Official Report


Enterprise and Culture Committee, 30 May 2006

Scottish Parliament
Enterprise and Culture Committee
Tuesday 30 May 2006

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: [The Deputy Convener opened the meeting at 14:10]

The Deputy Convener (Christine May): : Good afternoon and welcome to the 15th meeting in 2006 of the Enterprise and Culture Committee. We have received apologies from Shiona Baird, Alex Neil—that is why I am convening the meeting—and Susan Deacon. Mark Ballard is the committee substitute for Shiona Baird and Margaret Jamieson is the committee substitute for Susan Deacon. Will the committee substitutes declare any relevant interests?

Mark Ballard (Lothians) (Green): : On 9 June, I will be installed as rector of the University of Edinburgh, which will confer on me the position of chair of the university court. That is relevant to the committee's discussions on higher education and variable fees for medical students.

Margaret Jamieson (Kilmarnock and Loudoun) (Lab): : I have no relevant interests to declare.

Budget Process 2007-08

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The Deputy Convener: : Item 1 is the budget process. Members have a paper from the clerk on our approach to budget scrutiny. It is evident from the paper that what the enterprise networks do with their budgets will continue to be extremely important and of relevance to the committee. Therefore, the suggestion that we take evidence from the networks is a good one—unless there are dissenters in the committee. I invite members to comment on the paper.

Karen Gillon (Clydesdale) (Lab): : I am content with such an approach. However, it would be useful for members to have a brief summary of what the enterprise networks said about their budgets the last time that we heard from them, which we could compare with what happened. We will want to ascertain whether what is said the next time that we hear from them bears any resemblance to what happens in the year ahead.

Michael Matheson (Central Scotland) (SNP): : Will we take evidence from quangos and other executive agencies through correspondence, rather than by inviting representatives to appear before the committee?

The Deputy Convener: : It might be appropriate to take oral evidence from representatives of the national collections, for example, given the level of budget for which they are responsible. As it says in the paper, the budget of the National Galleries of Scotland is £23 million, the budget of the National Library of Scotland is £23 million and the budget of the National Museums of Scotland is £28 million. We could hear from one of those institutions. We could also hear from Historic Scotland, given that it is reviewing its operation and how it deals with other agencies. Historic Scotland's activity is relevant to much of what happens in the economy. Those are my suggestions, but I am open to members' suggestions.

Michael Matheson: : The Scottish Arts Council, sportscotland and VisitScotland all have sizeable budgets, as the paper shows. If we are to invite representatives from organisations to give evidence to the committee, we need more discussion about who should come along and why. The size of the budget might not necessarily be the main factor in our decision to invite someone.

Margaret Jamieson: : We should consider how an organisation interacts with other organisations and with the public, rather than the size of its budget. Michael Matheson and I have just attended a meeting at which we discussed aspects of VisitScotland's operation with which we are less than satisfied. The size of the budget does not always reflect the work that is being done.

The Deputy Convener: : You both make good points, to which I will return.

Mr Jamie Stone (Caithness, Sutherland and Easter Ross) (LD): : I strongly support the deputy convener's suggestion that we hear from Historic Scotland. In a global market, Scotland must play to its strengths, one of which is our unique heritage, which is recognised throughout the world.

Margaret Jamieson's comment was wise. I am aware of recent discussions between the Historic Houses Association, Historic Scotland and the National Trust for Scotland. Such co-ordination can deliver the product and achieve results for our cultural tourism industry.

The Deputy Convener: : I am anxious that the committee should scrutinise organisations that it has not previously scrutinised. We have done a fair bit on VisitScotland through our consideration of the reorganisation of the tourist boards and the Tourist Boards (Scotland) Bill, and the Scottish Arts Council has been subjected to intensive scrutiny on a number of occasions. However, the committee has never scrutinised the national collections other than to raise questions about the National Galleries of Scotland's acquisitions budgets, hence my suggestion that we invite one of those organisations to come in for a discussion.

If members have no strong views one way or the other, are we agreed that we should have the enterprise agencies back—particularly, as Karen Gillon said, to compare their previous evidence with what they are now saying—Historic Scotland and one of the national collections?

Members indicated agreement.

The Deputy Convener: : It is suggested that the format in which Scottish Enterprise and Highlands and Islands Enterprise have been asked to submit their budgets is particularly good and clear and that the other agencies that are coming to give evidence should be asked to do likewise so that we can make comparisons between their budgets on the same basis across the range of responsibility. Is that agreed?

Members indicated agreement.

Karen Gillon: : Has anybody added up the figures that we have been given?

The Deputy Convener: : I confess that I have not done that.

Margaret Jamieson: : Have you, Karen?

Karen Gillon: : No. That is why I ask the question. If we suggest that the budgets be presented in that format then, if they are to mean anything to us, they must add up to the amount of money that the agencies had at the start of the year. My confusion with budgets is that there are always bits lying about all over the place. I was trying to do a quick count on the back of the figures that we have been given and I do not think that they add up to the right amount of money because of the way that they have been set out. It would be useful for figures about the agencies' budget allocations and how they will be broken down to be presented in a slightly clearer way than the figures have been presented in the paper.

The Deputy Convener: : That is a reasonable request. The clerks can pass it on so that we get a balancing figure that clarifies what is and is not included.

Michael Matheson: : Did we not, at a previous budget scrutiny meeting, request figures down to level 4—rather than level 3, which was what was being provided—because we felt that it would give us much more detail on individual areas? I do not know whether that has been actioned or whether we want to pursue it in this budget scrutiny.

The Deputy Convener: : The clerks can check the Official Report to see what was asked for and ensure that information is provided to the level that we previously asked for across all the organisations.

Karen Gillon: : That is particularly pertinent to Scottish Enterprise's budget, given that we are not yet sure how the money will filter down to the local enterprise companies and then down to the training budgets.

The Deputy Convener: : Is that agreed?

Members indicated agreement.

Work Programme

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The Deputy Convener: : Item 2 concerns our future work programme. We have a paper that outlines our current commitments and the scope that we have. Committee members will see in the bullet points on page 2 of the paper suggestions that have been picked up from the Official Report and members' suggestions over time. Do any committee members wish to say anything on any or all of those bullet points?

