Meeting of the Parliament

Meeting date: Wednesday, September 11, 2013

Official Report 849KB pdf

---

Enterprise Networks

The next item of business is a debate on motion S4M-07643, in the name of Fergus Ewing, on enterprise networks. I call Fergus Ewing to speak to and move the motion. You have 13 minutes, minister.

15:39

I warmly welcome the Cabinet Secretary for Finance, Employment and Sustainable Growth’s announcement on the budget. As he outlined, the Government continues to make sound financial investments in Scotland’s future despite the on-going and unprecedented tight budget settlements that are being handed to us by the Westminster Parliament.

We can see positive signs of global economic recovery gaining traction, such as growth in emerging markets. We have also had recent positive developments in the Scottish economy. For example, youth unemployment has fallen by 2 per cent over the year and there have been positive business surveys, such as the Ernst and Young 2013 United Kingdom attractiveness survey, which showed that, in two of the past three years, Scotland has been the top-ranked country or region outside London for securing foreign direct investment—FDI—projects. In 2012, Scotland’s FDI projects were up by nearly a half from 2011 to 76 projects, which is the highest number in 15 years, whereas the number of FDI projects that most English regions, excluding London, secured declined in 2012. Investments in England outside London were 24 per cent below their 2010 level, a decline that has coincided with the closure of the regional development agencies and the switch to local enterprise partnerships. In contrast, Scotland, Wales and Northern Ireland recorded large rises.

Our performance and economic recovery can be clearly linked to the actions that we have taken. We are investing decisively in Scotland’s economic growth. We are working through our enterprise and skills agencies and closely with our partners in local government to support businesses to help them grow, internationalise and export, while helping our people to take advantage of the opportunities that will follow. For example, a Ross-shire business that began life in a garden shed has signed a deal with China’s largest online training provider. The directors and founders of Dingwall-based TEFL Scotland, Joe and Jennifer Hallwood, who now employ 13 staff, will be working with the Zhi Bo Hong Yuan Co Ltd—I hope that I have pronounced that correctly—to develop and promote distance and classroom training as well as international cultural exchanges for English teachers across China.

The role of our enterprise agencies is a key element of the distinctive approach that we take in Scotland. Their work in supporting Scottish businesses aims to increase exports and productivity and to ensure that Scotland continues to have sustainable economic growth. A comparison with recent developments south of the border, where the coalition Government has abolished the regional development agencies, shows that our approach is the right one. Further, we understand that the return on investment for every £1 spent by the enterprise network is approximately £6. Scottish Enterprise anticipates that, over the next decade, the net additional return on gross value added from its proposals will be about £5.75 billion.

Some of those statistics are estimates, so they might be right and they might be wrong, but it is clear that, overall, the performance thus far has been strong, and we are reasonably entitled to assume that the agencies remain on the right track and that their performance will be equally good in future.

While the minister is on the subject of statistics, one statistic that his Government is using at the moment is that 75 per cent of people in the Highlands and Islands will benefit from the investment in broadband upgrades that is to take place next year and the year after. However, does he accept that it is more important to invest in the 25 per cent of households and businesses that do not have access to broadband or that are on dial-up speeds? Will he bring his office to bear on that subject, rather than just ensuring that those who already have broadband get something better?

Tavish Scott raises a significant point that takes up a lot of time and consideration. I recently met with the Highlands and Islands Enterprise team that is involved in the broadband exercise and with representatives of BT. The issue is close to the heart of all HIE officials, as they are all citizens, too. As Tavish Scott well knows, particularly in tourism, it is difficult for a business to be successful if it is not on broadband. Ten years ago, broadband might have been a luxury or add-on, but now it is a sine qua non of success, if I may use a Latin phrase, so we will certainly be pursuing those matters.

Our success has been recognised in not altogether likely places. The Financial Times ran an editorial that said:

“The ‘Team Scotland’ approach adopted by the devolved Holyrood government and its enterprise agencies has helped to attract high-profile investments over the past year in spite of the tough economic environment ... While parts of England are still struggling to adjust to the abolition of the regional development agencies, Scotland has benefited from stability and continuity offered by Scottish Enterprise”.

In October 2012, following a regional analysis report into UK public expenditure, one of the report’s authors said:

“An investor looking at the North East”

—the north-east of England, that is—

“has to traipse round the whole of the North East knocking on a variety of doors. They go up to Scotland, they go and see Scottish Enterprise, it sorts out grants for the land, it sorts out grants for training, it sorts out all of the support that they require and that obviously makes it a whole lot easier for them.”

Scottish business supports our approach, too. Iain Pitman, the chairman of Arran Aromatics, said that his company has

“enjoyed fantastic support from Highland & Islands Enterprise, Scottish Enterprise and Scottish Development International over the past years and we hope these positive working relationships will continue to support further international growth and help take Arran Aromatics from a £5.2m business to a truly global brand.”

The role of account management is important, and I want to showcase that in the debate, with—I hope—support from colleagues across the political spectrum. Scottish Enterprise works with approximately 10,000 Scottish businesses, providing support to help them to grow through innovation, access to finance, exporting, leadership and other key business support areas.

More than 2,000 of those companies are account managed, which ensures an approach that is focused on and targeted at those that can deliver the greatest growth. It makes sense to focus the greatest attention—and taxpayers’ cash—on those companies that have been identified as having the greatest growth capacity. Plainly, we cannot support every company with grants, so we have used that method of prioritisation, and I hope that we can, together, endorse that methodology once again today.

Over the period from 2008-09 to 2011-12, it is estimated that 1,120 companies took part in the evaluation. They achieved a net additional increase in turnover of £1.45 billion, contributing net additional gross value added of £575 million to the Scottish economy. Multiplier effects through supply chains and spending by employees are estimated to have contributed an additional £535 million GVA. The total net additional GVA over the period is therefore estimated at £1.1 billion—£1,100 million—which was generated as a result of account management activity. That is pretty significant.

I am grateful to the minister for giving way. We heard some interesting evidence this morning at the Economy, Energy and Tourism Committee—I am referring not to the minister’s evidence, which was interesting in itself, but to the evidence that we heard later from those who are involved in the entrepreneurial arena on the question of account-managed companies.

The witnesses were full of praise for Scottish Enterprise and account-managed companies, but they said that there was an issue with the selection of companies for the programme. Would the minister care to tell us something about how that process might be improved? It is very easy to say that we should select the companies with the greatest potential, but who does the selection, and how does the minister ensure that he always gets the right people into the pipeline?

That is a perfectly valid point, and I am keen—or at least willing—to look at the process again. Plainly, any gatekeeper process must be fixed and certain; if it is too vague, it is not much use. On the one hand, fixing an amount of turnover is open to criticism for being arbitrary—which it is; on the other hand, that gives an element of certainty and clarity, so that endless arguments do not arise about who is entitled to be in and who is not.

That said, turnover is not the only yardstick. Some companies with no record of profits and growth in turnover—in the area of life sciences, for example—are accepted for account management where they plainly have a potentially world-beating product. There is, therefore, an element of flexibility.

This is perhaps not the time to go into all the details, but I am happy to work with members in all parties to look at the issue. My feeling is that we have got the process right, but if there has been criticism from business in committee this morning, my officials will look at that evidence. I am happy to come back to members if they have any specific suggestions in that respect.

Over the period of the evaluation, 6,800 net additional direct jobs were created, with 8,330 created through multiplier effects. The total net extra jobs was therefore 15,130—the fact that more than 15,000 people have a job at least in part because of SE’s account-management services merits mention in the debate—which suggests a GVA return of around £5 for every £1 of SE spend over the four-year period. Account-managed companies currently employ 300,000 people. In the first quarter of 2013, 43 per cent of those companies reported that they had recruited more people, including young people.

Regarding the employers’ views of account management, the evaluation found that 90 per cent of the employers were satisfied or very satisfied with the support that they received; 80 per cent did not think that they could find that support elsewhere; 80 per cent said that the support had increased their level of turnover; 40 per cent said that SE support had helped them to increase international sales; 50 per cent said that the support had helped them to enter new international markets; 75 per cent said that their innovation spend had increased as a result of SE support; and 70 per cent reported that their productivity had improved. Those are good results.

Minister, you are approaching your last minute.

Will the minister take an intervention?

Sorry, I have oodles—to use a non-ministerial technical expression—of my speech left.

I am afraid that we are rather tight for time. You are now in your last minute.

Looking north, I should point out that, over the past five years, Highlands and Islands Enterprise has built a portfolio of accounts comprising 596 business and social enterprises in 50 communities. HIE has also achieved great success, as has VisitScotland, to which I will perhaps return in my closing speech.

To conclude, let me pay tribute to every single person who works in our enterprise agencies. I have met a great many of them in my visits with them to companies in all parts of the country—just about—and they do a great job for Scotland. Today is an opportunity for us to thank them, to pay tribute to them and to see how, through positive suggestions, we can perhaps do even better in future.

I move,

That the Parliament notes the challenging economic conditions of recent years, the emerging signs of the global economic recovery and the vital role that Scotland’s enterprise agencies play in ensuring that its economy responds to these challenges and opportunities; supports the enterprise agencies in their role of delivering the Scottish Government’s purpose of sustainable economic growth, and recognises the importance of the account management and other direct support that they provide to businesses and key sectors across the country to help them grow, create employment, increase exports, boost innovation and help Scotland become more globally competitive.

