Enterprise and Lifelong Learning Committee, 01 Nov 2000

Meeting date: Wednesday, November 1, 2000

Official Report 282KB pdf

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Enterprise and Lifelong Learning Budget

The first item of business is evidence on the budget for enterprise and lifelong learning. Prior to the ministerial reshuffle, Nicol Stephen was scheduled to present that evidence. As a result of the changes, I welcome Alasdair Morrison, the new Deputy Minister for Enterprise, Lifelong Learning and Gaelic, and congratulate him on his promotion. Alasdair has been in his new post for only 48 hours and he has kindly agreed to go ahead with the presentation of this morning's evidence. Inevitably, however, some of the detail may need to be followed up in writing. Unfortunately, we could not postpone hearing the evidence, because the committee has a deadline to meet and must report to the Finance Committee. Alasdair has given me a guarantee that any detail that is not readily available this morning will be provided to the committee early next week.

First, I would like to introduce my colleagues. Douglas Baird is the head of the enterprise and lifelong learning finance team and Eddie Frizzell is the head of the enterprise and lifelong learning department. I wish that I could honestly say that I am glad to see you, convener, but I genuinely cannot—because the sun is in my eyes, all I can see is five shadowy characters at the other end of the room.

Thank you for your warm words of welcome. I think that you did right by stating, euphemistically, my shortcomings even before I opened my mouth. However, I am glad that you have highlighted the fact that I have been in my new position for only 48 hours. As always, I am happy to appear before the committee, as are all my colleagues. The committee rightly expects to be given full and detailed responses to its forensic examination of the budget issues. To reiterate your comments, convener, I suspect that there will be many areas in which I will not be able to give you a meaningful response. However, I assure you that, by close of business on Friday, my officials will deliver the details to you. I appreciate that you have to keep to your own timetable and deadlines.

I am grateful for the opportunity to make some opening remarks about the outcome of the spending review for the enterprise and lifelong learning department. When Nicol Stephen appeared before the committee on 3 May, he explained that the department's expenditure proposals for the next year—the third year of the comprehensive spending review—would amount to some £1,992 million in cash terms, as set out in "Investing in You".

Although the main focus of the spending review was on adding expenditure proposals for 2002-03 and 2003-04 to our existing plans, as part of that process we have been extremely successful in securing additional funding for next year, which has resulted in a revised baseline of £2,146 million. Together with increases for the following two years, that will mean that we will be spending a further £300 million in three years' time on the department's activities, compared with our current expenditure.

Those increases are a major boost for learning and technology, but the aim of the budget has been to put knowledge and learning at the forefront of our agenda over the next three years. It is about learning inclusion, which involves creating more additional student places, with an emphasis on under-represented groups, and providing the means to retain students from those groups once they are in the education system. Learning inclusion will also involve adult literacy, as problems with literacy form one of the most significant barriers to learning. A sum of £22 million has been allocated to adult literacy over the next three years. That money will be spent principally by the further education and voluntary sectors.

I draw the committee's attention to the significant ramp-up of funding next year for student awards and for the Scottish Higher Education Funding Council and the Scottish Further Education Funding Council. Additional expenditure for the funding councils will exceed £100 million. That front-loading is to enable the bodies to achieve additional activity quickly, allowing consolidation with increases that are less, but still significant, in the following years.

Despite the emphasis on learning inclusion, we have not neglected the needs of technology and business support. Over the next three years, more than £40 million will be targeted at investment in technology and in strengthening e-commerce. The priority that we have attached to learning inclusion has meant that some difficult decisions have had to be taken. However, the budget for Scottish Enterprise will increase by £21 million over the next three years, half of which is specifically intended for increased support to small businesses.

We believe that the allocations to Highlands and Islands Enterprise are generous, taking into account a time-limited initiative of £4 million per annum, which was due to cease at the end of next year but which Highlands and Islands Enterprise is now being allowed to retain. As a constituency MSP and the minister with specific responsibility for the Highlands and Islands, I particularly welcome that.

