Enterprise and Culture Committee, 18 Apr 2006

Meeting date: Tuesday, April 18, 2006

Official Report 235KB pdf

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Scottish Enterprise

Welcome to the 10th meeting in 2006 of the Enterprise and Culture Committee. I ask everyone to switch off their mobile phones. I have received apologies from Shiona Baird and Jamie Stone, who will be late.

Item 1 on the agenda concerns Scottish Enterprise's budget and restructuring plans. We have received a request from Scottish Enterprise to change the date of its appearance before the committee from 25 April to 2 May. Moreover, we have been informed that, contrary to what we had been promised, we will not receive its written submission this week. The paper will be submitted to the committee after the Deputy First Minister and Minister for Enterprise and Lifelong Learning has seen it, but before Scottish Enterprise officials appear before the committee. I have already pointed out to Jack Perry, the chief executive of Scottish Enterprise, that we need the paper in plenty of time to be able to read it, understand what it is saying and decide the questions that we want to ask.

Usually, I would have agreed to such a request. However, given that the committee decided to ask Scottish Enterprise to attend on 25 April, I thought it only right and democratic for members to decide whether to agree to change the date to 2 May.

I appreciate why Scottish Enterprise has asked for the date to be changed. However, the danger is that a number of issues might become confused.

For a start, there is the question of the budget. At the previous meeting, I was careful to make it clear that I wanted to confine my remarks to the activities of the organisation that are relevant to this committee, including, for example, how it intends to deal with and meet its strategic objectives. Although I accept that everything comes down to money and that organisations need budgets to carry out their functions, I am less concerned about how Scottish Enterprise has managed its budget—which is an issue more for the Audit Committee and the Finance Committee—than I am about its ability to match local work such as skills development and training with national strategic work. I wonder whether Scottish Enterprise officials feel that we want to grill them on the budget and that they do not really want to discuss the matter with us until they have sorted that out with the minister. I appreciate that, but it would be helpful if they were able to speak to us on 25 April and perhaps to come back the next week after their discussion with the minister. If the answer to some of our questions is, "That is still subject to a finalised audit" or "That is subject to further discussions with the minister", that is fair enough. I am interested in hearing my colleagues' comments on the matter.

I will comment on that in a second, but I want to ask for clarification, as I am trying to follow the trail of e-mails that I have received over the past few days. We originally asked for a written report from Scottish Enterprise by 12 April. Am I right in thinking that Scottish Enterprise agreed to provide a report within that timescale?

Yes.

Stephen Imrie, the clerk, received an e-mail on 13 April, the day after that deadline, after chasing up Scottish Enterprise, which said that the board of Scottish Enterprise was now determined that the report would not be released prior to its review by the Minister for Enterprise and Lifelong Learning. I just wonder whether, as a matter of form, it is appropriate for the board of Scottish Enterprise to take that position. We are a committee of the Parliament, and part of our responsibility is the scrutiny of the work of Executive agencies such as Scottish Enterprise. Is it procedurally correct for the Scottish Enterprise board to say, "We're not responding to a request from a parliamentary committee, notwithstanding the fact that we've already agreed to do so, because we want to speak to the minister first"? I throw that open as a question to the committee.

I am also trying to follow the correspondence trail. I disagree slightly with Christine May, as I think that the budget will have implications for how the job can be carried out. The enterprise agency's overrunning so far on its budget creates issues for the confidence of business in Scotland, and that has an impact on us. I was party to the conversation about the meeting on 18 April—today's meeting—and about whether or not Scottish Enterprise representatives should come. My understanding was that they had offered to come today, and were willing to cancel holidays to do so. Given the family-friendly nature of the Parliament, I think it appropriate that we acceded to their request to come on 25 April. However, the fact that we are now being told, "Sorry, we can't come even on 25 April," although they had already agreed to come, and the fact that they were prepared to cancel holidays to come today, causes me some concern about what is going on.