I call Jenny Marra to speak to and move amendment S4M-07643.1. Ms Marra, you have a maximum of nine minutes.

15:52

Like the minister, I put on record the Labour Party’s support for the work of Scottish Enterprise and all our enterprise networks in developing Scotland’s businesses and economy. When I had the pleasure of meeting Lorne Crerar of Highlands and Islands Enterprise just a couple of weeks ago, I was impressed to hear about HIE’s on-going work and its ambitions for the future.

The evaluation that is the subject of today’s debate highlights much of the good work that Scottish Enterprise and our other enterprise agencies undertake and the rewards that they bring to our economy. In particular, the creation of new jobs and the increase in turnover by Scottish companies will be warmly welcomed by members across the chamber. However, it is important to sound a note of caution that we cannot be complacent, especially in the current economic environment. I am sure that the minister would agree with me on that.

The Government’s motion rightly points out that Scotland has not been immune to the global recession. With long-term youth unemployment remaining stubbornly high, unemployment among women rising and part-time, temporary or zero-hours jobs becoming an increasingly common feature of our economy, we on the Labour benches believe that now is perhaps the right time for the Government to review how our enterprise agencies interact with each other and with local and national Government in order properly to assess how they are delivering against our shared aim of building an economy that is equitable and sustainable and that consists of a skilled workforce doing high-quality jobs under good contracts.

What the member has just suggested was very much a feature under the Labour/Liberal Scottish Executive, when Scottish Enterprise had no clear direction. Since the Scottish National Party Government came to power, there has been very clear direction on where Scottish Enterprise should go. Is that not why Scottish Enterprise has been successful?

I had hoped to strike a conciliatory note—

Order, please. We cannot hear the member.

I was about to go on to propose a review of the agencies. Since 1999, Scottish Enterprise has operated effectively, but it has perhaps not always been as effective as we would like.

As I have said, we cannot be complacent; we must ensure that the money that we spend on our enterprise agencies works to its full potential, expands our economy and gets people the best jobs. That is what I am proposing this afternoon.

When the Scottish National Party came to power in 2007, it announced reforms to the operation of our enterprise agencies that resulted in a number of changes to Scottish Enterprise’s governance and remit, including the transfer of its skills activity and Careers Scotland to Skills Development Scotland and responsibility for business gateway to local authorities. However, since 2007, we have had very little analysis of the effectiveness of those changes, particularly in the light of our challenging economic—[Interruption.]

Excuse me, Ms Marra, but the conversations that are taking place in the chamber, particularly those behind you, must cease.

We need to examine the impact that the reforms have had on workers and business and we believe that now is the right time for a pulse-check.

As well as noting the increased turnover and jobs growth for businesses that are account managed by Scottish Enterprise, the evaluation that was published on Monday also noted that more than 300 companies have been stuck in transition between business gateway and Scottish Enterprise’s account-managed process, having been unable to access the intensive support to be able to grow. Although Monday’s report concluded that the pipeline is not working as effectively as it could be, it could not say whether the problem lay with the kind of companies that are being put forward or the kind of support that they were being offered. A Government review of its 2007 reforms could help to clarify such identified areas for improvement and make it easier for the right businesses to get the right support.

Our enterprise agencies provide a powerful combination of support for business and support for workers. Although the creation of Skills Development Scotland removed the skills function from Scottish Enterprise, the move was designed to bring even greater focus to providing workers with the knowledge and ability that our industries require. The modern apprenticeship scheme, in particular, was designed to allow the Government to deliver on its youth employment strategy and opportunities for all commitment. However, we know from a report published last week by the Equality and Human Rights Commission that those opportunities could be more equitable. The report concluded that less than 0.5 per cent of modern apprenticeship schemes are being taken up by disabled people in Scotland, despite the fact that 8 per cent of 16 to 24-year-olds have a disability, and that less than 2 per cent of modern apprenticeships are being taken up by ethnic minorities, despite the fact that 4 per cent of 16 to 24-year-olds in Scotland are from an ethnic minority background. Finally, it concluded that there is no evidence of women entering traditionally male apprenticeships, despite the many more males who are taking up traditionally female apprenticeships.

Such analysis is important because it shows whose skills we are developing and the kind of labour force we are building. The modern apprenticeship scheme is just one example of our enterprise agencies, our local authorities and our businesses working in partnership to deliver on key Government pledges, and we believe that a review of that partnership working, in which lessons can be learned from good practice, could lead to a workforce where opportunities are available for every person.

That recommendation was reinforced in a 2011 Economy, Energy and Tourism Committee report on the purpose of our enterprise networks, which stated:

“It is of critical importance at this early stage of economic recovery and for the future that industry is able to articulate its needs and receive a joined up skills response, based on local, regional and national mapping of need.”

Presiding Officer, can you tell me whether I have seven or nine minutes?

You have nine minutes, but I can give you a few more seconds for the interruption.

Thank you.

The Economy, Energy and Tourism Committee report examined our enterprise networks as a whole, the gaps in partnership working and the proactive steps that Government could take with local authorities and enterprise agencies themselves to improve their working. It concluded by saying:

“The Scottish Government now needs to give serious thought to what shape enterprise and regeneration support in the future might take.”

Our future challenges for growth and regeneration are clear. We have a workforce that relies increasingly on part-time, zero-hours and temporary work. We have unaddressed long-term youth unemployment, and women are still bearing the brunt of the recession.

Enterprise networks have a significant role to play in overcoming those challenges, and the report that was published on Monday shows that the networks can be successful, but we need to ensure that the Government, local authorities and businesses work together as efficiently and as effectively as they can, so that we spend the public money as effectively as we can and get the right support to those who need it.

I am sure that the minister agrees that there is no room for complacency. A Government-commissioned review of our enterprise networks could present significant opportunities to promote a sustainable and equitable economy that is equipped for further growth.

I move amendment S4M-07643.1, to insert at end:

“, and calls on the Scottish Government to conduct a review of the work and functions of enterprise agencies, including the work of Business Gateways in local authorities, and how they support and enhance its economic strategy and, given the current economic climate, how enterprise agencies are contributing toward sustainable economic growth”.

16:00

It was in 2007 that I previously held the economy and enterprise brief for my party, but it is almost as if nothing has changed in the interim. Here we are, back debating Scottish Enterprise again. I well remember all the debates that took place years ago in which Scottish Enterprise was regularly a kicking boy. I confess that I did my fair share of kicking in those days, and I was not alone in that. Front-bench spokesmen from the minister’s party, which was then in opposition, were more than happy to put the boot in regularly.

However, times have changed and the enterprise networks have changed with them. We now see much slimmed-down organisations that have smaller budgets, fewer responsibilities and a much more focused approach.

The debate is held in the week when a new study has come out about Scottish Enterprise’s account-management approach. The study is largely positive, although it highlighted concerns about the low level of churn in the account-management portfolio, a slow transition from the business gateway growth pipeline to account management and shortages of management and performance data for account-managed companies.

At this morning’s Economy, Energy and Tourism Committee meeting, we heard evidence from WeDO Scotland that there is a lack of information about who can apply to be part of Scottish Enterprise’s high-growth programme and that account managers with relevant experience and expertise need to be aligned with the high-growth companies that are accepted on to the programme. Companies to which account managers from relevant backgrounds are assigned have had positive experiences, but that has not always been the case. We also heard evidence about the disconnect between business gateway and the transition to account-managed programmes, which Jenny Marra picked up on, and about a general lack of knowledge of the help that is available to small and medium-sized enterprises.

There are improvements to make, but they should not detract from what is a positive story overall. There remains a deeper philosophical issue about picking winners, which I debated with the minister a few moments ago. I am sure that that debate will continue.

In her amendment, Jenny Marra makes the case for a full review of the enterprise agencies’ work. I listened with great interest to the case that she made, but I am not convinced at this stage that a review is the right thing to do. We had a major restructuring and upheaval in the enterprise networks not long ago. That has had time to bed down and, overall, the change has been positive. We should keep a close watching brief on that, but I am not sure whether a full review to dig that up and examine the roots is the right way to go at this stage.

My amendment raises a specific issue in connection with Scottish Enterprise—that of the intermediary technology institutes. Members with long memories will recall that, in 2002, the then Scottish Enterprise chief executive, Robert Crawford, set up the ITIs with the laudable aim of helping to commercialise research from Scottish universities. Three ITIs were established—in life sciences, energy and digital media—with offices in Dundee, Aberdeen and Glasgow respectively.

The then First Minister, Jack McConnell, was fulsome in his support of the new initiative. He said:

“Scotland’s Technology Institutes will have a crucial role in making the giant leap to more world-beating companies and high-quality jobs.”

It was not just members of the then Scottish Executive who were supportive. Alex Neil, the then convener of the Enterprise and Lifelong Learning Committee, said:

“they play a vital role in creating the industries of tomorrow”.

Sadly, the ITIs had a chequered history. In the first two years, there was a high level of turnover of senior managers, amid complaints that Scottish Enterprise was cutting back on its initial funding promises. There was a major restructuring in 2007, and in 2009 the operation of the ITIs was brought back in-house. In 2010, Scottish Enterprise took the decision to stop investing in new projects altogether. The total spend over that period was some £231 million. The value of the intellectual property that has been generated to date is assessed to be a mere £600,000. On any measure, that represents a spectacular failure.

