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South of Scotland Enterprise Bill

Overview

The Bill aims to set up a new South of Scotland Enterprise (SoSE) agency to help improve the economy of the Borders, and Dumfries and Galloway.

The aims of SoSE would be to:

  • support economic growth for all
  • provide, maintain and safeguard employment
  • develop skills for employment
  • encouraging business start-ups and entrepreneurship
  • improve the local amenities and environment

You can find out more in the Scottish Government document that explains the Bill.


Why the Bill was created

The idea of a new enterprise agency for the South was first announced by the Scottish Government in 2016, during its Enterprise and Skills Review. This area is one which underperforms across a range of economic targets.

The south of Scotland faces a number of economic challenges, including:

  • an ageing population
  • transport and digital connectivity issues
  • sectors with traditionally low wages and few higher skilled jobs
  • various ‘fragile’ communities, which means many young people are leaving the area

The new agency would be able to focus on the specific needs of this part of the country to improve the economy for all.

You can find out more in the Scottish Government document that explains the Bill.


The Bill at different stages

'Bills' are proposed laws. Members of the Scottish Parliament (MSPs) discuss them to decide if they should become law.

Here are the different versions of the Bill:

The Bill as introduced 

South of Scotland Enterprise Bill

The Scottish Government sends the Bill and the related documents to the Scottish Parliament.

Bill is at ScottishParliament.SC.Feature.BillComponents.Models.BillStageModel?.DefaultBillStage?.Stage_Name stage.

Where do laws come from?

The Scottish Parliament can make decisions about many things like:

  • agriculture and fisheries
  • education and training
  • environment
  • health and social services
  • housing
  • justice and policing
  • local government
  • some aspects of tax and social security

These are 'devolved matters'.

Laws that are decided by the Scottish Parliament come from:

Government Bills

These are Bills that have been introduced by the Scottish Government. They are sometimes called 'Executive Bills'.

Most of the laws that the Scottish Parliament looks at are Government Bills.

Hybrid Bills

These Bills are suggested by the Scottish Government.

As well as having an impact on a general law, they could also have an impact on organisations' or the public's private interests.

The first Hybrid Bill was the Forth Crossing Bill.

Members' Bill

These are Bills suggested by MSPs. Every MSP can try to get 2 laws passed in the time between elections. This 5-year period is called a 'parliamentary session'.

To do this, they need other MSPs from different political parties to support their Bills.

Committee Bills

These are Bills suggested by a group of MSPs called a committee.

These are Public Bills because they will change general law.

Private Bills

These are Bills suggested by a person, group or company. They usually:

  • add to an existing law
  • change an existing law

A committee would be created to work on a Private Bill.

Bill stage timeline

The South of Scotland Enterprise Bill is at Stage 2.

Introduced

The Scottish Government sends the Bill and related documents to the Parliament.

South of Scotland Enterprise Bill as introduced

Related information from the Scottish Government on the Bill

Scottish Parliament research on the Bill 

Stage 1 - General principles

Committees examine the Bill. Then MSPs vote on whether it should continue to Stage 2.

Have your say

The deadline for sharing your views on this Bill has passed. Read the views that were given.

Committees involved in this Bill

Who examined the Bill

Each Bill is examined by a 'lead committee'. This is the committee that has the subject of the Bill in its remit.

It looks at everything to do with the Bill.

Other committees may look at certain parts of the Bill if it covers subjects they deal with.

Who spoke to the lead committee about the Bill

Video Thumbnail Preview PNG

First meeting transcript

The Convener

We move on to our first evidence session on the South of Scotland Enterprise Bill, in which we will take evidence from the Scottish Government bill team. I welcome from the Scottish Government Karen Jackson, team leader with the south of Scotland economic development team; Sandra Reid, the bill team leader; Felicity Cullen from the legal directorate; and Fraser Gough, the parliamentary counsel to the Scottish Government.

We have a series of questions for you. I am sure that you are well versed in how this works. The microphones will be switched on for you and, if you catch my eye, I will try to bring you in at the relevant time. In this committee, if you look the other way when a question is raised, there is a danger that I will just point to the person who does not look away fast enough.

The first question is from John Finnie.

John Finnie (Highlands and Islands) (Green)

Good morning, panel. Will you outline for the committee the extent of the Government consultation on the bill, particularly with regard to businesses, communities, individuals, councils, trade unions and third sector organisations? What were the key messages raised during the consultation process? I am particularly interested in whether the social development element was picked up, because that is what would differentiate the new agency from the existing arrangements.

Karen Jackson (Scottish Government)

It is fair to say that engagement, both formal and informal, has been a key part of our work in developing the proposals. The Scottish Government’s pre-legislative written consultation ran for 12 weeks between March and June, and we received a really good response, with 268 respondents. There was a good mixture of responses. We got 115 responses from organisations and the rest were from individuals. There was a really good spread of organisational coverage and people who were interested.

We complemented the written consultation with events across the south of Scotland—we ran 26 events in the same period. Also, the national economic forum took place in Dumfries at the end of May, which brought in businesses. The consultation built on previous consultations that we had during the enterprise and skills review. Engagement with stakeholders has been an important part of our work.

I think that you asked about the themes that came out of the consultation.

John Finnie

Yes. It was about the key messages, and particularly whether social development was picked up on.

Karen Jackson

Obviously, we have published the summary of responses, so I will not go through it in too much detail, but people were focused on ensuring that the south is an attractive place to visit and to live and work in, and on how we create better employment opportunities and better-paid jobs. There was a recognition that the south of Scotland has a very different economy and that the business base is different, so the new agency needs to respond to those needs and opportunities.

There was a focus on young people. Many people move away from the south of Scotland, so there were lots of comments about what we need to do to help young people and to create new opportunities.

There was a theme about recognising the strength of communities in the south of Scotland. They are resilient and strong and the new agency can do something to help. We have picked that up in the social element of the new agency’s remit—that absolutely is a key point.

The other themes were about the important sectors in the south of Scotland. There is a recognition that the economy in the area is different. There are certain sectors such as forestry, tourism and the creative industries—that is not an exhaustive list—that the agency can pick up on. As you will imagine, there were issues about connectivity, both physical and digital.

John Finnie

I want to push you on the issue of social development. I represent the Highlands and Islands, as does the convener. Historically, the social development element was seen as a hugely important part of the work of the Highlands and Islands Development Board and Highlands and Islands Enterprise. However, the emphasis seems to have changed. The new organisation is not just about the economics; it is about the social. To what extent will that feature in the agency’s work?

Karen Jackson

The overarching aims of the new agency will be to promote the social development as well as the economic development of the south. We see those as integrated. We are looking at places, and businesses and communities are equally important in places. The new agency will bring those together.

John Finnie

Looking ahead to the anticipated timetable should the legislation proceed, when will the chair and board be appointed, when will the action plan be published and where will the headquarters be?

Karen Jackson

Gosh, there is a lot in that.

John Finnie

When will that be decided, then?

Karen Jackson

As you said, this is assuming that Parliament approves the legislation but, on the timetable for the chair, we hope to start the appointment process as soon as the Parliament has approved the principle of the bill, which means when we reach the end of stage 1. That should let the public appointments process run so that, ideally, we have a chair in place towards the end of the summer.

You also asked about decisions on the location.

John Finnie

Yes, and when the plan will be published.

Karen Jackson

The plan will be for the new agency to publish. We would expect that to happen after the new agency comes into being. If Parliament approves the legislation, we expect the new agency to be established on 1 April 2020, so the action plan would be developed and approved after that.

On location, the consultation was clear that people want the agency to be everywhere and to be accessible to all. They thought that having a single headquarters was the wrong way to go. Therefore, we are considering how we deliver that in practice through co-location with other public agencies. Again, we have not set a timetable for that, but that work is progressing.

John Finnie

Were it to proceed, what would be the timeframe within which the board would be appointed? I presume that you will appoint the chair first.

Karen Jackson

We will appoint the chair first and we assume that the chair will have a role in the appointments process after that. Ideally, we would have the members in place before 1 April 2020, ready to start when the agency is established.

