Labour plans to cut Scottish Enterprise in two

Labour plans to cut Scottish Enterprise in two
Douglas Fraser
The Herald

The Labour Party plans to split Scotland’s main development agency into two, creating a new quango aimed at achieving full employment.

The new agency is to cover careers guidance, skills and training, splitting that from the main part of Scottish Enterprise, that would then focus on promoting business start-ups and business growth.

The idea will be a key part of Labour’s manifesto and election campaign, following a rift between the coalition parties about what to do with Careers Scotland and its 1100 staff, after it was decided by cabinet that it should part company with Scottish Enterprise.

Labour ministers have disagreed with Nicol Stephen, the LibDem leader and Enterprise Minister, over how the split should be handled, resulting in the current non-committal executive consultation on Careers Scotland’s future.

The new ‘full employment agency’, also being described as a workforce development agency, is intended to focus in particular on the large group of NEETs, or young people who are Not in Education, Employment or Training.

It would also aim at employment for the large number of people on incapacity benefit.

Yesterday’s announcement about Labour’s manifesto was described by a LibDem source as ‘premature’, saying a workforce quango may be the result of the consultation, with Mr Stephen wanting to push ahead with reform ahead of the election.

Scottish Enterprise management was keen to shed Careers Scotland and the requirement to promote social inclusion, but there was concern from an agency source last night that a plan to split off the entire training budget would remove an important part of its support for business growth.

Another part of Labour’s manifesto commitment is to aim for 80% employment, seen by economists as being roughly the point of full employment. Currently at 75%, it is one of the highest rates in Europe, largely because of the relatively high rate of female employment.

A source close to the First Minister, said: ‘We are closer to full employment now than at any time in our history – and closer to it than most other countries in Europe.’

Focusing attention on employment removes attention from Scotland’s growth rate, which was top Labour priority in the 2003 election campaign, but which has struggled to rise above its sluggish long-term trend.

The new agency would be a joint enterprise between government and industry leaders, but Jack McConnell is keen to ensure it is not local council-dominated. It may also include learndirect scotland, the agency with more than 100 staff that acts as a broker for training courses.

It would have a budget of £150m, of which £50m would be for Careers Scotland and £100m for training, including its modern apprenticeships and Skillseeker programmes. That would come out of the £530m Scottish Enterprise budget.

The move follows months of pressure on Scottish Enterprise over its budget mismanagement, involving a £50m bail-out in spring.

The Labour plan dovetails with a letter sent to Nicol Stephen on Friday by leading figures in Scottish business and education, recommending a new agency should be set up, that would go further than the Enterprise Minister had proposed in the consultation on the future of Careers Scotland.

The group recommends a stand-alone quango covering Careers Scotland and Scottish Enterprise’s skills and training functions.