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Item 2 is an update from Scottish Enterprise. It is primarily to welcome to the committee the two new postholders: Crawford Gillies, chair of Scottish Enterprise, and Lena Wilson, who has recently taken over as chief executive. I welcome you both to your first appearance at the committee in your current posts and invite you to make opening comments before we go to questions.
Let me say at the outset how pleased we are to be here this afternoon. It was unfortunate that, when you met in October, Lena Wilson and I had other long-standing engagements and were not able to attend. We are delighted to be here today.
Good afternoon convener, committee members and clerks. Like Crawford Gillies, I am absolutely delighted to have the opportunity to be here today so early in my post—it is week 4—and to begin what I hope will be a productive relationship with the committee. I regret that I was unable to be here the previous time that the committee took evidence from Scottish Enterprise, but I had a long-standing commitment to a meeting with some inward investors and the First Minister in Ayrshire.
Thank you. I will start with questions about the overall budget available to Scottish Enterprise. You said in your third submission to the committee that the real-terms decrease in Scottish Enterprise's budget is slightly less than that previously quoted but still amounts to 16 per cent of your budget after taking account of various changes and stripping out the things that you no longer deal with. Given that we are currently in recession and likely to remain in recession or slow growth over the next year or so, do you really think that Scottish Enterprise has done enough to protect its resources to help protect Scotland's economy?
There is no doubt that anyone in our position would like a bigger budget than we have—there is no surprise there. That said, our big challenge is to get the maximum that we can from the budget that we have. Lena Wilson, our board and I are absolutely determined to do that. We believe that with the budget we have we can continue to deliver a significant amount, particularly when we work in partnership with others.
Have you made representations to the Minister for Enterprise, Energy and Tourism that you could do more with a bigger budget? If so, what form has any such representation taken and what additional things have you suggested you could do if you had more money?
Perhaps I should take the committee through our budget plan, which I think of as having four stages. Stage 1 is our business plan, which was published in March and laid out a proposed three-year spending plan. Over the subsequent seven or eight months, we have been engaged in dialogue with Government ministers and officials; for example, every month Scottish Enterprise's chief executive and I meet the economy director-general to discuss budget issues, priorities and so on. That is the second stage.
We also have a track record of being able to utilise additional moneys that become available through the year, and we always have a list of longer-term projects on the stocks that can be accelerated if such funding or any other opportunities for Scotland come up. For example, we have always been able to bring other inward investment opportunities to Government and other partners throughout the year.
With regard to the four stages of your budget process, is Scottish Enterprise happy or unhappy with what happens between stages 2 and 3?
I do not want to repeat myself, but as I have said—and as anyone who runs an organisation such as ours will tell you—we would always like more money because we feel that we could do more with it. At the same time, however, we recognise the budget pressures that the Government and the whole public sector are under and after having this dialogue with the Government we are focusing very much on maximising the impact of what we have been allocated.
I am interested in your comment that innovation and commercialisation are important for growing the economy, given that those are the very budgets that have taken the biggest hits. How can you justify such a move at this stage in Scotland's economic development?
We have been very much concentrating on company-to-company interventions. Indeed, many such interventions this year have taken place through our Scottish manufacturing advisory service, which has helped companies with issues such as liquidity, customer retention and simply staying afloat and has allowed organisations to become much more efficient.
To take an example that affects the whole of Scotland, where do companies and longer-term projects that are involved in renewable energy fit into that picture?
Renewable energy comes into one of three areas. First, it may come into the internationalisation side. For example, when Skykon acquired the Vestas facility in Campbeltown, it received money not only from the Scottish Enterprise budget but from the local authority budget as well as a large chunk of regional selective assistance. Secondly, it may come into our infrastructure development. I am thinking of, for example, Fife energy park and the work that is being done around Dundee. Much of our accelerated capital expenditure has been devoted to renewable energy. Thirdly, you may find some of it in the commercialisation work that is bringing the intermediary technology institutes into Scottish Enterprise. One of the ITIs is focused wholly on energy, with a big focus on renewable energy. We are also working closely with the academic base on that. Renewable energy cuts through our budget.
