Scottish Enterprise

– in the Scottish Parliament at 9:31 am on 10th February 2000.

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Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament 9:31 am, 10th February 2000

The first item of business is the non-Executive debate on motion S1M-510, in the name of Nick Johnston, on Scottish Enterprise, and on an amendment to the motion.

Photo of Lord James Selkirk Lord James Selkirk Conservative

On a point of order. I wish to point out that I gave the correct information, that the enterprise debate would be before the debate on section 2A, and would last an hour. The misprint on the business bulletin was therefore nothing to do with the correct information that I had submitted.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

There is no suggestion that you were in any way at fault, Lord James. It was a technical fault in the preparation of the bulletin, which was not spotted by the business managers or by anyone preparing the bulletin. I understand that the revised bulletin is in everyone's hands, and we are indeed beginning with the enterprise debate.

Photo of Nick Johnston Nick Johnston Conservative 9:32 am, 10th February 2000

This morning, I want to talk about coincidences. A coincidence is a chance happening or, as Louis Pasteur put it:

"Where observation is concerned, chance favours only the prepared mind."

Or, as Francis Bacon said:

"In things that are tender and unpleasing, it is good to break the ice by some whose words are of less weight, and to reserve the more weighty voice to come in as by chance."

Or, to paraphrase Paul Simon, coincidence is too good to leave to chance.

The Minister for Enterprise and Lifelong Learning is, by coincidence, the weighty voice today. After nearly nine months of procrastination, it has taken a Conservative motion, lodged by a humble junior spokesman, to bring forth a response from our minister. Notwithstanding the fine work done by the Enterprise and Lifelong Learning Committee in its inquiry into support at local level, and notwithstanding the welcome, if overdue, announcement of a consultation on the national economic strategy, we need to fundamentally revisit the provision of economic development in Scotland.

For many months, the Conservatives have been campaigning for a radical overhaul of the enterprise network. When Scottish Enterprise and Highlands and Islands Enterprise were first introduced 10 years ago, it was made clear that they served as a framework for an economic development system which had a finite lifespan of 10 years maximum. As we are only too aware, the pace of change over the past decade has accelerated way beyond our wildest imagination. Consequently, the sell-by date of the Scottish Enterprise and HIE structure fell well short of the original expected 10-year lifespan.

Apart from the growing criticism from and disenchantment felt by the business community about Scottish Enterprise's output and deliveries to them over the past two years, if further proof were needed that the current design was starting to fail Scotland, one only has to look at SE's consultative document, "A New Strategy for the Scottish Enterprise Network", to confirm the growing anxiety that many of us have felt about SE's ability to deliver for Scotland as we approached the first decade of the new millennium.

By its own hand, Scottish Enterprise recognised Scotland's relatively low level of entrepreneurial activity and identified the relatively low number of companies competing at a low level. Scottish Enterprise pointed out that Scotland created fewer large global companies than we should expect, given its population.

The list of failures and inadequacies grew ever more depressing, with low levels of investment in corporate research, a continued fall in school education performance, growth in many of the fast-growing tradeable services such as computing, consultancy and business services below the UK average, and a large stock of workers with out-of-date skills or with a low level of skills.

The picture portrayed was not just sad but seriously worrying if Scotland was to survive and grow in an increasingly competitive world economy. For months, we have urged the Executive to tackle the problem of Scotland's slippage in those vital areas of economic activity and to deal with them with a greater sense of urgency and importance than it seems willing to do.

Scottish Enterprise and Highlands and Islands Enterprise were success stories for many years and were the ideas for their time. Scottish Enterprise replaced the Scottish Development Agency, which was seen as the economic machine of the 1980s, as Scottish Enterprise was for the 1990s. Due to the pace of change, we are in need of another radical overhaul.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Could Mr Johnston specify exactly when things went wrong?

Photo of Nick Johnston Nick Johnston Conservative

It is tempting to say that it all went wrong in May 1997, but the pace of change has been increasing for the past four or five years. I cannot point to an exact moment when things started to go wrong. No doubt Mr McLeish will do so later.

The radical reform of our economic machine must not be left to those operators in Scottish Enterprise and Highlands and Islands Enterprise or to civil servants. We need a small team of radical and dynamic business figures to produce a new blueprint for Scotland's economic prosperity in the first decade of the new millennium.

We have a new Parliament, a new Enterprise and Lifelong Learning Committee, a new Minister for Enterprise and Lifelong Learning and a new chief executive of Scottish Enterprise, who started this week. I have not seen a copy of the consultation document but, as usual, The Herald had it before me. If what The Herald says is correct, the answer to my question today to the enterprise agencies—has Scotland the relevant structures?—is no.

We should not ask the enterprise agencies to vote themselves out of existence—we should not ask turkeys to vote for Christmas. We understand that the contract of the chairman of Scottish Enterprise expires in August or September this year and we suggest that the minister speedily identifies a chairman designate. The new chief executive and the chairman should gather round them, as I mentioned earlier, a small team of radical and dynamic business figures to design a new model that will drive Scotland's economic development into the new millennium.

Photo of John Swinney John Swinney Scottish National Party

I offer Mr Johnston the opportunity to step back from the abyss that he is lurching towards. He is in danger of insulting one of the most successful business figures in the Scottish economy.

Photo of Nick Johnston Nick Johnston Conservative

I presume that Mr Swinney is referring to the chairman of Scottish Enterprise. I have no intention of insulting anybody. As Mr Swinney knows, that is not my style. However, we have many new structures in Scotland and surely the time is right to re-examine the system. I do not know if the chairman of Scottish Enterprise wishes to continue in his post, but I suggest that it is time for a new chairman.

