Rural Economy and Connectivity Committee

Meeting date: Wednesday, May 15, 2019

Official Report 709KB pdf

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South of Scotland Enterprise Bill: Stage 2

Item 5 is day 2 of our consideration of the South of Scotland Enterprise Bill at stage 2.

I welcome the Cabinet Secretary for the Rural Economy and his supporting officials: Karen Jackson is south of Scotland economic development team leader; Sandra Reid is bill team leader; Felicity Cullen is from the Scottish Government directorate for legal services; and Fraser Gough is parliamentary counsel. I also welcome Finlay Carson MSP.

We will resume where we left off.

Section 14—Annual report

Amendment 42, in the name of John Mason, is in a group on its own.

As members can see, section 14 states:

“South of Scotland Enterprise must, after each financial year—

(a) prepare and publish a report of its activities during the year, and

(b) send a copy of the report to the Scottish Ministers.”

Amendment 42 would require the report also to be laid before the Parliament, which will ensure that members are regularly informed about the agency’s activities and that the agency is accountable for its actions, to enable members to build up a picture of activity over time. I think that such an approach is standard practice for most non-departmental public bodies and would bring the new agency’s reporting requirements into line with those of the existing enterprise agencies. I hope that members will support amendment 42, which will increase transparency.

I move amendment 42.

Amendment 42 would increase the accountability of the board. We would expect such accountability from any public service body, and we think that it is the correct approach. I support amendment 42.

No one else wants to speak, so I will bring in the cabinet secretary.

Thank you, convener. I am pleased to support amendment 42, which will bring the new enterprise agency’s reporting requirements into line with those of the existing enterprise agencies.

Amendment 42 agreed to.

Section 14, as amended, agreed to.

Before section 15

Amendment 43, in the name of Colin Smyth, is grouped with amendment 44.

Amendment 43 would give ministers a duty to set up a framework to ensure that the new agency interacts effectively with the many existing bodies that cover the south of Scotland. As members know, one of the big concerns that was raised with the committee by stakeholders in the south of Scotland was about how the new agency will interact with other bodies working in the region. That issue dominates the views of many businesses and organisations that I speak to regularly in the south of Scotland. I presume that that is why committee members agreed to recommend in our stage 1 report that there should be an amendment to the bill regarding that issue.

The agency will operate alongside councils, Scottish Enterprise, the Scottish Further and Higher Education Funding Council, VisitScotland, whatever governance is put in place regarding the Borderlands growth deal and so on. In practical terms, we need to ensure that there is no duplication or no gap in the work being done and that there is clarity about who is responsible for what.

More broadly, we need to ensure that there is collaboration and coherence across the bodies. The new agency will have a crucial leadership and co-ordinating role to play in that regard. The existing duties that are set out in the Community Empowerment (Scotland) Act 2015 require co-operation, but that is at local authority level. The new agency will work across local authorities, and community planning partnerships will not be sufficient to cover the need to co-ordinate that work. Amendment 44 is consequential on amendment 43.

I move amendment 43.

I am one of two constituency MSPs whose constituencies cross the Highland and Islands Enterprise and Scottish Enterprise boundaries, so I see how the two agencies work together. As far as I am aware, they work together not because of a requirement in a piece of legislation but through concordats and formal agreements. I suspect that that might be a better way of working together.

More specifically, looking at the way in which Colin Smyth has constructed his amendment 43, I wonder whether the phrase

“which operate in the South of Scotland”

is a bit restrictive. There are public authorities whose effects are in the south of Scotland but which do not necessarily meet the test of operating in the south of Scotland. I think that there is a wee issue in that regard, which Colin Smyth might be able to address in his concluding remarks.

The phrase that I quoted is qualified by the phrase

“and which have functions relevant to the aims of South of Scotland Enterprise.”

Again, I suspect that that is more restrictive than would likely be the case with the agreement that I would expect to be reached between the new body and whatever bodies it is relevant for it to have agreements and to co-operate with.