The effect of year-on-year baseline increases for the Scottish Tourist Board will mean additional expenditure provision of £12 million by 2003-04.

All in all, we believe that we have secured a good settlement from the spending review. All our key expenditure programmes will benefit, despite the emphasis that we have placed on driving forward learning inclusion. As I mentioned in my opening remarks, I am being assisted by my able officials, who have a firm grasp of the detail of the budgetary process; I would be happy to respond to questions from members.

Thank you, minister. We intend to cover two broad areas. First, we will address the budgetary process—a subject about which the committee raised concerns earlier in the year. Secondly, we will ask about the specific figures.

I welcome to the meeting David Davidson, who is a member of the Finance Committee. I will be happy to bring him into the debate when he indicates that he wishes to participate.

Thank you for your helpful comments, minister; I acknowledge the constraints that you are under, having recently taken up your post.

Examining the figures over the three-year span, I am slightly concerned about the funding for higher education. I accept your explanation that there is an attempt to kick in funding at the early stages, but I note that that pans out from 2002-03 to 2003-04 to very little indeed. I am conscious that Scottish higher education has concerns about the funding of research. Are you satisfied that the projected funding over three years is a reasonable way in which to meet the obvious challenges confronting higher education? Are you satisfied that the Scottish Higher Education Funding Council will not apply a policy of retention, as it did last year, which left many of our universities in a difficult situation? If so, it would be reassuring for the universities to know that whatever is budgeted for them will reach the institutions.

I make those remarks in the context of the figures further down the projected analysis. I suspect that many people in receipt of budget allocation from the department will pray that they are in the "Other" category, which seems to be scoring at the expense of areas that might justifiably ask why they are not doing better.

I am grateful to Miss Goldie for recognising that my recent arrival might limit my responses to the committee. As I said, there will be an additional £100 million for the funding councils. That money is being front-loaded to allow the organisations to get on with their important business, rather than having a slow gradient of income. As Miss Goldie says, that will result in a levelling-out over following years. SHEFC must set its own priorities. Research is an important area and requires adequate and appropriate levels of funding. I invite Douglas Baird to give the committee further details on the funding.

The additional expenditure allocation that is being made available to the funding councils over the three-year period includes money for commercialisation of research. That amounts to £7.5 million over three years.

It is important to remember that there are two streams of research funding for the universities: funding that comes through SHEFC and funding from the research councils. The combination of those two streams provides the universities' research base.

As for top-slicing, it is up to SHEFC to decide how it parcels up the money. SHEFC is aware of the criticisms that have been made in respect of top-slicing and the possible reduction in the amount of discretionary funding. The minister has told SHEFC that, although certain things were in mind when the allocation was decided, there is flexibility. The Executive is not seeking to constrain SHEFC's ability to apply the money. A key factor behind the allocation was to ensure that the quality of provision in the universities is sustained. We have made allowances within the allocation for widening access and we expect SHEFC to take account of that. That is a distribution issue, rather than one of top-slicing.

When we examined the initial budget some time ago, there appeared to be considerable sums of unallocated money, which it was thought might be needed for the implementation of Cubie. Can you update us on the current situation in respect of unallocated funding?

There is a sizable sum of unallocated money—to be precise, I am told that it is £26,834,000. As one would expect, that money will be subject to much debate and discussion. If, for example, the Scottish Qualifications Authority receives more cash, the money will come from that pot. We are in the fortunate position of having unallocated money. However, there will be robust discussion and ministers will decide on its distribution as part of an on-going process.

Minister, I was pleased to hear you talk about inclusion in learning and the intention that further and higher education colleges should widen access. However, having heard evidence during our inquiry into the SQA, I am concerned about the fact that colleges of further education were not given the flexibility that was given to some universities. The fee income of some colleges might be down this year, which could have an impact on widening access. Will ministers investigate that impact? Perhaps some of the unallocated funding could be used to alleviate the problem.

