Enterprise and Lifelong Learning Committee,

Meeting date: Wednesday, May 1, 2002

Official Report 273KB pdf

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Local Economic Forums

Item 3 concerns local economic forums. I ask the minister to make some introductory remarks.

We welcome the committee's scrutiny of the local economic forum process. This is the right moment for that, about 14 months after the forums' inception. I am keen to use this meeting as an opportunity to hear what the committee thinks the next steps for local economic forums should be, given that they owe their establishment to a committee report.

We have seen successes in the co-ordination of local economic development efforts, making local partnerships work more effectively. Some money that can be saved and reinvested has been identified. There has been a stronger focus on putting the business community and service users at the forefront when designing services.

A number of local economic forums are now considering how organisational structures in their areas should be changed. Others have given particular attention to making savings. Some forums are focusing on promoting best practice across the various participant organisations.

Yesterday I spoke again to representatives of the Federation of Small Businesses. I think that forums could do more to engage with and inform businesses. We may want to discuss how the non-accountability of individual business participants can be balanced with the need to have at the table the community that forums are seeking to serve. I would welcome hearing the committee's views on that matter.

If forums did not exist, we would have to invent them. With community planning coming over the horizon, it would be crazy not to have a forum that brings together around the same table all the players involved in local economic development. As Scottish Enterprise has begun to drive the business transformation process down to creating a business gateway at local level through the local enterprise companies, we need to think more systematically about the responsibility of LECs and LEC boards for providing quality business advice and about the strategic role of local economic forums. Those are live issues for us.

I will end my remarks there and invite questions from members.

Do you see local economic forums as a permanent feature of the landscape in Scotland?

Not necessarily. That remains an open question.

Do you think that, over the piece, the forums have achieved the objective of beginning to eliminate duplication and waste and identifying cost savings that can be channelled back into front-line services?

They have achieved some of their objectives. I have the same difficulty as committee members in knowing what is happening in 22 local economic forums. Over the past week, knowing that I was due to give evidence to the committee, I mentioned that problem to a number of people and asked them to tell me what they think. The message that they gave me is perhaps the most important insight that I will share with the committee, although I do not know whether other members feel the same way. Three years ago, when all of us were running for election, we could not go to a business breakfast without hearing people say that there was a ridiculous amount of duplication and that everyone was trying to do the same job. People criticised the fact that there were 420 organisations and asked us what we would do to sort out the mess.

I am not sure that the local economic forums have been the only drivers. People have read the runes in their own organisations. For example, most local authorities have ensured that their services complement the work of the LECs. Duplication has disappeared because chief executives in local authorities and LECs have said, "There's no point in us both doing the same thing." Both sides continue to participate but there is more complementarity. Customer responsiveness is important, as is the redirection of services to new areas, but duplication is not the problem that it was. People are aligning their activities more effectively.

We have only 20 minutes and five members have indicated a wish to speak, so can we make the questions and, ideally, the answers fairly short and sharp?

I think that I speak for those of us who were on the committee when it produced the proposal for local economic fora—I think that only Marilyn Livingstone and I remain—when I say that the unanimous feeling of members was that local flexibility was essential. That was the underpinning ethos, but how is it possible for the fora to operate as originally conceived if your department prescribes how they are driven?

I do not think that they can act responsively if they are driven prescriptively by our department, but I really do not think that that is happening. We have asked them to identify savings and redirect the money. Five of the local economic forums have done that and the sum of money comes to about £2 million. HIE is about to identify savings of more than £300 million. A fair question, Annabel, would be to ask what we should ask them to do next. There I think—

Minister, you have spoken about tasks—for example, appointed tasks for year 1 and forum tasks for year 2. How can the ingredient of localness, in any independent and autonomous sense, come through if there is ministerial direction from the Scottish Executive?

There is no direction on what people should save money on. The committee told the Executive about the degree of duplication and we have said that we want people to sit down together and get a handle on who is doing what. There has never been a forum for that before. That process has almost run its course. The question for the future is what a smart, successful Scotland looks like in a particular geography. If I asked you, "What does a smart, successful Scotland look like for Ayrshire or Renfrewshire?" the answers would be different. We are asking people to tell us what a smart, successful Scotland looks like in their geography. Robert Crawford made the point that how it looks in Edinburgh will be different from how it looks in Ayrshire.

