The Review ­ Background and Process

1. This is the Report of the Prior Options Review of the Scottish Tourist Board (STB). The Prior Options Review forms the first part of a Policy and Financial Management Review of the Board.

Terms of Reference

2. The terms of reference for the full review are as follows:

"To carry out a review of the status of the Scottish Tourist Board and of the relevance of its functions (a Prior Options Review) in accordance with Cabinet Office guidance, having regard to the 1992-93 review of public sector arrangements for the Scottish tourism industry as it related to the Board's role and functions.

Subject to the results of that review, to examine the arrangements for, and the adequacy of, the Board's constitution and organisation; aims and objectives; corporate planning and management information systems; financial regimes, budgeting and delegations; personnel systems; and accountability. This examination will have regard, inter alia, to the outcome of the 1991 Financial Management Review of STB and other relevant studies; performance measurement of Board activities; and communication and co-ordination within the Board."

3. STB was established as a Non-Departmental Public Body (NDPB) in 1969. It is Government policy that all NDPBs should be subject to a comprehensive Policy and Financial Management Review at least once every 5 years.

4. Policy and Financial Management Reviews are undertaken in 2 distinct stages. In conducting the first stage, Departments are required to examine rigorously whether the NDPB's function is required at all and if so to look at the full range of prior options, including the scope for privatising, contracting out, or transferring to another body some or all of the NDPB's functions, and the potential for merging bodies. The second stage looks at financial management and related procedures within the body.

5. As will be clear from the terms of reference, the Prior Options Review is concerned with the functions and performance of STB. It differs considerably from the tourism review of 1992-93 which was concerned with the wider issue of the structure of public sector support for the Scottish tourist industry at both the local and national level.

The Steering Group

6. The review was carried out by The Scottish Office Education and Industry Department (SOEID) under the guidance of a Steering Group chaired by Alan Fraser who heads the Department's Enterprise and Tourism Division. Mrs Melanie Gulliver was the external representative on the Steering Group, which also included the Board's Chief Executive and one of its Directors. (The full membership of the Steering Group is listed in Annex A.) The review officer was Neil Clement. The Steering Group met 7 times between February 1997 and February 1998: formal commencement of the Review was delayed by the announcement of the General Election and the ensuing change of Government.

Public Consultation

7. The beginning of the review was announced to Parliament by the Secretary of State on 30 July 1997. In accordance with normal practice, the announcement included an invitation to interested parties to submit comments. The review was the subject of a Scottish Office news release and was announced in "Government Opportunities". STB and Area Tourist Boards were also asked to publicise the review's announcement and the request for comments. In addition, the Department wrote to a number of bodies with an interest in the Board's functions, drawing attention to the review and seeking their views. Comments were invited by 6 October and a total of 102 responses were received. The Department is most grateful to all those who responded. An analysis of the responses is given under Annex B. The Steering Group took full account of the views of respondents in preparing this Report.

Methodology

8. The review was conducted in five main stages. The first stage consisted of a desk review of relevant written material including:

­ STB's enabling statute and its Management Statement;

­ the Board's corporate plan and related documents;

­ the Board's annual reports;

­ Scottish Office and Central Department guidance on NDPB sponsorship; and

­ the 1996-97 review of Government support for tourism undertaken by the then Department of National Heritage and HM Treasury.

9. The second stage consisted of a series of meetings held with senior staff of STB in order to gain a better understanding of the Board's functions and its internal and external relationships and to seek views on a range of issues relevant to the terms of reference. Meetings were also held with a range of other organisations comprising Area Tourist Boards, Scottish Enterprise and Highlands and Islands Enterprise (as key partners of the Board) and the UK's National Tourist Organisations, their sponsor Departments, and the Irish Republic's Department of Tourism and Trade (in order to compare the support arrangements and approach adopted in England, Wales, Northern Ireland and Eire with those currently applying in Scotland).

10. The third stage consisted of the public consultation process described in paragraph 7 above.

11. The fourth stage involved an analysis of the information and evidence from the previous stages together with the commissioning of such additional information as was considered necessary by the Steering Group. The Group considered, inter alia, the background to the Board, the mandate given to it, the rationale for its various functions, its recent performance, comparisons with other National Tourist Organisations, and the prior options of abolition, privatisation, or contracting out or transferring its functions (in whole or in part) to another body.

12. The fifth and final stage involved the writing of this report under the guidance of the Steering Group.

Costs of the Review

13. The estimated costs of the Review (which take account of travel and subsistence and the fees paid to the external member) were £38,000. This does not include any estimate for the costs incurred by STB staff in connection with the Review. Nor does it include any estimate for the costs of participation by Scottish Office staff ­ other than the review officer ­ who contributed to the Review process.