enterprise networks in Scotland.
The Government has pursued two objectives in designing the structures to implement our economic strategy. Firstly, we have been determined to establish a clear focus within the enterprise agencies on fulfilling what we consider to be their core purpose of assisting enterprise development in Scotland. Secondly, we have been determined to create greater cohesion in the provision of local economic and enterprise development services in Scotland.
Our plans will enable Scottish Enterprise and Highlands and Islands Enterprise to focus on what they are good at and also enable Scotland's local authorities - important partners in our efforts to build Scottish success - to do more to support businesses in their area.
These objectives run through the announcements that I will be making in this statement today.
In preparing this statement the Government has been engaged in a significant period of constructive debate and discussion with stakeholders including a range of interests across the business community, local authorities, trade unions and, of course, the enterprise networks themselves.
At the heart of our reforms is the need to ensure we have clear direction to implement our economic strategy for Scotland. To do this, we need to secure better and closer working between the agencies that have a shared responsibility to work with the Government to achieve our objectives for the Scottish economy. The Government's election manifesto signalled our commitment to establish a strategic forum for enterprise with exactly that purpose and we intend to establish such a forum.
Scotland's Enterprise Forum will be convened by Ministers on a quarterly basis and will bring together - initially - the Chairs and Chief Executives of Scottish Enterprise, Highlands & Islands Enterprise and VisitScotland.
I want those who lead these bodies to be working closely together to enhance and support each other's activities - to ensure that their respective interventions are delivered with one common goal - to grow Scotland's economy more sustainably and more effectively than before. The Forum will also be a frequent opportunity for Ministers to make clear the direction we expect to be pursued.
The Forum will also drive a process to ensure services are shared amongst the enterprise networks, VisitScotland and other relevant organisations. This process will ensure at a very practical and operational level there is no duplication of effort amongst our agencies, no waste of opportunity to ensure valuable public resources are spent on key enterprise development activities.
This will not just apply to back office functions like finance, legal services and information technology. Opportunities will be sought to share more mainstream activity such as marketing and working in priority sectors such as tourism. Over time we will expect this approach to extend across the wider public sector and for other organisations to become involved in this process.
We have given careful consideration to the structures that should be in place to deliver enterprise development support throughout Scotland. We have come to the view that although the current local structure of local enterprise companies and local economic forums brings together a great deal of business engagement, these bodies represent too fragmented a structure.
The governance requirements for LECs were an obstacle to effective economic development at local level. Progress was often achieved in spite of bureaucratic procedures and boundaries. We have come to the view that the current Local Enterprise Company and Local Economic Forum structures should be removed and we have decided to establish a regional delivery model for enterprise support in Scotland.
I believe that this is an important step in reducing bureaucracy and streamlining local enterprise development delivery. However, in removing the LEC and LEF structures, our overriding concern is to preserve their best features, particularly the vital engagement they provided with business.
Instead of 21 LECs with 21 Boards and 21 sets of governance arrangements, there will be 6 regional operations across Scotland.
For Scottish Enterprise these regions will be:
- Grampian
- Tayside
- East Central Scotland
- South of Scotland and
- West Central Scotland
There will be a single region served by Highlands & Islands Enterprise.
To further promote integration with the tourism sector, VisitScotland will align its own areas around the 6 enterprise networks regions. It will continue to look at new mechanisms to improve its engagement with the industry at a local level. Indeed, work in this area is already underway by VisitScotland. These changes will ensure that VisitScotland and the enterprise networks are well placed to maximise the economic potential of tourism to Scotland, in partnership with the tourism industry.
We will continue with the existing local offices located throughout Scotland and enterprise network staff will remain in those offices, working as now with local businesses and stakeholders. But - consistent with our approach to efficient government - we will be pursuing an agenda of co-location of these staff with relevant local authority staff to ensure a cohesive, joined-up service is available to members of the public.
We will be taking forward the presumption that more Scottish Enterprise and HIE staff should be located around Scotland rather than at their Headquarters.
We must also involve Scotland's local authorities more fully in economic development and provide them with new opportunities to contribute to growing local business success.
This government is fully committed to developing a new relationship with Scotland's councils and we recognise their vital role in creating flourishing local economies and communities.
That is why we believe Community Planning Partnerships should have a clear remit and responsibility for economic growth.
This Government has been clear that, wherever possible, local services to local areas should be delivered by local authorities.
With Scottish Enterprise firmly focused on national and regional priorities it is entirely right that local authorities assume an enhanced role in local economic development.
This approach will allow Local Authorities and national enterprise network programmes and personnel to come together at local level to contribute to the single goal of higher sustainable economic growth. I also want to encourage our local authorities to develop effective working relationships with Chambers of Commerce and local business organisations to enhance cooperation.
We have looked carefully at the enterprise networks' current functions and identified those truly local activities which we believe should be transferred to local authorities enabling them to take, forward a much more significant role in building their own local economy.
The Business Gateway is such an example. It provides advice to new start and local businesses serving mainly local markets.
It is appropriate that it should be delivered by local authorities with whom these businesses already interact on a range of local issues.
The importance of maintaining consistency in Business Gateway service and standards across the country is, however, well understood. So we will work with local authorities to ensure this is the case. The Business Gateway is one source of identifying emerging businesses with high growth potential and we will continue to ensure that such businesses are referred to the enterprise networks for further support in their growth.