Renewable energy must be a sector of the economy that can help us out of the recession if it is invested in now. The development of companies that can handle that work is both a short-term and medium-term project. Are you able to give that as big a shot as you would like, or is that limited in any way by the constraints within which you are working just now?
I refer back to a board strategy session that we had about four weeks ago, just a couple of days before Lena Wilson took over. That was the first step in what I described as stage 4 of our budget process. It was a high-level discussion over 24 hours with our entire board, not to get into the nitty-gritty of the numbers—as we say, we will do that in the future—but to talk directionally about where we should be focusing more resources and where we see the biggest opportunity for Scotland. The number 1 take-away from that session was the big opportunity that we have in renewables, which we need to get behind rapidly. Lena Wilson and her team have been asked to ensure that the budget, which we will review, absolutely reflects that priority.
Okay. Thanks for that.
Marilyn Livingstone has another committee commitment at 1 o'clock, so I invite her to ask her questions now.
You have talked about how partnership working will help you to get best value for your pound. Especially in the regions, are enough staff being deployed to take forward that partnership working?
I have not come across any evidence that we do not have enough people on the ground to develop the right sort of partnerships, which will often be with local authorities. I have talked to local authorities—I was down in Inverclyde yesterday—and I have not heard that. The local authorities are saying that they have a high regard for the expertise that exists in Scottish Enterprise. In the past, they may have looked to Scottish Enterprise for both expertise and cash. Although there is less cash available now, they still want the expertise on the property and infrastructure side to work with their officials.
That has not been my experience in Fife. When we lost Scottish Enterprise Fife, we lost a lot of that expertise. I have attended meetings that would previously have been attended by a representative of Scottish Enterprise Fife but at which no such representative has been present. In some areas, you will find that what you describe is not the case. That is a concern, as I agree with you that partnership working, especially with other public sector bodies, is important. What you have described has certainly not been my experience.
You make a good point. We have nominated a senior member of Scottish Enterprise staff to partner, befriend or buddy—whatever you would like to call it—every local authority. The difference that you are seeing is that that person is no longer a member of Scottish Enterprise Fife staff; they are a member of Scottish Enterprise staff.
Okay. I make my point. It is okay at that level but, across the board, in areas where it was working before there has definitely been a diminution. That is how it feels on the ground.
The co-operative development agency comes under the enterprise part of our budget, as it is about helping businesses to start up and grow. We see the co-operative development agency as supporting another useful model—it is a business model, like many other models. The agency has an excellent chief executive in Sarah Dees. She has a small team, but she leverages many other parts of Scottish Enterprise. The budget that you might see for the agency—I do not have the exact budget to hand right now—is the budget that we will use to run that service, but the agency will also bring in all the other experts in Scottish Enterprise. For example, if a co-operative business wanted to focus on innovation or internationalisation, it would have exactly the same access to those services that any other business would.
Could we have a note of the budget for the co-operative development agency and the comparisons with previous years? That would be really helpful.
Of course. I am happy to provide that information.
I have one final question. The reduction in spending on innovation has been presented as a tactical response. What conclusion has Scottish Enterprise reached about its most appropriate and effective role in supporting technology development and exploitation? What does that imply for the future strategy? That is quite a concern.
We now work with a number of industry advisory boards. The technology advisory board, which is a group of Scotland's leading technology entrepreneurs and senior business leaders, launched its strategy document about three weeks ago. The board has guided us on technology. Technology applies to many of our sectors and we have an important role in enabling technologies, not only to attract talent and inward investment but to encourage company growth.
I will start with a point that was made in response to Rob Gibson's question about renewable energy. I think that Crawford Gillies said that the renewable energy sector is recognised as presenting the biggest opportunity. Do you recognise that the oil and gas sector is of exceptional significance to the Scottish economy at present? Where does it fit into your view of the energy sector going forward?
I will start to answer that and Lena Wilson will give some examples. I absolutely recognise the importance of the oil and gas sector. Just two weeks ago, I met representatives of the sector in Aberdeen and looked at some of the innovations that are happening on the subsea side with the new research institute and so on. There is a significant opportunity there. Leaving aside ensuring that we get the maximum from exploiting the North Sea, the opportunity that is presented is much more on the international side; it relates to how we develop the supply chain such that the industry in Scotland operates around the globe. That is different from the challenge on the renewables side.