The £27 million will form part of an on-going process and discussion. At a departmental level, we will certainly discuss the allocation of those moneys. The first port of call for colleges that are facing difficulties would be SFEFC, which has a facility to deal with emergency situations in the short term. I suspect that colleges will approach SFEFC to overcome the difficulties that have arisen as a result of the SQA situation. As part of that process, ministers would discuss how best to use the unallocated money. The funding councils have flexibility and emergency powers.

I have two questions. First, at the last meeting at which Nicol Stephen gave evidence on the budget, the Highlands and Islands Enterprise budget was mentioned. As we can see from the figures, over the next three years there will be a decline in that budget in real terms. That is extremely worrying given the challenges that the Highlands and Islands face in job creation. Nicol Stephen told us that there were unallocated amounts in the budget for Scottish Enterprise that should have come under the heading for Highlands and Islands Enterprise. Is that still the case? Moreover, can HIE use end-year flexibility or bid for extra resources if it were likely that a significant inward-investment project would come to the Highlands and Islands?

We have discussed the Scottish tourism budget a number of times. The feedback that I am getting on funding to area tourist boards is that, despite the guarantees given last year by the Scottish Executive, the formula for ring-fencing money that goes through local authorities does not appear to be working—it certainly is not working for the tourist board in my area, which has had its budget cut. Minister, you have undertaken to re-examine the issue and to consider the direct funding of the tourism sector to ensure that it is given its rightful place as an industry that we want to be successful. At what stage are you with that review of the funding formula?

The apparent discrepancy in the Highlands and Islands Enterprise budget can be partially explained by the fact that individual learning account money and modern apprenticeship money resided in the Scottish Enterprise budget and had not been factored into the Highlands and Islands Enterprise budget.

It is worth pointing out that, subsequent to the committee's meeting with Nicol Stephen, there may have been further adjustments to the data that were not reflected in the baseline. For 2001-02, the budget may have been around £68 million. The revised budget is now in the region of £70 million. Similarly, when Mr Stephen was before the committee, the budget for 2002-03 would have been around £70 million, whereas the revised budget is closer to £71 million.

I repeat what I said in my opening remarks: Highlands and Islands Enterprise has been allowed to retain the cash that had been earmarked to deal with infectious salmon anaemia. That move has been welcomed. Henry McLeish and I recently met Jim Hunter, the chairman of Highlands and Islands Enterprise, and the then acting chief executive, Sandy Cumming—who, yesterday, after due process and interview, was appointed the chief executive of Highlands and Islands Enterprise. Both were happy with the allocation for next year.

We are aware that there is a mixed picture in relation to the guarantees that we were seeking from councils on tourism funding. Some councils—such as the City of Edinburgh Council and Glasgow City Council—are performing well and are taking seriously their responsibilities in relation to tourism but we are conscious of the fact that, historically, other councils have not taken those responsibilities seriously. Mr Lyon might recall that we highlighted that problem when Mr McLeish launched the tourism strategy. Mr McLeish said that the situation would be monitored and would be revisited in a year's time, as tourism is too important an industry to neglect. We are keeping a close eye on what councils are doing in relation to tourism.

Mr Lyon asked whether Highlands and Islands Enterprise would be able to use end-year flexibility if a situation arose in relation to a significant inward-investment project. The short answer is yes, and I sincerely hope that it would do so. It would be in everyone's interest if Highlands and Islands Enterprise were proactive and got in among ministers to pitch for the necessary money in relation to big projects that are in the offing.

The budget for the Scottish Tourist Board is a line item in "Making a Difference for Scotland", but there is also tourism spend by Scottish Enterprise and Highlands and Islands Enterprise. Would it be possible to give us information on the total tourism spend in lowland Scotland, which is covered by Scottish Enterprise, and in the Highlands and Islands, which is covered by HIE. I realise that such information might not be readily available, but we should consider the total tourism spend, rather than only the STB spend.