Mr Stone: : I have a quick suggestion, which will come as no surprise to the committee. I want to test the waters and find out whether other committee members would be interested. The suggested inquiry into European Union regional development funds would be of interest from a Highland perspective. There have been continuing arguments, with which I will not bore the committee now, about lines being drawn on maps in the Highlands. That is my bid, but I will respect colleagues' views.

Karen Gillon: : I refer to the bid that I made when I first joined the committee: we need to do something serious on sport. An inquiry into the implementation of sport 21 would be appropriate at this time. I understand the points that Jamie Stone is making. I would like to deal with all of the above. Given the committee's role and the lack of any kind of strategic overview of sport, I bid for an inquiry into sport 21.

Mark Ballard: : I know that Shiona Baird was keen on holding an inquiry into changes in the retail fabric of Scotland's towns and cities in recent years and the role of supermarkets, which she thought could be an important and interesting inquiry. Although the retail sector is important in itself, it also has significant knock-on effects on Scottish agriculture, for example. Shiona thought that such an inquiry should be a priority, given what is happening on the issues at Westminster.

Murdo Fraser (Mid Scotland and Fife) (Con): : We have considered employability in the past, as it is an important issue. My only slight reservation about taking it on in the autumn, in the run-up to the elections, is that it might get a bit party political. It might be worth recommending that our successor committee consider the issue post-2007.

I am interested in considering sportscotland. Similarly, it would be worth holding an inquiry into EU regional development funds. An inquiry into the Scottish film industry might have too narrow a focus.

Changes in the retail fabric in Scotland's towns and cities are an interesting area for debate, but I wonder whether an inquiry might overlap with the work that the Environment and Rural Development Committee is doing, as it is considering the power of supermarkets in dealing with farmers and so on. It might be better to wait and see that committee's conclusions before we undertake a similar piece of work.

On the suggestion of a committee bill to promote microgeneration schemes in Scotland, there are two members' bills on similar subjects. It is probably unrealistic to attempt to promote a committee bill at the back end of the session, given the lack of parliamentary time.

My preference is to hold an inquiry into sportscotland and the national sport strategy and/or an inquiry into EU regional development funds.

Michael Matheson: : The committee has been threatening to conduct an inquiry into employability for some time, so the matter is clearly outstanding. However, I acknowledge Murdo Fraser's concerns about the potential for such an inquiry to become party political in the run-up to an election campaign. I have previously thrown my weight behind the proposal to consider sportscotland and sport 21. It is a good time for that, given that a review of sport 21 is taking place and is due to report in the next couple of months.

On the suggestion for an inquiry into the Scottish film industry, I am conscious that Scottish Screen and the Scottish Arts Council are being remodelled to form creative Scotland. I wonder whether we should allow that to happen before we consider whether to hold an inquiry.

All in all, I am most keen on holding an inquiry into sport 21.

Richard Baker (North East Scotland) (Lab): : I take on board the point that Murdo Fraser and Michael Matheson made that holding an inquiry into employability in the run-up to the elections might make it rather more partisan that it would be otherwise. However, I think that we should do something on employability, given the long-awaited employability strategy, on which what is happening with Careers Scotland in relation to Scottish Enterprise has a great bearing. Holding an inquiry into employability would tackle some of the issues that are raised in bullet point 3 in the paper to do with the number of young people not in employment, education or training. It would be wise for the committee to engage in some sort of scrutiny of the employability strategy as it unrolls.

I also take on board the point that it would be a good time to hold a full inquiry into the implementation of sport 21, given that it is being reviewed. Having produced the report on football, I am aware of the huge interest that there would be in an inquiry into sport 21. However, I am loth to say that we should ignore the employability strategy.

Margaret Jamieson: : Given that I am only a substitute member of the committee, I will bow to the views of others. For the reason that Michael Matheson has given, the committee should consider holding an inquiry into sport 21. As Murdo Fraser said, the Environment and Rural Development Committee is investigating the role of supermarkets and I expect that the European and External Relations Committee will examine regional development funds.

The Deputy Convener: : Like Murdo Fraser, I will go through the list of inquiry options. The issues of employability and the Executive's proposed framework, and the plans to tackle the number of young people who are not in employment, education or training, are interrelated. I would not want the committee to forget about those issues but, given that we are still waiting for the policy paper, it might be best for the committee to react to that paper rather than to institute an inquiry before it comes out.

I will park the sport 21 proposal, in which there is a considerable amount of interest, and go through the other options. An inquiry into European regional development funds would be relevant to the work of the Enterprise and Culture Committee, given the evidence that will have been gathered to date on their lasting benefit to Scotland and Scottish industry. ERDF and the European social fund are both predicated on the need to improve the capacity of the workforce and the ability of regions to make changes in industry, so they are relevant to what we do.

I find the idea of an inquiry into the creative industries and the work of Scottish Screen, in particular, quite attractive, especially in the light of the proposed merger with the Scottish Arts Council and the success of Ken Loach's film—which had a Scottish screenwriter—at the Cannes film festival. Such an inquiry would be relevant to our efforts on the creative industries.

I think that colleagues are right about the suggestion relating to the retail fabric of Scottish towns and cities, on which a fair amount of work is being done already. Although Shiona Baird has been assiduous in examining the issue, I propose that we do not hold an inquiry on it at this stage.

Murdo Fraser made a good point about the microgeneration proposal—we do not have time to prepare a committee bill. There are already members' bills on that subject, one in the name of Shiona Baird and the other in the name of Sarah Boyack. Moreover, it is highly likely that the issue will feature in manifestos.

I remind members that, as the convener pointed out last week, we have the opportunity to produce a legacy paper. A good suggestion was made that we could work up such a paper by examining the recommendations that have emerged from the inquiries that the committee has done over the session, identifying which recommendations the Executive has accepted and assessing what it has done on them. Although our paper would not be binding on our successor committee, it would flag up a considerable number of existing issues.

