Regional Selective Assistance
We now move to members' business. I ask those who are leaving to do so quickly and quietly. The final item of business today is a debate on motion S1M-128, in the name of Allan Wilson, on regional selective assistance. The debate will be concluded, without any question being put, after 30 minutes.
Motion debated,
That the Parliament calls for the retention and development of the regional selective assistance priority scheme in areas of high and persistent unemployment.
I realise that this might not be the most exciting subject for this time of the evening, but I believe that regional selective assistance is a vital tool in combating the areas of high and persistent unemployment in our communities.
With the advent of a new assisted areas map, it is appropriate and opportune to have a brief debate on the workings of RSA and how it might assist areas such as my constituency of Cunninghame North, most of which remains eligible to receive RSA. The assisted areas map represents an excellent result for Scotland and is a good example of the UK Government working closely and effectively with the Scottish Executive and the Scottish Parliament.
The negotiating strength of the UK has got us a good deal overall on RSA and structural funds cover, which we discussed this morning. The Scottish Executive has been able to define the areas of eligibility at a detailed level in line with local needs. Regional selective assistance remains probably the most important incentive for companies that are thinking of establishing or consolidating businesses in eligible areas. It is important to remember that RSA is available to indigenous companies as well as to inward investors and to companies that need to invest to protect existing jobs as well as to those that are investing to create employment.
Perhaps that is not sufficiently understood. The impression is sometimes given that only big, glossy inward investors qualify for regional selective assistance, which is far from the truth. I am assured that no indigenous company has been turned down for regional selective assistance because the money has been taken up by inward investors. Perhaps the minister will confirm that.
I want to stress two issues. First, RSA must continue to span the whole range of job-creating activities in eligible areas. It is all very well to talk about focusing RSA more effectively on sustainable, so-called quality projects—no one would argue with that—but that must be interpreted flexibly. In many of the areas that have most need of regional selective assistance as a tool to attract the high-tech projects that I suspect the word "quality" refers to in this context, for example, the three towns in the Garnock valley in my constituency, any development that brings substantial additional employment is welcome— the higher the quality, the better. I would hate to think that a call centre or a fairly basic manufacturing investment might be lost because RSA was concentrated on more sophisticated or headline-grabbing projects. I hope that the minister will give an assurance that that is not the case.
I also want to make a strong plea for the regional selective assistance priority scheme, which has now been running for two years and targets five areas, including the three towns in north Ayrshire. In general, the scheme allows regional selective assistance in those five pilot areas to be paid at a substantially higher rate—up to £3,000 per job extra—than is paid anywhere else, if the company takes on employees who live in those areas, which have high and persistent unemployment. In principle, it is an excellent scheme that should go a long way towards levelling the playing field for communities that have the greatest difficulty in attracting investment and employment. However, I am far from convinced that the scheme is being promoted with much enthusiasm or commitment by the various economic development agencies.
What national advertising has been done, for instance, to draw attention to the existence of RSA priority and the significant extra benefits that can be offered in the five pilot areas? The answer, I suspect, is none. I meet companies all the time that might be interested in going to those three towns, rather than some other location, but which have never heard of RSA priority. What has been done to promote it? I make a serious plea for a real marketing strategy to raise awareness of the priority scheme, not only on behalf of the three towns in my Cunninghame North constituency, but on behalf of the other four pilot areas, in particular the areas of high unemployment in Glasgow, Dundee and the Vale of Leven.
The pilot period for RSA priority will soon come to an end. I do not want anyone, especially at ministerial level, to suggest that it should be abandoned because the uptake has been low. Uptake has been low largely because so little has been done to stimulate interest in and awareness of the potential of RSA priority. What I want to hear from the minister today is that RSA priority will continue in the pilot areas, but at a higher rate per job than has been the case hitherto, and that
such an increase will be accompanied by an innovative, imaginative and strident marketing strategy to promote RSA and RSA priority plus.
I congratulate Allan Wilson on securing the opportunity for a debate on this subject, which I hope will trigger a genuine discussion on how we should tackle issues relating to regional selective assistance.
I want to endorse Allan Wilson's point about the availability of and access to the body of information that exists on RSA. It would be fair to say that the economic community in Scotland is a bit deluged, if not bamboozled, by the amount of information that is available. Companies commit a vast amount of time to try to penetrate—to get to the nub of—the information that they require, which often is not available to those hard-pressed companies at particular stages of development. There is a broad view of those matters in the Parliament and there is an obligation on us to examine how we could improve access to the information and advice that exist in Scotland, to assist companies in their development.