One of our biggest investments in oil and gas is in the offshore technology conference in Houston. We take hundreds of companies out to Houston every year and run a series of events on the development of the supply chain. We help a number of oil and gas companies with their internationalisation. The oil sands in Calgary in Canada are a market, as is Perth in Western Australia. We have been intensifying our support in that area and in the energy industry more widely—it is not just about renewables but about oil and gas, power systems, smart grid and the technology that supports that. The oil and gas sector is very important. Many hundreds of oil and gas companies are account managed.
Do you recognise that there is concern when you say that you want to park long-term innovation projects, because some of those potential projects are in the energy industries and are the key to the recovery from economic recession that the whole economy looks to those industries to help to achieve?
Perhaps I should clarify the point about parking projects. We are aiming to carry on with every project for which all the funding could be in place. Remember that Scottish Enterprise funding is about leveraging private sector investment. Where such investment is not forthcoming, certain projects might be pushed out for a year or two. I am confident that we have the balance right. We still see oil and gas as very important indeed. We are spending a lot of time looking for alternative funding models. We are looking to our local authority partners' prudential borrowing powers, for example, to see whether we can find even more innovative ways of funding beyond the normal routes.
You have presented figures to us on the balance between longer-term innovation or commercialisation on the one hand and property infrastructure investment on the other hand. Have you collectively made a conscious decision that property infrastructure investment is the correct priority in dealing with the impact of the recession, or is it simply a case of needs must, because there are opportunities there and you are finding it difficult to find private partners for the innovation stuff? It seems a curious response to recession to increase the budget for property investment at a time when investment opportunities in property seem less significant for the recovery of the economy than the innovation, skills and infrastructure that we need to go forward.
There is perhaps a combination of two or three things. We had the opportunity to accelerate capital expenditure, which is a way to get people into jobs and on to sites and a way to attract business and give businesses that are still growing the opportunity for premises. That is one aspect. It has the immediate effect of giving people jobs on the ground on construction sites.
Why is private funding not available to develop those technologies—the kind of things that ITI Energy and other ITIs have supported? Is that problem permanent or temporary? What is your role in getting going again the projects that you talk about pushing back because of a lack of private investment?
Several ITI projects are still going—they are a very important part of our portfolio. For example, exciting developments are happening in marine renewables and in smart-grid technology. We are still investing in that.
From what you say, I am concerned about whether you feel that you have struck the right balance between investing in technologies and investing in property assets.
We have a balance that reflects the market opportunity and the development of the sectors. The continuing investment in and exploitation of Scotland's technology capability remain a strong focus for Scottish Enterprise.
I will focus on the table in Scottish Enterprise's second submission, which compares the projected spend in 2009-10 with the potential projected spend in 2010-11. SE does not—obviously—have a huge amount of control over its total budget; it can seek to influence that, but the budget is decided for it. However, SE does control how to allocate what is given to it.
The explanation has a few aspects. Most of our company delivery is through account managers. We have a few hundred account managers who work with businesses all over Scotland. We made that delivery more efficient and brought even more of it in-house, so our account management costs fell by about 19 per cent, but the impacts increased by about 47 per cent. That was a saving on account management expenditure.
To summarise, the figure is less, but the implications on the ground are not substantial, partly because you are being more effective and efficient and partly because of a change in the marketing profile. You think that we should not be concerned about the end result.
We are working with more companies now than we were in the past. We are working with 6,000 companies, 2,000 of which we are working with in the intensive way that I described.
The research and development line was £6 million for 2009-10 in the initial submission, £16 million in the reset figures and £12 million in the business plan, and the projected spend for 2010-11 is £10 million. However, we have just heard that £4 million of that has come from the company start-ups and growth line. Does that mean that, if we take out the £4 million that comes from marketing, there has been a cut in funds for research and development?
Our research and development line is about how we support our staff development, marketing and communications, and policy and research. We share much more on the research and development side across the public sector alignment and we aim not to duplicate research and development. For example, the Scottish funding council has told us that it will use aspects of our research and development rather than duplicate it. We have made savings where we have shared resources with other public sector bodies.
There are also savings from the Government. In the past, there was duplication of policy effort between SE and the Government that we are now endeavouring to eliminate.
