Chamber
Plenary, 06 Jul 2000
06 Jul 2000 · S1 · Plenary
Item of business
Enterprise Networks
I announce this morning the interim conclusions from my review of the enterprise networks. Following on from the framework for economic development published last week, the review is another important step towards the most comprehensive assessment of economic development policy in a generation.
The assessment takes place against a positive background. The economy is in good shape. The economic fundamentals are sound. However, we face major challenges. The e-revolution requires a step change in the way we deliver economic development. Even more important, we must ensure that our business community seizes the opportunities. All of us need to recognise in a real and significant way that the e-revolution is here. It is vitally important therefore that our economic development system is capable of meeting the challenge.
The review was built on extensive consultation, analysis and evidence. There is a shared vision about the need for effective and focused economic development. That vision is of economic development bodies that have a clear sense of direction and a clear task to perform; that have milestones and targets to ensure that they are on course to deliver the vision; that have 21st century Government approaches to 21st century problems; that are customer focused, responsive and relevant to the business, trainees and communities they serve; and that are accountable to the Executive and to the Parliament.
There is consensus about what is wrong at the moment. We need a better and more focused strategy. Previous Governments were unwilling and ideologically opposed to making economic development policy. There should no longer be a policy vacuum for the enterprise networks.
We need more comprehensive targets and milestones. We need to marshal our public sector agencies behind clear and challenging targets. However, we need to go much further. No one should be in any doubt about how serious I am about that. The outcome-led approach has to be a top priority. We should be adding value to the economy and getting value for the taxpayer.
We need more flexible enterprise networks that can adapt and evolve—1980s systems are trying to tackle 21st century problems. The enterprise networks need to be more streamlined and more focused on delivering the strategy set to them. They need to be more customer focused, responsive and relevant. They should be more business orientated, not less. They should be more focused on jobs, skills and new company growth to deliver employment opportunity for all.
We need more effective partnerships between the enterprise networks and the range of other players in economic development. There is duplication and overlap. Organisations pull against each other, rather than together to achieve a shared vision. Enterprise networks must be more accountable, with effective mechanisms for dealing with appointments and ensuring the highest standards of propriety.
There is consensus about the vision and the problems. It is for the Executive to provide the solutions and the prescriptions. The solution is a better strategy. We will accept the responsibility to set the lead on economic development. The framework for economic development provides the high level. A new strategy for enterprise is urgently required to turn that into action.
The strategy will set out the Government's action plan for economic development. It will establish clearly what the enterprise networks will do to create economic opportunity for all, to foster the knowledge economy and a culture of enterprise and to promote the learning revolution, sustainable development and social inclusion.
I want to see a clear thread running from our framework at national level through all economic development activity at national and local level. The enterprise networks will stimulate the dynamic competitiveness of enterprise, by promoting new markets, inward investment, indigenous enterprise, innovation and commercialisation.
The enterprise networks will help deliver a fairer Scotland, focusing on employability and employment—developing, advocating and implementing work-based solutions to social problems. They will help build the organisational effectiveness of our social economy and tackle the digital divide.
The strategy will set clear, well thought-out but tough targets for those agencies and will ensure that they pull together and in the same direction, so that we can make the most of the available resources. It will be a strategy for enterprise, to build a sustainable, successful economy, and to play an important role in building a fairer society and achieving employment opportunity for people in every part of Scotland.
I want the strategy to be in place by the end of the year, and to that effect I am establishing a high level expert group to achieve that. It will report to me and will bring together the expertise of the Executive, Scottish Enterprise, Highlands and Islands Enterprise, the tourist boards and the funding councils in higher and further education.
The key challenges for the enterprise networks are to reduce the productivity gap, the skills gap, the e-commerce gap, the entrepreneurship gap and, as part of that, the business start-up gap. No one should be in any doubt as to the priorities of the Executive and of the Parliament. Ultimately, we must try to close the jobs gap across the country. We will bring together the major agencies to ensure that all of them are absolutely clear about their role.
To deliver the strategy, there was an option to set up new organisations and shift responsibilities between agencies. I do not share that view. Structural change will be a distraction of management effort from delivery of our vision and strategy. Structural change misses the point. The focus is on customers, not on structures, and Scotland cannot afford to lose that focus even for a year. That is why the interim conclusions that I am announcing today are about evolution. Let no one be in any doubt that I expect the strategy to lead to significant change. Some of that change is already under way.
