Enterprise and Lifelong Learning Committee, 14 Jun 2000

Meeting date: Wednesday, June 14, 2000

Official Report 260KB pdf

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The New Economy

The next item on the agenda is the committee's inquiry on the impact of the new economy. There are two relevant papers: EL/00/16/2, in my name, sets out the issues on the remit of the inquiry; an additional paper relates to a specification for advisers.

Paper EL/00/16/2 is self-explanatory and I do not intend to make many comments about it. We have tried to develop our previous discussions on the subject, and the clerks have produced the paper in consultation with me. I think that Elaine Thomson has seen an earlier draft.

We will come on to discuss the specification for advisers, but I want to discuss the remit first.

In the schedule for the inquiry, I notice that the briefing from ministers will take place on 27 June and that nothing further is scheduled until our first meeting in September. The next page of the document discusses using Monday afternoons and Fridays for visits and so on outwith Edinburgh. For some members, meeting on a Monday afternoon means a full day, given the travel time and so on. It might be a matter of four hours' travelling for one or two hours' meeting.

I know that we have holidays to take during the recess, but I wonder whether, instead of committing ourselves to a future programme that keeps people here from Monday to Friday, we could fit some work in during the recess, perhaps towards the end of August.

Duncan McNeil has made an important point. I notice that there is an opportunity for all committees to meet elsewhere in the central belt during the autumn. It is debatable whether meeting in Glasgow or Stirling would give us any further information on this inquiry. I go along with Duncan McNeil's suggestion regarding the possibility of arranging visits to specific places of direct relevance to the inquiry, rather than meeting in Glasgow or Stirling for the sake of it.

I support what Duncan McNeil said. It would be useful to make a small number of suitable visits to places or organisations that can throw light on the inquiry. Mondays and Fridays are extremely busy times for members in their constituencies, although those days could be used on occasion for visits.

We should consider the suggestion of visiting certain organisations or places at the very end of the recess.

My points also concern the recommendations in the scale and timing section of the paper. Are we discussing our remit later, convener?

You can raise whatever points you want now.

I agree with what Duncan McNeil said about that section of the paper, specifically on going to Glasgow and Stirling on Monday afternoons. Given the remit of the inquiry, I believe that the committee, as innovative as ever, ought to consider holding meetings on the impact of the new economy in areas of Scotland that are directly affected by, or in the forefront of, that impact.

A couple of cases, which the committee has considered previously, spring to mind. One is IBM in Greenock, and the whole question of the flexible labour force around which the semiconductor market has been built; the other is Cadence, where the convener, George Lyon, Annabel Goldie and I had an informative meeting earlier in the session. I was impressed by the thinking behind Cadence's involvement in cutting-edge technology and Scotland's role in developing new technology.

There is merit in the idea that the committee should visit such locations, at the cutting edge of the new economy, to take evidence directly and to get a better perspective on our remit. Given the pressures of time, such visits could take place in the latter part of the recess. Our remit could perhaps be more focused than the five questions that are proposed in the paper; we could restrict it to two or three points.

On scale and timing, Duncan McNeil made the good point that a Monday afternoon meeting would mean more than an afternoon commitment for most members. In the local economic development inquiry, we formed small sub-groups that visited different areas. The quality of information that we got back from that exercise was in no way diminished by that approach. I wonder whether that might not be a more sensible way of using committee time.

IBM is an interesting example, but there are also interesting examples in Fife and the north-east. We might make better use of committee resources by forming sub-groups for visits. After selecting and visiting the areas and institutions that we want to see, we could come back and relate our respective experiences.

With the greatest respect, I suspect that we are about to hear the case for Rothesay as well.

You read me too well, convener. As part of the inquiry, the committee must get out and engage directly with businesses. Annabel Goldie's idea of dividing into groups is a good one; that would give us a decent spread and allow us to target a range of businesses, as well as perhaps one or two educational institutions. There are some fantastic examples of potential new economy spin-offs in higher education.

We must think about whom we want to engage with and divide the visits into several groups. That would send a strong signal to the business community that we are not lining up the usual suspects for hard, dry evidence, but going out and engaging directly. I would be willing to give up one day in the recess to that end.

We need a mix of things to keep the thread of innovation. We have not had a committee meeting in, for example, IBM, on the company's initiatives in local schools and how it links up with America. Holding the committee meeting there on a normal day, dealing with normal business and linking in internationally would be beneficial. IBM has not offered that yet, but I am sure that it will.

I suspect that it will have no option.

When one visits such plants, there is always someone speaking to someone in America and to people all over the world. The clocks on the wall show the different times all over the world. If we cannot go to America, IBM may do just as well. I promote the idea that the committee should meet on IBM's premises, to experience what is going on.

I support the idea of subdividing to allow us to visit a wide variety of places. We should strongly consider visiting Aberdeen, because 30 per cent of Scotland's information technology community lives in the north-east, although the area has only 10 per cent of the population. IT and the oil and gas industries go hand in glove.