I want to know the answers to some quite simple questions. When did the board know, and when did the officers know, that there were problems? What did they do about them? How did they communicate them and to whom? What steps were taken to resolve those issues? Those are not questions about the future structure of Scottish Enterprise; they are questions about the past that I want answered before I even begin to look at the future of Scottish Enterprise. How can we judge what is placed in front of us about the future of the agency if we do not know that the processes and procedures that were in place in the past were robust enough to cope with the problems that it faced at that time? I have serious doubts that they were robust enough, but somebody somewhere must be able to account for that, and I want Scottish Enterprise to come to the committee.

As a parliamentary committee, we have an obligation to hold Scottish Enterprise to account. We also have an obligation to hold the minister to account for his roles and responsibilities. I do not want to mix the two things up, and I believe that we have a responsibility to fulfil both duties, so I think that we should see both the minister and the Scottish Enterprise representatives, preferably on separate occasions, although if they want to come back on 2 May they will be welcome to do so.

To deal with Murdo Fraser's point, my understanding is that the minister has not insisted on seeing the submission before it comes to the committee. That was purely the decision of the board of Scottish Enterprise. That is my clear understanding. Like committee members, I think that the board should have responded more positively to the request from the committee. At this stage, it is a request, but we have powers, if required, to demand that both people and papers come before the committee. I do not think that we are at that stage, but I agree with Christine May, Karen Gillon and Murdo Fraser that we should invite Scottish Enterprise representatives to come on 25 April and, if necessary, to return on 2 May, because there may be outstanding questions that cannot be answered next week.

We should also require that the submission that it was going to make to us is with us by the end of this week at the latest, because members need time to read the papers before we meet next week. I think that that is a reasonable demand. It is now three weeks since we took the original decision to invite it and since it promised us its written submission. I do not think that we are being unreasonable—I do not want to be unreasonable. I think that our request is fair and I sense that that view is shared by the members who have spoken.

Regardless of whether there is a report for us to read, I would still like us to extend the invitation to Scottish Enterprise to be here. That way, if we have not been given the report, we can ask why.

It is worth emphasising that we tried to accommodate Scottish Enterprise by putting back the meeting by a further week. We are holding it to the commitment that it made to come before us on 25 April. We are not putting on it anything that it did not know about three weeks ago.

I accept all that, but the priority for the committee is to have all the information available to ensure that it can do its job of scrutinising the strategy, and the impact of the new budget on it, as well as possible. I am happy that we invite Scottish Enterprise to appear on the 25th, but I am concerned that we might lack information on another part of the Scottish Enterprise strategy that would have been available to us at a later meeting. If that will be the case, we should invite Scottish Enterprise to come back to the committee at a later date.

I appreciate Richard Baker's point. However, the point of the meeting on 25 April is to be clear about what has happened up to this point, who knew about what, when they knew and what they did about it. It is not rocket science. Private discussions with the minister, about how Scottish Enterprise will solve the problem that it faces and take forward a new strategy, are on-going. I, as well as businesspeople in my constituency, am keen to know how we got into the situation, who was monitoring things and what remedial action was taken when it was known that there was going to be a budget overrun. It is clear from the documents that I have seen that remedial action was supposed to be taken, but that did not happen and I want to know why.

I think that we are in danger of allowing the detail of time and handling to eclipse some of the substantive discussion that needs to take place. I am relaxed about which way we jump on the timing of discussions. The reasons given for putting back the discussion were sensible but, equally, it would be perfectly appropriate for us to have the discussion on the date that was suggested previously. Rather than sitting here having half-discussions about what we might discuss and when, it would be better for all concerned if we just got on with having that discussion in order to get transparency and, hopefully, generate more light than heat around some of the issues that have been in the press. It is important that the discussion is as informed as possible.