That is an important point. Often, when the media compare the tourism spend in Scotland with that in other countries, the figure used is the STB spend, although other agencies spend money on tourism. I do not have that information with me, but by Friday we will, if at all possible, give the committee a detailed breakdown of the spend.

That will allow us to see whether total tourism spend is rising or falling.

It would be useful to have that information, as we are always being compared with our competitors in other countries. I know that the Irish tourism budget figures include educational courses and every damn thing that you can think of. The budget appears substantial, but a huge amount of it is not direct spend on marketing.

In fairness to the officials, I think that it would be next to impossible to do that kind of analysis before Friday. The information that the convener requested, however, should be readily available and with you by 5 pm on Friday.

I am particularly interested in this issue because of the implications for lifelong learning. Although I appreciate that the figures on that aspect of tourism-related spend will be difficult to get, it is essential that we have them.

Scottish Enterprise can identify tourism training as a line item. I presume that that will be included in the figures that the minister will provide. That might not cover all the training that goes on in relation to tourism, but it would go a long way towards identifying the main areas of spend.

I understand that some local enterprise companies have been providing matched assistance to enable business-led local marketing initiatives for tourism. That area should be encouraged. For example, a local marketing initiative by tourism businesses in Nairn has had some success. Minister, is that an area that you could examine with ensuring that Scottish Enterprise and Highlands and Islands Enterprise budgets can be used for that purpose? There seems to be some doubt about that.

I will be happy to clarify that in due course. Local marketing initiatives are vital. Mr Ewing will be aware of the success of the business-led golf initiative in the Highlands and Islands.

In my constituency—a wonderful place, where all committee members should holiday—the local authority is developing a local marketing strategy into which are going sizable sums of money. In the Western Isles, businesses are playing ball with the local authority.

As the strategy document highlighted, people should stop being territorial in relation to marketing. Western Isles Council is looking to co-operate with Highland Council, which is useful. Tourists can be confused by leaflets that cover only 10 miles towards some perceived border. That approach is useless in any attempt to disperse tourists.

I know that the Ossian project and the visitscotland.com online booking system are a major part of the Executive's tourism strategy. I understand that Ossian will be the subject of a public-private partnership. I have heard that there are concerns that an extraordinarily high proportion of the costs of the PPP will go into the coffers of consultants of various kinds—lawyers, financial advisers and computer specialists. I am sure that that will be of great concern to the industry in general, coming as it does on top of a large number of questions about the operability of the visitscotland.com site and its online booking system. I appreciate that you may not be able to give an answer today, but could you examine the matter and report back to the committee?

Mr Ewing is right to highlight the importance of the Ossian project. He says he would be concerned if millions of pounds disappeared into the hands of consultants and computer experts. It goes without saying that the development of Ossian requires the expertise of computer specialists. I do not have a detailed breakdown of where the money for Ossian is going. Ossian is an important project, which cannot be allowed to fail. In other countries that are at the forefront of tourism, such as Spain, there are well-financed, sophisticated sites, and we must have the same. I will be happy to furnish the committee with further detail on Ossian.

Before I have a pop at tourism, I would like to look at the numbers. Last year, you had unallocated provisions and underspends, which were penalised in the sense that 25 per cent of the total was pulled back by Mr McConnell, presumably for reallocation by the Executive. The amount that was returned to the centre was £30 million. What is the projected figure for unallocated provisions and underspends for this year, of which the Minister for Finance and Local Government could take a piece, thus reducing the amount of money that is available to be spent in your brief?

Decisions are still being taken on the final detail. Mr Baird may be able to enlighten you further. You are right that 25 per cent was taken back by Jack McConnell. The department was entitled to make bids for money from that pot, so we did not lose the money.