Having started by trying to get a handle on the savings issue, local economic forums may in future focus on high-level strategic issues—asking what things look like for their geography and asking what they should do. That may be a way of reflecting the seniority of the players round the table at local economic forums.

I am pleased to hear you say that. We should not ignore the complexities of the tensions over stewardship of taxpayers' money, local diversity and national priorities—I am sure that Annabel Goldie was not suggesting that we should.

The LEF from my area has spoken about problems between West and East Dunbartonshire and said that what may be considered duplication and waste over a large area in and around Glasgow may actually be a resource for the LEF in a much smaller area. Have you had a chance to reflect on feedback? Have you considered—although not in a prescriptive fashion—the next steps for the LEFs?

From the feedback, I think that the desire is to have the opportunity to be strategic. Over the past year, we have asked LEFs to focus on the relationship with the LECs and to consider, for example, how to provide business services and the small business gateway.

The focus of local economic forums in the coming year should be on considering their relationship with local government in the community planning process. I want them to consider what the framework of "A Smart, Successful Scotland" means for their part of the country. If we were discussing community planning for health or community care, we would start with the health plan and if we were discussing social justice, we would start with the social justice action plan.

I met businessmen earlier this week. They said that "A Smart, Successful Scotland" is great, but only the enterprise network knows about it and owns it. "A Smart, Successful Scotland" has to be an economic strategy for all the players in Scotland, whether small businesses, local government or the voluntary sector. I would like the committee to consider and give me advice about whether local economic forums could helpfully use the framework of "A Smart, Successful Scotland".

I attended a deeply practical meeting of a local economic forum in Shetland at the beginning of the year. I appreciate that the issue is different in my part of the country, as we do not have the same duplication problems that other parts of the country have, because of geography—that is the advantage of being surrounded by sea.

In the context of community planning, have you thought about the practicalities of joining up local enterprise companies and the economic development departments of local authorities? Shetland is planning that kind of one-stop shop approach.

That has been done in Clackmannan.

I was interested in the minutes of the most recent meeting of the task force, which decided not to consider a paper on learning and skills at the moment because of the committee's work.

People in my part of the world are considering where the skills shortages are. I hope that LEFs will do that, for example by feeding into Future Skills Scotland.

Over the past year, LEFs have been very practical. We have told them to sort out the duplication and who does what. Some have risen to that challenge and now want to move on to do something else, but some areas have not risen to the challenge.

Once the local economic forum has made a strategic decision about who should do what, it is up to local government, the enterprise trust or the LEC to make it happen. That has created a bit of a vacuum around what LEFs will do next.

Tavish Scott raised a point about community planning. I am not sure that the economic development of the community plan is best done by just the LEC and the local authority, without the LEF at the table. Consideration of the economic part of community planning should not just be a dialogue between the LEC and local government, given that we have local economic forums. We have to consider whether they might be central to the process in parts of Scotland that are slightly less joined up than Tavish Scott's part of the country.

Careers Scotland is four weeks old. The new institutional structure that we have created and the operational initiatives that the committee has come up with need time to bed down a wee bit. The LEFs might tackle the learning and skills agenda more easily a year further down the line. People would then know what we are doing with people in apprenticeships and how the funding streams for further education will be directed. My instinct is for people to wait until the committee has finished what it is doing. However, the community planning issue is live and topical.

To what extent is there the willingness and capacity in local government to engage with LEFs in the community planning process? Have you had any discussions with your counterparts in local government?

I have had informal discussions with the Convention of Scottish Local Authorities and I have asked for formal discussions. We want to avoid the economic section of the community plan being drawn up by local government without participation from anyone else. Whatever architecture we are trying to create, it is not that. However, unless we take a view on the matter and set a framework, that is where we could end up.

It is good that the committee is offering its views. I have formally asked COSLA to come and see me and I have spoken informally to leading players in economic development in COSLA. One opportunity will be at the LEC board members conference over the next two days. Every LEC board includes at least one councillor, so talking to them about how they are thinking of doing the economic component of the community plan is a way to trial some of this stuff.