The Convener

That is a tight timescale to get everyone in and all the locations sorted.

John Scott (Ayr) (Con)

Good morning. Continuing on that theme, why is primary legislation required and what are the benefits of that approach compared to other available options?

The Convener

Who would like to have a go at answering that? This is the dangerous part where you all look away. Sandra Reid, do you want to lead off?

Karen Jackson

I will take it, if that is okay. Sorry—I am just looking for my bit of paper that tells me about legislation.

The bill will implement decisions that came from the enterprise and skills review. Through that review, we looked at various options to establish the structure of a body, including legislation. We looked at whether the body should be a partnership, which would not require primary legislation, but would be supported by a memorandum of understanding. We looked at whether it should be a joint committee under the local government legislation. We looked at whether it should be a company owned by the public sector, or whether one of the existing public agencies in the south of Scotland could deliver it as a separate branch. However, the conclusion was that a new public body was the right way to go. During the enterprise and skills review, a real consensus developed that it was right to do it through primary legislation.

We assessed all those options against different principles, and the agency and legislation option scored best against them all. We decided that that was the most ambitious way to go. It would deliver the transformational change that everybody wanted to see; it would be independent and able to employ its own staff; there would be a clarity around its budget; and, with that wider remit, it could support businesses and communities. The legislation would define a clear remit, and people would be able to engage with it. It would also have the benefit of making the agency part of the national structure of other enterprise agencies. For all those reasons, we thought that legislation was the right way to go.

John Scott

Thank you; that was very clear.

What historic, social, economic or cultural reasons are there for treating the Scottish Borders and Dumfries and Galloway differently from other areas south of the central belt, such as parts of South Lanarkshire and Ayrshire? I declare an interest as a resident of South Ayrshire.

For example, the area south of Girvan—which is not in my constituency—is a natural fit with that south of Scotland area. It was disadvantaged under schemes in the 1990s, when Struan Stevenson tried to get it included for special treatment in that part of the south of Scotland.

Why did you choose to include some areas and perhaps disadvantage other areas?

The Convener

Karen Jackson, everyone else is still looking at you, so it looks as though it is still for you to answer.

Karen Jackson

I am happy to take that question.

We have been exploring the boundary issue for a long time. As part of the enterprise and skills review, we looked at how we might define the south of Scotland, and there were various options. We looked at whether it should mirror the south of Scotland parliamentary region, which would bring in a range of local authorities, or whether it should pick up on the southern Scotland NUTS 2 area—I am happy to write to you with the definition of that—which would bring in different local authorities. There was also a focus on the two council areas.

During that period, a consensus emerged that using the two local authorities—Scottish Borders Council and Dumfries and Galloway Council—to define the area was the right way to go. That reflected the economic challenges faced by those two areas and the opportunities that they have. The agency could offer a real focus on tackling those challenges.

It emerged that defining the area that way would be much clearer for businesses and communities, as they would know exactly which agency to go to. The other definitions would have been much more confusing for the service user. Choosing that definition recognised the work in the local area: the south of Scotland alliance was already a partnership of those two local authorities, so it would build on that local stakeholder engagement. In addition, those two local authorities have come together in the borderlands growth deal to build that partnership. We thought that the focus on those two areas built on the work that was going on locally.

Ayrshire and other parts of Scotland have been interested, but, during the consultation, they supported the boundary that we were developing. Both Ayrshire and South Lanarkshire look to other structures. The Ayrshires are looking at their growth deal structure, and South Lanarkshire is part of the Glasgow city region deal area.

We are not creating an island. The legislation is very clear that the new agency can look across its boundaries to work with other local authority areas here and in England, so that it benefits the people of the south of Scotland and gets that alignment of purpose.

John Scott

Are you saying that the loose definition of the area is the two local authority areas?

Karen Jackson

No. The definition of the geographical area is the two local authority areas: Scottish Borders Council and Dumfries and Galloway Council. The agency will be able to align and co-operate with organisations outside that boundary to benefit the people of the south of Scotland.

10:15  
Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I am familiar with those boundary issues, because my constituency straddles the areas of Highlands and Islands Enterprise and Scottish Enterprise; in other words, I am partly in Moray and partly in Aberdeenshire.

Will Scottish Enterprise, which will retain responsibility for South Ayrshire and other adjacent local authorities, take particular actions to collaborate with the new body for the south of Scotland, to ensure that the neighbouring areas are not disadvantaged? Is it possible to make sure that areas of difficulty that exist at the boundary areas do not become greater?

Sandra Reid (Scottish Government)

As Karen Jackson said, the new agency’s remit covers the south of Scotland, but we expect it to collaborate with other agencies, including Scottish Enterprise. The new agency will focus on regional economic activity in the south of Scotland. We expect that Scottish Enterprise will remain a national agency, but both agencies will work together to ensure that we achieve our aims.

Stewart Stevenson

Forgive me, but that is what I would expect you to say. However, I want to draw out the specifics. Will Scottish Enterprise take any particular action to support areas that are adjacent to the new agency’s area? Differential policies and administrative decisions affecting areas that are within a few hundred meters of each other can create difficulties that come from administrative decisions. Is there going to be a particular focus on making sure that that does not happen in North, South and East Ayrshire and other bordering authorities, given that there are disadvantaged areas north of the new proposed area?

Karen Jackson

Scottish Enterprise has been engaged in the work that we have been doing around rural economic partnerships. I know that in two or three weeks’ time you will be hearing from Scottish Enterprise, which will be able to give you more detail on its work on aligning with regional organisations. With its new chief executive, it is looking at its regional approach and how it tailors its responses to other parts of Scotland.

The Convener

That neatly leads on to the next question, which is from Maureen Watt.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

What is Scottish Enterprise currently unable to do in the south of Scotland that the new agency will be able to do?

Sandra Reid

The new agency will have the flexibility to respond to the needs of the south of Scotland and, more specifically, to focus its resources on the circumstances of the area and on what is needed to help to achieve its aims of supporting businesses, sustaining communities and harnessing the potential of the people in the area. The new agency will have the ability to put a renewed focus on the south of Scotland.

Maureen Watt

Cross-border issues have been talked about a lot recently, including the idea of having the equivalent of a city deal in the area. Can you explain where we are at with that? Will this new agency be able to access funds from the deal and perhaps use them better than might otherwise be the case?

The Convener

Does Karen Jackson want to start and then let Sandra Reid come in?

Karen Jackson

I will start and then Sandra Reid can pick up on the difficult detail. Maureen Watt is right that we are looking at the borderlands growth deal. The borderlands area takes in Dumfries and Galloway Council, Scottish Borders Council and three English local authorities: Carlisle, Cumbria and Northumberland. Those local authorities are coming together to put proposals to both Governments about a growth deal.

You asked where we are. The authorities have submitted proposals to both Governments and we are looking at the detail of the propositions. I think that there are 10 different outline business cases, which focus on various themes that the authorities see as key to driving growth across the area.

As the detail develops, we will look at how those propositions and proposals can be delivered. The new agency absolutely will have a role in delivering some of the projects. For example, if there is a focus on energy, tourism or place, we see the agency getting involved in delivery in that regard. We are working hard to ensure that the projects in the borderlands and the agency’s priorities are closely aligned; you would expect the new agency to be absolutely integrated with the borderlands proposition.

Maureen Watt

Are the three council areas south of the border working separately, or do they all come together in some sort of grouping?

Karen Jackson

They come together in the borderlands partnership. The proposals that have been submitted to both Governments have come from the borderlands partnership, so they have come from all five local authorities together.

Colin Smyth (South Scotland) (Lab)

Board members will be appointed by the Scottish ministers, as will the chair and first chief executive. Ministers will also decide the location of the new agency, and I see that the agency will be able to change its action plan only with ministers’ permission. That gives rise to concerns about local accountability. How will we ensure that decisions on membership, in particular, are in line with local opinion?

Sandra Reid

South of Scotland enterprise will be a non-departmental public body, as you are aware, so appointments will be made via an open and fair process, which will be regulated by the Commissioner for Ethical Standards in Public Life in Scotland and the “Code of Practice for Ministerial Appointments to Public Bodies in Scotland”.