Henry McLeish has been agreeing with us for months about the need for radical change, after his initial knee-jerk reaction against our initiative. No doubt the Labour members of the Enterprise and Lifelong Learning Committee, together with the intelligence that he received from the business community, convinced him that that was not a clever response. We can all do U-turns. However, after all the promises and statements of intent, we seem to be no further forward.

We are all understandably anxious that Mr McLeish imagined that a quick and easy solution to this problem was simply to get his civil servants together with Scottish Enterprise's senior staff to design a new formula. That would be entirely the wrong approach. As I said before, business needs to design a model that best serves the interests of the business community. The matter should not be left to others who think that they know what the business community's interests are.

Senior figures in the enterprise network are honest enough to admit the structure's failings and are convinced that the per capita spend on economic development in Scotland is far higher than in any other country in the western world. They are also concerned about the fact that, despite that record spend, Scottish Enterprise is now, at best, in the middle of the first division of the league table and not even at the bottom of the premier league. I suggest that we need an Inverness Caledonian Thistle and not a Celtic to run Scotland's economic development.

We expect the minister to answer the following questions not next week, not next month, not next year, but now. Is he prepared to announce the remit for a comprehensive review of the operations of Scottish Enterprise and other agencies involved in economic development? Within what time scale will that comprehensive review be undertaken? Is the minister prepared to announce who will be involved and who will lead that review? When can we expect the announcement of the new chairman designate, and is the minister prepared to allow the Enterprise and Lifelong Learning Committee to be involved in the final choice?

The minister's responses are necessary not only for our benefit, and not only for the benefit of the Scottish Parliament, but for the benefit of the Scottish business community. Scotland's future prosperity depends not just on the number of jobs that are created, but on the funding of first-class public services, be they schools, hospitals, housing, or whatever else is paid for out of the public purse. That, in turn, will be financed by a prosperous business community.

I notice that Mr McLeish announced, on 9 December, an intention to review the enterprise network in those terms. Almost two months have passed since then. That, in my book, is too long to wait for a review to take place.

I move,

That the Parliament calls upon the Scottish Executive to announce a remit and timescale for a comprehensive review of the operations of Scottish Enterprise and other agencies involved in economic development as a demonstration of its commitment to the expansion of Scotland's indigenous business base.

Photo of Henry McLeish Henry McLeish Labour 9:41 am, 10th February 2000

I am currently dealing with a couple of requests from Kilmarnock and Aberdeen to take over the managers' jobs at those clubs. If the Celtic job comes along, I shall give it due consideration after consulting my busy schedule.

I am always deeply impressed by the selective amnesia of the Conservative party: it is as though Conservative members have just flown in from another planet. From 1979 to 1997—a period during which we had a Conservative Government in the United Kingdom—is it not the case that they had control over the economy, that they appointed Sir Ian Wood as the chairman of Scottish Enterprise and that they gave him a knighthood as well?

With all the courtesy that I can muster, I must say that this debate is not about the chairman of Scottish Enterprise, nor is this the time to say that anyone should be moving on. This debate should be centred on the functions, aims, aspirations, objectives and role of our enterprise network.

I am pleased that the Conservative party is engaging, in a positive way, with the future of the Scottish economy. That was not evident between 1979 and 1997—but more of that later. We are trying to develop a consensus in Scotland on the real issues that affect the economy. I praise the work of the Enterprise and Lifelong Learning Committee, which has all-party involvement. It is an excellent committee, and is already tackling the key issue of local economic delivery.

This review can take place against an encouraging set of economic figures: inflation is low and stable; output in the Scottish economy continues to expand, both in manufacturing and in services; unemployment in Scotland is falling, and by historical and international standards is low; and employment is rising.

Those conditions, combined with our investment in skills, knowledge and learning, provide a sound basis on which Scotland can move forward. Gross domestic product grew by a highly respectable 2.2 per cent in the year to June 1999, slightly above its long-term trend, and conditions in the labour market are excellent. Moreover, the new deal is helping those who previously faced the greatest hurdles in the labour market. Youth and long-term unemployment are at their lowest levels since records began, nearly 50 years ago.

At this point, I want to demonstrate why people in Scotland will find it difficult to have confidence in the policies of the Conservative party unless it changes its ways. It cannot be trusted on the issue of jobs, if its previous record is to be believed. We want a commitment that it is willing to work in a consensual way with all political parties.

Lest we forget, let us consider the high point—if it can be called that—of unemployment under the Conservative Government. In 1986, 360,201 Scots—that was the yearly average—were unemployed: 14.6 per cent of the Scottish population. One in seven Scots who wanted to work could not work. The equivalent figure for 1999 was 133,796, representing 5 per cent, or one in 20 Scots, who wanted to work but could not.

Photo of Henry McLeish Henry McLeish Labour

I shall give way in a moment.

We talk about structures, and economic policies and indicators, but the priority is employment for all in Scotland. That one in 20 still represents, in my view, too many. That figure pales into insignificance relative to the dramatic figures at the high point—or low point, depending upon one's perspective—of Conservative economic fortunes.

Photo of Phil Gallie Phil Gallie Conservative

Does the minister agree that, after the disasters of the 1960s and 1970s, the UK economy had to be turned around? High unemployment in the 1980s was an unfortunate consequence of that but, from 1992 onwards, the Tories achieved a consistent downward trend in unemployment. For a short period after Labour came to power, the Government reversed that trend in Scotland.