Perhaps we should commission some research on regional development funds because part of the work of the operators of those funds in Scotland is to examine their continuing benefits; I suspect that some of that analysis has been done. I believe that the committee would benefit from a short piece of research that examined the evidence on what has been done, what lessons have been learned and where the funds should go in future.

A number of members have identified sport 21 as an area that is of relevance to the committee and on which we have done relatively little work. I believe that the review of sport 21 will report in October, so perhaps we should get the Scottish Parliament information centre to do a scoping paper on a potential inquiry, which we could ask to be produced for us just after the summer. We are talking about an inquiry that we would hold in the autumn. I suggest that we also ask SPICe to do a scoping paper on a potential inquiry into Scottish Screen and the creative industries, so that we can make a choice with some background information.

Do members agree to that?

Members indicated agreement.

The Deputy Convener: : I do not see any great enthusiasm among members.

Karen Gillon: : I understand the points that you are making about the creative industries, but I am not sure whether this is the right time to be going down that road, particularly because of the merger. Nevertheless, I am happy to wait and see what comes out of the paper.

Michael Matheson: : On the review, I have a feeling that I had a parliamentary answer fairly recently—in the past week or two—in which the minister said that the review itself will be completed and with the minister during the summer. It may be that a response will be published in October, but I was told that the review would be completed over the summer months.

The Deputy Convener: : In that case, a paper on sportscotland for the first or second meeting after the recess in September would be quite good. I would also like to push the paper on the creative industries, at least to the extent of seeing what the issues are.

Mark Ballard: : You commented on Shiona Baird's assiduousness in promoting the issues to do with small businesses and the retail sector in particular, and you said that you would outline some suggestions for how that subject might be addressed.

The Deputy Convener: : I did. It occurred to me that the Planning etc (Scotland) Bill is going through at the moment. I could not commit a future committee to any work, but it seems to me a future committee might want to consider the implications of that bill and the changes in planning legislation for business. That would also include opportunities for the retail sector, particularly in enhanced town centres, an area where we all share the same sorts of concerns. That would be a good time to consider the issue. The Office of Fair Trading will have finished its work down south and the Environment and Rural Development Committee will have finished its current work here, so all that evidence will be available, which might allow the Enterprise and Culture Committee to consider both those pieces of work, plus the Planning etc (Scotland) Bill. The OFT report will not be binding on Scotland but will nevertheless be highly influential. We can look at that report in conjunction with the Planning etc (Scotland) Bill and consider whether there are issues for the committee.

Mark Ballard: : Is that something that you would envisage including in the legacy paper?

The Deputy Convener: : Yes.

Is that agreed?

Members indicated agreement.

Subordinate Legislation

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Student Fees (Specification) (Scotland) Order 2006 (draft)

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The Deputy Convener: : Item 3 is consideration of the draft Student Fees (Specification) (Scotland) Order 2006. I welcome the Deputy Minister for Enterprise and Lifelong Learning, Allan Wilson. I remind the committee of Mark Ballard's declaration of future interest.

Good afternoon, minister. We have 90 minutes for the debate, and the committee is entirely at your service. I invite you to make any comments that you would like to make. The committee has considered the matter already on two occasions, so please speak to and move the motion.

The Deputy Minister for Enterprise and Lifelong Learning (Allan Wilson): : I am sure that 90 minutes will be wholly adequate for the purposes of the debate.

I am grateful for the opportunity to move the motion. As you know, I was here a number of weeks ago to explain our proposals for tuition fees in the academic year 2006-07. We propose to increase the annual tuition fee for new entrants to full-time degree courses and initial teacher training courses from just under £1,200 to £1,700 and to introduce a separate higher fee of £2,700 for entrants to full-time medical degree courses.

I will briefly repeat the thinking behind the proposals. From 2006-07, a new fee regime will begin to emerge in the rest of the United Kingdom with the introduction of variable fees, which will allow institutions to charge fees up to the cap of £3,000. As members know, we are committed to not introducing variable fees in Scotland and to providing full fee support for the majority of Scotland-domiciled students who are studying in Scotland. That position will remain intact on approval of the order.

However, Scottish higher education exists—indeed, I would argue that it excels—within a wider UK market, and our overriding interest in that regard must be in maintaining the ability of our higher education institutions to attract the best students from around the globe and from the other constituent parts of the UK while protecting the interests of Scottish students and ensuring that they are not disadvantaged. That is important. Scottish students are best served by a system that makes us competitive in attracting the best students within the UK and more generally and also ensures that Scotland-domiciled residents can take up places in Scottish institutions. Therefore, there must be equilibrium in cross-border student flows. We have no evidence that suitably qualified Scottish students are being denied access to or are unable to obtain places in Scottish higher education institutions but, obviously, the prospect of a fee gap opening up between Scottish higher education institutions and institutions elsewhere is a matter of concern to us, which is why we have made the proposals that we have made.

In crude terms, following the introduction of variable fees elsewhere in the UK, the cost of a degree in Scotland could be 40 per cent cheaper than that of a degree down south. As a result, there would be a temptation for students in the rest of the UK to make decisions on the basis of the respective costs involved in the separate systems. We would be failing the interests of Scotland-domiciled students if we failed to take action and they were displaced from our institutions as a consequence. On that basis alone, we have proposed to increase general tuition fees to £1,700. As I have said, we do not want to exclude from our institutions students from the rest of the UK—indeed, we welcome them. It is best for the institutions to have such students and studying here is good for the students themselves, but we must ensure that an equilibrium in cross-border student flows is maintained.

We have proposed medical fees of £2,700, which would be significantly higher than fees for other subjects. The simple reason for that proposal is that medical schools face a significantly different situation. In general, medical degrees, whether they are undertaken in Scotland or in medical schools elsewhere in the UK, last for five years, and any fee increase in the rest of the UK without a response by us in Scotland would automatically lead to deeper disparities in the costs of studying medicine than there would be in other areas of study. We know that medical courses in the rest of the UK are likely to attract the maximum fee of £3,000 per year and that the costs of provision are significant. The costs in Scotland fall on our national health service as well as on our higher education institutions. We also know that the ratio of applications to Scottish medical schools to places stands at around 10:1 and that more than 40 per cent of entrants to our medical schools come from the rest of the UK.