I was not a member of the Enterprise and Lifelong Learning Committee when it produced the report, so I do not have to pretend that I like it—I do not.

That is admirably candid. The report was my first engagement as a minister, on day one.

I always felt that the report fudged the line between local government, the enterprise companies and others. Do you not think that it is important to establish ownership of who is responsible for delivering the vision of, as you put it, "a smart, successful Scotland," in a particular geographical area? In my own area, I am ultimately unclear about who is responsible for delivering a smart, successful Dumfries and Galloway. Who is responsible? Is it the council, the enterprise company, or the tourist board?

It is all of them.

It is all very well to say that it is all of them, but if there is no mechanism that allows someone to own the task—

You have hit on the kernel of the argument, which is that "A Smart, Successful Scotland" is a strategy document for the enterprise networks. That invites the possibility that you could have other economic strategies for a particular geographical area. That does not seem to be in the spirit of the work that this committee has sought to do. The committee must think about how it would like that to be addressed.

All I would say is that I talked to businessmen this week and they are relieved that we are not rewriting "A Smart, Successful Scotland" every year or sending annual guidelines to Scottish Enterprise. They are happy that we are sticking with an unchanged strategy and that we will give people time to think about what it means for their part of the world.

On your point about duplication and local government—yes, local government spends £90 million, but it spends some of that in different ways now and it employs many people. Not much money is spent on duplicated aspects. There has been a shaking out of who does what. We can drive that process a bit further, but doing so depends on the political will within a council and the political will within a LEC.

It is not about the political will within a LEF, because that is ultimately not the accountable body. That fact causes some frustration to the business people on the LEFs. LEFs are not statutory bodies, so whether the LEF's insights are acted on is the responsibility of its constituent bodies.

The committee's evidence shows that flexibility and circumstances vary. I return to a point that I have raised repeatedly in the committee. Local government, the health service and public services generally are important economic actors in rural Scotland and they must be engaged in the community planning process as such, not just as agencies that provide services. How will we get that factor into the process?

I agree wholeheartedly. I would like guidance from the committee on two issues. How hard do we drive down the savings agenda on non-statutory bodies that just have not lived up to that promise? We must collectively take a view on that. I think that there is a case for the stick-and-carrot approach. How robust should we be with those that we think have not met the challenge? However, if we are robust with voluntary bodies, will we destroy the goodwill that allows the LEF to be a significant body in its local community, although it does not have statutory responsibilities?

That begs the second question. Can we allow there to be no national guidance on economic development at all? Can we allow the smart, successful Scotland vision to be exclusively for the enterprise networks in circumstances in which community economic planning and many other factors are emerging? That issue has recently come on to my agenda and the committee should take a view on that.

The last word goes to Marilyn Livingstone.

Your comments on "A Smart, Successful Scotland" and allowing localities to develop it for their areas answer Annabel Goldie's point about local flavour and flexibility. As you know—I have said it to you before—that is the big worry. Local economic forums told us that although the current system has worked well in the main, they need more teeth to undertake that task. They do not want to be talking shops.

More important, local economic forums say that all bodies are equal players around the table and that neither the enterprise network—"A Smart, Successful Scotland" could be considered its strategy—nor any other player is the main driver of the forum. How do we ensure that all players feel part of the forum and the community planning process? That relates to how we deliver the agenda for our communities and for Scotland.

The community planning process is serviced by local government, so local government officers—not LEC officers—will draw up the economic section of a community plan. That is a not insignificant dynamic in deciding the strategic framework under which those considerations are made. We will reflect on that.

If people want to offer me sticks, I will be happy to think about using them. One carrot is status, because a problem is the varying quality of business representation. It has been suggested to me that we should ask for chairs and chief executives of chambers of commerce and of the Federation of Small Businesses, because they have some authority to speak on behalf of their organisations, unlike any old member, who does not have authority at the table. I am attracted to that suggestion.

Another issue is the number of business reps that is required for the voice of the market to be sufficiently heard. The committee may want to take a view on that.

We all feel that the private sector has too many business organisations competing with one another. It would be more effective if some of them joined together and had one voice.

That was a long session on the budget and the LEFs. I thank the minister for attending; we look forward to seeing her again soon.

Not that soon.

That was not too aggressive.