Focus on Scotland's Enterprise Network

Hall Aitken attended a consultation event organized by EDAS (Economic Development Association Scotland) on 1 September 2010 in Edinburgh.  The event was chaired by Iain Smith, MSP.

In September 2007, for the Cabinet Secretary for Finance and Sustainable Growth announced wide-reaching reforms to enterprise networks which were designed to support the implementation of the Scottish Government Economic Strategy.  The Local Enterprise Companies (LECs) and Local Enterprise Forums (LEFs) were abolished and replaced with a regional delivery model for enterprise support in an effort to reduce bureaucracy and streamline local delivery.

Business Gateway and local regeneration services are now delivered by local authorities and other enterprise network agency services are delivered within local authority premises with the aim that local businesses are able to access services through a single point of contact.  In recognition of the different needs of remote and rural communities, HIE has retained its strengthening communities remit.

These reforms were accompanied by a transfer of funding to local authorities that has resulted in a reduction of budgets and a reduction in staff numbers remaining in SE and HIE.  In addition to the transfer of funds, the enterprise agencies have had to find efficiencies in their running costs on a year-on-year basis.  Updated figures recently provided to SPICe show that the combined effect of the budget transfers and the efficiency savings has seen the grant in aid for SE fall in real terms by £75 million (16%) since 2007/08 and, similarly, by £40 million (43%) for HIE - once adjusted for exceptional items.

The Cabinet Secretary also announced that skills and training elements of the enterprise networks would merge with Careers Scotland and learndirect Scotland to form Skills Development Scotland.  This was accompanied by a transfer of funding to the new agency.

The Economy, Energy and Tourism Committee, during its consideration of the 2010-11 budget, raised some fundamental questions about the purpose of the enterprise network and its role in economic development.  These included whether it was time to rethink the very purpose of an enterprise network and what tasks it should be expected to carry out in a modern economy.  This inquiry aims to address those questions.

At the end of the enquiry, the Committee will produce a report to Parliament, making a series of conclusions and recommendations for actions to be taken by the Scottish Government and other which will have a beneficial impact on the growth of the economy.

The group considered the purpose of an enterprise agency and the success of the recent reforms.  The key questions touched on were:

  • Are there more successful or efficient models of delivery in other parts of the World;
  • Is a single approach suitable for SE and HIE area;
  • Has the transfer of distinct functions such as Business Gateway to Local Authorities improved local service delivery;
  • What benefits or problems have accrued from the transfer of local regeneration activities to local authorities; and
  • How has the establishment of the strategic forum assisted in this regard.

Constructive discussions took place. However the discussion touched more on the lack of impact that the Enterprise agency has had over the past few years.  The issue of lack of support to SMEs or rather the poor alignment of services and poor communication with SMEs was raised.  In principle there appeared to be agreement that public support to stimulate enterprise was necessary however the administrative cost of delivering this support in a strategic way was at issue.  Local authorities have been muddling through and trying to make some inroads however other agencies are developing skills programmes in isolation.  The account managed system in Scottish Enterprise currently is not recognizing the fact that SMEs are the backbone of the economy.  Nor does it recognize that in these straightened times there is a need to safeguard jobs and maintain SMEs in existence as well as focus of "high growth" companies that at the moment are the priority of Scottish Enterprise.

EDAS will be summarizing the discussion and submitting these to the Economy, Energy and Tourism Committee.