Again, although the cash sum is reduced, you are not concerned about the outcome, which you think will be the same if not better.
As I look at the split of that £10 million, the biggest chunk relates to marketing and communications, where we are upping our game with some of our programmes—we launched the now's the time to ask campaign last year and a new one on staff development, policy and research just a few weeks ago. Refocusing our resources towards customer-facing staff to the extent that we have has been the right thing to do.
The marketing and communications expenditure has not been to market Scottish Enterprise; it is to market initiatives, projects and programmes that companies can take advantage of and to make them aware of the offering. That accounts for the bulk of our marketing expenditure.
The other area that I want to ask about concerns customer-facing staff, support staff and related costs. The projected spend on customer-facing staff for 2009-10 was £46 million in the reset submission figures and £47 million in the business plan for 2009-10, and the projected spend for the next financial year is £44 million, which is a slight drop. At the same time, however, the projected spend on support staff for 2009-10 was £6 million in the reset submission figures and £12 million in the business plan, and the projected spend for 2010-11 is £17 million. It seems that there is a slight drop, of about 5 per cent, in spend on customer-facing staff, and quite a big increase in spend on support staff. Will you explain that?
First, I understand your question. Secondly, I apologise to the committee on this matter. I agree that it is confusing. Essentially, with regard to these figures—the £11 million in last year's submission to the committee, the £12 million in the business plan and the £17 million in this year's submission—there was an increase of £6 million as a result of an efficiency investment made between last year's submission and the business plan. Another efficiency investment of £6 million is going in this year, but that has been offset by a £6 million overestimate of the transfer to Skills Development Scotland. If we strip out the Skills Development Scotland confusion and the additional efficiency investment, we find that, year on year, top-line support costs are absolutely flat.
Probably.
Okay.
I know that your overall budget has gone down, but I note that the funding for customer-facing staff will drop slightly from £47 million in the published plan for this financial year to £44 million for the next financial year. Was that decrease forced on you, or is it an efficiency saving?
Through a severance programme, we have reduced the number of senior director and director positions in Scottish Enterprise by 35 per cent. We have not taken anyone away from customers; indeed, we have increased the number of account managers and international advisers and expanded SMAS. In short, we have grown all the aspects that help companies but, as I say, we have taken out a large layer of senior staff.
Although some of those senior staff were included in the category of customer-facing staff in the budget, they did not meet any customers.
They might have met customers, but they did not form the bulk of our delivery to customers. We have not cut back on any customer-facing delivery staff; in fact, we exempted those staff from our severance programme.
Thank you for coming this morning, Crawford. I want you to take us to the very highest level of your strategic thinking and guide us through your choices in next year's budget. Like Gavin Brown, I feel that the most helpful information that you have provided is the table of figures that you sent us on 6 November, and I would like to dwell on one or two of those numbers.
I think that, at the highest level, we are trying to focus on the long-term changes that need to happen in the Scottish economy while ensuring that we make a real impact in the short term. We are also trying to strike a balance in the areas that you highlighted.
If you are cutting those budgets by more than a third, which areas are you rewarding?
You can see the other areas where the money is going. Would it be easier to go into the individual subcategories that you are asking about?
No. I am simply asking why, at the highest level and in the space of a year, you have decided to cut by a third your enterprise, innovation and commercialisation lines. Most observers and businesspeople in Scotland would not find that consistent with the published position. I am trying to get at the board's strategic thinking on why shifts of that magnitude are appropriate for the 12 months beginning in April 2010. There is, as you said, a new regime. What economic thinking underlies the shifts at the highest level of more than a third in your three biggest lines?
For an organisation such as Scottish Enterprise, strategy comes down in large measure to resource prioritisation and allocation. We start with a certain amount, and the question is how we allocate that across the various opportunities. The board has not yet looked at the numbers, but will do so later this week. However, the view is that this is the budget that can best help us to recover from the recession in the short term and set us up for longer-term success.
Forgive me, but I am not clear about what the priorities are and why they are priorities. Let me take company start-ups and growth, which we have discussed. Last year, you were going to spend £44 million, and you thought that, by the end of the year, you had spent £27 million, perhaps because of the depth of the recession. However, it seems slightly strange to cut that figure even further. We heard that there was a 19 per cent efficiency saving and that marketing has been reallocated. However, over 12 months, you have a cut of 60 per cent. The 19 per cent figure does not explain why it seems strategically right to cut the budget by more than half. That will surprise people, and they will ask why you are doing that.