I will listen to the debate, but what I have said about amendment 43 means that I am not sure that I should support it at this stage.

Amendment 43 is interesting, and I thank Colin Smyth for lodging it. He raises an important issue, and the premise behind the amendment is something that the committee discussed and reflected on at stage 1. One of the conundrums that we face is how the new agency will work with other bodies and agencies. We had a lengthy discussion last week about the agency’s aims and the areas of portfolio interest that it will reflect. We looked at transport, digital connectivity and so on.

I support the principle of what Mr Smyth is trying to achieve with amendment 43, but I have some questions for him that he can perhaps reflect on in summing up. His response might influence how I—or, indeed, committee colleagues—vote on the amendment.

First, can Colin Smyth provide me with any comfort that the amendment will not place any additional duties on the new agency to deliver the functions of any other agency that operates in the south of Scotland, or indeed, as Mr Stevenson stated, any other agency that has functions relevant to the new agency’s aims? I appreciate that the agency’s final aims have yet to be agreed at stage 3. I look for comfort that the amendment would not place an additional duty to deliver things that other agencies should be delivering.

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What does

“co-operates and co-ordinates activities with”

mean? The statement is valid, but it is vague. What is the definition of co-operation and co-ordination? What would be the consequences of not co-operating or co-ordinating? I am slightly worried that there would be recourse to the agency’s board, the agency and ministers if they were deemed not to have co-operated with and co-ordinated other agencies’ work, although that work will be largely outside the agency’s control.

Would Colin Smyth be willing to work with other committee members to tighten the wording, if we felt that it did not achieve his premise technically? Would he work with us to develop a watertight amendment for stage 3 that we could support?

To build on what Jamie Greene said, I share some of his concerns about the phrase “co-operates and co-ordinates”. I understand that, if three of us are co-operating, we are all equal and working together to find a solution. If three of us are together, the person who co-ordinates is taking a lead. Mr Smyth used the word “leadership”, which suggests that south of Scotland enterprise’s position would be above that of the local authorities. That might not be the member’s intention, but it is my reading, which suggests that local authorities’ autonomy would be undermined.

The duties are

“to ensure that South of Scotland Enterprise co-operates and co-ordinates activities with other Scottish public authorities”.

That is clear and is the whole point. I am relaxed about the proposal, but do we need the Scottish Government to make regulations on that? That seems to be overkill.

I share some of the concerns that other members have expressed, although I do not doubt that amendment 43 is entirely well meant. If the two local authorities in the area took diametrically opposed positions on an issue—I cannot think of an example at this juncture—how would the co-ordination and co-operation work? What additional pressures could that place on the new agency?

I share the concerns of a lot of committee members, but I think that amendment 43 could be important, with changes. We do not want money that the board allocates to be used in areas in which other public bodies—such as the Scottish funding council, Skills Development Scotland and VisitScotland—have the funding for delivery. We want accountability and co-operation to ensure that money comes out of the right pot. There was an argument that, although the £6.6 million that was allocated to colleges in Dumfries and Galloway and the south of Scotland was greatly welcome, some of it should have come from the funding council. The amendment could enable us to hold board members to account and ensure that money is allocated from the right pot.

I have listened with great interest to the discussion. I agree with the principle, which Mr Smyth is to be commended for introducing, that it is essential for south of Scotland enterprise to work closely with other public bodies across the south of Scotland. I would go further and suggest that it is equally important for the agency to engage with businesses, education institutions, communities and—as Mr Stevenson said—public bodies that do not operate in the south of Scotland but whose influence and decisions have an impact on the area.

I am cognisant of the fact that, earlier in stage 2, Claudia Beamish moved a similar amendment about a duty to co-operate with environmental bodies. I will say the same thing that I said about that: of course there needs to be co-operation with all relevant stakeholders. As all members have done, I agree that the principle is correct. The question is how the objective is best secured in practice and whether primary legislation is the best way to achieve it.

