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Meeting of the Parliament 11 September 2013

11 Sep 2013 · S4 · Meeting of the Parliament

Item of business

Enterprise Networks

McDougall, Margaret Lab West Scotland Watch on SPTV

Scotland’s enterprise agencies are a vital tool in helping Scotland to meet the economic challenges that we face. They are integral to the creation of a sustainable economy that fosters innovation and investment.

I welcome the publication of the “Evaluation of Scottish Enterprise Engagement with Account Managed Companies”, but the report was commissioned by Scottish Enterprise and is fairly self-congratulatory. As Jenny Marra said, Scottish Enterprise has not been independently reviewed since 2007. I support calls for such a review. If the agency was scrutinised by, for example, the Public Audit Committee, we could establish how well it is performing in delivering the Scottish Government’s economic strategy.

It says in the report that the account management model that the enterprise agencies use is effective, provides value for money and should remain largely unchanged. As the minister said, 80 per cent of people who took part in the telephone survey are not confident that they would be able to source comparable support from anywhere other than Scottish Enterprise.

An issue that SMEs raise time and again, which was raised in this morning’s meeting of the Economy, Energy and Tourism Committee, is access to finance. As it says in the report,

“It has been increasingly difficult for many companies to obtain bank loans and/or overdraft facilities to manage cash flow issues or facilitate growth.”

In the area that I represent, Sercon Support Services Ltd is a successful, award-winning small business—indeed, it is used by Scottish Enterprise as a model of best practice. Members might expect such a company to be able to get funding to expand, but Sercon struggled to find further investment funding. It is worrying that such a strong company, which has Scottish Enterprise’s support and put forward a robust business case, was rejected by funders. We must ask how many smaller, less well-established companies are being rejected.

We need to do more to ensure that support is on hand for small and medium-sized businesses, which are finding it hard to secure funding from banks as a result of stricter lending criteria or simply because banks are risk averse. Banks need to be clearer about the sectors that they will support and what they are looking for in business plans.

I am pleased to say that Sercon eventually secured funding. However, the company had to go through a protracted process, with many disappointments along the way.

The Scottish Government and the enterprise agencies need to do more to support businesses when they apply to banks for loans, particularly if the business provides a direct economic benefit to the area, as Sercon does, by safeguarding and creating employment opportunities.

Perhaps the minister will say today what the Scottish Government and Scottish Enterprise are doing to address such issues and whether it is possible to extend the lending portfolio of enterprises agencies, to ensure that companies, especially start-up and smaller businesses, can access much-needed finance so that they can grow or become better established.

It is not just financial support that SMEs need but advice on managerial issues, accountancy and a broad spectrum of other issues. There is also a need to focus on areas of high unemployment such as North Ayrshire, which, according to Scottish Enterprise’s statistics from April 2012 to March 2013, had only two companies—out of 268 in Scotland—that were considered to have growth prospects. Will more support be considered for areas that are economic black spots?

That said, according to the report, from 2008-09 to 2011-12 the account management model has contributed £1.11 billion of additional economic value to the Scottish economy and Scottish Enterprise has—as the minister stated earlier—created and/or safeguarded 15,130 jobs. We just need to ensure that that support is better targeted, perhaps towards women and minority groups and towards SMEs rather than higher growth companies.

In my area, I have seen the direct benefit of an enterprise agency’s work to safeguard jobs. Highlands and Islands Enterprise has played an integral part in stopping the closure of the university marine biological station at Millport by working with the Field Studies Council, North Ayrshire Council, Cumbrae Community Development Company and the wider community to secure its future. There is no doubt that the closure of the marine station would have devastated the local economy, with the loss of 30 quality jobs and up to £2 million removed from the local economy.

Although there is some evidence that Scottish Enterprise is supporting the economy, there remain questions on whether it could perform better, particularly in respect of support to small and start-up businesses as well as in areas of direct economic need.

I support the Labour amendment.

16:37

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Meeting of the Parliament 11 September 2013

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