The solution is to develop more effective ways of working. That means new management approaches, new people, better development of existing staff and a radical shake-up in our style, approach and attitude. In a sense, we need a wake-up call to everyone involved in economic delivery. The enterprise networks need to adapt. I have backed and encouraged the change in the Scottish enterprise networks that is being driven through by Sir Ian Wood and Robert Crawford. They are delivering greater coherence, effectiveness and customer focus.
At national level, Robert Crawford has undertaken a thorough review of operations at Bothwell Street. He has eliminated duplication and overlap and has created seven key directorates that report directly to him, bringing together network operations, international operations, e-commerce, knowledge management, finance, customer relations and human resources. He has also taken advantage of the greater coherence of the network to develop sharing of support services such as finance and human resources. That allows significant improvements in efficiency, but I want to push them further. I want to see real improvements in appraisal and evaluation, and we must have more transparency.
Local enterprise companies are burdened by the last vestiges of the failed internal market introduced a decade ago, which creates unnecessary red tape and transaction costs. As Crawford Beveridge said in response to our consultation, we
"need to decide whether the economic development strategy for Scotland is simply the aggregate of all the local development strategies, or whether you start with a National Strategy and manage it locally".
He goes on to say that if
"the second is the intent . . . then the notion of independent companies, limited by guarantee is nonsense."
The second is my intent, and I agree with him. I will remove the anomaly of the LECs' status as companies limited by guarantee. That will allow greater efficiency and streamlining, switching resources from the back office to the front line. It will also create the opportunity for a significant increase in real local responsibility.
I want to take this opportunity to thank all the LEC board members for their contribution over the years to developing their local economies. They give their time for nothing. I want to remove unnecessary barriers to help them make an even more effective contribution.
The Highlands and Islands Enterprise network had a different starting point and chose different ways of working. Overall, it has stood the test of time better. That message has come through very clearly from people in the Highland community and I respect their wishes. I applaud the work of Jim Hunter and Iain Robertson. We will encourage them to play a bigger part in the debate on national issues.
The Scottish Tourist Board also needs to meet the challenges in the new strategy for Scottish tourism. I expect a report from the board by December on how that will be achieved. Tourism will take its proper place in national economic development, and it must also play a full part locally. Area tourist boards must enthusiastically implement our new strategy for tourism, and I expect them to tighten the effectiveness of their visitor services and local marketing functions.
In the autumn, we will respond in full to the conclusion of the Enterprise and Lifelong Learning Committee's report into local economic development. There is much in the report to support, but it says that there is duplication and confusion at local level and we need to sort that.
Part of the solution is the small business gateway, which was launched yesterday. It will bring consistent and improved standards to the delivery of small business advice and it will ensure that the various agencies that deliver advice do so in partnership with one another. It is a first and important step.
However, we must go further. I want to see coherence and clarity at local level and I will charge local economic forums with achieving that. We will work up our vision for the forums over the summer and will issue guidelines in the autumn, when I intend to discuss this and other important issues flowing from our framework in a major conference. I invite the Enterprise and Lifelong Learning Committee, led by John Swinney, to get involved in that process.
Local economic forums will not be talking shops, they will not be another layer of bureaucracy and they will not be replacements for the LECs. We will look to the LECs to take the lead in setting up the local economic forums. The LECs have a key role in addressing the dynamic competitiveness of Scottish business, but our ambition, which is set out in the framework, is much wider than that.
I want the forums to focus on what they can do to remove the barriers to regional and social development for all individuals, promote opportunities for economic activity to prosper and help people to access those opportunities and take full advantage of them. I intend to set challenging targets on those matters for the forums, such as ensuring employment opportunity for all, improving adult basic education and widening access to further and higher education. We will therefore implement local economic forums, which will work to address overlap and duplication amongst partners. I will set a clear time scale for the forums to deliver to me what they can do to address this issue.
Forums will ensure that all the relevant local agencies pull together, including the ATBs, and will share best practice across the country. Again taking a lead from the Enterprise and Lifelong Learning Committee, I will look at incentives for good performance. We must demand value for money in the use of public funds—that is an imperative, which underpins the statement this morning. Forums will be locally driven and provide local solutions within a national framework.
In conclusion, we will: produce a strategy for enterprise by December; improve national co-ordination; streamline the enterprise networks; require better appraisal and evaluation; and cut unnecessary red tape in the networks by changing the LECs' legal status. Local economic forums will bring more coherence in local economic development.