Photo of Henry McLeish Henry McLeish Labour

I do not accept any of Phil Gallie's comments.

Photo of Henry McLeish Henry McLeish Labour

I will resist the temptation.

It is important that unemployment in a moral society is never used as an active weapon in economic policy. The 14.6 per cent unemployment total was bad enough, yet it was 17.2 per cent for males. We shall never return to such figures. One of the major objectives of this review and of economic policy is employment for all.

Photo of Nick Johnston Nick Johnston Conservative

What measures is the minister using to link the performance of Scottish Enterprise to the fall in unemployment? This debate is not solely about employment; it is about the effectiveness of the enterprise networks.

Photo of Henry McLeish Henry McLeish Labour

I agree that the debate is about the enterprise networks, but enterprise was introduced as a Conservative word for the economy. When we are talking about the economy, the debate must always come down to people. There is no point in having this or that particular policy unless it delivers for people on the ground. Our economic framework and agencies are key to assisting that positive purpose.

While the economic foundations are good and the Scottish economy is in good shape, there is no room for complacency. That is the context in which the review is taking place. Global competition is fierce and we must stay ahead of that competition. As we enter the 21st century, we can expect continued liberalisation of capital markets and trade, which will unleash a tidal wave of consolidation of major industries around the world.

I agree with commentators who predict that advances in communication technology will spur a revolution in economic affairs as profound as the first industrial revolution. We must make other new, dynamic and creative changes, to ensure that we are equipped for the 21st century.

I want a knowledge-driven economy and I think that my view is shared by this Parliament, by every political party and by the Executive. The knowledge-driven economy will be based on a lifelong learning revolution, on the new industrial revolution and on a revolution in the workplace and in the labour market. As I said earlier, at the core of our policy is the historic goal of employment for all.

As this is a brief debate, I now turn to the framework for the review. I am determined to ensure that the public sector support for business in Scotland meets the needs of the 21st century. In my lifetime, the Scottish economy has gone through an astonishing transformation. In the 1960s and 1970s, the decline of traditional heavy manufacturing was a large factor behind the creation of the Scottish Development Agency, which was a great Scottish success story. Continuing change saw the focus shifting to market-based approaches and to the improvement of skills, which was instrumental in the 1991 merger of the SDA and, separately, the Highlands and Islands Development Board, with the Training Agency in Scotland to form Scottish Enterprise and Highlands and Islands Enterprise—again, success stories.

I believe that the challenge is to turn Scotland into a knowledge economy and to unleash a learning revolution. Members will be aware that the Enterprise and Lifelong Learning Committee is conducting an inquiry into the delivery of local economic development services. I want to continue to have a close working relationship with the committee. The work that it has undertaken already will form a major part of our overall review.

The review will seek views on the following areas: the tasks that we expect enterprise networks to perform; the functions performed by the networks in pursuit of their tasks; the structure of the enterprise networks, between national priorities and local needs; the experience of leading development agencies in other parts of the world—as a nation, we are not good at learning from others—and the type of activities and programmes upon which the networks should focus.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

I would be grateful if the minister did not give way as he is well over time.

Photo of Henry McLeish Henry McLeish Labour

I will be brief, Sir David. I appreciate that there are time constraints. I hope that John Swinney will have an opportunity to make his comments.

I want the review to be a genuinely open exercise. I have no preconceived ideas about the outcome and I am prepared, as are the networks, for serious change if it is merited. However, I am clear that we have a strong base of success on which to build, so we need to take a measured view of the proposals for change.

The open consultation will extend to early May. We will engage in discussion with key players. We will have a website and we intend to organise seminars that will provide us with the opportunity to hear a range of views. It is hoped to conclude the review by the summer. We must minimise any period of uncertainty for the enterprise networks and the business groups that they serve.

I want to find out what all the members of this Parliament, all the political parties and the Enterprise and Lifelong Learning Committee want. This is an important opportunity to get it right. I sincerely hope that we can create a new economic model on the basis of consensus, and that if anything illustrates the spirit of the new Parliament in Scotland, it is the success that we seek in relation to the Scottish economy.

I move amendment S1M-510.1, to leave out from "calls upon" to end and insert:

"supports the Executive's publication of a consultation paper seeking views on the future of the enterprise networks as part of its drive to encourage a more entrepreneurial culture in Scotland and to provide a modern framework for economic development."

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

This is a short debate, and the speeches are accordingly shorter.

Photo of John Swinney John Swinney Scottish National Party 9:50 am, 10th February 2000

I will take that as a welcome hint, Presiding Officer.

I welcome this debate and the fact that the minister was able to provide information to substantiate his amendment in relation to the consultation document that he has announced.

In the past few days, I have been reading the economic strategy of the Irish Government, "Enterprise 2010—New Strategy for the Promotion of Enterprise in Ireland in the 21st Century". I would like to quote from the introduction to that document by Mary Harney, the Tánaiste in the Republic of Ireland. She states:

"The performance of Ireland's economy in recent years has been outstanding by any standard. Never in the relatively short period since the political independence of this country was achieved have we had so many people living in this country, so many people in gainful employment and so many people enjoying a standard of living which is among the highest in the world."

The document is part of an overarching, long-term economic strategy for Ireland. It sets the vision, defines the strategy, develops the policies and lays down the structures for the development of enterprise and commercial development in Ireland, all from a country that the previous Minister for Business and Industry at the Scottish Office, Lord Macdonald of Tradeston, defined as a good place for a stag weekend.