The policy memorandum, which you might have seen, says that the aim is that

“Members will be chosen to provide a balanced mix of relevant skills and expertise which reflect the business and communities of the south of Scotland”.

We intend to advertise appointments in such a way as to attract a strong and diverse field of suitable candidates, with a particular focus on people in the south of Scotland.

That is standard practice for the existing enterprise agencies—Scottish Enterprise and HIE—the members of which are also appointed through the public appointments process.

As part of that process, we intend to set out a clear description of the skills, knowledge and expertise that are required. In drawing that together, we will reflect on responses to the consultation. The consultation asked about board members, and respondees submitted views on whom they would like to see on the board. Their suggestions included people from the local area, young people and individuals from the private sector. Respondees reinforced the need for the board to be representative of people in the south of Scotland, and we will work hard to ensure that that is the case.

Colin Smyth

The bill does not specify the skills and expertise that are required. You will do that. Will you ensure that there is a mix, so that, for example, young people, trade unions and small business owners are represented?

The local authority is represented in the current south of scotland economic partnership—the interim partnership. Why will it not be represented in the new agency?

Sandra Reid

We will take account of all the factors that you mentioned in the public appointments process, but the bill does not specify the detail, as you said. Of course, councillors may apply to be members of the board. I am aware that Councillor Stephen Hagan is a member of the VisitScotland board, for example. There is access through that means.

Colin Smyth

But the final decision on membership will be made by ministers.

Sandra Reid

Yes. That is what the bill says.

Colin Smyth

On ministerial direction, I notice in the Highlands and Islands Enterprise legislation that ministers can issue direction only following consultation with Highlands and Islands Enterprise, but the South of Scotland Enterprise Bill does not include such a requirement. Why is that? Will ministers effectively be able to veto the agency’s decisions?

Sandra Reid

You are right to say that the bill does not include that requirement. However, I expect that those powers of direction will be used only in exceptional circumstances, and in consultation with, or following engagement with, the new agency.

Colin Smyth

I am just intrigued about why that requirement is specified in the Highlands and Islands Enterprise legislation but not in this bill.

Sandra Reid

That is something that could be considered, if you think that it should be contained in the bill.

The Convener

For clarity, is it the case that that is not a conscious omission and that it simply has not transferred across? Are you saying that it could be considered at a later date?

Sandra Reid

That is correct. No particular decision has been made in that regard, and I would expect some consultation or engagement to happen before a direction was issued.

Richard Lyle (Uddingston and Bellshill) (SNP)

When you create a new organisation, surely you specify who is doing what, who will be responsible and who will be involved in it. Given the importance of the strategic board to the Government’s enterprise and skills reform agenda, why is there no mention of it in either the bill or the policy memorandum?

The Convener

Who would like to answer that? Karen Jackson is wavering.

Karen Jackson

I am looking forward to answering the question.

The strategic board is not defined in legislation; it is a different sort of construct. That is why it is not included in the bill. We would absolutely expect the chair of the new agency to be part of the strategic board process, as are the chairs of other agencies.

Richard Lyle

The fact is, sometimes you create an agency and find that everybody is doing the same thing. That brings me to my second question. The bill specifies a role for the new south of Scotland agency in

“enhancing skills and capacities relevant to employment”.

That is also a core function of Skills Development Scotland. How will the two agencies work together? Will that duplication not cause confusion and ensure that it is a disaster right from the start? How are you going to sort that?

The Convener

I think that everyone is taken aback at the suggestion that this is going to be a disaster. Karen Jackson is going to convince us that it will not be.

Richard Lyle

We are here to probe.

Karen Jackson

We will avoid disasters.

You are right to suggest that the agency will not be the only agency operating in the south of Scotland after 1 April 2020. Other agencies already operate there, including Skills Development Scotland, VisitScotland and local authorities, and Scottish Enterprise will still have a presence. We would argue that that is absolutely right, because the south of Scotland will benefit from the input of lots of different agencies. However, we want to avoid duplication and ensure that the agencies are complementary rather than duplicatory. That involves the new agency acting as the voice of the south of Scotland. It can have an informed conversation with Skills Development Scotland and identify issues such as the fact that, in the south, sectors such as forestry need different skills. That will ensure that SDS can respond appropriately to the needs of the south of Scotland. I think that that will strengthen the position of people in the south rather than creating any confusion.

Richard Lyle

In case people take my previous comment out of context, I should say that I do not want it to be a disaster; I want to ensure that the organisation can work with other people to deliver a level footing for the future.

Karen Jackson

Absolutely. You started your question with a reference to the strategic board—the alignment happens from the national level down.

Colin Smyth

On that point, the Highlands and Islands Enterprise legislation makes it clear that that agency has the responsibility for many functions that are carried out by Scottish Enterprise elsewhere. However, the South of Scotland Enterprise Bill states that the property and liabilities of Scottish Enterprise will be transferred to the new agency, but it does not clarify which functions, if any, Scottish Enterprise will retain. It is therefore not entirely clear what functions Scottish Enterprise will retain and what specific functions the new agency will have. Does that need to be clarified in the bill or will you set it out elsewhere?

10:30  
Sandra Reid

The bill is drafted in a way that is high level and enabling in order to provide the new agency with the flexibility to determine what activities would be most appropriate to meet the needs and circumstances of the south of Scotland.

As we said, we expect the new body to assume responsibility for regionally specific enterprise activity. As Colin Smyth said, that might involve building on work that has already been done. We expect Scottish Enterprise to remain the national agency; it will continue to have a presence in the south of Scotland through national products such as the Scottish manufacturing advisory service or regional selective assistance. The new body’s activities will be developed and determined through our project delivery as we work towards its establishment.

Colin Smyth

You are right that the bill is very high level. It is fair to say that its aims are quite general. The aims of the Highlands and Islands Enterprise legislation, however, are very specific; the list of functions in that act is a lot more detailed. Why is it different in this legislation? I have heard the argument that Highlands and Islands Enterprise has been prevented from doing things because its aims and functions, as set out in legislation, are too specific and detailed. Are there any examples of things that Highlands and Islands Enterprise has been unable to do because of the way in which the legislation that governs it is written?

Karen Jackson

I will start by talking about the aims and then perhaps Fraser Gough can come in on the drafting construct.

The aim of the bill is high level—it is to further the economic and social development and improve the amenity and environment of the south of Scotland. It then illustrates how those aims might be achieved. It is fair to say that that reflects modern drafting practice. That high-level aim and those illustrations mean that the new agency can do what it needs to do to respond to opportunities and needs in the south of Scotland.

Fraser Gough

As Karen Jackson said, the Enterprise and New Towns (Scotland) Act 1990 is very much a product of its time in the way in which it is drafted and structured.

I cannot speak to exactly what problems or restrictions Scottish Enterprise or HIE might have encountered. These days we tend to avoid long exhaustive lists of things, which, in each case in the 1990 act, are given as specific examples under the general power to do anything in pursuance of the bodies’ aims. The difficulty with elaborate lists is that they begin to look as though they are constraining. The more words you have on the legislative page, the more opportunities you give lawyers to create arguments—you can infer constraints that were not intended. We therefore tend to eschew that style of drafting these days.

I will give you a simple example. Scottish Enterprise and Highlands and Islands Enterprise are empowered to reclaim land from the sea, but the bill says that south of Scotland enterprise can acquire land and enter into contracts, and those contracts could be with people who are involved in reclaiming land from the sea. We are therefore dealing with the same propositions but at a higher level of abstraction. We do not need to get down to the specifics in the same way.

Colin Smyth

The Highlands and Islands Enterprise legislation specifically mentions compulsory purchase. Are you saying that the south of Scotland enterprise agency will have the power of compulsory purchase as well?

Fraser Gough

No. It is fair to say that a lot of the complexity in the 1990 act surrounds powers that—as a matter of policy—the Government is not proposing to give to south of Scotland enterprise. Those powers include compulsory purchase powers, powers to enter on to land without permission, and powers to require people to give information under penalty of criminal sanction for not providing it. As a matter of policy, those powers are not being pursued for the south of Scotland agency.