We want to preserve the opportunity for Scottish students to study medicine in Scottish institutions in order, among other ways, to maintain a future supply of graduates for the national health service in Scotland. Scottish students are two and a quarter times more likely than students from the rest of the UK to stay and practise in the NHS in Scotland for 10 years.

It is an issue of national importance. The order recognises that medical training goes beyond the realm simply of higher education and places it firmly within our policies for longer-term public health provision, to ensure that we are able to meet the targets of having more doctors and better public health provision more generally. Those are important factors, but I repeat that the order's overriding motivation is to protect the interests of Scottish students who want to enter Scottish institutions and to ensure that we maintain some equilibrium in the cross-border flow in the context of the changing fee regime south of the border. That is a matter that the committee and the Executive have been discussing for some years, and I think that these measured proposals fit the bill in that context.

I move,

The Deputy Convener: : Thank you, minister. Members now have the opportunity to ask questions of the minister and to speak on the matter.

Mr Stone: : I would like to probe you, minister, on the cross-border flows. I have three questions. First, is the measure designed to maintain cross-border flows at current levels? In other words, is it a preventive measure? Secondly, how do you intend to monitor the cross-border flow situation to show that the measure is adaptable—that it can be changed, approved or whatever—to meet changes in circumstances? Thirdly, how are you and your officials working to address additional issues—highlighted by Calman in his report—such as the five highers entrance requirement for courses and the reduction in the number of Scots who are applying to study medicine?

Allan Wilson: : The draft order is designed broadly to maintain equilibrium in the cross-border flow. It is not our intention unfairly or unnecessarily to penalise students from the rest of the UK who come to study here. Indeed, in terms of fee charges alone, there will still be an advantage to students from the rest of the UK in applying to study in Scotland. The draft order is designed to protect the interests of Scotland-domiciled students in accessing places in Scottish institutions. We will monitor the impacts of the draft order in so far as there is a direct correlation between the two things.

A variety of factors will affect an individual's choice of institution or course, including location. The most recent figures show that there was an increase—albeit at the margins—of 1.14 per cent in the number of applications received from the rest of the UK by Scottish institutions at a time when the number of applications overall was falling, both north and south of the border. That supports our contention that, if we left the situation alone, that figure would increase markedly as the incentive to move north was multiplied.

The turnaround in fee costs for medical students, for example, would be about £9,000. The committee considered that that would act as an incentive, and Mr Fraser said that we should consider the prospective as well as the retrospective effect of the policy. That is fundamentally correct. In general, we must act before issues arise.

Fees are clearly not the only issue to consider in relation to medical school applications. A board of medical education has been established and is involved with all the medical schools in considering the range of access issues, including the requirement for five highers at the first sitting, which is a matter of contention. The board will report to the Executive and the Scottish funding council on those issues. As with the measures in general, that board is a product of the Calman review.

The Deputy Convener: : Does Jamie Stone have any follow-up questions?

Mr Stone: : I may come back later, if I can reserve that right.

Murdo Fraser: : I draw attention to my entry in the register of members' interests, which refers to the fact that I am on the board of management of Dundee University Students Association, which may be relevant.

We have discussed the issue at some length previously, so I do not intend to rehearse all the arguments. I simply want to say that I oppose the draft order, although not because I oppose any measures that are designed to create a level playing field on fees between Scotland and England. I understand the situation that the Executive is in, which is not of its own making, and I acknowledge that the Executive is endeavouring to prevent Scottish students from being disadvantaged as a result of a large influx of students from south of the border. I appreciate that the Executive is required to take action to try to prevent such disadvantage. However, I have a concern about the additional fees that medical students will be charged under the order.

The Executive proposes to introduce increased fees for the academic year 2006-07, which will apply to students who arrive at university in September of this year, a few months from now. My concern is that the measure is at best premature, because the application process for places in the 2006-07 academic year closed a long time ago, in the autumn. I presume that most, if not all, places have been awarded. I cannot see a risk to Scottish students in the coming academic year and so cannot see the justification for introducing the measure for that year.

In a previous committee meeting, the minister and I debated the issue at some length; clearly, we did not have a meeting of minds on the issue. I do not see a risk to students who will commence their studies in the coming academic year and the minister was unable to convince me that such a risk exists. It would be premature to press ahead with the changes now. The most recent Universities and Colleges Admissions Service figures show a 6.5 per cent drop in applications from people in England to medical programmes in Scotland, whereas applications to the same courses from people within Scotland rose by 12 per cent. Therefore, the prospect of a gap emerging in tuition fee levels has not generated a sharp rise in applications from south of the border.

The Executive has not investigated properly possible measures that would be alternative or complementary to the rise in fees. Some such measures are mooted in the Cubie report and are supported by the National Union of Students, including that of providing incentives for medical graduates to remain in Scotland to practise. The Executive should have done a bit more to investigate those options. The Executive argues that the fact that the draft fees order has been in the pipeline has had the desired effect of deterring a huge influx of fee refugees but, frankly, there is not much empirical evidence of that. Further research must be carried out so that we can find out whether it is necessary to introduce the measure for the coming academic year. The provision in relation to medical students is at best premature. Accordingly, I will oppose the draft order.

Allan Wilson: : We have debated the subject at some length and it is fair to say that we have agreed to disagree. The only point that I will draw to Murdo Fraser's attention is the inconsistency in his argument. After our previous discussion, I read the debate on 17 March 2004 about the Scottish solutions report, in which Mr Fraser was correct to say that the Higher Education Act 2004 would not have an impact in Scotland only from 2006-07. He said:

"Academics and lecturers might already be looking at their prospects; they might be tempted to leave posts in Scotland"

to obtain a better pay rise elsewhere. He also said:

"Conversely, there might be increased pressure on places at Scottish universities as students seek to avoid paying top-up fees at English universities. All those things are starting to happen already, which is why the Executive must act quickly to allay the concerns of people in the sector".—[Official Report, 17 March 2004; c 6725.]