I use Lord Macdonald's intervention in order to pose a question to the Government about where this review has come from. In the Scottish Grand Committee—which, to my delight, is to have its meeting programme restored—on 18 January last year, I asked Lord Macdonald, at his sole appearance before the committee, about the issues that we are wrestling with today. He told me that

"our development agencies Scottish Enterprise and Highlands and Islands Enterprise and LEC networks are the envy of every English region and are probably the best in Europe. They should be left untouched, . . .to allow them to implement their ambitious and effective strategy."—[Official Report, House of Commons, Scottish Grand Committee, 18 January 1999; c 6]

This morning, Mr McLeish is quoted in The Herald as saying:

"My question to the various enterprise agencies today is this: has Scotland the relevant structures to make us, as a small country, a world leader in this area? And the answer just now is No".

We need to know what has happened in the past 12 months to encourage the Government to move from being, under Lord Macdonald, dramatically hostile to a review to being enthusiastic for reform today.

Among my other interesting reading is a document to which I pay close attention, "Making it work together: A programme for government". It is a huge document, which we use as an umbrella when we come over from parliamentary headquarters when it is raining. Under Mr McLeish's priorities, reference is made to a tourism strategy review and a management strategy review, but there is absolutely no mention of a review of the enterprise networks. Where has this come from?

I hope that it is not change for change's sake, because that is what I am accused of all the time. I was accused of arguing for change for change's sake when I argued for the merging of Scottish Trade International and Locate in Scotland, and the development of commercial embassies abroad for Scotland. I was ridiculed at the election for arguing for that, but I find in the Scottish Executive's submission to the House of Commons Scottish Affairs Select Committee that a pilot exercise on that very subject is currently under way in the United States. At the election I also argued for the rationalisation of enterprise networks and agencies, and I am pretty sure that I was ridiculed for it in debates with Mr McLeish. However, that is now at the heart of the Government's thinking.

I make those points not to crow about them, but to indicate that we must understand where this debate is coming from. We must have a wide and inclusive debate, in which many views can be expressed and appreciated, rather than dismissed in the way that some of our views—sensible views that have now been incorporated into the heart of Executive thinking—have been dismissed because they happen to come from a particular quarter. Maybe this is the emergence of new politics; if so, that is welcome.

Photo of Henry McLeish Henry McLeish Labour

As a generous man, Mr Swinney will concur that we are trying to develop a genuine consensus on economic policy. The work of his committee, including the contributions of Allan Wilson, Annabel Goldie and George Lyon, is excellent. This review will be based on evidence. There are challenges ahead and I hope that we will build up a consensus to take us forward.

Photo of John Swinney John Swinney Scottish National Party

As the minister knows, I am all for a consensus that benefits the Scottish economy. The key point, which the minister has just made, is that whatever we decide about the structure of the economic development agencies and our economic strategy must be based firmly on evidence. Arguments and ideas that are strongly based on evidence must not be rejected because of their source.

In December, shortly before Mr McLeish made a speech at the Royal Bank of Scotland conference on many of these issues, I noticed that, in an exclusive article in The Herald by Alf Young, Bill Hughes, the creator of Scottish Enterprise, called for the demise of Scottish Enterprise. I disagree with Mr Hughes about these issues, but his views should be disregarded not because of who he is, but because they are not grounded in evidence. There should be a reasoned and substantial debate about these issues.

I also do not want to get into the position that Scottish Business Insider magazine got into when it defined the appointment of Robert Crawford as chief executive of Scottish Enterprise as safe. We must be more generous to people who are prepared to make a contribution and to lead and initiate this debate. We must be imaginative and bold and have a good, well-evidenced debate in the public domain.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

I am afraid that I must be ungenerous with time.

Photo of John Swinney John Swinney Scottish National Party

I will conclude on this point. It is important that the process be open and transparent, and based on an understanding of the Scottish economy and on much better information about the Scottish economy. I know that Dr Andrew Goudie of the Scottish Executive is working on that. Out of that process, we must create a strategy, a delivery mechanism and, most important, performance measurements. We can then have a robust economic development framework and robust economic development agencies. The Irish example I gave shows how we can give coherence and structure to the process. We must get it right this time by having an open and honest debate and then sticking with it.

Photo of George Lyon George Lyon Liberal Democrat 9:57 am, 10th February 2000

I, too, welcome this chance to debate the future of the enterprise structures in Scotland. On 9 December, Henry McLeish announced the Executive review of Scottish Enterprise and we welcome today the publication of the consultation paper. However, it should be recognised that the Enterprise and Lifelong Learning Committee is midway through an in-depth review of the delivery of service. I was glad to hear the minister say that the committee's review will be an integral part of the review of the enterprise network.

Nick Johnston's motion seems to call on the Executive to gazump the Parliament's inquiry. That is not the right way to proceed. I was glad to hear John Swinney call on the Executive to ensure that the review of Scottish Enterprise is an inclusive process and that all sides are listened to before final decisions are taken.

Photo of Nick Johnston Nick Johnston Conservative

In the limited time that I had, I tried to make it clear that the review of Scottish Enterprise should not cut across the work of the Enterprise and Lifelong Learning Committee. We have done a good job, even though I say so myself. We need to examine the strategic framework that overarches our work.