Colin Smyth

Let me probe that point further. The Highlands and Islands Enterprise legislation talks in depth about safeguarding the environment, natural beauty and the geography of the region, and it includes provisions on developing the environment and derelict land, whereas the South of Scotland Enterprise Bill refers only to the “amenity and environment” of the region and does not mention natural assets. Are you saying that the bill makes south of Scotland enterprise’s responsibilities in that regard no weaker than those of Highlands and Islands Enterprise? Can you give the committee an absolute guarantee that no power has been given to the Highlands and Islands agency that is not being given to the south of Scotland one?

Fraser Gough

Yes. Your question began from the premise that, because the bill contains less detail on those things, the new agency will be more constrained than the existing agencies. However, aside from the policy exceptions on compulsory purchase and obtaining information, which I have mentioned, we are quite comfortable that, if anything, the bill having less detail and constraint built into it is in broad pursuance of its aims, which are every bit as broad as, if not broader than, those of the 1990 act.

Colin Smyth

I want to be clear on the point about there being no additional powers. You mentioned compulsory purchase. Additional powers appear to have been given to Highlands and Islands Enterprise that are not being given to south of Scotland enterprise. Is that the case?

Fraser Gough

Yes. Those are the specific ones that I have mentioned: the powers for compulsory purchase, for obtaining information from people and for entering on to land without permission.

The Convener

Those are important points, Colin. When representatives from HIE come in, you will get a chance to see how relevant those powers are and whether they have used them. I do not want to cut you off, but I am going to bring in John Finnie. I will be happy to come back to you if you want to develop that point.

John Finnie

I am going to sound like a stuck record and ask about social development again. In layperson’s terms, that was what marked out HIE as being different from Scottish Enterprise. I want to understand whether the somewhat romantic notion that people had about the role of the old Highlands and Islands Development Board, and then its successor organisation, will be a feature of the new agency. That is to say that it would not just be involved—as it appears to be now—in a lot of the high-level strategy stuff about increasing exports for businesses within its portfolio, but there would be meaningful engagement with communities at a very local level. Can you give examples of the social development that you envisage the south of Scotland enterprise agency will undertake? My concern is that that work will drop off and it will concern itself not with communities but solely with the balance sheets of large companies.

Karen Jackson

I will start on that question. The bill gives the agency responsibility for social development. The consultation gave a range of examples of the activities that the agency might be expected to pursue as part of that community element. The focus on developing community capacity—

John Finnie

I am sorry to interrupt, Karen, but, for the record, could you detail some of those activities, please?

Karen Jackson

Absolutely. We explored helping communities to acquire specific assets, looking at how they could use them to generate income.

John Finnie

But without compulsory purchase.

Karen Jackson

I will not be able to answer properly to that level of detail, so perhaps we could come back to it in writing. The community empowerment stuff includes helping communities to develop specific assets, generate income and deliver services. We recognise that social enterprises are very important in the south of Scotland, so the new agency will have a focus on what it can do to grow them. Similarly, community-based businesses are very important in resilient communities and play an important part in the economy of the south, so we would expect the agency to look at those. There will be a place-based focus, so an agency that focuses on the south of Scotland will be able to understand what makes the place tick. Its focus should be on pursuing both the business and community elements of that. It should ask what the important thing is in a place that makes it vibrant and resilient. That is not necessarily a business; it could be a community facility.

On the question of how the agency can help communities to respond to opportunities that are presented to them, because Highlands and Islands Enterprise works closely with us we understand about best practice there. However, we are working with other agencies, such as the Development Trusts Association Scotland and the Southern Uplands Partnership, to bring in different perspectives.

In the consultation, we got lots of responses from community councils and other community organisations, so there is a wealth of information about practical things that the agency could help to tackle.

Fraser Gough

I want to add something on the point about the absence of compulsory purchase powers and the agency helping communities to acquire assets. You must bear in mind the fact that, since the 1990 act came into force, the Scottish Parliament has conferred the community right to buy and there are compulsory purchase powers in the Town and Country Planning (Scotland) Act 1997 that did not exist in 1990. When comparing the two acts to see what is missing, we must bear in mind that the legislative landscape has moved on, in large measure through the Scottish Parliament’s efforts.

Richard Lyle

My question follows on from Colin Smyth’s and John Finnie’s questions. Will the agency have the same powers as other agencies—yes or no?

The Convener

Who would like to dodge that question? Does Karen Jackson want to try that one?

Richard Lyle

It is a simple question.

Karen Jackson

The overarching aim of the agency is absolutely what you would expect Highlands and Islands Enterprise to do, so it is equivalent in that sense. As Fraser Gough has been explaining, certain elements of the detail are different in order to reflect the different legislative processes and the acts that have subsequently been introduced.

Richard Lyle

I am sorry to press you, but you are saying that the agency will not have the same powers as Highlands and Islands Enterprise.

Karen Jackson

I am saying that the agency will have a clear power to drive forward the economy of the south of Scotland, supporting communities and businesses across the south of Scotland.

The Convener

Richard, I am not going to cut you off, but the cabinet secretary will be in and I am sure that he will look forward to your robust line of questioning.

Richard Lyle

It is a point that we have to clarify. Colin Smyth asked the question, but it has not been answered.

The Convener

I am sure that the cabinet secretary is listening to this meeting and taking cognisance of the fact that you are going to ask him that question.

Gail Ross (Caithness, Sutherland and Ross) (SNP)

I will follow Richard Lyle’s other line of questioning on the duplication of services. The bill specifies a role for the agency in encouraging business start-ups and entrepreneurship. Is it intended to replace the business gateway or to work alongside the business gateway? How will the agency work with local authorities to encourage new businesses and the growth of existing ones?

Karen Jackson

In advance of the creation of the new agency, we have created the south of Scotland economic partnership, which brings together the seven key public sector agencies that support economic development in the south of Scotland. As Mr Smyth suggested, Scottish Borders Council and Dumfries and Galloway Council are members of that partnership, which is helping to develop alignment across agencies. We are discussing what makes sense to businesses in terms of who delivers what and how we ensure that there is one clear place for businesses to go and get the services that they need, which might be delivered not by the agency but by other organisations, local authorities, the private sector or the third sector. You can therefore see a role for the agency in creating that alignment and in helping businesses to navigate what they sometimes think is quite a complicated landscape.

Gail Ross

Will the business gateway still exist?

Karen Jackson

That decision has not been made. We are talking with local authorities about how those services are best delivered. The business gateway might be the best way in which to do that, but those discussions are still evolving.

Peter Chapman (North East Scotland) (Con)

We have strayed into a fair bit of my question, but I will ask it anyway. How will the new agency work with Scottish Enterprise and Highlands and Islands Enterprise, given that Scottish Enterprise will continue to have a presence in the area and that HIE is the model organisation for the new agency in the south of Scotland?

Karen Jackson

I think that we have covered quite a lot of that ground. It is about alignment, complementarity and finding a way for the agency to bring together what businesses and communities need.

Peter Chapman

Scottish Enterprise’s role will obviously diminish when the new agency is up and running, but it will still have a role in the region—is that assumption correct?

Karen Jackson

Absolutely. Scottish Enterprise will still operate as the national economic development agency across Scotland. As Sandra Reid mentioned, Scottish Enterprise delivers various national products such as regional selective assistance grants, the Scottish manufacturing advisory service and some of the Skills Development International services. Those services are all delivered nationally, and we would expect Scottish Enterprise to do that following the creation of the new agency.

There is also expertise in Scottish Enterprise that we would not want the south of Scotland to be cut off from. Energy is a good example. Scottish Enterprise has a depth of information about energy, and we would not want to cut off the south from benefiting from that expertise in the national body. Similarly, the new agency could develop expertise in areas that reflect its economy—in forestry, for example—which would help other agencies such as Scottish Enterprise and HIE. Such alignment and complementarity go all the way through the system.