What did you bid for and what did you get?

Again, I think that my officials are best placed to respond to that, as they have a grasp of the specifics.

My recollection is that capital for further education colleges came out of the central resources—I will check that.

You say that it is too early to specify the unallocated amount, but the briefing that we have received gives a projected unallocated provision of £26.8 million.

I think that we are looking at the annexe to the letter from Nicol Stephen. At the bottom of that annexe, it refers to agreed claims on central reserve and mentions "SFEFC Infrastructure/Disability Access". That money will improve the fabric of further education colleges, focusing on improving access for the disabled.

As I understand it, the question is: what happened to the amount that was unallocated at year end last year, which totalled nearly £30 million? Secondly, what will happen to the current projection of £26.8 million for unallocated provision at year end this year?

I am asking about the 25 per cent that may be clawed back; I wonder whether that matter has been flagged up. I do not expect the minister to answer fully today, but a serious requirement of the budget process is that the committee has an indication of the target that the minister will set for clawback into the centre; we must report on that to the Finance Committee. If the minister wants to take that question away and report back to the committee, that is fair enough.

Last year, when I asked Mr McLeish what sanctions he would use against local authorities if they did not produce their indicated support for area tourist boards, he answered that there would be no sanctions. Does that mean that you are actively considering direct funding for area tourist boards? If so, are you also considering using some of the unallocated money to help area tourist boards to fund accreditation schemes? There is a huge quality issue in Scotland. There are good examples and we want to learn from best practice, but there is a need for investment in accreditation schemes so that area tourist boards can do their job locally. Are you prepared to spend money in that way?

The convener will be given information on the clawback.

On the direct funding of ATBs—a matter that I suspect Mr Davidson has raised in every debate on tourism in the Parliament—the position is the same as it was in February. On launching the strategy, Henry McLeish said that we would examine the matter after 12 months and, in the meantime, monitor closely what local authorities were doing on tourism. We will reach decisions on the funding of area tourist boards after the turn of the year.

When you refer to accreditation schemes, do you mean quality assurance schemes?

I mean quality assurance schemes, benchmarking and sorting out what tourism service fits into what grade.

Quality is important. I know many people demanded that we have compulsory registration and a whole host of things, but evidence from Ireland proves conclusively that compulsory registration does not result in improved quality. There is a divergence of views in the industry on that issue. We have decided not to dwell on the issue of compulsory registration.

Do you intend to support actively the Scottish tourism centre at the Robert Gordon University?

Many colleges are developing tourism courses. I do not have a grasp of the detail of what is happening at the Robert Gordon University, but I am certainly interested in hearing what the university is doing.

Will the minister make information available to the committee on tourism funding for this year? I refer to what councils have passed on without cuts. That information should be available now.

I will ensure that you have that information by Friday.

Before we move on, I want to return to the unallocated funds. There is a significant difference between the total departmental figures in "Making a Difference for Scotland", which was published in September, and those in the October budget revisions. For example, in the September document, the total provision for the department in 2000-01 is £1,969,700,000 based on current prices, but in the budget revision, the total budget is shown as £2,084,589,000. The difference would be even bigger if the September figure were given in real terms. What explains that difference?

I am happy to defer to Mr Baird.

I had intended to make one or two points about end-year flexibility and unallocated provision.

The difference between the two figures will be due to the fact that, at the beginning of this year, we brought into this year's figures underspend moneys from last year, less 25 per cent. We added to that unallocated money that we already had this year. The unallocated money sits in the "Other" budget line. Once we had added those two amounts, we made a number of allocations for this year only. It is important to realise that allocations from unallocated money can be made only within the year, and the money has to be spent within the year.

I am not familiar with the exact reasons for the difference between the figure in "Making a Difference for Scotland" and the figure in the budget revisions, but I suspect that it is accounted for largely by the allocations that are detailed in Nicol Stephen's response to the committee's report on the budget process, in which the additional in-year allocations are listed. The budget revision document is part of the process by which the allocations are eventually approved by the Parliament. The allocations are not included in "Making a Difference for Scotland" because they have not yet been approved.