Photo of George Lyon George Lyon Liberal Democrat

Everyone should be aware that there are two separate enterprise networks in Scotland: Highlands and Islands Enterprise and Scottish Enterprise. The structures and remits of those organisations are very different. Highlands and Islands Enterprise has a social remit that is quite different from the functions of Scottish Enterprise. The number of structures in the areas covered by the two organisations is different; the only structures in the Highlands and Islands are the enterprise network and the local authorities. It should be recognised that there has been very little criticism of Highlands and Islands Enterprise's performance.

As has been said in much of the evidence to the Enterprise and Lifelong Learning Committee, there are numerous bodies charged with economic and business development: enterprise trusts, local authorities, local enterprise companies, business shops. It is clear that this creates confusion. Any review should acknowledge that if we could have a clean sheet, we would not start from here. Many of the institutions and agencies are there because they have been there for many years and they are still trying to come to terms with some of the changes that have been introduced.

As I have said, the Enterprise and Lifelong Learning Committee has had evidence of confusion and overlap, but also evidence of partnership working to deliver real benefits. Yesterday we heard from the Aberdeen area where an economic forum seems to be working well and offers a useful model. I spent some time in Ayr and saw good partnership working at a strategic level, although below that level there was some confusion on how it was delivered.

The Enterprise and Lifelong Learning Committee is not yet in a position to come to any firm conclusion on the way forward. Before the Executive takes action it should engage with the committee and listen closely to our final conclusions. We must be very careful not to throw out the baby with the bath water. There is much that is good within the enterprise network at the moment. The key must be to identify what must remain in place and what needs radical surgery to bring it into line with the overall economic development framework that the Scottish Executive intends to pursue.

I believe that we must see change on the basis of the evidence—not change for the sake of change. As John Swinney rightly said, we must get it right for Scotland.

Photo of Des McNulty Des McNulty Labour 10:02 am, 10th February 2000

It is interesting to participate in an enterprise debate called for by the Conservatives. I represent Clydebank, which perhaps of all areas of Scotland is the clearest victim of the past mistakes of Conservative enterprise strategies. It goes back two generations: the destruction of the shipbuilding industry, beginning with United Clyde Shipbuilders; and the Conservatives' madcap economic strategy of the early 1980s, which brought about so much manufacturing decline in Scotland, but particularly in Clydebank—

Photo of Des McNulty Des McNulty Labour

No—perhaps I will give way in a little while, but I will make my point first.

The closure of Singers resulted in 10,000 job losses. What Clydebank got in its place, the Conservatives' solution, was designation as a rates holiday area, which brought in relatively few jobs and limited numbers of small-scale businesses. It brought the great Clydebank experiment, the creation of Health Care International, into which tens of millions of pounds were poured on the basis that an American-based private medical scheme, using highly speculative business strategies, would solve Clydebank's problems.

Photo of Des McNulty Des McNulty Labour

HCI is only now beginning to move forward on its business strategy. That is no thanks to the efforts of the Conservatives.

Photo of Ben Wallace Ben Wallace Conservative

I visited HCI; the management of HCI would completely disagree and say that it is absolutely nothing to do with Labour policy that it is now moving forward, employing more people than Kvaerner shipyards just down the road from it, and is in fact an investment that was made by our Government and the specialist equipment that was there. On the point of Scotland and the "madcap" economic policies, will the member answer this question: why was it under the Conservative party that Scotland as a region in Britain went from one of the most poorest to one of the most prosperous?

Photo of Des McNulty Des McNulty Labour

I am not sure which school Ben Wallace attended to achieve such grammatical clarity.

The management of HCI is beginning to work with other sectors in the business community, in biotechnology and in providing services in partnership with the health service. I welcome that, and I visited HCI last Friday. The new management of HCI has had to cope with the complete mess left by Conservative Administrations. When the money was put in, there was no conception of how the original owners would engage with or provide for the people of Clydebank, despite the statements that were made.

What we need in Scotland is not some ideologically fed perception of enterprise, something that is geared towards business prejudices rather than local needs. What we need is something that tackles the problems of people living in our local communities, with a stronger emphasis on training. I welcome the fact that there is now a link between training and economic development as framed in the ministerial responsibilities of Henry McLeish. I welcome the fact that there is more co-ordinated local participation in decision making and more pressure, through the Scottish Enterprise network, to bring about clearer local strategies.

In Clydebank, where there are high rates of unemployment and a slow rate of business start-up, we need the efforts to be sharply focused. We suffered from a backward-looking approach to the possibilities for and capabilities of our people during the 1970s, 1980s and 1990s. We must build up support and expertise for the people of Clydebank, but there must be more co-ordinated activity. I hope that working through a revised Scottish Enterprise network strategy will enable public-private partnerships and allow us to form a strategy for the Clyde. That will enable us to spread throughout Scotland the prosperity that exists in some parts of the country.

It is only under a Labour Government that has produced an effective economic strategy and better prosperity, and under the coalition Executive here in Scotland, that we can achieve that, because, certainly for Clydebank, the Tories' policies consistently failed.

Photo of Tricia Marwick Tricia Marwick Scottish National Party 10:07 am, 10th February 2000

Like Des McNulty, I find it strange to be debating a Conservative motion that draws attention to the problems facing Scotland's indigenous industries and the consequences of unemployment associated with the decline of that industrial base. I shall come back to the Conservatives' record a bit later.

It is not possible to tackle unemployment by examining the enterprise network in isolation. It must be set in the wider political context and must work as part of our overall co-ordinated strategy. The potential for job creation cannot be viewed in isolation from the new deal, for example.