I understand. One of the things that we need to do is communicate properly the number of companies that we work with across Scotland. In round numbers, no one has the real data, but there are probably 10,000 companies in Scotland, leaving aside individuals and so on. We work, in one way or another, with 6,000 of those companies. We work intensively with 2,000, which are the account-managed companies to which Lena Wilson referred, and most intensively with a subset of those 2,000.
You understand my point. Why is it that a 60 per cent cut seems the right thing to do for next year, given the point that we are at in the recession? I do not doubt that there might be more companies, and that you will spend a lot less on supporting more of them. However, you could support a much larger number of companies if you had maintained the budget. I just want to understand the strategic thinking involved.
Our budget—or forecast, which is what it is at the moment—in the business plan absolutely reflects what we understand to be current demand out there. We are not constrained by budget in supporting companies; that is not an issue. In fact, we have started to go out and prospect for the very first time. We went to the market and said "Have you ever even heard of Scottish Enterprise? Do you have ambition? Do you have technology? Do you want to grow your business?" That is how we got some companies through the door that had never come through before. We are therefore not constrained by budget in helping companies. In fact, our current budgetary allocation reflects the demand that we have.
But if the programme is demand led, that also sends the interesting message that you anticipate a 25 per cent reduction in demand next year, when we are meant to be starting to recover.
Definitely not. In fact, we are out there encouraging demand. As Crawford Gillies said, we are working with around 6,000 companies. There is a common misconception that Scottish Enterprise works with 2,000 companies. Those are the companies that we work with most intensively, but we work with another 4,000 through internationalisation support and the manufacturing advisory service. We will not cut services or the number of companies that we work with—that number will absolutely be protected; in fact, we are seeking to increase it. That means not simply taking in more companies—we have an excellent business gateway service that is now doing that—but growing our pipeline for companies that are going to grow. We are still lacking in companies of scale in Scotland, so we want to work with more companies.
I have two final points to make on the overall profile of Scottish Enterprise's spend. I say to Crawford Gillies, the new chairman, that the reclassification of marketing and communications expenditure under research and development would give any chairman of a public organisation concern about management accounting practices. There is no clear line between spend and strategic priorities if spend is constantly reclassified. Moreover, it is extraordinary that marketing of any description should be described as research and development. That does not help anybody—the board or any observer—to have a clear sight of the line between the accounts and the organisation's objectives. I say that not as someone who is hostile, but as someone who is favourably disposed towards the organisation. If there is no clearly visible line between the strategy and the management accounts on a year-by-year basis, how can we have any sensible discussion?
I am absolutely keen to get more consistency year on year. I hope that we are turning a corner. Because we have been through so many different restructurings of one type or another, with things coming in and out over the past few years, there has been some confusion. I hope that, going forward, we will have far more stability. That will help us as well as outsiders such as yourselves.
Can I supplement the answer to the R and D question? Wendy Alexander is absolutely right that the reclassification of marketing and communications is perhaps not helpful. As I said, it is not about marketing Scottish Enterprise; it is about using initiatives to attract business, and a huge proportion of that is the research that we undertake to allow us to understand the market in order that we can attract companies. A big element of that spend is, indeed, what I would regard as true research.
I make one final observation. As you will know, we are going to have one more in-depth look at whether the changes that have been made over recent years have worked. In that context, we asked the parliamentary research service to examine the trend in the organisation's spend over a decade, and it believed in good faith that, since 2007, on a like-for-like basis, there has been a decline of 33 per cent in real terms. That is obviously highly significant given the fact that, over those two years, the overall Scottish budget was growing. In fairness, Scottish Enterprise says in one of its written submissions that £79 million came in one-off additions to the budget in 2007-08 and that the real like-for-like decline has been of the order of 17 per cent.