I commend this statement to the Parliament.
The assessment takes place against a positive background. The economy is in good shape. The economic fundamentals are sound. However, we face major challenges. The e-revolution requires a step change in the way we deliver economic development. Even more important, we must ensure that our business community seizes the opportunities. All of us need to recognise in a real and significant way that the e-revolution is here. It is vitally important therefore that our economic development system is capable of meeting the challenge.
The review was built on extensive consultation, analysis and evidence. There is a shared vision about the need for effective and focused economic development. That vision is of economic development bodies that have a clear sense of direction and a clear task to perform; that have milestones and targets to ensure that they are on course to deliver the vision; that have 21st century Government approaches to 21st century problems; that are customer focused, responsive and relevant to the business, trainees and communities they serve; and that are accountable to the Executive and to the Parliament.
There is consensus about what is wrong at the moment. We need a better and more focused strategy. Previous Governments were unwilling and ideologically opposed to making economic development policy. There should no longer be a policy vacuum for the enterprise networks.
We need more comprehensive targets and milestones. We need to marshal our public sector agencies behind clear and challenging targets. However, we need to go much further. No one should be in any doubt about how serious I am about that. The outcome-led approach has to be a top priority. We should be adding value to the economy and getting value for the taxpayer.
We need more flexible enterprise networks that can adapt and evolve—1980s systems are trying to tackle 21st century problems. The enterprise networks need to be more streamlined and more focused on delivering the strategy set to them. They need to be more customer focused, responsive and relevant. They should be more business orientated, not less. They should be more focused on jobs, skills and new company growth to deliver employment opportunity for all.
We need more effective partnerships between the enterprise networks and the range of other players in economic development. There is duplication and overlap. Organisations pull against each other, rather than together to achieve a shared vision. Enterprise networks must be more accountable, with effective mechanisms for dealing with appointments and ensuring the highest standards of propriety.
There is consensus about the vision and the problems. It is for the Executive to provide the solutions and the prescriptions. The solution is a better strategy. We will accept the responsibility to set the lead on economic development. The framework for economic development provides the high level. A new strategy for enterprise is urgently required to turn that into action.
The strategy will set out the Government's action plan for economic development. It will establish clearly what the enterprise networks will do to create economic opportunity for all, to foster the knowledge economy and a culture of enterprise and to promote the learning revolution, sustainable development and social inclusion.
I want to see a clear thread running from our framework at national level through all economic development activity at national and local level. The enterprise networks will stimulate the dynamic competitiveness of enterprise, by promoting new markets, inward investment, indigenous enterprise, innovation and commercialisation.
The enterprise networks will help deliver a fairer Scotland, focusing on employability and employment—developing, advocating and implementing work-based solutions to social problems. They will help build the organisational effectiveness of our social economy and tackle the digital divide.
The strategy will set clear, well thought-out but tough targets for those agencies and will ensure that they pull together and in the same direction, so that we can make the most of the available resources. It will be a strategy for enterprise, to build a sustainable, successful economy, and to play an important role in building a fairer society and achieving employment opportunity for people in every part of Scotland.
I want the strategy to be in place by the end of the year, and to that effect I am establishing a high level expert group to achieve that. It will report to me and will bring together the expertise of the Executive, Scottish Enterprise, Highlands and Islands Enterprise, the tourist boards and the funding councils in higher and further education.
The key challenges for the enterprise networks are to reduce the productivity gap, the skills gap, the e-commerce gap, the entrepreneurship gap and, as part of that, the business start-up gap. No one should be in any doubt as to the priorities of the Executive and of the Parliament. Ultimately, we must try to close the jobs gap across the country. We will bring together the major agencies to ensure that all of them are absolutely clear about their role.
To deliver the strategy, there was an option to set up new organisations and shift responsibilities between agencies. I do not share that view. Structural change will be a distraction of management effort from delivery of our vision and strategy. Structural change misses the point. The focus is on customers, not on structures, and Scotland cannot afford to lose that focus even for a year. That is why the interim conclusions that I am announcing today are about evolution. Let no one be in any doubt that I expect the strategy to lead to significant change. Some of that change is already under way.
The solution is to develop more effective ways of working. That means new management approaches, new people, better development of existing staff and a radical shake-up in our style, approach and attitude. In a sense, we need a wake-up call to everyone involved in economic delivery. The enterprise networks need to adapt. I have backed and encouraged the change in the Scottish enterprise networks that is being driven through by Sir Ian Wood and Robert Crawford. They are delivering greater coherence, effectiveness and customer focus.