Of course, that is what we did. We consulted back then on the proposal, which has had the desired impact of better regulating cross-border flow. Even though the number of applications from the rest of the UK to Scottish institutions has increased modestly at a time when the number of applications north and south of the border is decreasing, our statement of intent back in July last year has had a major impact.

As I said to Jamie Stone, we will continue to monitor the situation—we do not intend to reduce overall the number of students from the rest of the UK who study in Scotland. We want to maintain that important cross-border flow, which is good for students and institutions. All that I am doing is what Murdo Fraser urged me to do all those years ago.

Murdo Fraser: : I am never disappointed to be proved wrong by events, if that turns out to be the case. Whether the Executive's statement of intent caused the drop in the figures is a matter for debate. The point that I was making was simply that there is no risk in delaying the measure for a year to see what the effect may be, given that places at Scottish medical colleges for the forthcoming academic year have all been awarded.

Allan Wilson: : You also made that comment during the previous discussion, and we checked the position. You quoted Universities Scotland to aid your proposition, but it wrote to us subsequently to say that it wanted the changes to be effected now and that it wanted no further delay, because it believes—as I do—that implementing the measure expeditiously is in everybody's interests, although we understand that that will place administrations and those who are involved in the process in difficulty in ensuring that the system is administered effectively. The measure should be implemented now. It was probably the cross-party consensus that emerged in 2004, which Murdo Fraser now seeks to break asunder, that influenced the figures over the piece.

Michael Matheson: : I am conscious that the issue has been debated extensively at previous committee meetings. The minister gave a full and detailed statement to the committee on 2 May and he has not really added anything to what he said then. I agree with him about the principle of ensuring a level playing field for Scotland-domiciled students to access places at Scottish higher education institutions, but as he said on 2 May and has repeated today, there is

"no evidence that … Scotland-domiciled students are … unable to obtain places at Scottish higher education institutions."—[Official Report, Enterprise and Culture Committee, 2 May 2006; c 3033-34.]

The shift in fees that the minister proposes should at least have a clear evidence base. As Murdo Fraser said, places for the academic year 2006-07 have already been offered to students. Universities Scotland discussed the pragmatic proposal of deferring the change for another year in order to see whether evidence shows that it is required. On the basis of what I have said, I will not support the motion.

The Deputy Convener: : Does the minister want to comment?

Allan Wilson: : What distinguishes Michael Matheson and his colleagues from us is that the Opposition has the luxury of being able to say that difficult and perhaps unpopular decisions ought to be deferred or delayed for whatever reason. In Government, it is necessary to confront difficult situations, act before more difficult situations emerge and take steps to ameliorate the impact.

It is logical to assume that if a £9,000 differential in the fee regimes for medical students north of the border and those south of the border were to emerge, that would lead to an influx of applicants from south of the border who were as well qualified as students from north of the border. Given that there is already a 10:1 surplus of applicants over places and that 40 per cent of applicants currently come from the rest of the UK, it does not take a genius to work out that Scotland-domiciled students would be under even more pressure in their attempts to access a place in a Scottish medical school. That would, in turn, place our national health service at a disadvantage in years to come. That is what we are seeking to avoid and justifies the measure's introduction.

Mark Ballard: : This is obviously the first time that I have participated in this debate at a meeting of the Enterprise and Culture Committee. I apologise for coming to the matter as a newbie.

I was surprised by the unanimity of the concerns that have been expressed about the measure in the evidence from different bodies. My personal position is that I am against variations in fees, whether by university, by course or by country of origin, which is effectively what is being proposed in this case. I am concerned that the draft order will introduce a variation in fees.

I have listened to the minister's evidence. As I came to university in Scotland from the English and Welsh system, despite the fact that it was significantly more expensive for me to study in here than it would have been for me to study in England or Wales, I am not sure that there is a precise link between the cost—whether in relation to fees or anything else—of an education in Scotland and cross-border flows. As Michael Matheson and others have pointed out, there is no evidence that Scottish students are being crowded out, so it seems precipitate to assume without any evidence that variations in price will automatically lead to such crowding out in the future.

I share the concerns raised by Murdo Fraser about the timing of the measure. I am interested to know what evidence the minister has that the fee variation that we are voting on in June 2006 will act as a deterrent for students who will potentially come to Scotland in 2006-07. Applications will already have been put in and places will already have been offered at medical schools for 2006-07. How will voting for an increase now affect students who have already been offered places at medical schools in Scotland? It seems that the minister has not explained that.

The evidence from the Student Awards Agency for Scotland refers to the complexity of the change and the difficulties of timing it in relation to the application process. Given that the matter is so complicated and technical, why was it not possible to wait for more evidence to come in and to give the SAAS and the Scottish funding council more time by bringing the measure in not in 2006 but in 2007?

What consideration was given to ways other than a fee variation of increasing the retention of medical graduates in Scotland?

Allan Wilson: : I answered Mark Ballard's final question directly in my response to Jamie Stone's original question about the outcome of the Calman report. As I said, a range of measures were considered by the expert committee that advised us and the funding council.

The measure is not precipitate. Although Mark Ballard may have come relatively late to the debate, the issue has been discussed by the committee, as I pointed out to Murdo Fraser, since 2004 and we expressed our intent way back in summer 2005. Indeed, higher education institutions in Scotland advertised the courses to which Mark Ballard referred with the proviso that they were potentially liable to subsequent fee variation. That has, I believe, had the desired impact of better regulating cross-border flows.

I repeat that we have the evidence. The number of cross-border applications has increased at a time when the number of applications north and south of the border overall has decreased. In part, that is due to the fact that Scotland already has a preferential fee regime in situ.

As I said in response to Jamie Stone's initial question, I entirely accept that fees and student support regimes are only one factor among many others in the equation. If Mark Ballard does not, as he claims, support variable fees, he had better support the draft order because, if it is not approved, we will have a completely unregulated fee regime under which institutions would be free to set whatever fees they wished. That would be the consequence of voting against the draft order. Mark Ballard and any other member who is considering voting against the draft order should be aware that, if they do not believe in a variable fee regime, they should most certainly support the draft order.