I will say two things in response. First, we will do anything that we can to help you to get clarity around the numbers. Secondly, there is a change in Scottish Enterprise that we need to recognise and do a better job in communicating. Scottish Enterprise is moving away from being an organisation that people on the outside—and, frankly, within the organisation—thought of as one that simply wrote big cheques to being an organisation that has influence across the Scottish economy without necessarily writing big cheques. As we make that transition, we can have a greater impact on the Scottish economy but with less resource.
Before I bring in Chris Harvie, I will follow up on Wendy Alexander's questions by approaching the issues from a slightly different direction. She asked about the reduction in the enterprise, innovation and commercialisation budgets, but the counter to that is that you have increased the investment—or infrastructure—budget.
I think that you are referring to the investment that we have made in supporting Scotland's key sectors, such as the investment that we continue to make in Edinburgh in the BioQuarter around life sciences and the investment that I mentioned in the renewables space. That is infrastructure investment, which is targeted at opportunities to grow Scotland's key sectors and attract inward investment into Scotland, and it is important that we maintain it.
The purpose of advanced capital is to spend money a year before you would have been able to spend it otherwise. You appear to have spent it a year ahead, but you have maintained the budget for next year as well, so you are willing to spend the same amount of money again, and you have taken that money from elsewhere in the budget. Is that correct?
There is a slight increase. If you take—
It is a significant increase.
If you take the £75 million from last year, the acceleration of the £30 million should lead to a £60 million reduction in the following year. You would expect—everything being equal—the figure to go from £75 million to £15 million. We are proposing that it goes from £15 million to £27 million, so in that respect there is an additional £12 million. That is driven by the quality of the projects that are coming forward, and it recognises the short-term impact that capital expenditure can have on the economy.
It is focused exclusively on our key sectors.
The £75 million includes an extra £17 million that you added, so it is not like for like.
An additional £17 million was added between the production of the original submission and the finalising of the budget.
So if we compare your starting point under the "Committee Submission October 2008" heading and the number under "Potential Projected Spend Scenario", we can see that you have actually increased the budget by £27 million, not by £12 million.
With regard to last year's submission, it is unfortunate that our interaction with the committee comes at a time when the budget is, to be frank, very much a straw man. The number to which you refer before the £17 million was added falls into that category.
But the infrastructure investment is—
I am trying to make the point that, as part of the strategic structural change that you have made as an organisation, you have taken the strategic decision to concentrate more on infrastructure investment than on the revenue support that you provided in the past.
Yes, indeed, but that is a key way to unlock private sector investment. Our ratio is 1:2, or 1:2.5, so for every pound that we spend on infrastructure, we get very high leverage. That unlocks greater investment in Scotland, helps the supply chain and gives Scottish subcontractors business—there are much wider multiplier effects from that investment than simply the effect on our expenditure.
I will make two points that pertain to internationalisation—for which, I noticed, the budget seems more or less level. That work will involve co-operation with other regions. One of my points is positive and one is rather negative. The positive point is something that I notch up to my own initiatives in the area: the links that we, in my own office, have managed to make with the minister for research in Baden-Württemberg in Germany, which is now the biggest industrial region on the continent, with an output that is roughly equivalent to that of Sweden. That co-operation has been achieved largely through one of my assistants, an economics graduate who has applied himself to the task. It will soon reach the stage when we will come to Scottish Enterprise to seek your involvement.
I am not sure that Scottish Enterprise can resolve that, but we can take that up with the funding council and ensure that it is aware of that opportunity.
Another issue, which is ultimately rather tragic, is the closure of the headquarters of Chambers Harrap Publishers in Edinburgh. Some 24 redundancies have just been announced by Hachette in France—it is an example of foreign direct investment gone wrong, in a way. The work that Chambers does is a marvellous example of an area that could have been developed in terms of systematised interchange of information, which is one of the crucial aspects of what we are talking about. Instead, we are going to lose the Chambers editorial office. Surely the securing of that office should be a priority for a body such as Scottish Enterprise.
The global recession has seen the closure of foreign investors in Scotland and in countries throughout the world. We have had a great number of success stories that have involved our turning around what would have been closures and moving some companies up the value chain. However, a greater part of the resource of Scottish Enterprise and SDI has been devoted to trying to prevent closures or helping workforces to access new opportunities.
The budget lines for the urban regeneration companies, which are important to Scottish Enterprise, have remained the same, according to the 6 November figures. What behind-the-scenes alterations have been made to the URCs over the past 12 months or so due to the recession?