As Henry McLeish pointed out, under the Conservatives, the nation witnessed the politically engineered destruction of coal, steel and shipbuilding, and the doors clanged shut on industry after industry. The Tories' response at the time was quite simple; they did not want to deal with those who were unemployed, so they simply stopped counting them.

We all remember that the local enterprise companies scheme was drawn up on the back of a fag packet by Bill Hughes, as the Conservatives' answer to investment in employment. It is hardly surprising that the LECs were not the answer then and are certainly not the answer now. It is only right that we should study and review the enterprise network. The world is changing and we are operating in a global economy.

The empty Hyundai plant in Dunfermline is the living legacy of the folly of placing all the enterprise eggs in one basket. Let us consider Henry McLeish's constituency, Central Fife; what a pity he is not here to listen to this list. There have been 60 job losses at Anderson paper mill, 65 at Fraser Gray, 200 at Bekaert Handling and Display, 70 at Methil power station, 40 at Balfour and, in the past few weeks, 25 at Central Farmers and 35 at Glencast. Those jobs have been lost in his constituency in the past year. If some of the millions of pounds that were thrown at Hyundai had been used to support our existing companies and the start-up of new indigenous companies, our communities would not now be suffering such devastating job losses.

I mentioned that the enterprise network alone cannot create prosperity, so I will refer to the Government's main initiative to cut unemployment. Tony Blair promised the best of the American slogans, and hailed a new deal and a promise of jobs. Blair hijacked the idea of Roosevelt's new deal, but he sold out on the ideal.

Under the new deal, there are a number of different assessments on those without work, but in itself it does not create jobs. More than three quarters of new dealers have left the scheme without going into a marketplace job. Industry is not impressed by the scheme. Only 6 per cent of Scottish businesses have signed up to the new deal.

Roosevelt's new deal created the Tennessee river valley project, which provided flood control and navigation to satisfy a national need, electricity, and jobs for the unemployed. Blair's new deal has done none of that. Tennessee got a dam, but all that we got was a dome.

I believe that restructuring the enterprise network is not enough. We welcome it, but the goal of full employment can be achieved only if our Parliament is allowed to take responsibility, and not just for the enterprise network, because that is only part of the budget. The £200 million for the new deal should be handed over to this Parliament to allow us to succeed where Westminster has failed.

We need to put together all the pieces of the jigsaw, combining the strategies of promoting enterprise, investing in communities, creating jobs and businesses, and getting people back to work. We can restructure the enterprise network, but we are having to watch while millions of pounds are squandered on the new deal, and while people are pitched between the scheme and the dole, creating work only for those involved in the resulting paper chase. While I welcome the measures that were announced by the minister today, they do not go far enough. Tackling unemployment should be at the heart of this Parliament, not at the whim of Westminster.

Photo of Euan Robson Euan Robson Liberal Democrat 10:12 am, 10th February 2000

This is an interesting short debate. I welcome the inquiry of the Enterprise and Lifelong Learning Committee, and especially its examination of the performance of local enterprise companies, local authorities, chambers of commerce and enterprise trusts. The minister's enterprise networks review issues paper asked a number of the right questions. It is time that we went through those questions in detail.

It is true that in parts of Scotland there is duplication of agencies, a lack of clarity for business as to who does what and when, and a lack of focus for the agencies themselves. In such circumstances, we risk having a system of benevolent incoherence in some areas. There is also a need to contain costs. The administrative costs of Scottish Enterprise and Highlands and Islands Enterprise are higher in percentage terms than are those of the national health service, which is cause for concern.

The view that the review might suggest a uniform structure for the enterprise network is important, because that would be a considerable disadvantage. I would like to relate our experience in the Scottish Borders. We faced a meltdown in our economy some months ago, which was encapsulated in the phrase, "the banana wars". The Deputy Minister for Enterprise and Lifelong Learning heard something about that when he visited us earlier this week. The response in that situation was to set up a working party with the Scottish Office, and then to develop the "New Ways" strategy for the economy. But the key lesson that was learned was that working in partnership was fundamental to leading our local economy back from the abyss.

We had an advantage, in that the local authority, Scottish Borders Enterprise, Borders College and Scottish Borders Tourist Board had coterminous boundaries, so there was a focus, but the key point was working in partnership. The response was first to pool knowledge, to develop a common understanding of what the problems were, and then to draw up an agreed programme with a series of targets and objectives. Those were the ingredients of a successful economic strategy. I commend the example from the Borders, which was developed out of a crisis that was not of Scotland's making; it was an international crisis.

I also commend that example as a constructive way of addressing the economic problems of a region in Scotland. Where there are coterminous boundaries, it would be disastrous if the local enterprise company were drawn back into the parent body. If Scottish Borders Enterprise had not existed and a committee of Scottish Enterprise was dealing with the south-east of Scotland, it would not have been able to develop the same recipe for success.

In commending the review, I emphasise to the minister the concerns of rural areas that their identity be retained and suggest that the advantages that have been demonstrated in my area are used in the review to develop future structures.

Photo of Andrew Wilson Andrew Wilson Scottish National Party 10:16 am, 10th February 2000

It is a privilege to take part in such an animated and informed debate on this key issue as we look forward to the future of the Scottish economy.

I was very taken by the Conservative motion. Mr Johnston spent his entire opening speech criticising a structure that his own party set up. His explanation was that it was good for 10 years and then had to be abolished. He also stated that it was under pressure after five years—in the heart of the period of Conservative administration.