Can you provide us with a detailed breakdown of the difference between the two figures?

As I have explained, there may be differences at the margins that I can deal with.

In a similar vein, the budget document contains a provision for capital receipts of nearly £25 million. Where does that come from?

I suspect that a large part of it may be within Scottish Enterprise, but I would have to check to be sure. I can cover that point when I give you the detail that you have asked for.

This is not a question on end-year allocations or tourism in particular; it concerns some of the committee's responses at stage 1, particularly the last sentence of recommendation 2. The minister, rightly, highlighted the importance not only of developing the knowledge economy and making the necessary investment in education, but also of investment in e-commerce and ensuring that the Ossian project is up and running for tourism.

Recently, with other committee members, I attended a demonstration by Scottish Enterprise of the knowledge web, or k-web, that it is developing. If successful, that will be an effective tool for economic development in Scotland. We asked that developments by Scottish Enterprise be made available to Highlands and Islands Enterprise. That would ensure that we get the best use from the money that is being spent in this area. I have a query about that, because we have not had a response from the Executive.

My second point refers to recommendation 14. We asked for improved monitoring of rurality, ethnicity and gender. I note that the response refers mostly to further and higher education. To the best of my knowledge, some of the monitoring in that area is already rather good. The committee was looking for monitoring across the whole budget area of enterprise and lifelong learning, not just on the lifelong learning aspect.

I guarantee that Highlands and Islands Enterprise gets its share of the cake with regard to the knowledge economy. HIE gets its proportion of allocations that are made to Scottish Enterprise to drive forward the knowledge economy. It is my business to ensure that that is the case.

Douglas Baird is keen to answer the question on rurality and monitoring.

You are correct that the committee recommended in its report that it should have that information. I recall that, at the time, we said that we would give the committee the information that it was asking for in relation to further and higher education. The reason for the delay in responding was that the Scottish Further Education Funding Council was developing its website, on which that information was included. I wrote to the committee two days ago—the letter may not have reached you yet—with all the information that I could gather on further and higher education.

But we wanted the information not just on further and higher education; we wanted monitoring to be extended, especially into economic development areas and spending by Scottish Enterprise, where feasible.

By and large, when spending bodies are given letters of guidance each year about their allocations and the targets that underpin them, they are required to ensure that they can deliver those targets and, at the same time, provide us with information so that we know that they have achieved them. Monitoring is up to those bodies and, as far as I am aware, they do it.

One of the points that is emerging from the SQA inquiry is the lack of proper procedures by the sponsoring department—in this case your department—for monitoring the agency's performance. The major concern is how the department monitors the performance of the agencies that it sponsors. Perhaps there is a need for the department to look thoroughly at how it does that—a quarterly chat with the chief executive and the chairman over a cup of tea is clearly inadequate.

I have two questions on performance targets. First, the budget provisions document includes targets for each line item in the budget, but the targets relate only to the first year of the budget. Can we have the targets for each of the subsequent two years, so that we can look at the spend and the performance targets over the period of the budget? Can we also have reports, at least annually, on actual performance against each of the targets?

Secondly, in addition to providing performance targets, will you indicate the outputs that you expect for the money? We have no indication, from how the budget is presented at the moment, of outputs.

We acknowledge that advances have been made with resource budgeting and so on, but there is no correlation between performance, output and spend. If we are to be able to evaluate whether taxpayers are getting a return for their money, we need the targets, the performance against the targets, the target outputs, and the performance against the target outputs, as well as the throughputs and the spend. Can we have an undertaking that that information will be made available for the three-year period?

As part of the comprehensive spending review, we are required to identify outputs and targets for additional expenditure. Those are laid out in letters of guidance to the bodies that we fund, and the bodies are then required to monitor and report on their achievements. The key targets are published in "Investing in You."

