Hansard

It is my pleasure to introduce the report of the Enterprise and Lifelong Learning Committee on local economic development services, and to speak in my capacity as that committee's convener.

Our report was published on 10 May, and I welcome this early opportunity to debate the issues that were raised in it. The Executive is entitled to an eight-week period to respond to committee reports, and we appreciate the fact that ministers are prepared to take part in an earlier-than-anticipated debate, outwith that time scale.

The committee has proposed substantial changes to the existing arrangements for economic development; I will come to those changes later. Before that, I will explain what led the committee down its route of inquiry. We had all experienced dealings with local economic development and, from members' constituency experience, the committee was aware of fairly widespread unease over the effectiveness of existing services. There was a concern that, if the agencies involved were not actually out of control, they were potentially out of touch with those whom they were established to serve.

The committee embarked on its inquiry unanimously, and agreed its report unanimously. We were determined to listen to the case that was put in front of us, to test the evidence from a wide base and to formulate conclusions with all that in mind. Our report fits into a welcome debate about the future of economic development, which has been developed by the minister. As important as the debate is the recognition that the talking must, at some point, stop and the delivery of services must begin in earnest under any revised model.

I am glad that the Minister for Enterprise and Lifelong Learning was able to give a commitment, during his appearance at the committee in March, that the debate over the future of the enterprise networks, the framework for economic development and the delivery of local services would be complete in time to ensure implementation of the proposals in the autumn and towards the end of the year.

In its deliberations, the committee took substantial evidence over an eight-month period. That involved consideration of more than 100 written submissions, and hearing 41 witnesses who came to speak to the committee. We visited the Highlands and Islands to appreciate the differences between the lowland and Highland perspectives, and we were the first committee to move its proceedings out of metropolitan Edinburgh, if I can so describe it.

In December, the committee published an interim report. To ensure that our conclusions had some resonance in reality, and reflected the debate among those who needed to use the services, we held the business in the chamber event, in which 129 business people were invited into the parliamentary chamber to debate our key interim conclusions. That event provided a valuable opportunity for us to test the effectiveness of the direction of our thinking, and to find out whether we were touching the issues that were of concern to the wider community.

We also commissioned independent academic research from the University of Paisley in an attempt to capture the nature of the map of services, and to provide a schematic of how those services are delivered. To say that the University of Paisley produced a rather complex schematic would be an understatement of all proportions, but it was certainly a useful example of the benefits of independent academic advice. It gave us useful information about the problems with which we were wrestling. We also recruited input from academic, business and media circles to judge the conclusions that we were adopting.

Before going on to discuss those conclusions, I express the committee's thanks to our clerks, Simon Watkins, David McLaren and Mark MacPherson, for their work on the inquiry. I also record my thanks to Enterprise and Lifelong Learning Committee members for their involvement. I record our appreciation to those people who gave evidence to the committee, in writing and orally, and to the Presiding Officer and his deputies for agreeing to and chairing the business in the chamber event on the committee's behalf.

I want to cover three main areas: first, the principal conclusion that congestion exists in service provision and that there is a need for rationalisation; secondly, the nature, quality and effectiveness of business advice; and thirdly, the integration of tourism into local economic development.

Before I make my remarks, which in many respects will be quite critical of existing practice, I want to place on record the committee's acknowledgement of the fact that, in a range of areas, in different parts of Scotland, many good services are provided and much good work is done by our local enterprise companies, enterprise agencies, local authorities, area tourist boards, chambers of commerce and all the other players who are involved. However, in spite of that welcome for the work that is being undertaken, there are some hard issues to wrestle with.

On the first of those three main areas, the committee concluded that there is congestion in the field of economic development in Scotland. There is confusion, overlap, duplication and even active competition between the many agencies that are involved. There are numerous circumstances in which the same services are provided by different organisations, all of them publicly funded, in the same part of the country.

In reaching that conclusion, the committee made two clear points. First, the existing provision of services is failing adequately to meet the needs of consumers. Those who seek to use the services are not best served by the existing arrangements. The agencies have lost their focus on the consumer; they have become too insular and are not delivering the flexibility and responsiveness that is required to help aspiring and dynamic businesses. Secondly, if that principal conclusion is correct, there is an inherent failure to deliver maximum value to the public purse for the substantial sums of public money that are invested in those services. It is difficult to capture absolutely and definitively the sums of money that are spent on this area of policy, but it must be between £800 million and £1 billion per annum in Scotland. If we are prepared to spend 5 to 6 per cent of the total Scottish block on economic development, we must be sure that we receive optimum value for that investment.

The committee recognised that there has been significant progress on co-operation and partnership working between local economic development providers over the past three years. Examples of good practice at local level have been examined and can be recommended as models to influence developments elsewhere in Scotland. Nevertheless, however welcome that process may be, the committee took the view that intensified partnership working alone would be unlikely to deliver the level of rationalisation of services, cost-effectiveness and consumer focus that is desired. Local economic development services should be restructured to achieve that.

The committee came to the conclusion that a new structure for local economic development in Scotland should be established, and set out how that would impact on key players. At a strategic level, we believe that the Executive should withdraw from operational programmes and concentrate on giving strategic guidance, setting targets and measurable outcomes, ensuring value for money in service provision, promoting good practice, reporting and evaluation. As part of that strategic role, the Executive should take the lead in guaranteeing that a simpler, more cohesive structure exists in Scotland for the delivery of local economic development services. The Executive should initiate a process of eliminating duplication in service provision at local level and should be prepared to penalise publicly funded bodies that do not co-operate in that process, in the way that it is prepared to do in the tourism strategy.