This week, I asked the Auditor General, Caroline Gardner, to carry out an audit of the performance of the ITIs. When such large sums of public money are involved, it is important that we understand exactly what went wrong, not least so that we can learn lessons for the future.

I have been aware of Mr Fraser’s concerns about the matter since yesterday, when his amendment was lodged. I would be more than happy to facilitate a meeting with Paul Lewis of Scottish Enterprise, at which Mr Fraser would have the opportunity to discuss his concerns and the detail of them at some length.

Of course, the Auditor General is independent of the Scottish Government and will make her own decision on how to pursue the matter.

You are now in your final 30 seconds.

I am grateful to the minister for that helpful offer, and I look forward to engaging directly with Scottish Enterprise.

I raised the issue directly with Lena Wilson, the chief executive of Scottish Enterprise, in May, when she came to the Economy, Energy and Tourism Committee, and she subsequently provided me with a study that had been carried out by the consultancy Frontline. Although it makes interesting reading, it does not specifically address the performance of the ITIs, so I think that further studies are required.

I applaud ambitious programmes and accept that, on occasion, risks will be taken that do not pay off when public money is spent. I am not looking to damn anyone for mistakes that may have been made, but I think that we need to obtain a proper understanding of what went wrong, not least so that we can learn lessons for the future and avoid the Scottish Government and its agencies repeating the mistakes of the past.

I move amendment S4M-07463, to insert at end:

“, but believes that all public agencies must be able to demonstrate good value for public funds expended; notes that around £231 million was spent on Intermediary Technology Institutes (ITI) with very little return, and calls for a full independent audit of ITIs and their investments so that lessons can be learned for the future”.

We come to the open debate. Speeches should be of a maximum of six minutes, because we are very tight for time.

16:07

On the afternoon of the publication of the draft budget, it is entirely appropriate for us to debate a motion on the enterprise networks. It is helpful, I think, to place the motion in context. The context is that we are now, at long last, tentatively emerging from what some commentators have described as the deepest recession for more than a century.

The performance of our enterprise agencies must be considered against that background, and it is against that background that the results that they have achieved can only be described as staggeringly successful. A payback that achieves more than £5 of benefit for every public pound that is spent is a worthy achievement in any climate; in the economic climate of recent years, it is remarkable.

The Economy, Energy and Tourism Committee has had the opportunity to question senior officials from the enterprise agencies on several occasions over the past two years, and I know from those sessions that the evidence of the effectiveness of our enterprise agencies can stand up to scrutiny. I pay particular tribute to the robust methodology that Scottish Enterprise has developed to analyse its effectiveness. It takes a courageous and confident organisation to subject itself to such robust self-analysis, and I am convinced that that is part of the key to its success in recent years.

The clear goals and direction that the Scottish Government has set are another part of the reason for the success of our enterprise agencies. This is about economic understanding and competence. The great economist David Ricardo made the case very well in his theory of comparative advantage, which can perhaps be summarised as, “Do what you are good at and leave others to do what they are good at.”

In helping businesses with high-growth potential and in facilitating sectors in which we excel, we are following that wisdom. For many months now, that has been seen to pay off as a range of statistics have steadily shown that we are generally outperforming the economy of the UK as a whole. Employment is higher, unemployment is lower, growth is returning faster than it is to the UK as a whole and, over the long term, Scotland is performing extremely well indeed.

Just as the Scottish Government is following a course of economic wisdom, sadly, George Osborne is ignoring the wisdom of perhaps England’s greatest economist, John Maynard Keynes, and we are all paying for the chancellor’s economic ineptitude. Think how much more we could achieve in Scotland if Mr Osborne had not cut our capital budget by 26 per cent. Think how much better our oil industry could be performing if he had not mounted his ill-conceived tax grab.

On a point of order, Presiding Officer. I understood that the topic for debate was Scotland’s enterprise networks, on which we have a motion and amendments before us. Is it in order for a member to address a subject that is completely outwith the terms of the debate?

Members should try to stick to the terms of the debate. If any member wishes to intervene on another member, they can ask to do so. Mr MacKenzie, please continue.

Think how much better our renewables industry could be performing if George Osborne was not dithering over energy market reform, causing huge uncertainty and an investment hiatus. Think, too, how much better we could do if we could reduce VAT on tourism and if we could reduce air passenger duty. There would be more enterprise.

Think how much better we could do if we could work with the oil and gas industry to provide a stable and consistent tax regime. That would bring more enterprise and more success for our enterprise companies. Think what we could do with the prudent use of borrowing powers following Keynes’s counter-cyclical wisdom, boosting the economy in times of recession and leaving a lasting legacy of better infrastructure. There would be more enterprise. Think how much better our enterprise companies could do and how much more they could achieve.

Given that the economy is now in a very different place from where it was in 2007, does the member not agree that this is the time for a review of the enterprise agencies?

I disagree entirely. I think that they are doing staggeringly well. Any review—if there is one at all—should be conducted on the basis of understanding how on earth they are managing to produce incredible results against such a difficult background.

Will the member take an intervention?

The member is concluding.

The Scottish economy appears, at long last, to be on an upward trajectory. A fundamental and necessary ingredient of the growth part of the business cycle is confidence, and the opportunities of next year’s referendum are steadily becoming apparent and are a contributory factor in this growing confidence. That confidence, in turn, will help us to reach an escape velocity in which our enterprise companies will thrive and we will, at long last, throw off the drag factor of the economic incompetence of the UK Government.

I am afraid that if members go over their time, another member will have to be dropped out of the debate.

16:13

I will try to introduce a little balance to the debate, following the hyperbole of the previous speaker. In the interests of balance, I recognise and support many of the priorities and successes of the enterprise agencies. However, equally, I think that it is important to identify the problems and gaps that justify Jenny Marra’s call for a review.

I welcome many of the enterprise agencies’ activities—for example, the focus on offshore renewables, which I hope will benefit my constituency in due course. I recognise that Scottish Enterprise is making a great contribution to that. I was also happy to recognise the successes in internationalisation when we had our debate on Scotland and China.

Finally, and most important in the context of today’s debate, I and the Labour Party more generally welcome the focus on growing business and account management. One reason why we support that, of course, is that we started it; we instituted it through the smart, successful Scotland strategy of 2001, which was centred on the idea of growing businesses. We absolutely accept the principle of that. As the report that evaluated account management came out this week, it is right that we are focusing on it to a large extent in the debate.

I hope that, in winding up, the minister will answer the question on the budget statement that John Swinney did not answer. I asked him what the effect of the transfer of £41.8 million from revenue to capital would be on the enterprise budgets next year. I do not necessarily say that that is a good or bad thing, because I do not know what the precise detail of that is, but I have a suspicion that account management must have a large resource budget and worry that that transfer may have an effect on account management. Perhaps the minister will explain that in winding up.

The report that came out this week is quite a balanced document in its way. I point out to the minister that it says on page 114:

“The common perception that SE actively account manages 2000+ companies is inaccurate”.

I think that the minister will remember saying that in his speech, but that is a quibble and a detail, in a sense.

The more basic point to make is that we have to think of the context of the report. The evaluators went out to talk to the people who get a great deal of help from Scottish Enterprise. It is as if someone did a survey of my constituents and identified the people to whom I have given the most help in the past year. I am sure that 90 per cent of them would say, “He’s great.” Far be it from me to say whether 90 per cent of all my constituents would say that, but members can get the distinction. That is part of the report’s methodology. People who got support were talked to.

One of the concerns in the study from the Economy, Energy and Tourism Committee two years ago, I think, was that companies with the potential to grow could be left out in the cold. I think that Murdo Fraser made that point in his intervention. That report was especially worried about the gap that might exist between the business gateway and account management. In a way, that was picked up in the evaluation report.

Mr Chisholm has made many good points and I am happy to pursue some of them, but I suggest to him and other members that, if they come across any company that they think should have account-managed services and they write to me, I will ensure that the matter is fully investigated.

As ever, the minister is helpful. I thank him for that.

The next word that I had written down was “review”. The report this week that we are focusing on talks about reviewing the business gateway pipeline

“to consider whether pipeline companies have access to the level of support needed”.

That is not the only place in the report in which the word “review” is used. Therefore, I do not think that people should be so surprised by what Jenny Marra proposes. She is not proposing it just because of this week’s report, which is, in general, as I have said, perhaps too favourable to Scottish Enterprise. However, it talks about reviewing several aspects of what currently happens. Ministers and Murdo Fraser should bear that in mind.

This week’s report is worried about

“the slow transition from the Business Gateway Growth Pipeline to account management”

and about

“The limited ‘churn’ in the account management portfolio.”

It raises many issues and concerns while there are also positive reports.

A majority of the improvements are generated by a small group of companies. I was surprised to read that 10 per cent of companies deliver half of the gross value added. That is great, but it reminds us that there are many other companies that are not making the same progress or, indeed, are not being helped at all.

You are in your final minute.

I am in my final minute, so I cannot make all the other points that I wanted to make. However, I was struck by the report’s statement that Scottish Enterprise needs to

“improve its internal data capture and monitoring systems.”