10:45  
Peter Chapman

I understand that. Both Scottish Enterprise and HIE publish annual business plans, which include useful budget information, organisational targets and priorities. Is there anything in the bill that requires the new south of Scotland agency to do likewise?

Sandra Reid

The most direct comparison in the bill is the requirement for the new body to produce an action plan that is to be agreed with ministers. That would set out how the agency should look to achieve its aims. The business plan and corporate plans will be used as the blueprint for how the agency will take forward its activities.

Peter Chapman

I assume that the new board will have a big input into that planning process.

Sandra Reid

Yes, we would expect that.

John Mason (Glasgow Shettleston) (SNP)

I am looking at some of the figures in the financial memorandum, a lot of which makes sense—the three parts on set-up costs, running costs and the on-going budget. I was particularly struck by the estates figure, under the setting-up costs on page 4. I agree with the approach of taking a low and a high figure, but it seems quite extreme that the low figure could be £542,000 and the high figure could be £2.6 million. Can you explain why there is such a big range?

Karen Jackson

Absolutely. In bringing those estimates together, we were looking at all sorts of different possibilities for what the estates and the geographic footprint of the new agency might look like. At the higher end, the costs assume that we would need to fit out a building from scratch; at the lower end, it is much more about co-location.

It was clear from the consultation that people wanted the agency to be accessible everywhere, and we are exploring how we could deliver that through co-locating with other bits of the public sector estate and with bits of private or third sector agencies that offer accommodation. That explains the range. It is obviously more expensive to fit out a new building and less expensive to share premises with others. We hope that co-location will be the way in which the agency operates.

John Mason

So, the figures include all the possibilities—whether there is one main headquarters and a lot of smaller offices or two big headquarters, or whatever the option might be.

Karen Jackson

The policy memorandum explores all those possibilities and gives us the financial estimates for all sorts of different models. One of the options that was consulted on was a hub-and-spoke model, which would have two or three key hubs for the agency and would spread out across the area. The estimates cover the range of options.

John Mason

My other point concerns part 3, on the total budget allocation. On page 10, in paragraph 53, the policy memorandum says:

“It is intended that the allocation given to the new body will be equivalent on a per-capita basis to the allocation for HIE”.

I accept that the figure needs to be higher than what Scottish Enterprise gets, because the south of Scotland is a more urban area, but the HIE area is much more spread out, has a whole lot of islands and faces many more challenges than the south of Scotland. Can you explain why the allocation would be a matching per capita amount?

The Convener

Who would like to answer that question? I am trying to control the committee, because there are a few Highlands and Islands MSPs who might want to jump in on the back of that question.

Karen Jackson

We looked to the Highlands and Islands and saw very similar challenges around geographic spread and rurality. We listened carefully to what consultees were saying, and they made the case that the new body needs to be funded in a way that is equivalent to how HIE is funded. I am sure that you will want to pick up with the cabinet secretary the issue of how different funding amounts are justified. I can explain where we have got to in the financial memorandum, but I suspect that the committee has got the bigger point.

John Mason

The regions are similarly rural, but there are no islands that I am aware of in the region. That would be an immediate cost. I will take the issue up with the cabinet secretary, so I will not press you on it too far. However, surely the needs are not as great as those in the Highlands and Islands? If you do not want to answer that question, I will let it go.

The Convener

John, you seem to be taking some committee members with you, but some are against you. Let us keep that question for the cabinet secretary.

Colin Smyth

As one of the members that he certainly is not taking with him, I very much welcome the financial memorandum—

The Convener

Now, Colin, we said that we would not do that.

Colin Smyth

I welcome the financial memorandum’s commitment, given that the region is the lowest paid in Scotland.

Given that per capita commitment, the budget would be £42 million a year, based on the current HIE budget. However, the financial memorandum proposes only £32 million in the first year and the amount rises gradually until we get to that £42 million. The figure is therefore not per capita in the first two years. Why is that? I can think of many projects in the south of Scotland that would spend that per capita funding very quickly. Why are we not getting that per capita funding until, in effect, year 3?

Karen Jackson

We have been working on the transition planning. Our assumption is that we will build up to the full allocation. In the first year, the agency will not have its full staff or its full capital programme in place. The members of the agency will want to plot out that capital programme and where those resources can be used most effectively. We took the view that the agency would need two or three years to get to that point, but the committee may want to discuss that point more broadly.

The Convener

Maureen Watt has a question.

Maureen Watt

It is not related to the financial memorandum.

When the bill was drafted, we were in a different political situation from the one that we are in now. There will probably be a border down the middle of the Irish Sea, and Dumfries and Galloway will become another kind of borderland. Should anything be put in the bill to strengthen the area and the powers in relation to various issues that had not been foreseen when the bill was drafted? Has that idea been considered?

Sandra Reid

As we have said, the bill has been drafted in a high-level way that makes it an enabling bill that will enable the new agency to be flexible and responsive in its approach. The agency will be able to change what it does, and, as circumstances change over time, it will be able to adapt and respond to those changes. That flexibility is necessary to reflect future situations. We cannot future proof everything, but we can ensure that the agency will be able to respond.

Richard Lyle

In the jobs that I used to do, I was not based in an office—I used to go out on the road a lot. The south of Scotland is wide and varied, so the new board will need time to work out where it wants to have its main hub or hubs and where it wants its staff to be. Is that correct?

Karen Jackson

I think that the answer to that question is yes.

Richard Lyle

I thought that it would be.

Karen Jackson

However, I suspect that I should qualify my answer by saying that some decisions will have to be made for purely practical reasons.

Richard Lyle

So, you are not going to say that the headquarters will be at X and the hubs will be at Y and Z. Are you saying that the board will come in and make those decisions, in consultation, for the benefit of the people of the south of Scotland?

Karen Jackson

There will be flexibility to change, but we expect that decisions on some hubs will need to have been made before 1 April 2020, so the decisions will not all be for the agency to make. We will need to have hubs in place so that there are places from which people can start operating on 1 April.

Richard Lyle

Thank you for clarifying that.

John Scott

I want clarification on the Ayrshire question. Why is it not part of the enterprise region? Did you say that the Ayrshire local authorities did not want to be part of the south of Scotland enterprise region? Is that being driven by there being two separate future funding streams—the borderlands growth deal and the Ayrshire growth deal?

Karen Jackson

The three Ayrshire local authorities have self-identified the Ayrshires as a growth deal area and have focused on that structure, rather than looking towards the south of Scotland. We recognise that there are real economic links across the council boundaries—economics does not always respect council boundaries. The approach was driven by the Ayrshire councils, which were absolutely focused on getting their own growth deal and considering their own structures across the three councils. The responses from the three Ayrshire councils to the Scottish Government consultation said that they were looking at the structure of their growth deal area, rather than at the south of Scotland, although they made the point that establishing an effective working relationship is key.

Colin Smyth

Why is there no specific reference to equalities in the South of Scotland Enterprise Bill? The act that regulates HIE includes provisions on responsibility for improving opportunities for disabled people, women and ethnic minorities, and for enforcing current legislation. It also states that, within reason, HIE and Scottish Enterprise are required to give preference to disabled former servicemen and servicewomen when they select disabled people for training. However, there is no explicit reference to equalities in the South of Scotland Enterprise Bill. What are the reasons for that?

Felicity Cullen (Scottish Government)

There is no such specific reference in the bill, but there is the intention to amend the relevant statutory instruments that will apply the public sector equality duty, and the suite of other equality legislation, to the new body. That will be done as part of preparation for commencement of the body on 1 April 2020. If those amendments are not in place by 1 April 2020, they will be in place very shortly afterwards, and the body will operate as if it were affected by the duties anyway.

The Convener

That completes our questions. Thank you, panel. Karen Jackson answered the majority of the questions, for which I thank her.

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Second meeting transcript 

The Convener (Edward Mountain)

Good morning, and welcome to the 33rd meeting in 2018 of the Rural Economy and Connectivity Committee. I ask you all to make sure that your mobile phones are in silent mode. No apologies have been received, but Stewart Stevenson will have to leave during the meeting to attend another committee.