Mark Ballard: : Is it the Scottish Executive's position that, if the committee rejects the draft order, the Executive will propose a free-market variable fees scheme instead? That seems to go far beyond any Scottish Executive plans that I have heard before.

Evidence from the NUS, Edinburgh University Students Association and others shows that it is more expensive to study in Scotland than elsewhere in the rest of the United Kingdom, yet the flow of students into Scotland has increased. Therefore, I do not see the logic in concluding that a clear link exists between the costs of studying and cross-border flows.

Allan Wilson: : I fundamentally disagree with both those points. The de facto position—it is not what we propose—would be a direct consequence of members rejecting the draft order. The fee process in the draft order was voted for by the Parliament—if not by Mark Ballard—when it passed the Further and Higher Education (Scotland) Bill. If the draft order is not approved, we will have an unregulated fee regime for Scottish higher education institutions. I repeat that, if members are against variable fees, they should support the draft order. Otherwise, there will be no prospective cap on what institutions can charge and there will be no bursary support. I would think twice about voting against the draft order.

Regarding the evidence from the student organisations to which Mark Ballard referred, I have said that I accept that fees are not the only factor that influences students from the rest of the UK when they are deciding whether to come to study in Scotland. The reputation of our higher education institutions and the quality of education are also factors in our success in attracting such students—long may that continue—despite the fact that, for some of those students, living costs and other factors might mean that they end up spending more on their education than they would have done down south. A difference of £9,000 per annum in the fee regime for medical students would have an influence on such decisions. Even if £1,500 was taken off that, we would still have a difference of £7,500 in the fee regime.

Likewise, the NUS figures show that there would be a £5,400 turnaround in costs in favour of students from the rest of the UK who attend Scottish institutions. I and the Executive believe that those figures would have an impact and I hope that the committee will confirm that. We are not willing to take that risk with either the future supply of doctors to our national health service or the opportunities for Scotland-domiciled students on all courses in Scottish institutions.

Richard Baker: : I will be brief because we have debated the matter at committee several times. As other members have said, the situation is not one of the Executive's making and the measure is needed to preserve equilibrium in the fees regime in relation to cross-border flows in the context of the partnership's commitment not to introduce top-up fees in Scotland.

The outcome of the measure is simply that it will not be far cheaper for students from England to study in Scotland rather than in England. Without the measure, students from England might well decide to study here on the basis of cost, as the minister said, rather than academic choice. The effect of that could be to squeeze out of medical courses Scottish students who could otherwise benefit from the bursaries regime, for which I campaigned long and hard in my days in student representation. That would be ludicrous and a negation of the Parliament's duty to our students.

There is a justified debate about the timing of the order, but I have not been persuaded by those who oppose it. Places have been offered to students from England but they have not been accepted yet and those students have more than one place that they can accept. Choices on the basis of cost could yet be made. We have conflicting evidence on the extent to which there is already a cross-border flow, but the minister has addressed both that and the cost issues that others have raised.

We should be clear about the position of Universities Scotland, which Mr Matheson mentioned. Universities Scotland wrote to the committee to say that it wants to make its position clear. Its letter of May 3 states:

"Universities Scotland sees no benefit in delaying the implementation of the proposals in the Order."

It wants clarity on the issue now. That is a sensible position and I support it. I will vote today to ensure that there are no further obstacles that prevent Scottish students from poorer backgrounds from furthering their studies in any subject area. I support the instrument.

Allan Wilson: : That is a sensible approach, which is in marked contrast to the previous approach, from Mark Ballard.

If we accept the data that underpin the NUS's argument, under the current system—with the quality of our institutions and the quality of teaching on offer—the extra cost of studying in Scotland relative to the cost in the rest of the UK stands at £3,190. The NUS accepts that, under the Executive's proposals, that gap will close to £990. According to NUS figures, were we to maintain Scotland's current fee regime, it would be £2,210 cheaper for a student from the rest of the UK to study in Scotland rather than at an institution in the rest of the UK. The turnaround in the figures is £5,400. That would be a substantial benefit and I think that it would lead to an increase in the number of students from the rest of the UK who come to study in Scotland on the basis of cost.

I repeat that, for medical students, the gap is about £9,000. Even if fees for medical courses were held at £1,700, the cost of studying medicine in Scotland would be £6,500 less than it is elsewhere in the UK. I maintain that that would significantly increase the pressure on places at Scottish medical schools, which would reduce opportunities for Scotland-domiciled students. I—and we, collectively—are here to represent Scotland-domiciled students in this context. Without the order, students from all backgrounds would be adversely affected.

The Deputy Convener: : A number of questions have been asked about delaying things until next year. In a couple of sentences, will you say why you believe that that would be bad for students and for universities?

Allan Wilson: : As I have said in response to other questions, as Richard Baker and others have confirmed and as Universities Scotland has confirmed in writing, there should not be any delay. A delay would send out to potential applicants from outside Scotland all the wrong signals about the fee regime, and we would inevitably have to address the problem again next year. In the interim, there would be an unregulated fee regime north of the border, in which institutions could charge whatever they wanted to.

The Deputy Convener: : I have already given an opportunity to members who indicated that they wanted to speak; I now invite the members who have not yet asked a question to do so if they wish to. Two members have indicated that they want to come back in.

Mr Stone: : Having listened to the debate, I want to make two points that I think are important. I should perhaps declare an interest: I have a son and his twin sister, one of them at Edinburgh completing third year and one of them at St Andrews completing third year.

We should not make any apology for not having fees of any form for our constituents who are attending Scottish higher education institutions; in fact, we should be proud of that. It allows some of the poorest folk to realise their potential. We should make no apology for protecting places for young Scots with their futures ahead of them.

We have heard arguments about waiting for evidence. I have no doubt that the minister is right and that the £9,000 is staring us in the face. I see students in the public seats shaking their heads, but I can tell you that my children would strongly disagree with what is being said. Is it morally right that we should wait until we have the evidence? During the delay, five, six, 10 or 20 young people would not get places because we were waiting for evidence. That is pretty chilly and I do not agree with it. For that reason if no other, I will be voting for the instrument.