In my mind, that connected with some of the equality issues, because there is a little paragraph in Scottish Enterprise’s business plan about how it is very much focused on equality, but there is very little indication of that in either its business plan or the evaluation report. Indeed, if we were to go by the pictures in its business plan, there would be few, if any, women-led businesses in Scotland, which is not the case. I think that Scottish Enterprise needs to focus on that to a greater extent and capture that data so that it focuses on equality issues as well as the issues of growing companies and the economy.

16:20

Nothing, but nothing—well, almost nothing—and I say this from years of domestic and international business experience, makes the blood flow more than entrepreneurial success. The concept, the design, the development, the making and the engineering of both hard and soft products, and, above all, the marketing, the selling and the servicing of the same are an infusion that makes you want more. Unsurprisingly, therefore, I support the main thrust of the motion. I do, however, place a question mark over the implied emergence of global economic recovery. If Mr Fraser will bear with me, I will get to the enterprise issue in a minute.

Recent predictions of a slowdown in Chinese and Indian GDP and a slowing in United States employment, aligned to inflation forecasts, puts one somewhat in the Jeremiah camp. Here in the UK, Osborne-esque ebullience on the economy is just a fig-leaf. If I may, I address that particular issue to Margaret McDougall. Total debt in the UK—personal, public and corporate—stands at £1.40 for every £1 that we earn. That is down from £1.60 over the past year, but it is set to rise again because we have house mortgage lending instead of the diversion of investment lending as intended to much needed access to finance for our SMEs. Here comes another housing bubble, just in time for the next Westminster election.

However, leaving the Jeremiah instinct aside, I think that the situation provides Scotland with a divergent economic opportunity to be realised via its various good enterprise networks after a yes vote next year. Although it will be easy to be critical, as some will be, constructive criticism should be set against a generally improving scenario because of anti-austerity actions, as were manifest in the excellent budget today. Since 2007, 18,160 new enterprises have been born; six years later 54.7 per cent of them still survive—despite harsh economic conditions—which is 2.7 per cent above the UK average.

In Scotland, there were 2,215 more new business starts in 2011 than in 2009; in Dundee, there were 10 more; in Perth and Kinross, there were 40 more; and, importantly, there were 25 more in South Ayrshire. In terms of the demise of enterprises over the same period, the number for Scotland fell from 15,085 to 14,110; in Dundee, the number fell from 320 to 300; in Perth and Kinross, it fell from 480 to 440; and, importantly, it fell in South Ayrshire from 335 to 290. In general, despite the financial environment, performance is up and recovery in Scotland is working in the face of Westminster austerity. All the data, of course, are courtesy of the Office for National Statistics.

Now, are we complacent? Of course we are not. Can the agencies deliver even greater efficiency in national economic growth? We heard this morning from witnesses at a meeting of the Economy, Energy and Tourism Committee about the need for greater localism and better communication between the business gateway and other agencies. The varied locations and organisational construction of the business gateways provides in some cases a patchy approach to cohesion and a fit with the national enterprise strategy. However, I feel sure that that will be addressed in the not too distant future.

There is little doubt, however, that both Scottish Enterprise and Scottish Development International have played a very significant part in Scotland’s current anti-austerity situation and its positive reaction to rebutting what has been the advance of industrial and commercial recession. There is also their role in raising Scotland’s international profile, underwritten by the Ernst & Young report declaring that Scotland is the place in the UK to be for inward investment. Our stock is higher, as is our profile and quality, and our export potential and performance continue to rise. The enterprise networks’ pursuit of the Government’s economic strategy, concentrating and focusing on winning sectors, is a totem to management and people in organisations and will continue to be an exciting entrepreneurial journey.

Although it is not yet a formal Government enterprise network agency, it would be remiss of me not to recognise the burgeoning social enterprise and third sector network. That important enterprise sector grew by 28 per cent in the past two years and we were told this morning that it has 335 routes to finance. It needs meaningful business support, but it is increasingly a key enterprise network. With the impending public procurement and community empowerment and renewal bills, it will be even more important as the days go on.

In the face of the most titanic of recessions, Scotland has been open for business, and the contribution of the enterprise agencies, notwithstanding their on-going review of efficiencies and organisations, has been a bulwark in that effort.

16:25

I am pleased to have been called to speak in this debate as it gives me an opportunity to highlight the huge contribution that companies in the north-east—not just in the oil and gas sector, but in the food and drink sector—make to the Scottish economy and, for now, to the UK economy, and to discuss the ways in which Scottish Enterprise has helped many of them.

The statistics that were announced over the past few weeks are impressive. Although there is still a long way to go, employment in Scotland is at its highest level in almost five years, economic inactivity dropped by 20,000 over the past quarter and we have the highest youth employment rate of any nation in the UK, at 57.2 per cent compared with the UK average of 49.8 per cent.

Scottish Enterprise has played an important role in driving economic growth in the Scottish economy, and its ambition is to grow the number of companies under its account-managed arm. Some 300 of its account-managed companies are in the oil and gas sector and about 250 are in the food and drink industry, with 46 of those in Aberdeen and Aberdeenshire.

An example of the help that Scottish Enterprise has given is its work with Hydrasun in my constituency, where the First Minister launched the oil and gas strategy. Hydrasun is a leading supplier of fluid connectors, hoses, fitting instrumentation and process control products, coupled with added-value services including integrity management, primarily to the oil and gas sector but also to a wide range of secondary sectors including the petrochemical, marine and defence industries.

Scottish Enterprise has supported Hydrasun to export to 58 different countries. Interestingly, it employs a number of linguists to help with that. Scottish Enterprise has helped with an acquisition in Brazil and has helped to drive Hydrasun not only to export but to establish operational bases and manufacturing facilities in Angola and the United Arab Emirates. The company also services the Gulf of Mexico oil industry and has partnership and distribution agreements in Egypt and Thailand. Its truly impressive growth has been helped by Scottish Enterprise.

While Scottish Enterprise has helped by account managing that company and others, it has not helped them on its own. It has worked with Scottish Development International on exports and with local universities on research and development. Many of the quarterly meetings that politicians in the north-east have with Scottish Enterprise Grampian have been at the premises of account-managed companies, and the feedback has been overwhelmingly positive. The advice that has been given has not just been sectoral. Middle managers were initially sceptical about having management skills training with colleagues from other industries, but it proved to be very “worthwhile”. I am sure that it would not have happened without the help and co-operation of Scottish Enterprise.

Work with other organisations has been particularly evident in the food and drink sector. The food and health innovation service, which is based at the Rowett institute of nutrition and health in Aberdeen, directly supports food and drink companies that seek to exploit the burgeoning market for healthy food and drink products, which is estimated to be worth £20 billion in the UK and more than £300 billion globally.

In that regard, Scottish Enterprise works with Scotland Food and Drink and, for example, the James Hutton Institute, in my constituency, and its crop research arm in Dundee, which has helped to develop soft fruit production by introducing new products. Scottish Enterprise also works with other people in the food and drink sector, of course.

I am particularly interested in how small and medium-sized companies grow their businesses, access the skills of our university graduates and take on apprentices. The Scotgrad scheme has much merit but needs far more publicity. There also needs to be more co-ordination between the business gateway and Scottish Enterprise, with a view to driving companies into greater growth, as many members said.

Scottish Enterprise is on the right track. I have met no one in the agency who is in any way complacent or thinks that it cannot continue to improve its service to the Scottish economy and Scottish companies. Is the study that has been mentioned not an independent review, on which I am sure that Scottish Enterprise can build?

16:31

Scotland’s enterprise agencies are a vital tool in helping Scotland to meet the economic challenges that we face. They are integral to the creation of a sustainable economy that fosters innovation and investment.

I welcome the publication of the “Evaluation of Scottish Enterprise Engagement with Account Managed Companies”, but the report was commissioned by Scottish Enterprise and is fairly self-congratulatory. As Jenny Marra said, Scottish Enterprise has not been independently reviewed since 2007. I support calls for such a review. If the agency was scrutinised by, for example, the Public Audit Committee, we could establish how well it is performing in delivering the Scottish Government’s economic strategy.

It says in the report that the account management model that the enterprise agencies use is effective, provides value for money and should remain largely unchanged. As the minister said, 80 per cent of people who took part in the telephone survey are not confident that they would be able to source comparable support from anywhere other than Scottish Enterprise.

An issue that SMEs raise time and again, which was raised in this morning’s meeting of the Economy, Energy and Tourism Committee, is access to finance. As it says in the report,

“It has been increasingly difficult for many companies to obtain bank loans and/or overdraft facilities to manage cash flow issues or facilitate growth.”

In the area that I represent, Sercon Support Services Ltd is a successful, award-winning small business—indeed, it is used by Scottish Enterprise as a model of best practice. Members might expect such a company to be able to get funding to expand, but Sercon struggled to find further investment funding. It is worrying that such a strong company, which has Scottish Enterprise’s support and put forward a robust business case, was rejected by funders. We must ask how many smaller, less well-established companies are being rejected.

We need to do more to ensure that support is on hand for small and medium-sized businesses, which are finding it hard to secure funding from banks as a result of stricter lending criteria or simply because banks are risk averse. Banks need to be clearer about the sectors that they will support and what they are looking for in business plans.

I am pleased to say that Sercon eventually secured funding. However, the company had to go through a protracted process, with many disappointments along the way.