The first agenda item is an evidence session on the South of Scotland Enterprise Bill with organisations that have an economic interest. I welcome Garry Clark, the development manager for the east of Scotland at the Federation of Small Businesses; Matt Lancashire, the director of policy and public affairs at the Scottish Council for Development and Industry; Margaret Simpson, a director of Scottish Borders social enterprise chamber; and Norma Austin Hart, the chief executive officer of Dumfries and Galloway Third Sector Interface.

You have probably all given evidence at parliamentary committees before, but I remind you that you do not have to touch any buttons on your microphone, as it will be activated for you. If you want to come in, just try to catch my eye. I give a subtle wiggle of my pen if I think that you are extending your answers beyond a reasonable time. The pen has never yet flown out of my hand in the direction of a person who has not stopped. I hope that we can continue that.

The first questions this morning will be from Mike Rumbles.

Mike Rumbles (North East Scotland) (LD)

This is a question for all the panel members. What are your aspirations for the economy of the south of Scotland? What is your vision for the area in 10 to 20 years’ time, and what needs to be done for the area if it is to reach its full potential?

The Convener

Who would like to start? By the way, the other danger is that, if you all look away, I will nominate somebody. Garry Clark, why not start?

Garry Clark (Federation of Small Businesses)

I will kick off. To some extent, our aspirations for the south of Scotland are pretty similar to those for the rest of Scotland, and we want businesses in the south to be supported as businesses in the rest of Scotland ought to be.

However, we must recognise that the south of Scotland has business and economic needs that are different from those in other parts of Scotland. There has been a lot of comparison between the prospective south of Scotland enterprise agency and Highlands and Islands Enterprise, but we see quite radical differences between the north and south of the country. There are greater ties with other parts of the UK, and there is no central nexus in the way that Inverness anchors Highlands and Islands Enterprise.

In the south, there is the Borders region, which is quite reliant on Edinburgh—much of the Borders region is now within a 50-minute train journey of Edinburgh. The south-west is more remote and there are different challenges for places such as Dumfries and Stranraer. We want a new agency to be able to look at what the businesses in the south need and to address those needs rather than take a one-size-fits-all approach. That is the great advantage and opportunity that we have in the south of Scotland. We can look at the particular geographical and sectoral needs of businesses there and address them in a way that fits the businesses.

Matt Lancashire (Scottish Council for Development and Industry)

Our aspiration for the south of Scotland is that its inclusive and sustainable economy will grow over the next 10, 15 or 20 years. We know that there is currently a productivity issue across the south of Scotland, and there are many economic challenges to do with wages, housing and other issues that drive the economic development of the region. To overcome those challenges, we need the agency to span public, private and third sectors and, in particular, to find opportunities in the challenges to drive economic development forward.

Our aspiration is that the agency will support a breadth of organisations—not just the private sector, the small and medium-sized enterprises and the large corporates, but the social enterprises and the third sector—that all generate economic growth in a particular region or area.

In 10, 15 or 20 years’ time, we want to have changed the dial on productivity in the south of Scotland—that is key. If the agency could support us to achieve that, that would be a success. If we could bring productivity and wages back into line with those in the rest of Scotland, that would be a success and we would have inclusive economic growth that we could drive forward. Our aspiration is growth for all in the region.

The Convener

Margaret Simpson was nodding furiously. Do you want to add to that?

Margaret Simpson (Scottish Borders Social Enterprise Chamber)

I totally agree with that. I am a great believer in the need for us to build the capacity of the region from the bottom up. This is a great opportunity to make the whole Borders region more competitive with the rest of the country. We have fallen behind on wages and opportunity. Our young people leave, but we need them to stay in the Borders.

We need to develop the skills base. Our sector generates £60 million and 1,200 full-time equivalent jobs, yet we get minimal support to make the changes that we would love to make to create the wealth that we need in the Borders. We should be looking at research and development, computer coding and 3D printing, and we should be bringing in things that will allow us to compete.

We are only an hour away from Edinburgh and the same distance from the north of England. We need to make those connections better.

The Convener

Stewart Stevenson wants to tackle Garry on a particular point.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

Yes. I am looking at the bill because, at the end of the day, we will end up with a bill. The bill describes the aims of the enterprise agency—there is a long list in section 5(2)—but it does not say anything about small and medium-sized enterprises. I wonder whether Garry Clark, in particular, would like to comment on that. The bill specifically talks about “promoting commercial and industrial” and “supporting community organisations” but it does not say anything about social enterprises, which Matt Lancashire referred to, or SMEs.

Given the nature of the challenge in the south of Scotland and the predominance of SMEs as an economic contributor, should the aims of the enterprise agency as expressed in the bill be extended to cover those things, if only to balance the things that are mentioned?

Garry Clark

Yes. That is a fair point. We ought to consider the nature of the economy of the south of Scotland. In the Borders, for example, more than 50 per cent of the workforce is employed by small businesses, which is not the case in other parts of Scotland. In the central belt, only 25 per cent of the workforce in West Lothian is employed by small businesses, with the rest being employed by large businesses. That is the point that I made at the outset when I said that we must address the specific needs of the south of Scotland. Like the Borders, Dumfries and Galloway is very reliant on small businesses for employment, and it is the only area of Scotland that has seen a decrease in the number of businesses—it has seen about a 2 per cent decrease according to the most recent round of figures. There are specific challenges there.

We need to look at the scale of businesses in those areas and the sectoral approach of the new south of Scotland agency. The key sectors that Scottish Enterprise focuses on in its account management are not necessarily what will drive the growth in productivity that we want to see in the south of Scotland. We would certainly welcome a focus on that, but it is important that we support all businesses and recognise the specifics, and small businesses form a huge part of the local economy in the south.

Norma Austin Hart (Third Sector Dumfries and Galloway)

In answer to Mike Rumbles’s question about the aspirations, I think that we want to see a younger, wealthier, better-connected set of communities in the south of Scotland. To add to what has been said rather than repeat it, I note that there are some important questions to ask about the towns and small communities across the south of Scotland, which are fragile. It would be great to see them turn into thriving centres of small communities.

If I could wave a magic wand, I would ensure that we started to think in an integrated way about our economy and place-based regeneration and not about businesses separately from social enterprises, communities and community-based organisations. That is very much where the bill is going, and we, in the third sector, welcome that.

Mike Rumbles

I have listened to your responses. Has Scottish Enterprise not recognised the strengths and assets of the south of Scotland in the way that you would like it to? I do not want to put words into your mouths, but do you think that the new agency for the south of Scotland will be able to do a much better job than Scottish Enterprise has done? If so, why?

The Convener

Norma, you seem to be happy to lead the charge on that.

Norma Austin Hart

I think that that is what is known as a leading question. [Laughter.]

Stewart Stevenson

Correct.

Norma Austin Hart

I would not want to be directly critical of Scottish Enterprise, which has been constrained by its powers. One of the very positive things about the bill is that it will bring in a new model that is based on Highlands and Islands Enterprise. We, in the third sector, welcome that, because it represents an opportunity to look at communities and the regeneration of our economy and our area in a different way. The place-based approach is extremely welcome.

The Convener

That was a very adroit answer, if I may say so. Who would like to go next?

Matt Lancashire

We should not look at Scottish Enterprise and the new agency as competing and combative entities. For the new south of Scotland agency to work, it will need to work with Scottish Enterprise in order for them to be more than the sum of their parts. Obviously, we want it to succeed with the business base, the place making and all the stuff that we have just talked about, but we also want it to be able to connect into other opportunities that exist outwith the region. We have talked about 3D printing and imaging, renewables and so on. Those things will be achieved only if the region connects beyond its boundaries into the north of England and the central belt and internationally.

The south of Scotland agency will have a role to play in that, and so will Scottish Enterprise. There need to be conversations so that there is a link. Rather than there being a combative relationship, there needs to be partnership and collaboration in order to move things forward, because both agencies will bring opportunities to the region.