The amendment says that the Scottish ministers “must” make regulations. That would confer powers on the Scottish ministers that we do not seek. We would prefer to leave it to the judgment of the people who are appointed following due process as the chair and members of the board, and their staff, to work in the way that we all wish them to do. I do not want the Scottish ministers to take a prescriptive approach, and I do not see why that is necessary or desirable. However, we absolutely want to encourage a culture of co-operation. We have seen that culture in the south of Scotland economic partnership under Professor Griggs’s chairmanship. Indeed, from what I have seen—I have had the privilege of being involved in many of the meetings and discussions—the partnership is working extremely well.

Of course, we have no idea who the office bearers of the new body will be, but I hope that that culture of co-operation will carry on. SOSEP has brought together public sector organisations with private, third and education sector bodies and has forged good working relations, and it is right to record that. Professor Griggs is about to engage on another 32 public meetings across the area, which is an outstanding stint. Those of us who have been involved in public meetings will know that that is a bit of a shift, to put it in non-ministerial parlance.

I am sure that those relationships will continue with the establishment of the enterprise agency, and rightly so. However, I want to try to be helpful, because there is a mood of trying to find a positive way through, as Mr Greene and Mr Finnie expressed. First, I should have discussions with the local authorities to see what they want in relation to the matter, and I have an opportunity to do so prior to stage 3. That would be useful. Mr Finnie postulated a question about what would happen if there was a disagreement between local authorities and how the duty would impact on that, which is a fair point.

Secondly, I can give an absolute assurance that ministerial letters of guidance are used as an extra-statutory mechanism. I have given a commitment to the committee to write in detail before stage 3 about what the initial letter of guidance to the new body should contain. In response to amendment 43, I guarantee that, if the bill is passed by Parliament and we get to the stage of the initial letter of guidance, my intention is that the letter will cover the duty to co-operate with all relevant parties. That seems to me to be the correct procedural way to achieve the objective that we all share.

Further, the Enterprise and Skills Strategic Board focuses strongly on alignment, and the chair of the new agency will of course be a member of the board. Part of the purpose of setting up that board was to achieve exactly what amendment 43 seeks. I also point to our commitment to establishing regional economic partnerships across Scotland. I believe that Mr Smyth is a former chair of the south of Scotland alliance, so I hope that he sees value in an increased role for that alliance, building on the successes and bringing together a wider group of agencies.

I have listened with care and I am sympathetic to the aims, but there are better ways to achieve them. I hope that members agree that I have given clear proof that the overall objective will be achieved with letters of guidance and that legislation is not the best way forward on the issue. However, I am happy to give an additional assurance to members that we will explore the issue further before stage 3, as we have done before stage 2.

In light of those assurances and guarantees, as well as the points that have been made in the debate, all of which were interesting, relevant and germane, I hope that Mr Smyth will not press amendment 43.

As a starting point, I believe that there is a requirement to have something in the legislation to achieve this aim. The cabinet secretary used the interesting phrase that he hopes that the current “culture of co-operation” in SOSEP will continue. Hope is something that we all have, but there are no guarantees when it comes to hope. There is a guarantee that if it is a legal requirement, it has to continue.

The cabinet secretary mentioned that co-ordination will be a key part of the initial letter of guidance, but letters of guidance change regularly; cabinet secretaries change too, and Governments change. In my view, a letter of guidance is not enough because, prior to SOSEP, we had a lack of co-ordination, a lack of working together and a lack of delivery among a lot of public bodies in Scotland. Had we not had that lack of delivery, there would be no requirement for the bill in the first place. I therefore believe that there is a need for a legal underpinning.

I do not think that there is anything in the wording

“operate in the South of Scotland”

that would in any way prevent any organisation that has any work taking place in the south of Scotland—within the aims of the agency, it is important to stress—from being involved in those discussions. I cannot think of a single example in which that would be the case.