The Scottish Government and the enterprise agencies need to do more to support businesses when they apply to banks for loans, particularly if the business provides a direct economic benefit to the area, as Sercon does, by safeguarding and creating employment opportunities.

Perhaps the minister will say today what the Scottish Government and Scottish Enterprise are doing to address such issues and whether it is possible to extend the lending portfolio of enterprises agencies, to ensure that companies, especially start-up and smaller businesses, can access much-needed finance so that they can grow or become better established.

It is not just financial support that SMEs need but advice on managerial issues, accountancy and a broad spectrum of other issues. There is also a need to focus on areas of high unemployment such as North Ayrshire, which, according to Scottish Enterprise’s statistics from April 2012 to March 2013, had only two companies—out of 268 in Scotland—that were considered to have growth prospects. Will more support be considered for areas that are economic black spots?

That said, according to the report, from 2008-09 to 2011-12 the account management model has contributed £1.11 billion of additional economic value to the Scottish economy and Scottish Enterprise has—as the minister stated earlier—created and/or safeguarded 15,130 jobs. We just need to ensure that that support is better targeted, perhaps towards women and minority groups and towards SMEs rather than higher growth companies.

In my area, I have seen the direct benefit of an enterprise agency’s work to safeguard jobs. Highlands and Islands Enterprise has played an integral part in stopping the closure of the university marine biological station at Millport by working with the Field Studies Council, North Ayrshire Council, Cumbrae Community Development Company and the wider community to secure its future. There is no doubt that the closure of the marine station would have devastated the local economy, with the loss of 30 quality jobs and up to £2 million removed from the local economy.

Although there is some evidence that Scottish Enterprise is supporting the economy, there remain questions on whether it could perform better, particularly in respect of support to small and start-up businesses as well as in areas of direct economic need.

I support the Labour amendment.

16:37

I had the great pleasure of spending a large part of last week at the offshore Europe conference at the Aberdeen Exhibition and Conference Centre, which hosted well over 50,000 delegates and 1,500 stands, with not only multinational companies but small companies, some of which are just starting out.

I know that the minister spent quite a lot of time there—I know that because I saw him. During the two days that I managed to attend, many folk said that they had had the opportunity to speak directly to him. That was very much appreciated.

Obviously, there are the big players in the offshore energy market, but there are also the small companies that I referred to. Some companies are moving away from their former traditional markets to enter the oil and gas field.

One question that I always ask when I visit companies is what their relationship is with Scottish Enterprise, whether they have an account manager and what their relationship is with the local council’s economic development team. When I did the same thing a number of years ago as a councillor, the reports back about Scottish Enterprise were normally unfavourable. That has changed dramatically. While there is always room for improvement, the system that we have now is much better than the previous system.

I will make one plea about some of the small companies from outwith the north-east of Scotland that are trying to break into oil and gas. By doing so, I am showing that I am not completely and utterly parochial. Sometimes, account managers from elsewhere in the country do not have the oil and gas experience of those who are based in the north-east of Scotland. I would like to see better flexibility and use of resource. It would be a great boon to account managers if they were to get back-up—and an even greater boon to the companies that are trying to break out of their traditional markets and into oil and gas.

I am also enthused by the fact that the VisitScotland expo is coming to Aberdeen in April 2015. It will showcase the best of Scottish tourism and will involve tour operators and travel operators from around 40 countries—from as far afield as India, Russia and the middle east as well as North America and Europe.

Such events are often times when Scottish Enterprise comes to the fore. It may be a tourism event that is designed to boost Scottish tourism and Aberdeen as a tourist destination but, beyond that, I am sure that many folk who are there will want to do business in this country.

I have listened carefully to what others have said and I think that, sometimes, no matter what side of the constitutional argument they are on, people in this place can sometimes downplay how well we are doing. There was an article on foreign investment in The Economist on 31 August, entitled, “Catching the Scots—why England trails the Celtic fringe”. It is well worth a read.

Speaking about the situation south of the border, the article states:

“Ernst & Young blames government policy. In 2010 the coalition announced that England’s nine regional development agencies would be replaced by 39 local enterprise partnerships (LEPs), voluntary consortiums of local councils and businesses. This was done two years later. It seems to have made things worse.”

It also states:

“In Scotland, Wales and Northern Ireland, where devolved administrations run economic development, the agencies are undisturbed.”

It continues:

“Scotland is simply better at co-ordinating different arms of local and central government to deliver what inward investors want—roads for new factories, planning permissions, training packages for workforces and the like. A Scottish government minister cracks the whip at any laggards.”

I do not know whether that last sentence is true, but I hope that the minister will confirm it when he sums up the debate.

Will the member give way?

I am in my last minute—I am sorry.

The article concludes:

“Edward Twiddy, chief executive of the North East LEP, covering Tyneside and Durham, enviously admires his northern counterparts ... But his Celtic competitors are well ahead, and they show no sign of slowing down.”

I think that we could power ahead even further in that regard if we had the full levers of power of a normal, independent Parliament. I am quite sure that, if the minister had that power, we would be doing even better than we currently are.

16:43

I gently point out to Kevin Stewart, after his great tribute to The Economist, that the magazine once published another article about independence, which was featured on the front page. He might not have been so keen to quote that article in the context of his exposition of what a wonderful magazine The Economist is. Perhaps we should always take these arguments in the round.

Will the member give way?

No, you have had your say, Kevin. We listened with great interest but did not give a lot of thought to what you said.

I ask members to use full names, please.

A lot of speakers on Mr Stewart’s benches have run down England this afternoon. That is a bit of an unfortunate side to this debate, but I suppose that we will just have to put up with it for the next year. We have heard the independence budget and this is a debate on the independence aspects of the enterprise networks—that is what it is going to be like.

What Maureen Watt said about a clear direction being given to the enterprise networks is absolutely true, which is why I think that the Labour amendment misses the point of the debate. There has never been clearer direction for all the quangos and agencies in Scotland: they are told what to do by the Government of the day.

Like it or not, that is the nature of the quango state that we have in Scotland today—it is absolutely controlled from the centre. The challenge function of the Highlands and Islands Enterprise board and the Scottish Enterprise board that I recall from my time as a minister does not exist in the same way today. That is not just my assessment; it is what board members have told me privately—of course, they could not possibly say those things publicly.

Does Tavish Scott agree that the point of my amendment is not to make a point about whether the agencies are Government led but to say that a robust institution that is performing well, such as SE, should not fear further scrutiny to check that public money is being spent most effectively and to support the businesses that need it the most?

Let me make a parliamentary point to that reasonable argument from Jenny Marra. The last thing that Scotland should do at a time of difficult public spending cuts is to spend yet more money on consultants and big KPMG-type organisations, who would undoubtedly be commissioned to do the work.

I am not about to say that Mr Fraser’s committee is not doing its job properly, but Parliament’s job is to scrutinise such matters. If people want parliamentary reviews of the structure of the enterprise companies, they should get the parliamentary committees to take it on and conduct a full and proper investigation into the matter.

In fairness, that is what happened in the past. If Parliament did not do much of a job with that, perhaps we should examine ourselves rather than always assume that the right thing to do would be to employ expensive external consultants to examine other areas of public policy.

Will Tavish Scott give way?

No—although I will come to Mr MacKenzie, because he made some really silly points to which I want to reply.

Mr Ewing was looking for ideas, which is a good principle. Let me give him an idea that relates to Scottish Enterprise. As I am sure he is aware, there is a considerable movement worldwide to invest in high-speed rail. The interesting aspect from a Scottish perspective is not so much the track but what the track sits on. In Scotland, at Heriot-Watt University, we have a centre of world excellence in that, which Scottish Enterprise has had a small look at. I thank it for that interest.

Our challenge is not in how to engineer a train that goes much more quickly; it is in the existing track testing. There is a track-testing station at Heriot-Watt University that is a global centre of excellence. The university has just signed a memorandum of understanding with Atkins—the major international engineering business—that can take the work into a new dimension. Indeed, the chief executive officer of Atkins said at the signing of that memorandum on 19 July:

“With 15,000 miles of new high speed track due to be laid in the next decade … we have a Centre of Excellence which is a ‘go-to’ place for design and testing of new ideas such as design of new shape of embankments.”

I hope that the minister will encourage his ministerial colleagues to visit the centre and take an active interest in it. As yet, that has not happened at ministerial level. It has happened at Scottish Enterprise level and I am grateful for that, but the centre needs similar ministerial interest for the simple reason that—the nationalist case is always running down England and I must bring this piece of news to the SNP’s attention—in its most recent regional growth fund the UK Government awarded moneys to the University of Huddersfield and its institute of railway research to create a centre of innovation in rail for exactly such work.

SNP members always say that nothing good ever happens in England. There is an example of investment in rail in England. We could do the same in Scotland. Scottish Enterprise has shown some interest in it, but we have not had any ministerial involvement in the centre of excellence here in Scotland’s capital city. I plead with the minister that he show some leadership where his colleagues have not and that he have a close and encouraging look at the centre.

You are in your final minute, Mr Scott.

I will make one other point on oil and gas. I do not think that Mike MacKenzie ever listens to anything that Fergus Ewing says because, when Oil & Gas UK published the latest investment figures, the first press release that I saw that morning was from Mr Ewing, saying what an outstanding success it was and that it was all down to the considerable work that was being done—

Will Tavish Scott give way?