10:15  
Garry Clark

That is absolutely right. It is not a case of Scottish Enterprise versus the south of Scotland enterprise agency; it is about the additionality that the south of Scotland enterprise agency could bring to the equation. Scottish Enterprise has a national focus on the key sectors that drive the Scottish economy as a whole. The sectors in the south of Scotland include agriculture, forestry and tourism, which is a key sector. Those sectors are particular to that part of the country, and they would benefit from a greater local focus and greater local resources being brought to bear to support the businesses in those areas.

We are certainly looking for additionality. We will look for the south of Scotland enterprise agency to link closely with existing services, including SE, business gateway, Skills Development Scotland and local services, in order to bring additionality.

John Finnie (Highlands and Islands) (Green)

I note that the panel is being very diplomatic and not wanting to be critical of Scottish Enterprise. I represent the Highlands and Islands region. I have been critical of the performance of Highlands and Islands Enterprise, but it has given many organisations more than the sum that Scottish Enterprise has allocated to businesses and headquarters in the south of Scotland. We are told that, in the past two years, Scottish Enterprise has given the region between £3 million and £5 million, which is a very modest sum. Two years ago, Scottish Enterprise gave £2 million to Lockheed Martin, the most profitable arms company in the world. I appreciate that witnesses do not want to comment on Scottish Enterprise, but it is important that what I have said is on the record. Surely, the level of funding from Scottish Enterprise must impact on the start-up rate and lead to the dearth of start-ups.

Margaret Simpson

I will be slightly critical. We do not see very much of Scottish Enterprise in my sector, because most firms are small organisations with fewer than five employees. When they need investment, they do not meet the threshold or hit the targets to be account managed. I would like there to be much more flexible support at that level, so that we can develop skills and find places for our young people and, indeed, our older people. Yesterday, we heard that unemployment among our young people in the Borders has gone up by 11 per cent. We do not want more of the same; I hope that the new agency will be the innovation that is needed. I am sorry, but I will hold it to account.

The Convener

That is quite right. Norma Austin Hart wants to come in.

John Finnie

Will you comment on the number of start-ups, in particular, please?

Norma Austin Hart

I will add to what Margaret Simpson said—this is not so much about start-ups. Like many central belt-based agencies, Scottish Enterprise might not have the same grip on, or the same understanding of, rural issues as we have at a local level. The committee will be aware of the recent closure of Pinneys of Scotland in Annan, in Dumfries and Galloway, with the loss of 450 jobs. The impact of that is the equivalent of Glasgow losing 4,000 jobs.

To draw that point out a little further, a place-based approach is important because it allows agencies such as mine, Scottish Enterprise and, I hope, the new enterprise agency to look at communities and consider the impact of the loss of small numbers of jobs here and there. The approach will allow the agencies to see the jobs as a collective group and to look at the whole picture, so that they are able to respond to job losses in a strategic way. For that to happen, there needs to be local understanding and a grasp of what is happening with small businesses and microbusinesses, otherwise we will just paper over the cracks.

Matt Lancashire

I will keep this brief, convener. Obviously, there needs to be support for business start-ups in the south of Scotland. Arguments can be made back and forth about whether there has been enough support until now, and I am not going to comment on that, but we have to look beyond—

John Finnie

Why do you not want to comment on that?

Matt Lancashire

I do not have the figures in front of me. It would be unfair to comment when I cannot see the official figures.

More support needs to be given to business start-ups, but we need to look beyond that, to scaling them up. That is how we keep people in an area and support investment in housing and in transport links. People will be attracted to an area when they see businesses scaling up. It draws returners who have left the south of Scotland—people with a skills base that differs from the existing skills base—back into the area.

One of the critical areas that the south of Scotland needs to focus on is its demography, because of its ageing population and because it is suggested that, by 2030, the population will have reduced by 5 per cent. How do we attract people back into the south of Scotland? How will the new agency support that? Business start-up is one route, and scale-up offers more jobs, more investment and the potential for more people to return to the area, so our focus needs to be twofold, not just on business start-ups.

John Finnie

Before Garry Clark answers, I ask him also to pick up on the point that Matt Lancashire has made about not just attracting but retaining young people, because that is a key factor.

Garry Clark

Absolutely, it is. It is not all down to Scottish Enterprise. Business gateway is responsible for supporting a lot of the start-ups in the south of Scotland, but it is not entirely within its gift just to increase the start-up rate. We know that the start-up rate in the south of Scotland is increasing by about 2 per cent, whereas in the rest of Scotland it has been increasing by about 10 per cent, so the south of Scotland is running far behind the rest of the country. Rural areas in general have had that sort of rate, and it is to do with demographics and population, as Matt Lancashire has said. We need to do more to anchor young people, in particular, in the south by creating opportunities for them to start up their own businesses or to work in local businesses. There is a big challenge ahead that involves a great many agencies including business gateway, Skills Development Scotland, the colleges and the councils. There are a lot of players involved in trying to push that agenda forward.

John Finnie

Do other panel members want to comment on the retention of young people?

Norma Austin Hart

One of the biggest challenges that we face is the fact that, despite the very good school results that we get from the local education system, the people who get those good results leave the area for higher education and other job opportunities, which creates a skills gap because those who remain are not trained up for the jobs that exist in the region. We need to address that skills gap for the new agency and for all the other agencies that can make a contribution, such as Skills Development Scotland and the local colleges.

The other interesting question is why so many people stay. They do not all leave—some young people stay. In my view, something has been changing in the region over the past five or 10 years. There is a new energy and what you might call green shoots. You may have heard of a local organisation called the Stove Network, in Dumfries, which is doing some interesting things with young people and getting them involved in town centre development. It places an emphasis on art, culture and creative activities to encourage them to express themselves and be engaged with what is happening in their own lives.

We could do a lot more, not just through education but by creating the kind of place that young people want to live in. You have probably heard about millennials. We talk a lot about millennials in my office, because they are apparently very different from baby boomers. I will make no comment on which of us around the table might be a baby boomer, but managers tend to be baby boomers and young people coming into the workplace tend to be millennials.

I am told that the key difference is that baby boomers do not really have an interest in work-life balance—we just work, work, work—whereas the middle generation, generation X, are interested in work-life balance and the millennials, who are the youngest group coming into the workplace, are interested in life-work balance. They place as much attention on the quality of their life around work as they do on work. We have a fabulous environment to offer young people. If we could knit together some of the strengths of the natural environment, the art and culture of the area and the job opportunities, we could get more to stay.

The Convener

Maureen Watt has a supplementary question.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

There has been a huge increase in the number of apprenticeships across Scotland. Do you have the figures for the south of Scotland? Are they keeping up with the trends in other parts of Scotland?

Margaret Simpson

I sit on the local skills board. We are making a concerted effort on apprenticeships. The problem is that the bigger firms can take on apprentices, but smaller one and two-man businesses are really struggling. We have been considering making opportunities available through shared apprenticeships. We are working with Borders College to ensure that the opportunities that it provides fit the needs of the businesses. We also work closely with the Scottish Borders Chamber of Commerce, which is excellent and which is actually a member of our chamber, which I find amusing. Over the past couple of years, we have tapped into LEADER funding and managed to get back into full-time employment 75 young people from deprived areas who would never have managed to do that on their own—or at least their chances of that would have been reduced. We are very proud of that and we would like to do more of it.

There is more to be done on apprenticeships. In our area, the transport issues are another problem. I hope that the new agency lets people reach their potential, because it is super to see young people when they go into their first job.

The Convener

The next question is from the deputy convener, Gail Ross.

Gail Ross (Caithness, Sutherland and Ross) (SNP)

Good morning, panel. We have spoken quite a lot about Scottish Enterprise and various people have mentioned the two local authorities, colleges, Skills Development Scotland and the chamber of commerce. I want to drill down into your experiences and perceptions of the level of business and skills support that those organisations offer and how they work together. What role do you see for Scottish Enterprise in working with the new enterprise agency?

The Convener

Who would like to start off on that? Everyone is looking away, which is dangerous. Margaret Simpson sort of looked at me, so I will let her start.

