Chamber and committees

For the avoidance of doubt, the budget for employability in 2024-25, as passed, was £102.9 million and, according to the budget document that was published, you spent £92.3 million. Is that correct?

Perfect.

I just have a small request. I want to go back to Jamie Halcro Johnston’s query about the balance of the DigitalBoost funding. My understanding is that it was made up of direct grants. Can you write to the committee to clarify the shape of that funding and the balance between capacity building and direct grants? My understanding was that the funding was primarily made up of direct grants.

Can you also clarify the effectiveness of the funding? My feeling from speaking to businesses is that Business Gateway does not have capacity in this space, so a written clarification about what that funding did and how effective it was would be really useful for the committee.

I will come on to that point, which I think is really important. All that I would say on the previous point is that it is absolutely the case that we should look at the composition of the funding. I completely agree that the issue is the money that is available to invest and be distributed by the enterprise agencies. However, we cannot simply look at the situation year on year; we need to look at the longer term. It is undoubtedly a fact that the enterprise agencies have a smaller proportion of the Scottish budget than they had a decade ago. If you are saying that this is the reset point and that we expect that to change in the future, I welcome that.

I turn to the point about the agencies’ effectiveness. Scottish Enterprise employs about 1,050 people. That number is broadly unchanged, though it might have gone down a little. More important—this is the interesting point—if we look at the numbers of people employed by HIE, SOSE and Scottish Enterprise relative to their budgets, we see that they are quite different. Likewise, the amounts of money that they are able to get out the door, whether we are talking about grants, loans or whatever—I asked a question in the same ballpark just the other week—are quite different. Are you looking at how much, as a proportion of your budget, you are getting out the door? Are you asking that question of each of the agencies?

On that point about the right size and prioritising the right things, it is interesting to observe that you identified that Scotland’s economy is largely made up of small and medium-sized enterprises. For SMEs in the central belt, whose door of those three agencies should they knock on? The reality is that Scottish Enterprise will often turn away SMEs on the basis of their sector and age. If growing the economy and increasing investment is a priority, we need SMEs to be doing those very things. Is it right that Scottish Enterprise continues to turn away SMEs or older privately owned businesses because they are the wrong age or in the wrong sector?

I am tempted to ask you about what was a slightly throwaway comment, that the national performance framework “should be” the lodestar for all the policy, which perhaps suggests that it is not quite that yet.

I am interested in doing a comparison over a number of years. In 2022-23, the spending on all the enterprise agencies, including on innovation, was £467 million in nominal terms. If we plug that into the Scottish Parliament information centre’s real-terms calculator, using the GDP deflator, the figure comes to £507 million, which would show there has been a 24 per cent cut since 2022-23. More interesting, if we go back to 2016-2017, the real-terms figure, at 2024-25 prices, would be around £520 million. Let us call it a cut of a quarter.

It strikes me that—without going into the ins and outs of year-to-year comparisons—over the longer term, that budget line has been raided, for want of a better description, by Governments when they have found the numbers difficult to balance. How are you going to stop that from happening in subsequent years? Do you accept that there has been a real-terms decrease of around a quarter over that decade?

Let us forget about the accounting changes that have been implemented. If we compare the financial footprint of the enterprise agencies with a decade ago, it is significantly less, is it not? It is more than 10 per cent less.

Surely, inflation would mean that you would max out budgets, not underspend them, as you did with the employability budget.

Thank you. We risk going down the rabbit hole of non-domestic rates reform, but it is one of my trigger issues. I remind the committee of my entry in the register of members’ interests and my background in retail.

I have a couple of points on the methodology. I question the hard distinction that you are making between retail and hospitality premises. The way in which commercial premises are marketed on the open market is always about the best opportunity, and we are seeing quite a lot of interchange between premises, certainly with retail going into hospitality. I acknowledge that the classifications are different, but, if I were in your position, cabinet secretary—dare I say it—I would push back on the assessors a little bit and say that I just wonder where there is that hard distinction.

My second point is not so much about the methodology for different classifications. That would assume that the methodology for retail is clear and transparent, but I contend that it is not. There is a great deal of frustration in the sector about how rateable value is calculated for retail and how the different assessors come up with it.

I am not necessarily asking for a detailed response but, if we are looking at reform, those are some of the things that I would certainly appreciate being looked at, and I think that those in the sector would certainly appreciate it, too.