Ministers to bail out jobs quango

Ministers to bail out jobs quango
Tom Gordon
The Herald

Ministers are poised to bail out Scottish Enterprise, the jobs quango, but will attach stringent conditions to the cash.

Nicol Stephen, the Liberal Democrat enterprise minister, will today make a statement to parliament about the agency.

By approving funding for too many projects, the agency went £30m over budget in 2005-06 and is set to overspend by £40m in the coming financial year.

The crisis forced it to cut money for a large number of projects, alarming MSPs about possible job losses in their constituencies.

Mr Stephen is expected to signal that the Scottish Executive is willing to give the agency more money to help it cope with its budget crisis.

Managers will need to use the extra cash to fund the small business and training projects it had planned to cut, such as the Business Gateway scheme for start-up firms and fledgling companies.
The move will be seen as a slap-down for Jack Perry, the £200,000 chief executive, who would like the organisation to focus more on big business.

The exact size of the bail-out is not expected to be finalised until late April. A source close to the quango said if it was £30m to £40m, it could impact on other programme budgets.

He added: ‘People will wonder if it’s all coming from Nicol’s budget and, if so, what else gets cut.’
It also emerged last night that Mr Perry and other senior figures at the agency had tried to dodge a grilling by MSPs on the financial problems. Earlier this week, Holyrood’s enterprise committee demanded Mr Perry, Sir John Ward, the SE chairman, and Iain Carmichael, the director of finance, appear before them on April 18.

The trio are understood to have asked to appear instead on May 2, after ministers sign off on the budget for 2006-07, when much of the political heat could have subsided.

As MSPs chose April 18 because they wanted an urgent account of the agency’s finances, the committee is understood to be sticking to its original request.

The officials had also been due to answer questions on its forthcoming restructuring. The quango, which spends around £500m a year, wants to dilute the power of its 12 local enterprise companies and focus on four new large strategic regions.

Three Labour ministers have asked to be kept closely informed of developments at SE. Tom McCabe, minister for finance and public sector reform, Peter Peacock, minister for education and lifelong learning, and Malcolm Chisholm, communities minister, all have portfolios directly affected by SE decisions. It is understood they were made part of an ‘inner circle’ within the cabinet last week.

Unions representing Scottish Enterprise staff are due to be briefed on the budget and restructure today. The Public and Commercial Services union (PCS) said the agency’s leadership was making its members look bad. Michael McCann, PCS deputy Scottish secretary, said: ‘Our members are deeply hurt that the latest restructuring and budget crises are undermining their professionalism. Scottish Enterprise has to decide the organisation’s direction and give it some much needed stability.’

An agency spokesman said: ‘We recognise the upset this uncertainty is causing and have asked staff to bear with us while we work through this.’