Mike Rumbles asked whether the existing duties are enough. We have seen from the evidence that stakeholders believe that what has happened in the past has not been enough. There has not been sufficient co-ordination among organisations and there have been huge gaps in what has been delivered in the south of Scotland. Had those gaps not existed—had there not in the past been a lack of co-ordination and working together—we would not have needed the bill in the first place. Amendment 43 would give a legal underpinning to that requirement.

The cabinet secretary referred to discussions with local authorities. It is important to point out that local authorities called for this provision in their evidence. In fact, Elaine Murray gave a specific example of how it could work, in the form of a memorandum of understanding to avoid duplication and to make sure that there are no gaps. This has very much come from the local authorities in the first place.

I understand that members have a concern about the specific wording. My view is that the best way to deal with that is to agree to amendment 43 at stage 2 and, if required, to tweak the language as we move to stage 3; I am more than happy to work with other members and the cabinet secretary. I am open to changes to the exact wording, but I think that the best way of achieving what is needed is to place the proposed new duty in the bill and then, if it requires tweaks, to look at how we can achieve that. Having an amendment on this issue was a committee recommendation in our stage 1 report. Crucially, stakeholders called for it, too.

I appreciate that we are at the end of the debate, but I have a concern, in light of the balance of opinion in the committee, that if we pursue the amendment and it is not agreed to, it would be difficult to bring back the concept at stage 3, given the precedent and the nature of things.

The amendment concerns a point that it is important to make in the bill, in some shape or form. My worry is that, if the current wording means that the amendment is not agreed to, that would make it more difficult to beef up the premise of what the member is trying to achieve.

My concern is that if the amendment is not agreed to, it would be difficult for a similar amendment to be agreed to at stage 3, given that some members seem to be implying that there is no requirement for any such provision in the legislation. That is a real concern because, as I said earlier, simply using letters of guidance and hoping that things will continue in the way that SOSEP is currently operating is not enough; to achieve that, we need to include something in the legislation.

I press amendment 43.

The question is, that amendment 43 be agreed to. Are we agreed?

Members: No.

There will be a division.

For

Chapman, Peter (North East Scotland) (Con)
Greene, Jamie (West Scotland) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Smyth, Colin (South Scotland) (Lab)

Against

Finnie, John (Highlands and Islands) (Green)
Lyle, Richard (Uddingston and Bellshill) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Rumbles, Mike (North East Scotland) (LD)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)

The result of the division is: For 4, Against 7, Abstentions 0.

Amendment 43 disagreed to.

Section 15—Direction

Amendment 12, in the name of the cabinet secretary, is grouped with amendment 13.

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The amendments in this group will require the Scottish ministers to consult south of Scotland enterprise before they issue directions to the agency, and to publish the reasons for any directions that they issue.

The Delegated Powers and Law Reform Committee called for such requirements to be in the bill, as did this committee in its stage 1 report. I am happy to accept the recommendation and to give effect to it. Amendments 12 and 13 do just that.

I move amendment 12.

Amendment 12 agreed to.

Amendment 13 moved—[Fergus Ewing]—and agreed to.

Section 15, as amended, agreed to.

Sections 16 to 19 agreed to.

Section 20—Regulation-making powers

Amendments 44 to 46 not moved.

Section 20 agreed to.

Sections 21 and 22 agreed to.

Long title agreed to.

That ends stage 2 consideration. The bill will now be reprinted, as amended at stage 2.

The Parliament has not yet decided when stage 3 will be held. Members will be informed of that in due course, along with the deadline for lodging stage 3 amendments. In the meantime, stage 3 amendments can be lodged with the clerks in the legislative team.

Cabinet secretary, I thank you and your officials for coming back to the meeting. I also thank committee members, because this turned out to be a marathon four-and-a-quarter-hours meeting to get through the work that we had to get through this morning. I look forward to—I hope—a shorter meeting next week.

Meeting closed at 12:18.