The member is concluding.

Mr Ewing said that it was all down to the useful work that the Scottish Government and the UK Government had been doing. He was at pains to press that point and I applaud him for that, so I do not know where Mr MacKenzie was when those world-leading UK investment figures were announced and I do not recognise his description of the UK oil and gas industry. We should talk it up rather than use the kind of examples that he used in his arguments.

As the decommissioning round that is going on in the northern North Sea continues, I hope that Mr Ewing and his ministerial colleagues will concentrate hard on the supply chain, because that is where there is great potential for Scottish jobs in both the Highlands and Islands Enterprise and the Scottish Enterprise areas.

16:49

I will comment on some of the speeches that members have made.

I disagree with most of what Tavish Scott said, but there is something with which I agree. Why have a review? It seems to me that, as Mike MacKenzie said, such a review would serve only to help other nations in the United Kingdom to understand how well we are doing here in Scotland. I am a bit dubious about what the purpose would be.

I am delighted to be speaking in the debate because it gives me another opportunity to promote my own region, North East Scotland, even if Maureen Watt and Kevin Stewart have already done a lot to promote it. It is really astonishing to see the improvements that have been made over the years to support the many businesses that make the north-east such a fantastic place to live and work.

Many of the speakers today—some of them on other parties’ benches—told us that we can do much more. I agree that we must always strive to do better in this global economy, but the place that Scotland occupies in the world today is truly astonishing. We are recognised and appreciated in many sectors and we are punching well above our weight.

From personal experience, I can illustrate that that was not true 25 years ago. Picture this: a young Frenchman in his 20s decided to offer a new seafood haulage service from Scotland to Spain—an opportunity for many small and medium-sized seafood companies across Scotland that wanted to open up new markets.

To my surprise, the promotion of the new service was led by Food from Britain. I was asked to come down to London to launch the service—a service that had nothing to do with London. I spoke at the event but struggled to recognise any faces and was introduced to people who had no interest in the project. FFB was created in the 1980s to promote the export of UK-produced food and drink, and it lost all its funding from the Department for Environment, Food and Rural Affairs back in 2008—rightly so.

Today, it is a different picture. Scotland’s enterprise agencies are playing a vital role in building the capability of Scottish producers. The food and drink steering group led by Scottish Enterprise—with representation from Scotland Food & Drink, the Scottish Government and VisitScotland—is ensuring that the food and drink offering is a priority at events such as those surrounding the Commonwealth games, the Ryder cup and the year of homecoming. The result of those efforts is clear for all to see, and the boom in the Scottish food and drink sector looks set to continue with the help of those agencies.

The north-east is at the heart of the sector, producing a fantastic array of food and drink products. Again, that was not always the case. On Monday, I was in Oldmeldrum in Aberdeenshire, visiting a vibrant distillery that is run by someone who understands better than most how much Scotland’s exports should be celebrated. If members visit the distillery, they should be sure to pronounce “Glen Garioch” correctly; otherwise, Kenny, the manager, will be quick to correct them and to point out that it is the name of one of Scotland’s oldest distilleries.

Kenny told me that, in the mid-1990s, the distillery had to stop production and shut down as it was unable to sell its stock. Now the distillery is booming, helped by a lot of the Government agencies. It is producing and exporting like never before, filling about 100 casks per week with the finest malt whisky.

We are truly moving forward as a nation. Scotland as a brand is now being used in everything that Scotland’s enterprise agencies do—with great success. It is not by accident that figures published this week show that the Scottish food and drink industry has met its turnover goal six years ahead of schedule, with a turnover of more than £13 billion in 2011 against a target of £12.5 billion by 2017.

The plan is to do more, and 2015 will be the year of Scotland’s food and drink—another way to promote the best of Scotland. As members can see, I love food and I love it to be Scottish and bought locally. Last Sunday, I went to the Huntly Hairst food and farming festival with Dennis Robertson, the constituency MSP for Aberdeenshire West. It is another event that is promoted by Scottish Government agencies. In its fifth year, the event is a great place for promoting and showcasing local food production, and it kick-started the Scottish food and drink fortnight in the north-east.

While Dennis held a surgery in the town hall, I sat in front of a full plate of stovies at the Gordon Arms hotel. We know how to make stovies in Huntly—after all, it is where the world stovies competition takes place every year. On Sunday, for the first time, a man won the trophy.

Another highlight in the north-east this year was the Dundee flower and food festival, which came at the start of Scottish food and drink fortnight. Glen Garioch distillery participated in that well-attended event and recorded much interest for its malt whisky.

Like Kevin Stewart, I, too, went to the offshore Europe conference, where I met a lot of Government-led organisations. One of them was VisitScotland, which had a special stall for the new MyAberdeen app. I encourage any member who wants to visit Aberdeen to get that app to ensure that they find the best food and accommodation that the north-east can provide.

You must conclude, please.

There is a big challenge in the energy sector—

I am afraid that you are over your time, so please come to a conclusion.

Yes, thank you.

The north-east is the best place to learn, to work, to visit and to eat. Scottish Enterprise and other organisations need to be ready to do much more, because a yes vote in 2014 will open many doors for our skills and expertise, our produce and our global brand—Scotland.

I call Ken Macintosh, to be followed by Stewart Stevenson, whose time may have to be reduced.

16:55

I am sure that the minister will take heart from the fact that all members and parties will, I think, support the Government motion. Few people in Scotland, let alone in Parliament, would not wish for Scotland’s enterprise agencies to play a vital role in securing economic recovery. I am sure that we are all delighted to hear that the account management system that has been introduced at Scottish Enterprise is working well.

We should say “Well done” to an organisation—and, more important, to its staff—when it does well, but given the size and scale of the difficulties that face the Scottish economy, do we want the message that the Scottish Parliament sends out today to be one of congratulation? Given that the output of our economy is still below the level of five years ago, and given the level of unemployment facing our country, particularly among young people, as well as the squeeze on nearly every family’s income through wage freezes, overtime bans and increases in the cost of living, does it not feel a little complacent, or at least a little premature, to pat ourselves on the back at this stage?

I would certainly hate to think of Mr Ewing or his colleague Mr Swinney taking a leaf out of George Osborne’s book and, after five years of recession, looking at some modest signs of recovery and thinking that they are vindicated and that their work is done. If the minister is tempted to do that, he might, rather than model himself on George Osborne, take a look at the more admirably cautious Vince Cable. If he does not want to do that, I remind him of today’s news that 10,000 more Scots are out of work.

I have no doubt that the staff at Scottish Enterprise and Highlands and Islands Enterprise are working assiduously to grow the economy and to help business and industry, but might not we in the Scottish Parliament play a more productive role if we were to examine more objectively the difference that those organisations make to the Scottish economy—the value that they add—and how that could be improved?

A quick glance at the companies that currently receive grants from our enterprise companies reveals a number of familiar names—KPMG, Honeywell and Hutchison 4G. I am sure that those are all admirable organisations, but they are also highly successful and profitable global multinationals. Is it really right that we, the taxpayers, should give financial support that is likely to end up with the shareholders of those multinational companies?

I also note that SSE received more than £1 million from the Scottish Government while simultaneously being fined £10.5 million by the Office of Gas and Electricity Markets for mis-selling. I have no particular beef with any of those companies, but I wonder whether more locally based and Scottish-owned small and medium-sized businesses might be more worthwhile recipients of our support.

I reassure Ken Macintosh that all emoluments that are paid from taxpayers’ money to any company are based on the strict application of laws and are especially directed towards job creation. In other words, the money is paid only when the jobs are created. In essence, that is the principle that applies, and it is one that I believe has created a great deal of employment. Unless Mr Macintosh can say which grants should not have been made, I wonder what the purpose of his criticism is.

I will give a specific example. This very week, I received a letter from Amazon. As the minister will know, many members—as well as many people who are denied full employment by the company and many hard-pressed local businesses that are faced with closure because of competition from Amazon—are dismayed that we are handing over millions of pounds to a company that does not pay its fair share of taxes.

In the letter that I received from Amazon, the company admits to having been awarded approximately £4 million of grants from Scottish Enterprise in the past five years. I am not sure whether that sum includes the taxpayer subsidy towards the cost of land, but either way it is a substantial sum of money.

My letter to Amazon asked a number of questions, including specific ones such as:

“How many staff work for Amazon in Scotland on so-called zero-hours contracts?”

My favourite sentence in the reply was:

“The vast majority of temporary associates in our fulfilment centres work a 40 hour week, and we are working with our employment agencies to guarantee all temporary associates at least 20 hours per week.”

I am sure that we all know the euphemisms that are used to disguise or temper the more brutal truth. I wonder how many of those who are working in a high-security warehouse, denied recognition of their own trade union membership, think that they are employed in a “fulfilment centre”?

I asked about zero hours contracts, which is in itself a euphemism for the denial of employment rights. The reply talks of “temporary associates”, but we must not allow ourselves to be sweet-talked into accepting jobs at any price—or worse, into paying for jobs that would have had to come here anyway. Given Amazon’s need to supply goods the length and breadth of Scotland, I cannot believe that it would not have pressed ahead with its so-called “fulfilment centre” without Government support.