At national level, Robert Crawford has undertaken a thorough review of operations at Bothwell Street. He has eliminated duplication and overlap and has created seven key directorates that report directly to him, bringing together network operations, international operations, e-commerce, knowledge management, finance, customer relations and human resources. He has also taken advantage of the greater coherence of the network to develop sharing of support services such as finance and human resources. That allows significant improvements in efficiency, but I want to push them further. I want to see real improvements in appraisal and evaluation, and we must have more transparency.
Local enterprise companies are burdened by the last vestiges of the failed internal market introduced a decade ago, which creates unnecessary red tape and transaction costs. As Crawford Beveridge said in response to our consultation, we
"need to decide whether the economic development strategy for Scotland is simply the aggregate of all the local development strategies, or whether you start with a National Strategy and manage it locally".
He goes on to say that if
"the second is the intent . . . then the notion of independent companies, limited by guarantee is nonsense."
The second is my intent, and I agree with him. I will remove the anomaly of the LECs' status as companies limited by guarantee. That will allow greater efficiency and streamlining, switching resources from the back office to the front line. It will also create the opportunity for a significant increase in real local responsibility.
I want to take this opportunity to thank all the LEC board members for their contribution over the years to developing their local economies. They give their time for nothing. I want to remove unnecessary barriers to help them make an even more effective contribution.
The Highlands and Islands Enterprise network had a different starting point and chose different ways of working. Overall, it has stood the test of time better. That message has come through very clearly from people in the Highland community and I respect their wishes. I applaud the work of Jim Hunter and Iain Robertson. We will encourage them to play a bigger part in the debate on national issues.
The Scottish Tourist Board also needs to meet the challenges in the new strategy for Scottish tourism. I expect a report from the board by December on how that will be achieved. Tourism will take its proper place in national economic development, and it must also play a full part locally. Area tourist boards must enthusiastically implement our new strategy for tourism, and I expect them to tighten the effectiveness of their visitor services and local marketing functions.
In the autumn, we will respond in full to the conclusion of the Enterprise and Lifelong Learning Committee's report into local economic development. There is much in the report to support, but it says that there is duplication and confusion at local level and we need to sort that.
Part of the solution is the small business gateway, which was launched yesterday. It will bring consistent and improved standards to the delivery of small business advice and it will ensure that the various agencies that deliver advice do so in partnership with one another. It is a first and important step.
However, we must go further. I want to see coherence and clarity at local level and I will charge local economic forums with achieving that. We will work up our vision for the forums over the summer and will issue guidelines in the autumn, when I intend to discuss this and other important issues flowing from our framework in a major conference. I invite the Enterprise and Lifelong Learning Committee, led by John Swinney, to get involved in that process.
Local economic forums will not be talking shops, they will not be another layer of bureaucracy and they will not be replacements for the LECs. We will look to the LECs to take the lead in setting up the local economic forums. The LECs have a key role in addressing the dynamic competitiveness of Scottish business, but our ambition, which is set out in the framework, is much wider than that.
I want the forums to focus on what they can do to remove the barriers to regional and social development for all individuals, promote opportunities for economic activity to prosper and help people to access those opportunities and take full advantage of them. I intend to set challenging targets on those matters for the forums, such as ensuring employment opportunity for all, improving adult basic education and widening access to further and higher education. We will therefore implement local economic forums, which will work to address overlap and duplication amongst partners. I will set a clear time scale for the forums to deliver to me what they can do to address this issue.
Forums will ensure that all the relevant local agencies pull together, including the ATBs, and will share best practice across the country. Again taking a lead from the Enterprise and Lifelong Learning Committee, I will look at incentives for good performance. We must demand value for money in the use of public funds—that is an imperative, which underpins the statement this morning. Forums will be locally driven and provide local solutions within a national framework.
In conclusion, we will: produce a strategy for enterprise by December; improve national co-ordination; streamline the enterprise networks; require better appraisal and evaluation; and cut unnecessary red tape in the networks by changing the LECs' legal status. Local economic forums will bring more coherence in local economic development.
I commend this statement to the Parliament.
In the same item of business
The Presiding Officer (Sir David Steel):
NPA
Good morning. The first item of business this morning is a statement by Henry McLeish on a review of the enterprise networks. The minister will take question...