Michael Matheson: : Minister, you said that Universities Scotland did not want a delay. In evidence to the committee on 2 May, you said:

"Universities Scotland argues for a year's delay on the ground that there is a need for more evidence and more time to introduce such complex changes."—[Official Report, Enterprise and Culture Committee, 2 May 2006; c 3037.]

Are you now saying that, when you gave evidence, that was not really Universities Scotland's position, or are you saying that it has since changed its position?

Allan Wilson: : The point was picked up by Richard Baker in the debate. Since the debate on 2 May, the director of Universities Scotland, David Caldwell, has written to the committee to state his support for the introduction of fee changes in the current year. In the process, he emphasised to committee members that Universities Scotland saw no benefit in delaying the implementation of the proposals in the order. That was in a letter from Universities Scotland to the committee—in response, I think, to comments made by Murdo Fraser.

Michael Matheson: : Are you saying that Universities Scotland has changed its position?

Allan Wilson: : I am not here to speak on behalf of Universities Scotland.

Michael Matheson: : Well, you referred to Universities Scotland in your previous evidence. You clearly now believe that it has changed its position.

Allan Wilson: : I am saying that it wrote to you on 2 May. If Universities Scotland wants to clarify its position, that is a matter for Universities Scotland—I am not here to represent it.

The Deputy Convener: : The fact is that Universities Scotland clarified its position to the committee. It wrote to every member.

Mark Ballard: : I find the minister's argument that an unregulated fee regime will stare us in the face if we do not pass the order to be a red herring, at best. If, in its wisdom, the committee decided to reject the order, I hope that the Executive would come forward with an order that was acceptable to the committee.

If the committee agrees to the order, people living in my region, Lothians, studying at the University of Edinburgh will in future have to pay additional variable fees because they come from England, Wales or Northern Ireland. No student in Scotland should have to pay additional variable fees. This is the thin end of the wedge, which is why I will oppose the order. I hope that other committee members oppose it too and I look forward to the Executive introducing a motion on a new order.

Murdo Fraser: : I have listened to the minister's argument and his position seems to be that the Executive signalling more than a year ago its intent to introduce the measure acted as a deterrent to English students applying for medical places at Scottish universities. How was that communicated to students from England applying to Scottish universities? If we take the example of Edinburgh university, given that the new rector is sitting opposite, was it the case that the section on medicine in the university's prospectus said that students applying from England and Wales faced the possibility of increased fees?

Allan Wilson: : As I have said, the fact that the fee structure was under review and that higher fee levels could apply was advertised in the context of the courses when they were introduced. Within Scotland and without, there was widespread public dissemination of the discussions—not least in this committee—on the impact that the change in the English and Welsh fee regime would have on the situation in Scotland. Mr Fraser contributed extensively to that debate and I have quoted from his comments. Jim Wallace, my current boss's predecessor, conducted a consultation and announced our intent way back in July.

All those factors have impacted on regulating cross-border flow. If things had not happened in the way in which they did, given the likelihood of the change in the regime having the beneficial impact on students from the rest of the United Kingdom that I have outlined, we would have seen a far greater increase in cross-border applications than has been the case—although there has been an increase in cross-border applications at a time when applications as a whole have decreased. We do not know what is happening in medical schools yet because the figures have not been produced.

The Deputy Convener: : Murdo Fraser has indicated that he wants to come back in. Murdo, is there any answer that is likely to change your mind on this?

Murdo Fraser: : That remains to be seen. I may be swept away by the quality of the minister's response.

I want to press this point. While I am sure that the debates of the committee and the Parliament—and not least my own utterances—are widely read throughout the UK, is the minister really trying to tell me that a sixth-form pupil in Surrey will have read a Scottish newspaper or the Official Report and relied upon that as evidence for determining whether they should apply to a Scottish university to take up a medical place? What direct communication was there with those considering applying to a Scottish university to study medicine about the Executive's intent to introduce the order?

Allan Wilson: : Are you suggesting that sixth-form students in the rest of the UK who are thinking of studying in Scotland would not take steps to identify the likely cost of that study over the piece?

Murdo Fraser: : So the answer to my question is none.

Allan Wilson: : No. There is guidance from the Students Awards Agency for Scotland and the Department for Education and Skills, as well as all the public dissemination to which I referred and the member's own warning that things were starting to happen. He should give young people more credit for their ability to source relevant information and to research such major decisions in their lives. The vast majority of students go into some depth on the question of where to study after they leave school, particularly if it might involve being uprooted from their home and family.

The Deputy Convener: : We have given the matter a fairly good airing. I will give the minister the opportunity to sum up later if he so wishes. Do members have any further comments? I would also appreciate it if they would give me an indication of whether they support the motion to approve the draft order.

Karen Gillon: : I have no further questions, and support the motion.

Murdo Fraser: : I could say a lot more on the subject, none of which will convince other members who have not already made up their minds. I intend to vote against the motion.

Margaret Jamieson: : I have nothing further to contribute and will vote in favour of the motion.

Michael Matheson: : I will not support the motion.

The Deputy Convener: : I have no further questions. It is time for us to make a decision, and I will certainly support the motion.

Richard Baker: : I support the motion.

Mark Ballard: : I see no evidence that crowding out happens at the moment and no truth in the claim that it will happen in the future. I do not want variable fees to be introduced for any student in Scotland and will oppose the motion.

Mr Stone: : We have spent a considerable amount of time examining the matter and have heard detailed evidence and sincerely held opinions from witnesses such as our young guests this afternoon. I have listened to and thought about the evidence and will vote in favour of the motion for the reasons that I have already stated.

The Deputy Convener: : Minister, do you wish to make any concluding remarks?

Allan Wilson: : No.

The Deputy Convener: : In that case, the question is, that the Enterprise and Culture Committee recommends that the draft Student Fees (Specification) (Scotland) Order 2006 be approved. Are we agreed?

Members: : No.

The Deputy Convener: : There will be a division.