I will kick off and then hand over to Lena. What I say will be largely influenced by recent visits to Riverside Inverclyde, where I was yesterday, and the Clyde Gateway.
In my previous role with SDI, I talked to the urban regeneration companies. I met the chief executive of the Clyde Gateway URC to help it develop its product for the inward investment market—to give it a sense of the inquiries that we get and of the kind of facilities that inward investors are looking for, and to ensure that it does the right thing for the market. We have really upped the advice that we are giving and consider the URCs' work to be extremely important not only for local communities but as part of Scotland's offering for some national-scale projects that I hope can emerge from it.
I stay in Greenock, so I am aware of Riverside Inverclyde and meet that URC regularly. I cannot fault the level of ambition in the Inverclyde area. It is refreshing, because there has been little ambition there over the years—I have said that to Alf Young and Bill Nicol. However, one thing that niggles me about RI is that much of its plan is predicated on the former housing boom. Obviously, we do not have a housing boom at the moment. It appears that there has been a lull in developing some of the company's ideas because external capital is no longer available. That is why I asked my initial question. Have you not so much applied any pressure but, in general discussions, recommended that it alter X, Y or Z?
I discussed that situation with Riverside Inverclyde yesterday. It was confident that it would continue to bring in the housing investment that it seeks. As you know, the project involves a mixture of tenure from social housing to very high-end development down on the waterfront. The company thinks of that as a 10-year project of which it is in year three, but it was confident that it could continue to attract the external, private sector investors that it needs, in partnership—and it has some creative partnerships—to drive the plan forward. I am not sure that there is anything that I can add.
Riverside Inverclyde also has good leverage. I think that it is getting 1:3.5, so it seems still to be attracting the private sector leverage. We are certainly available to give any advice or expertise required. Indeed, Bill Nicol at Riverside Inverclyde is a former member of our staff, so he knows how to use that expertise very well.
I will meet him next week or the week after.
If anything arises from that meeting, please let us know.
My next question concerns recreational boating opportunities and the knock-on effects of such opportunities. I am looking at the 6 November figures that you provided to us. What threat is there to the growth in recreational boating from the changes in some of the budget lines? Recreational boating provides a massive opportunity not only for tourism from within Scotland and the UK but international tourism. It is also a massive opportunity for job creation—we have only to look at the Largs yacht haven and Inverkip to see what can be done—and there are infrastructure possibilities not only on the lower and upper Clyde but north and south of the river.
Led originally by what was Scottish Enterprise Ayrshire, we did quite a lot of research into the opportunities in recreational boating, particularly for the Clyde coastal area, and that project is still very much alive. Recreational boating is a key tourism opportunity. Scotland has significant, large-scale opportunities for boating, mountain biking, hillwalking and other activity pursuits. The coastal project and the development of boating facilities are very much within our portfolio. We are looking to leverage as much private sector investment as possible because quite a lot of infrastructure is required. That is still very much in our plans, and we hope that it can be accelerated as the market picks up.
On private sector investment, I have spoken to a few people in recent months who have said that they are prepared to invest substantial amounts of money in recreational boating in Scotland but that they are put off by the bureaucratic nature of the system.
Is that to do with planning, or—
It is not just about planning. It is basically the whole gamut.
We would be delighted to talk to them as investors.
Perhaps you could pass on the information about that. We will then follow it up directly with them.
Sure.
It is an opportunity that we are keen to help to exploit.
Thank you.
I have a final question on the Scottish Investment Bank. You helpfully produced some figures on that. What progress has been made on developing the Scottish Investment Bank and is there any information on when it is likely formally to be set up?
We are participating in a Government-led policy process. For our part, we have set up a subsidiary with the title Scottish Investment Bank, which is on the stocks and is ready to be used should that be the desired process. We are prepared to transfer in some £150 million to £170 million of assets. I think that that is set out in the information that was provided to you. As for the timetable, I am not sure that I can enlighten you today, because that is in the Government's hands.
That concludes our questions. I thank you both for coming along. We look forward to continuing our dialogue in the coming weeks and months.
Meeting closed at 13:38.
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Financial Services Inquiry