The focus of the inquiry is Scotland's competitive edge in a global economy. That is what oil and gas and the industries that are associated with them are about. They operate at the leading edge, both in their business practices and in the technology that they use—in exploration and production, for instance. It would also be useful for us to see how they compete globally and how they have changed their business practices—in supply change management, for instance—in order to succeed.

This is an exciting inquiry, but it differs from our previous work in a number of respects. We all had a clear idea of what would emerge from the inquiry into local economic development services; from the beginning, we felt that there was too much congestion, overlap and duplication. The inquiry into the new economy will deal with extremely wide-ranging and important questions, but I feel that its remit is ambitious if we are aiming to produce a substantial piece of work, on the lines of our previous report. If we have to meet on Mondays and Fridays, so be it, although I would prefer to meet on Tuesdays or in the evening. My main concern is that we will bite off more than we can chew. What evidence will we take on each of the questions listed in the paper? Will that be sufficient?

I would like to make one positive recommendation. Our business in the chamber event was one of the greatest successes of our previous inquiry, and we learned a lot from it. Could we consider holding another, similar event? We could learn a great deal from 129 businesspeople who are involved in the new economy. Would not it be extremely useful to incorporate such an event into the inquiry as a way of gathering evidence, perhaps at an early stage? I support the inquiry, but I have reservations as to whether we will come up with a piece of work that will be as substantial as our previous report.

I sympathise with what Fergus Ewing said, but I confess that I am a complete philistine in this area. I may have to see something—such as IBM speaking to America or clocks on the walls—to be able to grasp what we are on about before we take evidence from business in the chamber. If that does not happen, I may be slightly deficient in my understanding of the issue.

It may not be necessary to include this in the remit for the inquiry, but we should examine closely the impact that the new economy is likely to have in rural Scotland. Today we have heard about Cap Gemini's proposed expansion in the Inverness area. Down in my part of the world, we have Telecom Service Centres, which is one of the fastest-growing call centre operations and operates in a rural environment. I know from speaking to businesspeople who are opening up in areas such as the Highlands and Islands that the infrastructure there is starting to lag behind the new technologies that are coming on stream. The inquiry should be about Scotland's competitive position and the impact of the new economy on rural Scotland.

I want to bring this discussion to a close. Throughout, I have been trying to remember where I said certain things about the inquiry; I thought I had written them down in the paper, but clearly I had not. Now I remember that I said them at our meeting with the Royal Society of Edinburgh, at which some members were present. I will go through some of the issues that were raised at that meeting.

There is a general proposal that we schedule meetings in Glasgow or Stirling on a Monday or Friday, because the facility is available. Some committees have already done that. We are not compelled to use that facility; if it does not suit us or fit in with our work programme, we are under no obligation to use it. The clerks included that suggestion in the paper so that the option would be available to the committee.

Let me say how I see the inquiry developing. One of the points that is made strongly in the paper is that much work has already been done on this subject; a lot of documents have been produced. One of the helpful things that an adviser could do would be to provide us with a document—by the end of the summer recess, for example—that encapsulated much of the material that has already been prepared. We have an idea of where the gaps are, and of the issues that the committee will need to reflect on to ensure that the inquiry fills those gaps. We could come back from the summer recess to find ourselves in possession of a document from our adviser that captured much of the existing thinking.

The other idea of visits to specific ventures is something that we should do. We could probably do it most efficiently by splitting into groups, each covering different technology ventures that reflect different aspects of our inquiry. It would be simple to arrange that part of the programme. We could probably undertake that towards the latter part of the recess. We are operating with clerking resources below the normal level. Our clerks need to get a summer break in the early part of the summer as well. We need to bear some practical constraints in mind.

Duncan McNeil suggested holding a committee meeting in an appropriate conference room in a large company, such as IBM. I think that is a very good idea. We could explore that with an adviser and come back to the committee with proposals. There is probably a forum for Fergus Ewing's point about business in the chamber. Members may recall from the event the young chap, Kevin Dorran, who made a contribution on high-tech approaches. We would probably benefit a great deal from hearing from a roomful of 20 young people, or entrepreneurs like Kevin Dorran, who have been involved in this policy area and who may have frustrations about it. We would perhaps need to make it a slightly less formal environment than business in the chamber. That kind of format is not suitable for everybody.

We can take those ideas forward purposefully. I take it from what the committee has said that meeting in Glasgow or Stirling on a Monday or Friday is a no-no—we do not see how that fits in with our inquiry. We want to consider the proposal of moving into sub-groups to examine particular ventures and initiatives. We are interested in exploring the IBM concept that Duncan McNeil suggested. We would like to discuss a panel of business views, probably not in a formal committee session, but in a forum that could be read into the record as we have done with other inquiries. Are we generally comfortable with the direction that is proposed in the paper?

I did not make any specific suggestions about the remit, although I could do so. As Fergus Ewing said, there is a danger that we bite off more than we can chew and do not produce anything worth while as a consequence. I would like the remit to be slightly more focused. I do not believe, for example, that anyone could genuinely answer question 3; many people would have different views about that. Going off at a tangent would deflect from, for instance, questions 1 and 5. I could go on, but as you said at the previous meeting, convener, we want the remit to be focused and to ensure as far as possible that we do not stray from it.