The most astonishing statement by Mr Johnston was his shameful call for the sacking of Sir Ian Wood as chairman of Scottish Enterprise. As the Minister for Enterprise and Lifelong Learning pointed out, a Conservative Prime Minister knighted him for services to Scottish business and industry, yet now Mr Johnston ungraciously calls for his sacking.

Photo of Nick Johnston Nick Johnston Conservative

I do not believe that in any way, shape or form I called for the sacking of the chairman of Scottish Enterprise. I suggested that his contract was up in August or September, and we do not know whether it will be renewed. Mr Wilson's grasp of facts is, as usual, tentative.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Mr Johnston said that we need a new chairman, someone more dynamic and forward looking. If that is not a call for a sacking, I do not know what it is. To take up the football analogy, I remember that "Sack the board" was the cry of Celtic fans, but if Nick Johnston had been there with them, it would have been, "Perhaps renew their contracts, perhaps not; in due course, in the fullness of time." Conservative members have shown a distinct lack of a grasp of reality in the debate. There are problems with the enterprise structures but, as Tricia Marwick pointed out, there is much more to the development of Scotland's economy than enterprise structures.

We must welcome the gracious praise that the Minister for Enterprise and Lifelong Learning gave the Enterprise and Lifelong Learning Committee, which perhaps should be renamed in the standing orders as John Swinney's Excellent Enterprise and Lifelong Learning Committee, because that is how it is often described.

I agree with Henry McLeish that there is scope in this policy area for a cross-partisan approach, because we all agree on the endgame. It is a question of opening our minds as to how we get there. As John Swinney pointed out, it is to be welcomed that so much of the Scottish National party programme at the election campaign has been adopted and embraced. The current enterprise minister shows a much more consensual approach than was shown by Lord Macdonald. John Swinney pointed out how wrong it was of Lord Macdonald to dismiss his call at the Scottish Grand Committee for our sights to be set on small countries such as Ireland. It was shameful that Lord Macdonald dismissed that by stating that Ireland was a good country for a stag night, but not for economic policy. How nice it is to put behind us those outdated, old-fashioned politicians, although perhaps they will raise their heads again at the Scottish Grand Committee when it starts—I hope not.

I was delighted at the Enterprise and Lifelong Learning Committee yesterday, to hear Dr Goudie, the respected new senior economist at the Scottish Executive, say that it is now looking towards Ireland for examples.

We should extend our sights beyond the narrow confines of enterprise structures to issues such as taxation, because we should never constrain ourselves in this Parliament.

I welcome the debate and Henry McLeish's generous remarks about the SNP's approach. I hope that we can have a cross-partisan approach to those issues and that Mr Johnston will retract, publicly and more formally, his shameful attack on such a respected figure in Scottish business and society.

Photo of Henry McLeish Henry McLeish Labour 10:19 am, 10th February 2000

This has been a productive debate. If this Parliament is to succeed—this is uncomfortable for some and difficult for others—the new politics must be different in Scotland.

This is not a matter of saying that any party has a monopoly on wisdom on any aspect of economic policy. That is vital to the prosperity of Scotland, to employment in Scotland and to the quality of life in Scotland. If we cannot move to a consensus on a new economic model, we will fail the wider aspirations of this great country, aspirations that this country now has its own Parliament to deal with. I take that as the baseline from which we should progress.

It is important that we should also consider the wider Scottish society in our deliberations—that is happening with the work of the committees and it is happening with the Executive. I am unapologetic about listening to people—that should be the nature of this Parliament. Once we stop listening, we will have much less of an influence on the politics and the quality of life in Scotland.

As part of the review, we will take the advice of the business world. The group of business advisers we have secured for the review is not another task group or another committee, but key people in Scotland, who will help us to shape the way forward as the consultation develops and as we reach the point of producing a report. They are: Frank Blin, the PricewaterhouseCoopers executive chairman in Scotland and head of the UK regions; Catherine Garner, head of research and enterprise at the University of Glasgow and a member of the knowledge economy task force, who has experience of commercialisation of the science base; Professor Neil Hood, professor of business policy at the University of Strathclyde, who has long experience of economic development; Afzal Khushi, director of Jacobs and Turner, an entrepreneur who developed small manufacturing to become a major exporter; Alison Loudon, chair of Appsco Software and Data Discoveries and a member of Connect and the Entrepreneurial Exchange, who has extensive experience of software; Gavin Nicholson, managing director of Realise and a member of the digital Scotland task force; Brian Stewart, group chief executive and deputy chairman of Scottish and Newcastle; and Mr Alf Young, deputy editor of The Herald.

We have tried to combine a wide range of experience and knowledge of the Scottish economy and the economic framework—that gives us a new model. We will want to add some names. There will be the parliamentary committee, there will be the Parliament and the political parties, there will be the wider business community in Scotland and there will be a chance for individuals to be involved in consultations. Now, instead of the review going out to consultants—which costs vast amounts—or being carried out in-house, we have a new economic model, with a group of business advisers to help us to shape the future of the economic network. That is a significant step forward and I hope that it appeals to the chamber.

I finish on the point on which I started: this is a unique opportunity to review where we are. We want a network that is effective, appropriate and relevant to the changing economic circumstances. It is important to say that we are building on success. The Scottish Development Agency was a success and the Highlands and Islands Development Board was a success. Highlands and Islands Enterprise and Scottish Enterprise are success stories.