There must be a debate in Scotland on how we structure the support that we make publicly available to companies. There is a danger that a geographical determination of those issues can skew the pattern and effectiveness of regional selective assistance. A case in my own area has concerned me a great deal, although it is moving towards some form of resolution.
Stevens Blinds is a successful company in Brechin in my constituency, employing about 50 people. It develops Venetian blinds and operates in cramped premises in the centre of Brechin, which is in an area that is not without its economic problems, although it is surrounded by areas that do not have quite the same problems.
The advice often given to that company over many years has been, "If you could just move your factory to Arbroath, we would be able to get you a new factory"—because Arbroath happened to have access to RSA resources. It would have been an unmitigated disaster if the company had followed that advice, as it would have lost its greatest asset: the 50 or so people who walk to work in Brechin. The development of that opportunity was not right for that company and, thankfully, that case is moving to resolution. However, the geographical concentration of RSA can skew our ability to assist successful companies that deliver a lot of employment to our communities to expand in particular areas. I understand Allan's arguments, but we must dig into the debate and find some flexibility to assist the companies that have the most to contribute to the Scottish economy.
Finding a mechanism within the area of public assistance to companies to assist their development is another vital point in the debate— we must find the companies that have the greatest potential to expand, be they inward investment companies or indigenous companies. We must find a mechanism to identify the companies that have the most to contribute to employment growth in Scotland, although I openly concede that that will be difficult to devise and that it is a difficult approach for our enterprise companies. However, if we can find that mechanism, we might find that the economic rewards to the Scottish economy are much greater and deliver much more than the simple geographic formula that concentrates RSA.
Allan Wilson has triggered an interesting debate and I look forward to hearing other speakers and to seeing where the debate takes us in scrutinising the most effective use of this public resource.
Members should restrict their speeches to about three minutes, please.
I thank Allan Wilson, my neighbour and colleague in Cunninghame North, for the opportunity to debate the motion. I am happy to support Allan's call for the retention and development of regional selective assistance priority schemes in areas of high and persistent unemployment.
The three towns priority area, to which Allan referred, is split between my constituency and his, but I would dearly like to see its positive effects spread through more of Cunninghame South, given my constituency's structural problems. I wish to take this opportunity to outline to the minister some of the problems in Cunninghame South before addressing the action that needs to be taken and how regional selective assistance priority can help.
On employment in Cunninghame South, north Ayrshire's unemployment rate is consistently 4 per cent above the Scottish average. While Scotland's employment rate is expected to grow by around 3 per cent by 2007, that of Ayrshire is expected to fall by 1 per cent, mostly accounted for by north and east Ayrshire.
The situation has been worsened with the announcement that the Volvo bus and manufacturing plant, as the Deputy Minister for Enterprise and Lifelong Learning knows, wants to move its operations to Belgium and Sweden. That is symptomatic of the problems of the Ayrshire
economy: 95 per cent of Ayrshire's exports are generated by firms with more than 200 employees, making us vulnerable to such relocations. Our business birth rate remains low and existing small and medium enterprises are still reliant on traditional markets. Ayrshire's economy is overweight in the traditional manufacturing sector and underweight in growth sectors, such as creative industries and new business.
There are positive signs, including the expansion of higher education. In my area, we will have the new north Ayrshire college next year. The siting of Universal Scientific Instruments in Irvine will provide 800 jobs over the next three years. However, north Ayrshire urgently needs a greater knowledge base, to attract new industries to the area and to encourage diversification in existing firms. Given Ayrshire's highly self- contained labour market, generating jobs locally is the most effective way of addressing structural change, so I call for an extension of the priority scheme to cover more of north Ayrshire. The status of the three towns remains and I hope that funding will stay at least at its current level and perhaps will increase to more than £3,000 per person, to increase the competitiveness of the priority areas.
In areas such as north Ayrshire, which have suffered from high unemployment for decades, the Scottish Parliament represents a real hope for change and a brighter future.
I endorse what John Swinney said about supporting Allan Wilson's motion and agree with what he said about finding more effective ways to support companies that are most likely to expand. Regional development requires joined-up government—it is not just a matter of economic incentive. Irene Oldfather was correct to point to the importance of local education opportunities; that must be done strategically.
