Economies of scale at the agency

Economies of scale at the agency
Damien Henderson and William Tinning, The Herald

It was an even more dramatic decluttering than many had predicted. The writing was on the wall for Scottish Enterprise on the day the SNP took power at Holyrood, with a manifesto commitment to reform the £500m-a-year agency, which employs 2800 people.

John Swinney delivered on that pledge yesterday, and turned 21 into six: in future, economic growth will be delivered through half-a-dozen large regional equivalents of the old local enterprise companies (LECs) across Scotland.

Glasgow will retain the Scottish Enterprise HQ, but there were clear signs yesterday that a relocation programme will mean a large number of jobs migrating from the city to other parts of Scotland. The long-trailed plan to remove responsibility for training programmes from Scottish Enterprise was fulfilled, accompanied by moves to hand powers for business start-ups and local regeneration back to Scotland’s 32 councils. It did not escape the notice of critics that the SNP now has a much stronger role in local authorities since the May election.

advertisementExpertise will be retained, Mr Swinney promised, on regional advisory boards – a decision which provoked claims of new bureaucracy last night from political opponents. But of more significance will be the power games to be played in the new merged bodies, perhaps especially in the west of Scotland, where Glasgow loses its stand-alone status and will have to work with former Strathclyde region partners in Lanarkshire and Renfrewshire.

Already last night, there were clear statements of intent from Scotland’s two biggest cities.

Ron Hewitt, chief executive of Edinburgh Chamber of Commerce, commented on the addition of Fife and Forth Valley to the ‘Edinburgh centred super-region’. He said it was ‘an intelligent reflection of the city’s travel-to-work area and promises progress in the streamlined approach to the future’.

In the new West Central region, Steven Purcell, leader of Glasgow City Council said the announcement seemed to ‘recognise that Glasgow is the main driver of the West of Scotland economy’.

He added: ‘Councils have started to work together much more closely in recent years and if this facilitates joint working which will lead to more and better jobs then that will be a very welcome development indeed.’

However, Chris Thompson, a South Lanarkshire councillor and chairman of Enterprise Resources within Scottish Enterprise Lanarkshire, said the reforms were betraying the skills and experience of staff there. He said the shake-up would result in Lanarkshire losing its ability to promote its own regeneration, despite having some of the most economically depressed areas in Scotland, with pockets of 30% to 40% not working.

‘There is a very good history of partnership working between the LEC, the council and the private sector,’ he said. ‘All of that experience will very soon disappear. I worry about the staff skills. Where are they going to go? I cannot see the rationale of splitting skills away from economic development.’

Among other commentators last night were two former key players at Scottish Enterprise.

Robert Crawford, former chief executive who resigned in 2003 amid criticism of the agency’s performance and his own £200,000 salary, said he regretted the separation of training from economic development.

He said: ‘Whatever we get, I believe Scottish Enterprise has built up one of the best business advisory networks in the world.

‘I have experience of what they have in place in England and I know they look enviously at what we have up here. We have to be careful we don’t lose the wisdom, expertise and experience that has been built up.’

He said the regional structures were ‘probably sensible’ but added: ‘The West of Scotland region is awfully big and is going to be a test of management.’

Bob Downes, head of BT Openreach in Scotland, and a former director of Scottish Enterprise and the Scottish Development Agency, welcomed a single, dedicated skills body.

But he added: ‘I am disappointed there appears to be a lack of international focus and, specifically, no mention of communications technologies, which are especially important for the success of every small country. Urban regeneration is also an an area where Scotland has lost its leading edge over the last 10 years or so. The proposal to move this to local authorities is flying in the face of experience elsewhere, where dedicated, local partnership bodies have been found to be most effective.’

Elsewhere, opinion divided on more predictable lines. There was an almost universally warm welcome for Mr Swinney’s plans from the business sector.

Iain McMillan, director of the Confederation of British Industry (CBI) Scotland, said the plan was ‘very close’ to recommendations made by his organisation to the previous administration and to current ministers after the May 3 elections. He said: ‘These changes, together with the vital ongoing engagement of business, ought to make Scottish Enterprise more effective and enhance the growth prospects for Scotland’s economy.

‘Our politicians now need to get behind Scottish Enterprise; ensure it is adequately funded and allow it to get on with the job.’

Norman Quirk, chairman of the Scottish Chambers of Commerce, said Mr Swinney’s statement on the future of economic development in Scotland was ‘certainly on the right track’.

He was emphatic: ‘This should make the whole business support services more accessible and straightforward for business. The message from our members was clear – reduce the bureaucracy and speed up delivery.’

Andy Willox, for the Federation of Small Business in Scotland, said: ‘Small businesses the length and breadth of the country are set to benefit from the shake-up of Scotland’s enterprise agencies.’

Philip Riddle, chief executive of VisitScotland, said: ‘We welcome this fresh approach to the tourism industry and the fact that it has been placed at the heart of economic delivery and growth.’

Other groups were less positive about the reforms, which they said could ‘undermine’ progress.

Pat Watters, president of the Convention of Scottish Local Authorities (Cosla), accused the Scottish Government of missing a real opportunity in relation to economic development in Scotland. He said: ‘The Scottish Government says it is committed to decluttering the public sector in Scotland and I am sure that this will be spun as having been done with the creation of six economic forums. However, if the six new bodies have no connection to any other layers in the public sector then this results in the exact opposite. A whole new layer of clutter has been established.’

Grahame Smith, general secretary of the Scottish TUC, said: ‘Separating responsibility for skills and business support will only undermine efforts to improve Scotland’s poor record in skills utilisation.’

The replacements

Scotland’s 21 local enterprise companies will be replaced with six regional operations as follows (with area covered in brackets): Grampian (Aberdeen City and Aberdeenshire); Tayside (Dundee, Perth & Kinross, Angus); East and Central Scotland (Edinburgh, the Lothians, Fife, Clackmannanshire, Falkirk, Stirling); South of Scotland (Borders, Dumfries and Galloway); West Central Scotland (Glasgow, Renfrewshire, Inverclyde, Dunbartonshire, Ayrshire and Lanarkshire). Highlands and Islands Enterprise will retain its separate identity.
Scottish Enterprise headquarters will remain in Glasgow, although the presumption is that many staff will be relocated around the country.
Most skills and training are to be transferred from enterprise networks to a new single-skills body resulting from the merger of Careers Scotland and learndirect Scotland.
Councils will assume an enhanced role in local economic development, with responsibility for business support through the Business Gateway scheme transferred to them.
Local regeneration activity will also become the responsibility of local councils.
VisitScotland will share services across a range of areas with the enterprise networks and skills body. It will align its areas around six new enterprise regions.