I am also pleased to announce that the Business Gateway will become a service available in all parts of the country. The Business Gateway will in future be offered in the HIE area - in addition to the Scottish Enterprise area - and will be tailored to better meet the needs of rural businesses across Scotland.
Local regeneration activity in the Scottish Enterprise area will also become the responsibility of local authorities. Currently Scottish Enterprise are engaged in a range of regeneration and economic development related activities including land and property interventions. Some of this regeneration activity is very much local in nature with the primary benefit of local regeneration felt within a local authority area. We believe it makes more sense to take a cohesive approach to local regeneration by placing local authorities at the centre of this activity and for that reason responsibility for local regeneration will be transferred to local authorities.
Local delivery will also be considered by the new skills body as it develops its plans to take forward our Skills Strategy. It is clear that Local Authorities have an important part to play in developing and maximising the skills of young Scots in particular and it is important that the activities of the skills body reflects this partnership.
The Government is determined to bring greater cohesion to the availability of business support services at local level. What matters most is that the people who need to obtain business support services can obtain these services as conveniently as possible. We believe that a package of services, from the Business Gateway, local authorities and the enterprise network can be made available conveniently under the auspices of local authority offices at local level and we will be encouraging the development of such an approach in these reforms.
What we expect to achieve out of these reforms is that local businesses will be able to reach a single point of access for advice - planning, licensing, business development and other services and that will be a great contrast to the pillar to post experience of many businesses today.
There are some elements of this announcement that will be applied differently in the Highlands & Islands Enterprise area. The focus on nationally and regionally significant companies and sectors with growth potential should apply equally to HIE. In the longer term I want to look at integrating national grant schemes - and reviewing the use of small business grants - in the HIE area. In the meantime, HIE will continue to operate its own grant schemes in the Highlands & Islands. It will not surprise the Chamber to learn that I do, however, recognise the very strong correlation between thriving communities and economic growth in remote and rural areas. We intend therefore that HIE should retain its strengthening communities remit.
In order to retain as much of the local expertise that currently exists in the LEC Boards as possible, both Scottish Enterprise and Highlands & Islands Enterprise will establish business led regional advisory boards.
The emphasis will be on securing business involvement, and bringing together representatives from local authorities and the further and higher education sectors. The purpose of these Boards would be to provide a vital link between national and regional activity.
There is already a successful national model for business engagement within key sectors - advisory bodies that put businesses in the driving seat in the development of strategies for growth. I have no doubt that those involved in the life sciences or financial services sector, for example, would be the first to recognise the success of this approach.
And that success should now be replicated across other key sectors and at a regional level.
Our proposals will maintain meaningful business participation in economic development delivery. Indeed, we aim to increase the number and range of businesses from which the enterprise networks can seek advice and the number and range of businesses that can become involved in the development and promotion of their own more local area in line with existing successful models.
I am aware that in many areas there are successful examples of effective local collaboration between the enterprise networks, local authorities and the business community. The Aberdeen City and Shire Economic Forum is one such example. So I want to make absolutely clear that where there are strong, effective local partnerships and strong local identity - whether in Fife, or Glasgow, or Stirling, or Aberdeen City as I mentioned or elsewhere - these should continue to operate within the regional model. This Government wants to encourage collaboration between the public, private and voluntary sectors and indeed believes that more local areas, having seen the benefits of this collaboration elsewhere, will choose to adopt a similar approach to these areas.
Our proposals for regional delivery will ensure greater coherence between local, regional and national delivery but will retain sufficient flexibility to encourage local development and initiative and so it should be.
The purpose of our reforms is to help the enterprise networks concentrate on those activities where they can make the greatest impact: focusing increasingly on those interventions which will most help to grow our economy:
- They will support Scotland's priority industries and develop transformational projects with a national or regional impact
- They will focus on encouraging investment and innovation by companies and sectors which have growth potential and by those which are important to the regional/national economy
The strategy of working proactively with those businesses that can make a real difference to the national or regional economy will be at the heart of the enterprise networks' role. To that end we will consolidate company support schemes to make it easier for companies to access the full range of business support services. We will charge Scottish Enterprise - initially under joint venture arrangements - with the delivery of national business grants such as RSA and SMART Scotland and a range of other business grants.
The Cabinet Secretary for Education and Lifelong Learning recently launched the Skills for Scotland strategy. She also set out her plans to merge Careers Scotland with learndirect Scotland to form the nucleus of a new skills body.
I can announce today that the skills and training elements of the enterprise networks will also be part of that body and close working between the skills body and the enterprise networks will be essential to deliver the skills that businesses desire. However, the enterprise networks will retain those interventions which are business-specific and which form a crucial part of their account management function. These include leadership development programmes and business mentoring schemes.
Given its statistical and monitoring role, Futureskills Scotland will move into the Scottish Government and will continue to influence the development of strategy in both the enterprise networks and the new skills body.
Presiding Officer, the proposals we have set in this statement will reinvigorate the enterprise networks - re-energising them towards a shared goal with Government of delivering increased and sustainable economic growth. They will bring greater integration between our economic development bodies.
They will enhance business input and they will develop local provision of integrated economic and enterprise development services.
They strike the right balance in helping Scottish Enterprise and Highlands & Islands Enterprise focus on where they can make the greatest impact and in ensuring the process of economic growth reaches every community in Scotland.
Of greatest significance, they provide a firm foundation upon which we can deliver the increase in sustainable economic growth that our country requires.