Without wishing to be critical of either agency, does the minister not share the further concern that Scottish Enterprise and HIE have, between them, spent more than £50 million on severance pay over the past five years? That is £50 million that has been spent not on hiring people, creating employment or finding jobs for the tens of thousands of Scots who are desperately seeking work, but on shoving people out the door. I find it difficult to see how that vast sum of money has contributed to the sustainability of our economy.

Please come to a conclusion, Mr Macintosh.

Thank you, Presiding Officer.

I ask the minister whether he heard this morning about the work of the Scottish cities alliance, and whether he will comment on the work of our local cities as engines of growth. I urge him to accept Labour’s amendment to the motion.

17:02

I have a special interest in the enterprise network, as the constituency that I represent is the only one that straddles the areas that are covered by Highlands and Islands Enterprise and Scottish Enterprise, so I have to deal with both agencies in my constituency work.

The experience is markedly different in the Highlands and Islands, where social concerns are at the centre of the agency’s activity, in contrast to the business-focused approach in the south of Scotland. I commend the Highlands and Islands Enterprise model to the rest of the country.

I have a couple of examples from elsewhere that might inform the debate to some extent. Our English friends do not necessarily get everything wrong. I have to say that because my English granny, who came from the north-east of England, would not—from up where she is—wish to hear me saying any different down here. The north-east is one of the areas of England that has suffered most from Westminster’s abolition of the regional development agencies.

One of the people with whom I worked when I was Minister for Transport, Infrastructure and Climate Change was Andrew Adonis, the Labour Secretary of State for Transport at Westminster—and a very effective minister he was. He is now working closely with a group of local authorities in the north-east of England to try to fill that gap, produce economic reports and co-ordinate activities. They are doing very well, in comparison with doing nothing, but they are denied the tools—as the report that he has published make clear—that would enable them to compete as effectively with Scotland as they wish. Many people in the north-east of England are now looking to us and considering the ways in which we could collaborate across the border, and I wish them well in that endeavour.

I will say just a word or two about Brazil, which is now part of the BRIC acronym—Brazil, Russia, India and China—that denotes the next wave of successful economies that will come to the fore in the world in the years to come. When I visited Brazil in 1982, it was in very deep difficulties indeed. In the eight days I was there, the value of the cruzeiro—Brazil’s currency—halved, and by the time I got back home and received my credit card statement with my transactions from Brazil, I actually had to pay less than one fifth of what the price had been when the transaction was conducted. That economy was in a difficult place.

However, the Brazilian Government then recognised that capital investment was essential to get the country out of the hole it was in. For example, the Government supported a university engineering course that included an exercise to design a commuter aircraft. That project led to Embraer, whose aircraft can now be seen at all our major airports—including Edinburgh, Aberdeen and Glasgow—operating regional routes around Europe. It is now a successful company. Out of adversity, the right investment policies by Government, through its enterprise agencies, can lead to successful outcomes.

Let us not imagine, however, that every investment will be successful. Indeed, it is necessary that we are not so risk averse as to invest only in certainties. We must be prepared to take some of our money and put it into projects that involve slightly higher risks than we might otherwise want. Some of those will pay off big style, but we should be prepared to carry the can for those that do not, and we should be prepared to make such investments.

You are in your final minute.

Tavish Scott took a pop at Kevin Stewart’s references to The Economist, but I must say that The Economist is an excellent newspaper. My wife used to write for it, so I am bound to say that. It was deeply offensive to Scotland for The Economist to include on its cover, in the edition to which Tavish Scott referred, a map of Scotland with the label “Skintland”. That label was actually quite disjointed from the article inside. I confess—please do not tell anyone that I did this—that, for some months afterwards, whenever I passed through a railway station, I moved The Economist behind other magazines, so ashamed was I that people might buy it.

Presiding Officer, I have—to use the minister’s word—oodles more that I could say. Would that I had the time to do so, but thank you very much.

Many thanks. I apologise for having to curtail your time.

We turn to closing speeches. I remind members who have participated in the debate that they should be in the chamber for closing speeches.

I call Alex Johnstone. You have a very tight six minutes.

17:07

The debate has been useful, in that we have skirted round many points that concern the current position of the enterprise networks and the direction in which they should go. At times, we have not dealt with issues in great depth, but some subjects have been properly aired.

Reading the motion in the name of the minister, which I will vote for later, I think that he is a bit ungenerous to mention

“the emerging signs of the global economic recovery and the vital role that Scotland’s enterprise agencies play”,

while forgetting that, in reality, we are currently surfing a wave of UK recovery. If we were not part of the UK economy, we might be suffering some of the ill effects that other European countries are suffering today.

That failure to regard the importance of that relationship has been the theme of today. Earlier today, the Cabinet Secretary for Finance, Employment and Sustainable Growth delivered his budget statement, which in my view was a responsible, balanced and—within his own policy priorities—sound statement. However, he spoiled it all by saying that he balanced the budget only because of the fiscal discipline that is imposed on him by the Scottish block grant and that if he were not subject to that discipline, he would break the bank, blow the budget and reverse every one of the hard-earned gains of the past three years. Similarly, Fergus Ewing and many of his back benchers, in taking the opportunity to take sideswipes at the UK and the UK economy, have also chosen today to destroy what could have been a reasonably consensual debate.

On the amendment in the name of Jenny Marra, I must say that we on this side of the chamber will find it difficult to support. In my view, a root and branch review of our enterprise networks would be a mistake at this stage. It is important to recognise that there have been radical changes in the enterprise networks, in which review has played a significant part. At the same time, I believe that a responsible minister—I believe that we have a responsible minister—will keep the network constantly under review and ensure that he addresses the needs of the network in a constructive manner. Indeed, in his opening speech the minister made it clear that during today’s debate and subsequently, he is seeking ideas and is willing to work together with others.

I turn to my colleague Murdo Fraser’s amendment. I have to say that there is some concern about the performance of the intermediary technology institutes, so I welcome the minister’s offer in that respect.

However, the enterprise network’s tendency over the years to indulge in the practice of picking winners was also mentioned. We do not want the network to decide who will succeed or who will fail; instead, we want it to pick the companies that will deliver the best growth, the best employment and the best long-term returns for the Scottish economy. What concerns me most about the Labour Party’s position, which was set out at some length by Margaret McDougall and supported in some respects by Ken Macintosh, is that it wants to pick companies not on the basis of potential to succeed for Scotland, but more on the basis of geography, social criteria and—I believe—even gender. It seems to be a case not so much of picking winners as of deliberately picking losers. If that is the kind of review of the enterprise network that the Labour Party wants, I am not prepared to address it.

Will Alex Johnstone give way?

I am sorry—I want to complete my remarks.

One or two other members who have spoken in the debate are worthy of note, not least of whom is my sparring adversary, Kevin Stewart, who began his remarks by saying that he does not want us to downplay our successes. Like John Lewis, Mr Stewart is never knowingly undersold; however, he then went on to indulge in a discourteous critique of our neighbours’ performance.

Will Alex Johnstone give way?

Perhaps we should recognise the importance of the relationship that we have with our friends on the other side of the border and not indulge in that sort of activity.

Will Alex Johnstone give way?

If Kevin Stewart is not going to sit down, I will have to hear what he says—but he needs to make it quick.

The article in The Economist clearly showed that people in the north-east of England are a little bit jealous of what goes on here. I think that, after independence, they will refocus their attention from London to north of the border and that, after independence, we should help them to boost their economy.

Kevin Stewart should, as was suggested by another member, read the whole of The Economist, not just the bits that he likes.

You have 30 seconds, Mr Johnstone.

Tavish Scott offered an interesting interpretation that I largely support. However, I thought at one point that he was going to propose a high-speed railway to Shetland—a proposal that even an independent Scotland would find hard to swallow.

Please come to a conclusion.

It is the Conservatives’ intention to support the Government motion and to seek support for our amendment. Unfortunately, however, we will be unable to support the Labour amendment at decision time.

Thank you very much.

Jenny Marra has a maximum of seven minutes.

17:13

The Labour Party will at decision time support the Government’s motion, our amendment and, despite Alex Johnstone’s remarks, the Conservative amendment.

Indeed, I want to clarify for Mr Johnstone that neither I nor my colleagues were advocating that Scottish Enterprise should select businesses to support based on anything other than their potential for economic growth and their contribution to our economy. Mr Johnstone made particular reference to my comments about gender, but I must draw to his attention the fact that they were based on evidence from the EHRC. The commission did not say that Scottish Enterprise should invest in businesses just to put more women into work but, according to its evidence, 0.5 per cent of modern apprenticeships are being taken up by disabled people in Scotland, despite the fact that 8 per cent of 16 to 24-year-olds have a disability, and less than 2 per cent are being taken up by ethnic minorities, despite the fact that 4 per cent of 16 to 24-year-olds are from an ethnic minority. That evidence shows that opportunities are not equal across our society, which is certainly a point to bear in mind.

The evaluation that was published on Monday goes some way to demonstrating that Scottish Enterprise adds to our economy and that it gives high levels of support to business. However, as I said, the evaluation also provides an opportunity to take a pulse check on how agencies interact with one another, with local and national Government and with business. Since 2007, when the economy was buoyant, no substantial Government-led review of our enterprise agencies has taken place, despite a rapidly changing Scottish economy and a rapidly changing economic landscape that could—although not necessarily—need new solutions. The position is worth reviewing.