As far as reporting for the three years is concerned, I do not think that we will be able to do that in the short term, but perhaps Mr Frizzell would like to explain the mechanisms.

We could consider how that could be done, if that is what the committee wants. Various publications in the finance series will contain some information, but we will take away the request.

If you issue performance and output targets in your guidance notes, it seems sensible to build in those targets to all the financial reports so that we can evaluate whether we are getting a return for the money.

That is a fair comment.

On the targets in the budget revisions document, the revisions are largely for this year. I suspect that the targets relate to the increased expenditure for this year; I can check that. It is not implicit that the changes will roll forward into later years.

But one of the deficiencies is that when someone looks at the budget documents, they need a research scientist to go through the previous publications to establish whether targets have improved as a result of the increase in the expenditure allocation.

You mean, what is the additional expenditure buying?

To evaluate effectively how well money is being spent, we need all that information.

That is a good point, convener.

The minister will be pleased to hear that I will not be asking about the Scottish Tourist Board.

I want to move on to departmental investment assistance, which—I presume—is money that is outwith the control of HIE and Scottish Enterprise. It is notoriously difficult to predict the level of budget that needs to be set for that; you said that it was roughly 3.5 per cent of the departmental budget. How do you decide which projects qualify for DIA, and do you intend to help existing indigenous businesses? One of the criticisms that we hear constantly is that newcomers get all the help and indigenous businesses get nothing.

How soon will you be able to identify whether there will be an underspend on that specific budget line, and how will any underspend be reallocated to avoid the situation, which we have talked about, of 25 per cent being clawed back by the rapacious grasp of the finance department?

I would not dream of calling my colleague Angus MacKay rapacious.

Perhaps when you get to know him better.

Indigenous businesses already get support. A number of members have mentioned that underspend—I think we have spent it 20 times over today. Again, Mr Frizzell will be able to outline further the detail of how we allocate.

UK guidelines exist for the payment of regional selective assistance, which is what DIA is. England has a parallel scheme. Clear criteria are laid down, and applicants have to submit a business case. Some applications are settled at official level. Large projects go to the Scottish Industrial Development Advisory Board, which meets every month and discusses whether a project should receive assistance. Money is paid out on the basis of SIDAB's recommendations.

Indigenous companies receive regional selective assistance. I am not aware of such companies being squeezed out by inward investors, but inward investment projects tend to be bigger, so they attract a bit more RSA. We are conscious of the need to assist indigenous companies, especially in business start-ups and growth. This year, we introduced a faster-track scheme called invest for growth; the scheme is aimed specifically at smaller businesses, to ensure that they get their applications in and that their applications are processed quickly. We are alive to the needs of indigenous businesses, as far as RSA is concerned.

How soon will any underspend be identified?

That is notoriously difficult to predict, although an underspend is running at the moment. It depends when the business cases are submitted, how long it takes to progress them and when they are agreed. We will know in the last quarter of the year whether we will have an underspend at the end of the year. We will certainly seek to roll the underspend forward if we can.

That is the benefit of having a reserve. The programme is big, and demand led; it depends what business cases come forward. It is helpful to have some flexibility, in the form of end-year flexibility or even—if I may say so—a claim on a central reserve if it is needed. We will know for sure what underspend there is only by the end of the financial year—there is always a push towards that time.

If there will be a fairly large, unallocated balance, do you intend to advertise to Scottish businesses that they should apply for some of it? I am not talking about accepting rubbish applications, but about encouraging people to participate in the programmes.

This process is part of the mechanism of advertising the fact that we have an underspend. An agency such as Highlands and Islands Enterprise, which knows what it wants, will make it its business to ensure that it gets in there. Although it is happy with its settlement for next year, it would find a home for additional resources—I am sure that I will be chapping on its door shortly. However, this process is helpful to enlighten people about any underspend. I have no doubt that we could spend it 100 times by midday today.