A key tool in assisting the Executive to fulfil its strategic role should be the development of an economic framework for Scotland, and the committee supports the Executive's desire to do that. The framework should specify outcomes that reflect the need for Scotland to be globally competitive and should draw together, for the first time, the Executive's aims and ambitions for the Scottish economy. The framework should also outline the contribution that is expected from local economic development organisations towards achieving those aims—I make that point strongly. In acting on behalf of the Scottish Executive, Scottish Enterprise and Highlands and Islands Enterprise should concentrate on managing the enterprise network and ensuring that there is effective, focused provision of services by local enterprise companies, acting with the principles of transparency, accountability and clarity at the core of their thinking.

The committee's key recommendation is to establish local economic forums, working with the Executive, to drive forward the process of simplifying, focusing and rationalising local economic development structures in Scotland. Each economic forum should create for its area an economic strategy that is capable of achieving the contribution that is expected of that area to the economic framework for Scotland, and that has at its core the delivery of support services with clarity in each local area.

In aiming to rationalise services, the committee could have identified one or more players that could have been taken out of the process; we could have removed local authorities, local enterprise companies or area tourist boards—everyone could have picked their favoured target. However, in reality, the issues are not so simple. A local authority is essential to the planning process, which is an integral part of the system of economic development. Local enterprise companies have built up different ranges of experience that should not be lost. An area tourist board offers contact with tourism, businesses and a range of expertise. Chambers of commerce offer contact with the business community. The transport infrastructure is essential to economic development and involves considerable local authority input.

The committee took the view that the delivery of services at local level should be decided locally, but within clearly defined and understood parameters. The committee did not wish to stifle local discretion by setting a prescriptive national model. However, I stress that the creation of local economic forums as a means of eradicating duplication is not a soft option. Rather, local economic forums are a serious attempt to force agencies into dialogue and to kick-start the process of eradicating duplication in service provision, which is a key first step in improving the effectiveness of the services that are provided to the consumer. The forums must not become an extra layer of bureaucracy, or talking shops. They must decide how better services can be delivered and how more value and effectiveness can be released from the process.

We argue that the Executive must be prepared to penalise publicly funded organisations that pay lip service to the process and do not participate effectively. We have given further force to our recommendations by requesting that, in two years' time, the Auditor General for Scotland and the Accounts Commission undertake a joint study to determine whether the process of rationalisation has taken place.

The second key question is business advice. Some improvements in that area are under way and the committee supports the establishment of a new business support service in Scotland that merges the services of all publicly funded authorities and markets them clearly to consumers through a nationally branded service. The Executive should initiate the introduction of that service, which at local level should be delivered through the strategy agreed by the economic forum.

However, we also need to re-examine the nature, quality and effectiveness of the business advice that is given to customers. The committee set out its views on the improvements that are required. Advice must be targeted more effectively to the consumer. Account management support to specific companies, which is available in some parts of the country, is essential to building relationships between companies and agencies and supporting them in the process. The quality of business advice through referral must also be strengthened.

At the business in the chamber event, I was struck by the contribution of Kevin Dorren, a young man who has established a successful software development company in Scotland. In a 90-second contribution—a model for the rest of us—he made a clear point on the nature of the advice that was given to him when he started his business. His adviser was a retired bank manager. I do not want to besmirch the reputations of retired bank managers, but Kevin Dorren was looking for advice from a mentor who had been through the process of establishing a high-growth, high-tech organisation with a steep learning curve and who could talk to him about the challenges that he would face. Getting the appropriate business advice and ensuring that it is correctly focused is essential.

The third main issue that I want to cover is the need to ensure that tourism is firmly integrated in the mainstream of local economic development. We propose to do that by including area tourist boards as mandatory members of local economic forums. Each forum's strategy should include a tourism element that must set out the strategy and delivery mechanisms at local level. That must be linked to a national tourism strategy and should identify every area's contribution to realising that strategy. The strategy should also indicate the resources that are dedicated by each partner—particularly by local authorities or local enterprise companies—to tourism development.

In some parts of Scotland, we have the ludicrous situation in which area tourist boards, which have no money, agree tourism strategies with local authorities, which have some money, and local enterprise companies, which have loads of money. Those strategies are then usurped by unilateral announcements and initiatives by local enterprise companies, which have the money to fund such activities, disregarding the partnership agreements that they have signed. The committee finds that practice unacceptable, and our report is designed to bring it to a halt.

On tourism, the committee will monitor the effectiveness of its proposed method of operation, and if that method does not guarantee the effective delivery of tourism support services or investment in the development of the tourism sector, we will consider proposing further structural changes.

I want to make a few comments on where the process goes from here. The minister has sparked an enterprise networks review to achieve sharper focus in those agencies. There is the imminent production of the framework for economic development, and the implementation of the tourism strategy and any structural changes that may be required. The Enterprise and Lifelong Learning Committee has completed its inquiry, and all those documents and initiatives now require ministerial action. I hope that ministers will be able to stick to their commitment to come to conclusions over the summer and the autumn, and to set out to all the parties in this complex process a clarity that will enable them to serve their consumers.

This is the moment when we must listen to consumers and not be driven by an agency agenda. We must provide simple choices and services to the consumer and, above all else, ensure that no two publicly funded organisations are involved in the provision of the same service in the same part of Scotland. That way, we may deliver services that customers want. We will also release the resources to deliver greater value. We may yet tackle some of the root challenges that have led to the underperformance of the Scottish economy in areas such as business start-up, and that have caused such bewilderment in key sectors of the business community.

I move,

That the Parliament notes the 1st Report 2000 of the Enterprise and Lifelong Learning Committee on local economic development services (SP Paper 109) and commends the conclusions to the Scottish Executive in the context of its current review of economic development structures.