I have spoken before about transport as an important strategic factor. I know the Ardrossan, Saltcoats and Stevenston area, as I was a candidate in Stevenston at the general election. Thus I appreciate that the Ayrshire lobby for the M77 must look at the transport requirements of that part of Ayrshire as well. The local authority's ambitions for economic development are unlikely to be realised without decent transport infrastructure. That argument is true for all the south of Scotland and, indeed, for many other areas of Scotland. The Executive must look at transport in relation to the location of industry.
One of the issues that disadvantaged Ayrshire was the selection of sites for high-technology, single-user industries, when Ayrshire lost out to the Clyde valley. The Government must make sure that sites are available, because the promotion of sites through Locate in Scotland and other agencies is often critical to decisions made on location.
The fine-tuning of the map for selective assistance was a subtle attempt to maximise the number of areas and the proportion of population that would be covered. It has become clear from the fallout since then that concentrating on wards where the unemployment figures are high does not do the whole job. Mention was made today of problems in Dundee—there are similar problems in Galashiels and other areas.
The industrial zonings, the sites, the facilities and the buildings might not be in the wards designated—grants must go to wards where the industrial estates are. In some cases, the map misses the places where the money needs to go. I do not know whether it is possible to fine-tune it before the Community finalises it, but if there is any way in which the Executive can do so, I hope that it will take on board the concerns of local authorities and enterprise agencies across Scotland.
It seems as if this is a three towns initiative debate. If it is a members' debate, it is disappointing that there are not more members present. It is also disappointing that there are not more members from further afield than Ayrshire.
As a resident of the three towns area, despite the fact that I represent Carrick, Cumnock and Doon Valley, I welcome the debate, because I know that many of the people who live and attempt to find work in the area around me are in the third generation of those who have never had a decent or quality job. Allan Wilson is to be congratulated on initiating the debate. It is unfortunate that more members are not here to examine the issue.
When we look at the future of selective assistance, we should do so critically. Allan was right to point out the benefits that have been brought to the priority areas. I welcome the fact that priority was given to areas of high unemployment, in an effort to ensure that money was targeted at the correct areas, but in some instances, some of the promised jobs have not materialised. We must be honest about that. We must also be honest about the fact that some of the companies that have received assistance, particularly some of the manufacturing and electronics companies, have not brought the
working conditions that, as a trade unionist, I would like to see. If we are looking to the future, we should concentrate on that.
Let us target the money and support firms, but let us put some conditions on that support: jobs should be high-quality, and there should be trade union recognition and decent working conditions. If companies do not deliver those conditions, they should not be able to get up and walk away. That should apply to inward investments and indigenous companies. The money is there for a purpose. Let us ensure that it is targeted at the right areas, but we should also ensure that people have the working conditions that they deserve.
I congratulate Allan Wilson on initiating the debate and on his motion.
Regional selective assistance is a useful tool to have in one's toolbox to deal with high unemployment. Although I do not represent a constituency in the central belt of Scotland, I can assure everyone that there is high unemployment in many parts of my constituency of Inverness East, Nairn and Lochaber. One such area is Kinlochleven, which has been the home of the aluminium company, British Alcan, for many years. Next spring, the British Alcan operation will close down. Kinlochleven was based on the aluminium industry, so its departure will have grave consequences. To be fair to the Government agencies involved, particularly the local enterprise company, and the local councillor, great efforts have been made.
My concern about regional selective assistance is that in attracting new employment—whether through inward investors or indigenous businesses—to areas of high unemployment, we find that there are many other barriers to overcome. Generally, locations where there is high unemployment are not seen as the optimum or preferred locations. My plea is that RSA should be applied with the maximum flexibility.
I am reminded of a story about an unnamed official of Locate in Scotland whom I met some years ago, who told me that when Scotland and Holland competed to attract inward investment, Scotland lost out. That was because the Dutch equivalent to Locate in Scotland took the rule book, put it to one side, and said to the prospective employer, "The rule book is over there. Tell us what you want." I have a suspicion that that modus operandi might operate in other European countries, too.
I hope that the Executive will consider my plea for flexibility in applying RSA. It is a useful tool, but it is by no means the only one that can be used when tackling the serious problem of unemployment.
The final seven minutes of the debate go to the minister, who will wind up.