I have two points to make. One is to flag up a parallel discussion that took place this morning at the Audit Committee, of which I am a member, about its work on Scottish Enterprise, which has been on-going for some years. It just so happens that the Audit Committee's work now coincides with current issues that have arisen. Useful material has arisen from the work of Audit Scotland and the Audit Committee that would help to inform our discussion and put in context some of the issues around the financial situation and the new arrangements for project appraisal and so on. I am sure that the clerks would communicate the information anyway, but I thought that the point was worth recording.

Secondly, I think that I am at variance with Karen Gillon. I am interested in discussing some of the wider forward-looking structural and strategic issues. I would not like to think that we had constrained any discussion with the agency simply to looking back and raking over the coals of detailed financial management issues.

I wish to make a small point in support of the proposal to invite Scottish Enterprise witnesses to give evidence on 25 April, simply because, as I understand it, that is in advance of the final agreement with the minister on the way forward. When we originally discussed the dates, we wanted to see the agency's witnesses before that final agreement was reached so that we could have some input into the decision making. It would be valuable, particularly given what Susan Deacon has just said about looking forward and being able to contribute to the process if, rather than hearing evidence from Scottish Enterprise after all the decisions have been made, we could hear from it while the decision-making process was still in a state of fluidity.

There is consensus that we want to see witnesses from Scottish Enterprise on 25 April. Is that agreed?

Members indicated agreement.

That would be with the possibility of recalling them on 2 May, if that proves essential. Is that agreed?

Members indicated agreement.

Remember that, provisionally, we also have the Minister for Enterprise and Lifelong Learning coming on 2 May.

Are we also agreed that we should ask Scottish Enterprise for the written submission that we should have received last Wednesday by the end of this week, so that we have time to read it ahead of our meeting on 25 April?

Referring to what Susan Deacon said, could we confirm that we do not wish just to look back, and that we want to be able to discuss what happens in the months ahead and over the next three years? That is the really important bit.

Absolutely.

I want to clarify something. Was the request to put back the meeting with the board of Scottish Enterprise to 2 May, or was the board simply saying that it will not have all the information available for us until after that date?

There are two separate matters. One is the issue of the meeting. The request to come to our meeting on 2 May came prior to last week. Scottish Enterprise will have its meeting with the Minister for Enterprise and Lifelong Learning on the morning of 2 May, and it has said that some information might not be available for us. That was about 10 days ago.

That is a separate matter from what happened last week. We were supposed to get the paper from Scottish Enterprise on Wednesday. Someone from the agency phoned to ask if it was okay to postpone that until Thursday. I agreed to that on the basis that one day would not make much difference. About an hour after we were supposed to receive the paper, we were notified by Scottish Enterprise that the board had decided not to give us the paper until the minister had seen it. Presumably, the paper is available, but Scottish Enterprise did not wish to give it to us until the minister had seen it. We should say that we want the paper this week so that we can question the witnesses next week, as well as addressing the other matters that Susan Deacon and other members have highlighted.

What happens if you go back to Scottish Enterprise on that basis and it refuses? What would the course of action be then?

The committee has powers to demand both papers and people. I really hope that it does not come to that. I hope that Scottish Enterprise sees reason. The last thing that we want is to get into that sort of situation, in which lawyers and others can get involved. Given that Scottish Enterprise is an agency of Government, I hope that it will see reason.

It is worth reiterating the point that Christine May made earlier, that, as with any discussion, process or organisation, the information that can be made available at any given point in time will vary. If the shorter timescale, which is the preferred one as far as we are concerned—the original timescale, if we want to look at it that way—is to be adhered to, Christine May's point stands, as we recognise that, in certain areas, Scottish Enterprise will say that it is not yet in a position to give us all the information, because of certain processes still being under way.

But it should give us what information it can.

Such factors should be explained to us transparently; then, we will engage in the discussion accordingly.

We would want the additional information to be available for the following week, given the meetings with the minister to be held on the Tuesday morning. Is that agreed?

Members indicated agreement.

That is agreed for the meeting of 25 April, with the proviso of possibly also using our meeting of 2 May. We will request the papers by the end of the week so that we have time to read them before next Tuesday.