I have a specific point about the remit. The second question to be addressed asks:

"What infrastructure will be necessary in the next ten years".

Frankly, that is way off the planet. We should be considering the next five years at the absolute outside. There are concerns about the inadequacy of the current infrastructure for leading the information highway. Ten years is completely unrealistic.

Question 2 is not just about infrastructure problems. What steps should be taken to ensure that business can succeed in this area? Improvements to infrastructure are, undoubtedly, part of that, but they are only part; the necessary steps will have much more to do with attitude change, skills and so on. Could we broaden out slightly the inquiry to take those points into account?

The third point could be removed, as the issue is probably covered under point 4, which says:

"How does Scotland's position and preparedness compare with that of its global competitors?"

That question fits in there quite easily.

George has made a specific proposal to remove point 3, with which I am quite comfortable. I am sympathetic to the need to—

That would narrow it down a bit.

I am anxious to avoid reinventing the wheel—a whole bundle of wheels have been invented already, and we have listed a number of existing reports in the preceding paragraph of the main text. There is no need for us to go down all those routes again, as we can capture that information with the help of an adviser.

Our approach should be to fill the gaps, to add value and to answer the unanswered questions. I concede that one could take three years to write a PhD dissertation on point 3, so we will remove it. With that change, are members content with the document, which is now fairly tightly defined?

Members indicated agreement.

Convener, what about the 10 years that are mentioned in point 2?

My apologies. Shall we narrow that down to five years?

Members indicated agreement.

The other paper before us deals with the specification for an adviser. I thought that it would be helpful for us to commission input from an adviser, as that would capture many of the issues that are involved in the debate. An adviser would provide some initial documentation, which would be drawn to members' attention before we return from the summer recess.

We will put out with the remit a call for written evidence, with a deadline of some time towards the middle of August. That written evidence would be at our disposal before we held oral hearings in September. The adviser should assist with capturing existing information and identifying the most appropriate witnesses for us to hear. The adviser would also assist us—just as our previous advisers did—in formulating our conclusions on the inquiry. What are members views on that point?

I have no proposals about whom the adviser should be, although long lists of names have been suggested by the Scottish Parliament information centre, which has a role in providing such information. I took the opportunity of the committee's informal meeting with the Royal Society of Edinburgh to ask, "Look, if there is anyone that you think would be of use in assisting with this inquiry, please let us know." I also took the opportunity of a meeting with the Committee of Scottish Higher Education Principals yesterday to ask the same question, as well as to offer COSHEP the opportunity of inputting into our thoughts.

The appointment of an adviser will have to come back to the committee for approval in a fortnight. Alternatively, we could delegate the selection process to a smaller group of members, as we have done in the past.

On the qualities and experience that an adviser should have, I suggest that we ask Scottish Enterprise and Highlands and Islands Enterprise for their views. Those organisations, and Robert Crawford in particular, are greatly involved in this field.

It occurs to me that while academics have a particular approach, our inquiry is about business. Ideally, we should have an adviser who is able to straddle both worlds—perhaps someone who has been involved in business. Such a person would add extra weight, compared with someone whose background is simply in academe.

I endorse Fergus Ewing's points. Should we tease out what we expect from an adviser for the inquiry? Speaking personally, what I have learned in this field I learned most dramatically from speaking to the business operators who are involved in it and from going to see what is happening.

In our previous inquiry, the role of the academics was invaluable; they gave a sound guide to how we should assess evidence and what weight we should attach to it. However, I share Fergus Ewing's view that in an inquiry such as this, we must be sure that we are guided by someone who has a hands-on understanding of the world in which we are operating.

I agree with Annabel Goldie's comments. Furthermore, if we are to consider some of the competitive issues and what is needed to ensure that Scotland stays at the forefront, we will need some knowledge of our competitor countries. I do not suppose for one minute that the committee could go out to consider competitor countries, so our special adviser would have to provide such knowledge to give us a decent analysis of where Scotland stands at present, to allow us to look forward. That must be part of his background.

Could the usual suspects prepare a short leet that can be brought back to the committee and agreed on?

If that proposal is acceptable to the committee, we can do that and take the matter forward.

The people whom we consider ought to have an understanding of the global perspective in which the inquiry is set, and should be knowledgeable about developments in other parts of the world.

I do not have a specific view about who the adviser should be, but—picking up on what Allan Wilson said—we could ask people who work in a global context, perhaps in IBM or some of the bigger consultancies. I agree with other members' comments.

The specification states that the adviser

"may have had a relationship with the main bodies involved".

I suggest that they should have had a relationship within the commercial world—telecommunication companies or software companies. If they do not have that experience, I am not sure that they would be suitable.

Those points are noted. The sub-group that examines such issues, which comprises George Lyon, Annabel Goldie, Allan Wilson and I, will meet to prepare recommendations for the committee.

The appointment of an adviser requires the approval of the Parliamentary Bureau. I propose that we revise the remit according to the views that have been expressed by members today and submit it to the bureau for approval, so that by the time we meet again, it will have been cleared.