I think David Davidson was saying that he wanted to see an improvement in the internal marketing—tied in to the time of year—so that business is geared up for any underspend. In all the evidence that we have heard, no one has ever said that they were aware that there are different considerations at different times of the year regarding the availability of money. Heading up to the year-end, they could be thinking, "We might have a bit more to play with", but nobody has ever said that.

I am happy to take that suggestion on board and to discuss it with officials after the meeting.

You might well say that here we are, in October, still hanging on to the £27 million. When we arrived at that figure, after we had made allocations earlier this year, we did not know the outcome of the spending review in relation to funding for Cubie next year. It may have been necessary—call it a contingency if you like—to hang on to an allocation of that sum, in case we had to carry it forward into next year to pay for Cubie.

We were fortunate in the spending review, in that we received cover for the Cubie money, so now we are trying to move quickly to get some of that money to where it is needed. You are right—that money will have to be spent by the end of the year; it is not continuation money, but a one-off.

I want some additional information that does not appear in the documents. First, will you give us details of the budget for this year and the next two years for spending on the new deal, which comes out of part of your budget, and associated performance and output targets for the new deal programmes? Secondly, is it possible for us to get similar information for the estimated spend on the Scottish University for Industry? We would want to consider that.

Thirdly, we are in the early stages of the introduction of resource budgeting, one of the objectives of which is to try to smooth out the profile of spend—especially of agencies—so that a large chunk of the money is not spent, or wasted even, in the last quarter. I realise that it might not be possible by Friday, but will you provide us with any evaluation you have undertaken of whether the profile of spend has improved this year as a result of the introduction of resource budgeting, or any information you have on the profile of spend?

Information on the new deal and the estimated spend on the Scottish University for Industry should be readily available. Information on the third item may take a bit longer.

That is fine.

Although—apart from the Students Awards Agency for Scotland line—the figures you have here are stated in resource terms, all the other items can be treated as cash. There are no resource implications on all the other lines at present.

Compare your spending plans on enterprise and lifelong learning for the next three years with growth in the same areas of spend in the rest of the UK over that period. If we had the same rate of growth, we would be spending something in the order of £490 million above what is already budgeted.

If we consider the competitive pressures on the enterprise side—in relation to inward investment and the expansion of indigenous businesses—and the lifelong learning side, where it is obvious that we must upscale substantially to compete effectively, that differential represents a potential threat to the competitiveness of the Scottish economy. Clearly, the spend on those areas in the rest of the UK is rising substantially faster than in Scotland. Will you provide us with a comparative analysis of where you believe the differences lie and consider the impact of that on our competitive position?

Especially now that there are so many regional development agencies south of the border, there is a real danger that, on top of all the other pressures we face from the expansion of the European Union and so on, the pressure on the Scottish economy as a result of that low growth—or negative growth with Scottish Enterprise at one stage—in spend could be a major threat to the long-term improvement of the Scottish economy. Will you comment on that?

That is an interesting analysis; I suspect that we will find ourselves debating many of the issues that you raise from opposite sides of the chamber. My colleagues may want to add to that, although it has a political dimension.

But facts are chiels that winna ding and the fact is that growth in projected spend in those budget areas south of the border is significantly higher for the next three years. That has serious implications for the Scottish economy. Will you consider that and give us your comparison and your views?

I will be happy to consider that, although not by Friday I suspect.

Saturday will do.

If committee members have no other questions, I thank the minister and his officials. You have been in the job for only 48 hours, minister, so thank you for attending at such short notice. We look forward to giving you a much harder time the next time we see you.

Thank you for your gentle—and genteel—approach. As I said at the outset, the matters of detail should be in your possession by close of business on Friday. I suspect that the next time I am in this chair, it will not be as comfortable.

Meeting adjourned.

On resuming—