The Minister for Enterprise and Lifelong Learning (Henry McLeish):
Lab
I announce this morning the interim conclusions from my review of the enterprise networks. Following on from the framework for economic development published...
Mr John Swinney (North Tayside) (SNP):
SNP
I thank Henry McLeish for his statement and the courtesy of giving advance notice of its contents.I take issue with one point that the minister made at the b...
Henry McLeish:
Lab
Sir David, you would not expect me to agree with John Swinney's analysis of the state of the Scottish economy. I am always impressed by unemployment figures ...
Miss Annabel Goldie (West of Scotland) (Con):
Con
I welcome the minister's certainty of pronouncement that the talking will stop. Although that is a worthy aspiration, I fear that, as long as we have politic...
Henry McLeish:
Lab
I thought things were going well until the end.It is difficult at times, but we must look at the bigger picture. Within a year, we have had the first-ever fr...
George Lyon (Argyll and Bute) (LD):
LD
On behalf of the Scottish Liberal Democrats, I welcome the minister's statement. I want to consider more closely the Executive's announcement that it is to s...
Henry McLeish:
Lab
I agree with much of what George Lyon has said. First, I want to work out the guidance that we provide for the creation of the economic forums. There are exa...
The Presiding Officer:
NPA
In theory, we have only just over a minute for back-bench questions, but as it is an important statement, I will let the discussion run on a bit. I urge memb...
Marilyn Livingstone (Kirkcaldy) (Lab):
Lab
I welcome the minister's statement and the changes to the structure of Scottish Enterprise. I was going to ask a very similar question to that asked by Georg...
Henry McLeish:
Lab
I was absolutely determined to ensure that, with these changes, we did not lose the business focus. That is why I told Annabel Goldie that, although we have ...
Fergus Ewing (Inverness East, Nairn and Lochaber) (SNP):
SNP
By what date will the forums be established and who will serve on them? Will the business and voluntary organisation voice be in the majority? If not, how wi...
Henry McLeish:
Lab
With the greatest respect I can muster, I have to say that nothing Fergus Ewing ever says in this Parliament surprises me. When we talk about raising the eco...
Mr Swinney:
SNP
The same question?
Henry McLeish:
Lab
Yes, indeed; the same question, which I answered.
Mr Swinney:
SNP
Slightly more.
Henry McLeish:
Lab
John Swinney says, "Slightly more" but he did not finish the sentence—and I know why.
Mr Swinney:
SNP
Slightly more tough.
Henry McLeish:
Lab
Slightly more irrelevant. If one answers a question, one expects some people to absorb the answer.That said, I will try to keep consensual.
The Minister for Children and Education (Mr Sam Galbraith):
Lab
Why?
Henry McLeish:
Lab
I refer Fergus Ewing to my answer to George Lyon.We want to discuss with key players and partners the issues that Fergus Ewing has raised. My target is to ge...
Helen Eadie (Dunfermline East) (Lab):
Lab
I welcome the minister's statement this morning, particularly its reference to changing the legal status of LECs. I saw a ripple of pleasure among my Labour ...
Henry McLeish:
Lab
I have been in correspondence with Helen Eadie on the co-operative idea. I hope that it is taken further as a developmental idea at a local level. One of the...
Alex Neil (Central Scotland) (SNP):
SNP
I ask the minister to set realistic expectations of what the enterprise network can do. He says that it will be charged with closing the productivity gap, th...
Henry McLeish:
Lab
I have partly answered Alex Neil's last point already. We have changed the name to local economic bodies. As a matter of urgency, we will have a discussion a...
Irene Oldfather (Cunninghame South) (Lab):
Lab
I welcome the minister's statement. Does he agree that to foster the dynamic enterprise environment that he has spoken about, we must do two things: foster e...
Henry McLeish:
Lab
I agree entirely with Irene Oldfather's comments. We are developing new ideas for taking entrepreneurship into primary schools and right through to the unive...
Mr Mike Rumbles (West Aberdeenshire and Kincardine) (LD):
LD
The minister made no specific mention of our local enterprise trusts. Kincardine and Deeside Enterprise Trust, which is in my constituency, is concerned abou...
Henry McLeish:
Lab
I will make two points about Mike Rumbles's comments on trusts. Yesterday, we considered the partners who will contribute to the business gateway. The trusts...
Nick Johnston (Mid Scotland and Fife) (Con):
Con
We thought, when we came to the chamber this morning, that we might cross the rubicon, but we are actually on a stepping stone in the middle. It would be chu...