I add my thanks to Allan Wilson for introducing the debate and welcome his support for the new assisted areas map. It was difficult, as we were required by the EU significantly to reduce the percentage of the population that is covered by the map. The approach taken in Scotland, with close targeting using the new council wards rather than travel-to-work areas, has been good. In the five areas covered by RSA priority pilot schemes, it would have left more than 90 per cent of successful RSA projects in place.
Allan Wilson asked various questions. I cannot turn round to address him because the microphone is in front of me, but I confirm that no indigenous company has ever been refused RSA because of a competing inward investment. There is considerable flexibility each year in the budget allocated to RSA, which is driven by demand. RSA projects consider job creation. That is one of the criteria central to RSA priority. If high-tech jobs are created, that is all the better as Scotland must look to added value, high technology and the knowledge economy. However, that is not a requirement. Low-tech projects are equally eligible for RSA.
On the promotion of RSA priority, I have been told that the department contacted all the key local players in relation to RSA priority: the local enterprise companies, the local authorities and local enterprise trusts. Everyone locally who advises companies should be aware of it. The media launch, which involved Brian Wilson MP— who was then Scottish industry minister—received a great deal of attention. I assume that Allan Wilson's specific comment was about a funded marketing campaign. He is correct that there has been none.
There is no question of abandoning RSA priority because the uptake has been low. As will be made clear in my later remarks, uptake has been good for a pilot scheme of this nature.
I agree with John Swinney about the complexity of the rules. We need simpler, clearer communication. It is especially important to help growth companies. It is crucial to target assistance in a way that assists the companies with the greatest potential. One of the problems is that we are limited by the EU rules on RSA. I will address ways of encouraging wider and more creative use
of RSA later in my speech.
On Irene Oldfather's speech, I commend the efforts that are being made—this debate is a good example—to put the problems of north Ayrshire and its high unemployment on the map. I have visited the area on more than one occasion and realise that a great deal has been done in a partnership between the public and private sector to address those problems. Clearly, more requires to be done.
Murray Tosh mentioned fine-tuning of the map. Some fine-tuning is being considered, although the extent to which that can be done once the map has been submitted is restricted. The positive side is that some fine-tuning is being considered, but on the negative side, the map must be approved by the EU, so it is possible that the EU could comment critically on our proposals. We await the EU decision with interest.
I agree with Cathy Jamieson that more members should be well informed about this subject. I also agree with Fergus Ewing's comments about maximum flexibility. In my formal response, to which I now turn, I will give examples of that.
RSA has been a central component of regional policy since its introduction more than two decades ago. Its underlying objective is to encourage industrial development and employment in less prosperous areas. However, strict EU rules—the need for a map is one such— mean that we are constrained.
RSA priority is a uniquely Scottish initiative that operates within the RSA scheme. There are no comparable initiatives anywhere else in the UK. Its aim is to give additional employment opportunities to residents of particularly deprived parts of assisted areas. RSA has been operating in the five pilot areas that were mentioned: Glasgow North, Glasgow East End, West Dunbartonshire, Dundee, and three towns in Ayrshire.
Under RSA priority, businesses with projects qualifying for RSA are able to secure £3,000 additional grant for each new job filled, but within the overall maximum EU limits. As I mentioned, to date, uptake has been good and broadly as expected. There have been 21 offers of additional RSA priority assistance, on projects involving a total RSA commitment of £3.8 million. The RSA priority element is £453,000. That has offered employment opportunities to an extra 151 residents in the pilot areas.
Those numbers are modest. At the local level, they are clearly good news and important for the potential employees, as well as for the areas in which they live. However, it is too early to draw conclusions about the effectiveness of the pilots because of the comparatively small number of projects and the fact that most of the projects that have been offered assistance are now only at the stage of recruiting staff.
Where do we go from here? I have been most impressed with the support voiced for the RSA priority initiative. The premium approach, in the form of the extra grant that is given under RSA priority, has produced clear benefit in the pilot areas, in terms of increased job opportunities. I see merit in not merely sustaining the pilots, but building on them. We are, therefore, examining how the RSA scheme might further complement existing social inclusion initiatives that are aimed at improving employment opportunities for those in greatest need.
The debate has been particularly timely and interesting. From what I have heard today, there is support for building on RSA priority to bring forward employment opportunities for the socially excluded, not just in the five pilot areas covered by RSA priority, but more widely throughout Scotland. The Scottish Executive is investigating that, but it will not be the subject of an announcement today.
Meeting closed at 17:33.