I did not agree with one of Andrew Wilson's points. This is a message to the Scottish National party: we have to boost the confidence of Scotland, to praise, where praise is necessary, and to take Scotland along with us. However, let us never talk Scotland down, even on areas where we can have a critical debate. As far as I am concerned, the consensus that I want must go hand in hand with everybody playing their part. We must not rubbish achievements just because they do not go as far as a political party would want.

I hope that this will be the start of a very productive few months. I look forward to everyone's participation.

Photo of Phil Gallie Phil Gallie Conservative 10:24 am, 10th February 2000

I declare an interest from the start, because I was in at the ground floor, when the Scottish Enterprise movement was launched. I was seconded for a time to Central Scotland chamber of commerce and worked closely with Bill Hughes on the project. The underlying principle of the Scottish Enterprise movement was a one-door and a business-led approach. I believe that to have been very important.

With respect to Andrew Wilson's attack on Nick Johnston, Andrew must realise that business is constantly changing. The business scene today is totally different from what it was 10 years ago. Nick Johnston's point was that when Scottish Enterprise was launched, it was on the basis that things would change and that that would have to be addressed.

I have a further interest to declare: I worked with Enterprise Ayrshire for a short time after my dismissal from Westminster. After becoming involved in the political mainstream once again, I was obliged to set up a small business consultancy and I was contracted to the enterprise movement. I have first-hand experience of the enterprise agencies.

In summing up, Henry McLeish said that he would listen to the people of Scotland. I hope that in the next debate that message comes from all the ministers. He spoke of the problems created by the Conservatives' handling of the economy between 1979 and 1997. As Ben Wallace suggested, during that time, Scotland's economy grew and we moved from second from the bottom in the United Kingdom league of economic prosperity to third from the top. That is a record of which I am proud, as I am sure is Ben Wallace.

I remind Des McNulty and Trish Marwick—to a lesser extent, because she is not part of the ruling group—that only a few weeks ago, Tony Blair spoke to the World Economic Forum. Tony Blair's advice to the world was to forget the Labour-led economic policies of the 1960s and 1970s and to look to the economic policies pursued in the United Kingdom between the 1980s and the 1990s. That was a ringing endorsement of the time to which Henry McLeish referred and I draw his attention to his leader's words.

John Swinney commented on Ireland. He said that we should follow the Irish route. That is all very well, but Ireland has enjoyed massive subsidies from Europe. I remind him of comments made two or three years ago by Margaret Ewing at a Scottish Grand Committee in Inverness, when she pointed to the difference between the economies of Scotland and Ireland. Margaret Ewing pointed out that Scotland would be a net contributor to Europe, rather than a taker of European funds.

Photo of John Swinney John Swinney Scottish National Party

Does Mr Gallie understand the point that I was making about the economic strategy of Ireland? The leadership that that strategy gives to the process of economic and enterprise development in Ireland is one that we are gradually creeping towards in Scotland. The coherence of economic strategy in Ireland is something that we should embrace and take to the heart of our economic policy.

Photo of Phil Gallie Phil Gallie Conservative

If we had unlimited funds from Europe, we would be happy to follow such a line. However, as we are all too well aware, the funds available to us are restricted.

Photo of Dr Winnie Ewing Dr Winnie Ewing Scottish National Party

Mr Gallie mentioned Ireland and the subsidy from Europe. Does he agree that it is rather sad that we are the only country that refuses to match money and therefore turns down European money? We are currently doing that in relation to the farmers' need for compensatory funds.

Photo of Phil Gallie Phil Gallie Conservative

I am glad that I allowed the lady to intervene, because in this case she has a point. Those of us who are concerned about the farming industry would identify with the comments that she made.

When we consider the enterprise movement, it is clear that it has drifted away from the one-door approach at which it was aimed. A multitude of agencies deliver enterprise services. I draw members' attention to comments made by the Glasgow Development Agency, which refer to the many organisations in the city that supposedly provide services. Those organisations include Glasgow City Council, Targeting Technology, Services to Software and Glasgow Exports. The GDA identifies 19 different organisations that are doing what one organisation should be doing. They should be providing services to businesses. One difficulty for businesses is that they are not quite sure where to go when they have a problem. When they get there, they are not quite sure which facilities can really help them. They are pushed from place to place.

Scottish Enterprise has, to some extent, done a great job for Scotland. It has brought in much inward investment, and that has to be welcomed. However, when we consider its activity at local level, we see the constraints that are placed on the enterprise organisations. Many companies may go to them simply to seek financial aid; they do not seem to recognise that such aid is not readily available.

We have to target cash in such a way that we can support product development or launch funding for new products. On some occasions—although I recognise that there are difficulties with competition—we should support companies that are suffering from short-term cash-flow difficulties. The perception of the small business community is that, if a company is big and comes from elsewhere, help is abundantly available, but that, if the company is an indigenous Scottish company, the situation is different.

The enterprise companies at local level are obliged to deliver various Government programmes. There is the new deal—which is youth training scheme mark 3, some would say. Investors in People is undoubtedly a good and necessary programme, but not one that is always seen as being imperative and important to small companies. There are other schemes such as skillseekers and new modern apprenticeships, which are excellent.

But what about the old skills and the traditional apprenticeships? What about the construction and engineering industries? We need people in those areas of Scotland's economy. I hope that Henry McLeish's review will consider that. He named a number of fairly high-profile and knowledgeable people who will serve on that group. I welcome that, but I make a plea to Henry—please include people from the small business community. That is essential. If he can achieve that, perhaps the enterprise movement will begin to gain some respectability in the future.