: For

Richard Baker (North East Scotland) (Lab)
Karen Gillon (Clydesdale) (Lab)
Margaret Jamieson (Kilmarnock and Loudoun) (Lab)
Christine May (Central Fife) (Lab)
Mr Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)


Mark Ballard (Lothians) (Green)
Murdo Fraser (Mid Scotland and Fife) (Con)
Michael Matheson (Central Scotland) (SNP)

The Deputy Convener: : The result of the division is: For 5, Against 3, Abstentions 0.

: Motion agreed to,

The Deputy Convener: : We will inform Parliament of our decision.

I thank the minister for giving evidence on this occasion and on others; his official; those who have turned up to listen to the debate; and committee members.

: Meeting suspended.

: On resuming—

Tourist Boards (Scotland) Bill: Stage 1

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The Deputy Convener: : I reconvene the meeting. Item 4 is consideration of the draft stage 1 report on the Tourist Boards (Scotland) Bill. Unusually for this committee, the draft report is a public paper and I should perhaps check that committee members are content for the discussion to take place in public. Are members content?

Members indicated agreement.

The Deputy Convener: : I understand that Murdo Fraser wants to make a few comments on the report.

Murdo Fraser: : Indeed. This bill does three things: it abolishes the network tourist boards; changes the name of the national tourist board; and increases the size limit of the VisitScotland board. I have no particular concerns about the third of those aims, but I am concerned about the first two. The abolition of the network tourist boards simply consolidates in law a change in practice that was introduced last year. Members will recall that, when we took evidence on the issue last year, the sector was rather unhappy about how the change had been handled. I am still unconvinced by—and unhappy about—that change. Anecdotal soundings that I have taken from people in the industry show that they are unhappy that area tourist boards were replaced by the new, centralised structure. Indeed, two weeks ago, when I pressed the minister to cite evidence from the industry that the changes have been beneficial, she was unable to do so.

As for the name change, I regard that element of the bill to be utterly pointless. A legal body should bear a name that at least describes what it does. For example, the Scottish Tourist Board is a perfectly sensible way of describing a body that acts as Scotland's tourist board. Giving it a trendy name of the moment such as VisitScotland might be all very well as a marketing tool; however, if that is the body's legal name, people will simply wonder what it is. Moreover, VisitScotland might well be a trendy marketing name today, but I dare say that it will be out of date in 10 years' time. The Scottish Tourist Board could endure for ever.

When I asked officials about that, they said that it did not matter, because the legal name is not terribly relevant and, in any case, the organisation can call itself anything it likes. If in 10 years' time it decides that VisitScotland is no longer a trendy name of the moment, it can change its marketing name to something else without having to change the legal name. Of course, that raises the question why the legal name needs to be changed at all. Surely it would be more sensible for the organisation's legal name to reflect what it does instead of being called some trendy name that has been dreamed up by marketing experts—no doubt at considerable public expense—simply because it is fashionable.

In summary, I support one of the bill's three aims and feel uncomfortable about the other two.

The Deputy Convener: : Thank you. I will ask you later how you want to proceed with your objections. Do other members have any comments on the draft report?

Mark Ballard: : Again, I come new to this issue. I have to say that I share Murdo Fraser's concerns about changing the name of the Scottish Tourist Board to VisitScotland, partly because of the environmental impact of the number of letterheads that will have to be pulped, brass plates that will have to be replaced and so on. Like Murdo, I see little point in introducing a bill that changes the legal name of an organisation from something understandable—such as the Scottish Tourist Board—to something like VisitScotland that requires an explanation.

The Deputy Convener: : Thank you. Again, I will ask you how you want to proceed on that after I have made my own comments.

Murdo Fraser says that he has anecdotal evidence that people are still unhappy about the change that has taken place. To some extent, I would concur that, of the people who were unhappy with the original change, those who were most vociferously opposed are still opposed; they did not support the change to begin with and they still do not support it. At least one of those people, however, has reported to me that business has never been better, so they would probably agree that the change has not adversely impacted on business. That seems to be the general consensus in the area for which I am elected; I have to confess that I have not been further abroad than that. The evidence that the change is at worst neutral and is at least doing some good is as strong as the counter-evidence.

At its simplest, changing the name of the legal entity—which must be done by these means; if the legal name of the organisation is to be changed, it must be reflected in the legislation—will, at the very least, avoid the pointless and time-consuming discussions that I recall happening some time ago in a similar organisation whose official name was different from its marketing name. We had endless discussions about whether the minutes should refer to the official name or the marketing name. The change that we are discussing will avoid that, at least.

The change also reflects practice across the global tourism industry. For the past six or seven years, tourist boards have all been called "visit" followed by the name of the country. Certainly that is the standard format for tourist boards on the web, so the change makes some sense—to me anyway.

I think that we are reasonably content with the increase in the size limit of the board.

From all that, members can see that I am in favour of what is in the report. Do Murdo Fraser and Mark Ballard want the report to reflect their dissent? I am not sure how we could amend it to take account of your detailed concerns, Murdo.

Murdo Fraser: : It is a very brief report and I see no point in producing a minority report; that seems unnecessary in the scale of things. I would be happy for it to be noted in paragraph 14 and the conclusion of the report that I dissented from the general view of the committee—assuming that that is the general view.

The Deputy Convener: : Is the committee content with that?

Mark Ballard: : I would like to join in that dissent.

Richard Baker: : I generally support the report. With great respect to Murdo Fraser, I note that he used the word "trendy" with a level of disdain that only a Conservative could muster. Perhaps in the future we should reflect on whether the name of the organisation should be face-of-the-bill stuff. However, I take Christine May's point that if it can help to avoid needless argument, it would be well worth while. It is hard to deduce from the current level of growth in tourism whether the changes have been beneficial.

The Deputy Convener: : So the final report that we produce will indicate that two members dissented from the views expressed. Is that agreed?

Members indicated agreement.

The Deputy Convener: : We now move to the final item on the agenda, on the Scottish Enterprise budget and restructuring plans, which is to be taken in private. I thank members of the public for their attendance. I also thank broadcasting and the official report.

: Meeting continued in private until 15:44.