As Ken Macintosh said, the long-term youth unemployment figure remains high. We heard this morning that an additional 32,000 16 to 24-year-olds in Scotland came out of work over the summer. The unemployment rate among women is rising, and workers increasingly face little choice but to take part-time or temporary work or a contract that means that they must wait for the phone to ring—a zero hours contract. Our shared aim is to get more young Scots into jobs, to support women in Scotland and to offer every person and every business the support that they need.

I will touch on some of the speeches. Margaret McDougall made a pertinent point about the plight of some small businesses that want to secure bank loans and about how Scottish Enterprise can work with them to help them in that process. Is the minister willing to address that point in closing or in a letter later?

Kevin Stewart spent time on listing Scottish Enterprise’s achievements and congratulating it on them. I agree with much of that but, as I have said in the chamber before, robust and successful institutions should not fear review, scrutiny and more suggestions on how they could operate better. Healthy organisations welcome a review process and, particularly in the changed economy since 2007, such scrutiny should be welcomed.

Tavish Scott said that, at a difficult economic time, we should not commission reviews that could be expensive. The point is well made, but I contend that it is particularly appropriate to review, assess and scrutinise an agency that is tasked with driving our economy at such a difficult economic time. We need to check that the precious public funds that are set aside for economic growth have the most impact and that we are getting the highest return for every pound that we spend.

Tavish Scott suggested that committees of the Parliament could step up and do the job. I know that the Conservatives will not support our amendment and that Murdo Fraser is sceptical about a review, but much of what he said in opening agreed with the purposes of a review. Might he undertake a review of Scottish Enterprise in the Economy, Energy and Tourism Committee?

Jenny Marra has made the point about her review. What measurement parameters would she expect to come out of it? How would they interact? What assessment would she make? Would the parameters include the rate of return, employment or investment?

The parameters and measurables would be set by the experts who conducted the review. Chic Brodie knows that I am a politician; I would leave it up to the experts to set out the criteria, but that should certainly be done.

Maureen Watt asked whether the study that was published on Monday is not an independent review that Scottish Enterprise can build on. I say to her that, although Monday’s report is useful, it is—unfortunately—not an independent report. It was commissioned by Upper Quartile, which is a research group that Scottish Enterprise commissioned. As Malcolm Chisholm pointed out, many of the report’s findings were taken from businesses that receive support from Scottish Enterprise. An inquiry that Murdo Fraser’s committee led would allow us to hear from businesses that feel that they need support, start-up businesses and fledgling initiatives, to see whether Scottish Enterprise is meeting their needs.

The member needs to bring her remarks to a close.

In conclusion, I think that it is time for a review, and I hope that the committees will also take heed of my suggestions.

I call Fergus Ewing to wind up the debate. You have until 5.29.

17:20

I thank everyone who has contributed to the debate and welcome Jenny Marra and Murdo Fraser—a new face and an old hand—to the enterprise portfolio.

I found the debate useful at times, and I would like to respond to some of the specific points that were made, which is what I always try to do. I will do so in no particular order.

In his speech, Ken Macintosh focused on whether grant payments should be made to some of the largest companies. I say to Ken Macintosh and other members of the chamber that regional selective assistance is not paid for zero hours contracts. Let us get that clear. No one should leave the chamber with the belief, or should draw from Ken Macintosh’s speech the inference, that RSA is paid for zero hours contracts. That is not the case, nor should it be the case.

Will the minister take an intervention?

No, as I have a lot of ground to cover. I just wanted to make that point.

Will the minister take an intervention on zero hours contracts?

No—I want to move on. That is the rule on RSA. [Interruption.]

Mr Macintosh, the minister is not taking an intervention.

Tavish Scott mentioned the work that is being done at Heriot-Watt University and the memorandum of understanding with Atkins. I will contact Heriot-Watt’s Steve Chapman. I have had good relations with him, and we played a little part in helping with the university’s tremendously successful establishing of a campus at Putrajaya in my early days in the portfolio. I praise the efforts of Heriot-Watt and I will, of course, continue to work with it in that regard.

Chic Brodie quite rightly mentioned the important role that the third sector and social enterprises play. Companies from those areas are among the account-managed companies.

Will the minister take a brief intervention?

Please let me get through what other members said. I do not have a lot of time and I want to show respect to the members who took part in the debate, one of whom was Margaret McDougall. She mentioned access to finance, and Jenny Marra repeated the request that I respond on that issue. That is perfectly correct—that is what debates are for.

My response is that we and the enterprise networks do a fairly substantial amount of work to encourage banks to lend, to ascertain their policies and to help them engage with businesses. This year, Scottish Enterprise intends to help 350 to 400 companies secure growth finance by improving their financial readiness. Mr Swinney, the First Minister and I have had regular meetings with bank representatives. That will, of course, continue, and I will write to Margaret McDougall with a more comprehensive statement of the help that we seek to provide.

Access to finance is very important, but we should remember that, at the end of the day, banks—not Governments—make the decisions. Frankly, I do not think that Governments should make the decisions, although we want banks to take better decisions. I remind members that appeals against decisions of banks to reject lending have had an extremely high success rate. I drew that to MSPs’ attention fairly recently, in a letter.

Jenny Marra and the other Labour Party members who spoke in the debate suggested that there should be a review. I was not persuaded before the debate that there was a case for a review. I listened with interest to the debate, in which a number of good points were made. I appreciated the spirit in which Jenny Marra made her contribution. I do not have a closed mind on the issue or on any other topics that relate to how we can help people in Scotland tackle the problems that we face.

I want to run through a number of points that indicate to me that now is not the right time for a review, after which I will be happy to give way to Jenny Marra. Incidentally, according to Jenny Marra’s amendment, the review is to be conducted by the Government, but towards the end of her speech she suggested that the review could be carried out by a Scottish Parliament committee. It would be up to the committee, not the Government, to decide whether to hold a review. There seemed to be a shift in the approach that Jenny Marra advocated.

Be that as it may, I will run through six or seven arguments. First, I do not think that there are significant systemic failures in the system of delivering enterprise support. Were Jenny Marra able to point to any such failures, there might be a case for a review. One would expect a call for a major review to be accompanied by a forensic analysis of failures that show that the system is wrong and is not working. That is normally why one has a review, but I do not think that that applies in this case. Nor do I think, with respect, that any such failings have been identified by members in the debate.

Secondly, the business gateway delivery arrangements came into effect on 1 October last year, so they have not yet been in place for a year. Surely, we do not want to disrupt the work that people have been doing when the first year of the operation has not yet been completed, far less any evaluation of that work.

Thirdly, the new arrangements include a local development forum that is chaired jointly by me and Stephen Hagan. We have met once and will meet every six months or thereabouts, and that is a welcome form of scrutiny.

Fourthly, there is a regular review of the business gateway pipeline companies, involving an analysis by the business gateway, working with Scottish Enterprise and the companies themselves. It is fair to recognise that that review should do its work. Also, companies in the pipeline do not necessarily become account managed companies, as not all companies will achieve the level of success and growth appropriate for account management. Not all companies will go through the end of the pipeline in that way.

Fifthly, to have a review would cause an element of diversion and disruption of staff time. This is not the moment for us to divert the time and attention of those who work in the enterprise network to the conduct of a Government-instructed review. There is so much work to be done now—work on task forces such as those involved with Vion and Freshlink Foods, work on Buckie Shipyard, work in the opencast coal mining sector, work in relation to many administration and solvency positions, the partnership action for continuing employment team’s work throughout the country and work relating to positive opportunities. If we diverted the time of the leadership and staff—in local authorities, Scottish Enterprise, Scottish Development International, HIE or VisitScotland—to a major review, I do not think that they would thank us. I believe that not as a matter of politics, but as a practicality born out of the experience of working with those excellent public servants every day of the week.

Jenny Marra rose—

I am happy to take an intervention from Jenny Marra, but I do not think that the case for a fundamental review of the enterprise delivery system has been made.

I thank the minister for saying that he does not have a closed mind on the matter. Businesses tell me that they must constantly review what they are doing to ensure that they are competitive in our economy. Should the institution that supports them, after six years of the same practices, not take a similar approach? It is not only when failure occurs that we need to review what we are doing. We need to take a pulse check constantly to ensure that we are meeting the needs of our economy.

I assure Jenny Marra that all the enterprise agencies review, consider, analyse and examine their own performance all the time internally and together with ministers. However, with respect, that is different from having a fundamental review of the whole system. I do not believe that this is the time for that, but I am happy to continue to engage on the topic with Jenny Marra and all members in a co-operative fashion.

In drawing my remarks to a close, I pay tribute to all those who work in the enterprise agencies more widely. VisitScotland, which is playing a blinder for Scotland and winning international accolades, is headed up by Malcolm Roughead and Mike Cantley. I also pay tribute to Lena Wilson, Crawford Gillies, Alec Paterson and Lorne Crerar as well as people whom we do not hear so much about, such as David Rennie, who heads up the oil and gas team in Aberdeen. I work daily with all those people and we recognise today, perhaps for the first time in detail, the work that they have done. We have had an opportunity to learn about that and we thank them for their contributions.

Nevertheless, we are not complacent. As long as there are any young people who wake up in the morning without a job and without a place in training, apprenticeship or education, we will continue to do our utmost to put that right. Today, John Swinney’s budget has made sure that we will be able to do that as best we can under the devolved settlement.