Margaret Simpson

It should not be more of the same. We need the new enterprise agency to work with the place and the communities and to work with the chambers of commerce and the third sector. The agency has to ensure that businesses are engaged, because many of them are disenfranchised. Links should also be made through community planning. For the past three years, Skills Development Scotland has been a brilliant ally of ours and we have worked closely with it. Mind you, it was a shame when it cut the 50 per cent funding that we could get for access to training, but that is another story.

Those sound like small things, but they are important in a rural area where things are hard. We have many part-time jobs and jobs that do not offer real progression. Anything that can be added brings real value, and that is what we want—a real chance for our communities.

10:30  
Matt Lancashire

The local authorities, Skills Development Scotland and the colleges and universities—the University of the West of Scotland and Heriot-Watt University are in the area—all do tremendous work in trying to drive economic development and growth. SDS’s regional skills work in the south of Scotland and elsewhere is very positive. Likewise, the local authorities’ local economic development teams try to drive progress in certain areas and the colleges and universities support research and development as well as the skills base for the area.

The beauty of the new agency is that it connects all that. Over the period, the south of Scotland region has missed the focal point that an agency such as HIE brings—I do not want to compare the south to the Highlands and Islands; I know that they are different in terms of make-up—because it pulls together the sum of the parts and assets that we have in the south.

The other aspect that we have missed is business. That is the critical element. We can talk about SDS, local authorities and X, Y and Z, but if we do not have the business base working with the new agency, it will not move matters forward, because we would have agencies speaking to agencies and not agencies speaking to businesses about what they need. There needs to be a clear, consistent business voice that does not just represent business to the region internally, but represents it outwith the region.

Norma Austin Hart

I emphasise Margaret Simpson’s important point: we cannot have more of the same. If we are to be honest about the role of Scottish Enterprise and the two local authorities, we have to ask why, after decades of working at this, their strategies have not worked—and, in many respects, they have not worked, given that more young people are leaving. I know from personal experience that it is very difficult to recruit to mid-level jobs and to recruit middle managers. Although it is not so much the case for recruiting people at the beginning of their career, it is very difficult to get people of quality and experience in the south of Scotland for that middle level. I suggest that hard questions be asked.

I would look to the new agency for innovative ideas on how to use the third sector to encourage not only young people, but older people to retrain and to take advantage of the career opportunities in that sector. We could be looking at lots of different ways of encouraging that, such as by using modern apprenticeships—the idea of shared apprenticeships is a really good one. Other ways include using community job Scotland and getting graduate career paths through the third sector.

The Convener

When I read the FSB submission to the bill consultation, something jumped out at me:

“Evidence gathered during the Enterprise and Skills Review highlighted that businesses accessing support services often felt a particular product was being ‘pushed’ at them, rather than assistance that would address their particular circumstances.”

You obviously feel that that is an issue. Will the bill enable the new enterprise agency to develop specific products for specific businesses? How do you see them being developed? Should a plan be disclosed annually to show what it is doing? That is a quite complex question, but you have raised the issue, so I am assuming that you are ready for it.

Garry Clark

The bill is wide and general; to that extent, it would give the enterprise agency the power to do such things. To link that question to the two previous questions, I say that the agency must not duplicate stuff that is already happening; it needs to enhance it. The agency needs to look at the demographics of businesses and people in the area and—to come back to the skills question that Maureen Watt raised—it needs to recognise that so many self-employed people in the Borders and Dumfries and Galloway are currently prevented from taking on an apprentice. Could we do something about that, to make sure that there are more opportunities for apprenticeships? The rules and the finance prevent people from taking on older apprentices to the same extent that they can take on younger apprentices. Can we do something with the likes of SDS, to enhance the availability of older-age apprenticeships for those who are 25-plus in order to allow people to retrain in those ways? Those are the kinds of opportunities that we would like to see the enterprise agency bring to the table. The bill is sufficiently wide to allow that to happen.

Should the agency produce annualised business plans? Yes, it should. It must set out a clear direction of travel. As Matt Lancashire said, it needs to engage properly with the local business community to enable that to happen, and it is probably not sufficient just to rely on a board to do that. The agency must have greater connectivity with small businesses right across the Borders and Dumfries and Galloway to enable it to get the intelligence that will lead it to provide the services that businesses need.

That brings me back to the convener’s question about our submission to the consultation. In looking at the enterprise and skills review and the review of business gateway that was conducted by another committee in the Parliament, a lot of the feedback that we have received has involved people saying, “I’m being offered support, but it’s not exactly what I need right now.” The issue is how we ensure that the new agency can help businesses to receive the support that they need when they need it, rather than support that they need at the wrong time or support that they do not need. There are big challenges in making that happen, because the delivery agencies across the south of Scotland—I am thinking of business gateway, for example—do not have a huge number of staff. I presume that the new agency will have sufficient staff to do that work, but there are questions about how staff will be recruited. We have talked about the difficulty in recruiting. The setting up of the agency will provide huge opportunities for local people to stay in the area or to come back to it, but bringing together the people to staff the agency will present big challenges.

The Convener

Jamie Greene will ask the next question.

Jamie Greene (West Scotland) (Con)

Good morning, panel. I want to ask some more fundamental questions about the creation of the agency, which I should perhaps have asked at the beginning of the meeting. Given that we already have an enterprise agency that covers the part of Scotland that lies outwith the Highlands and Islands, why is there a need for a dedicated south of Scotland enterprise agency? What is wrong with the current delivery system? What is the problem that the creation of the new agency seeks to address?

Garry Clark

For many years, people have suggested that the economy of the south of Scotland is different from the economies of the bulk of the rest of Scotland—it is different from the economy of the central belt and from the economies of Fife, Tayside and the north-east of Scotland. The south of Scotland area is different even from parts of Ayrshire and Lanarkshire.

Jamie Greene

In what way is it different?

Garry Clark

The south of Scotland has a very rural economy and is very reliant on small businesses and the self-employed in a way that many central belt areas are not. Earlier, I mentioned the example of West Lothian, which is a relatively rural area in the central belt. Only 25 per cent of the employment there is provided by small businesses; about 50 per cent of it is provided by big businesses. In the Borders, the situation is different, and that is largely the case across the south of Scotland.

Compared with the north of Scotland, there has been no economic boom equivalent to the one that there has been in Inverness over the past few years. Inverness has done relatively well. The rest of the Highlands and Islands might have struggled to keep pace with Inverness, but it serves as a nexus in the centre of the region. The south of Scotland does not really have that—its economy is very different. The Borders is quite reliant on Edinburgh, with which there is now greater connectivity. We hope that there will also be better connectivity with the area south of the border—with Newcastle and/or Carlisle—perhaps through the borderlands inclusive growth deal.

In Dumfries and Galloway, there are big towns at opposite ends of what is a big council area. To some extent, Dumfries looks north and south. Stranraer, which is quite a distance away from Dumfries, might have more in common with the southern part of Ayrshire; it is certainly closer to it. The economy of Dumfries and Galloway is very different, in that it is heavily reliant on agriculture and forestry. Those are big industries in the area that we do not—we probably cannot—put enough focus on at a national level.

Historically, Scottish Enterprise has had a fairly small footprint in the south—it has had a maximum of 200 to 300 interventions in any one year, which is not a lot compared with the number of interventions that it has had in the rest of the country.

We would argue that the new agency will give us an opportunity to recognise and celebrate those differences and to try to ensure that the south of Scotland and businesses there get the best possible advantage from Government support.

Norma Austin Hart

Dumfries and Galloway has a very contained economy as well, which we know because of the impact of the foot-and-mouth disease outbreak in 2001. Although the direct impact was on agriculture and the farming community, virtually every aspect of the economy was affected by that; it affected tourism and the service sector that agriculture buys into. At the time, it felt as if the whole economy was imploding, and it took us several years to recover from that. There is an interconnectedness in the economy that is particular to the south of Scotland and is not the case in other parts of Scotland, with the probable exception of the Highlands and Islands.

The other point about how the economy in Dumfries and Galloway is different is that it is very difficult to identify the deprivation there. We know that 80 per cent of the people who live in formally defined deprivation do not live in the 15 per cent most deprived Scottish index of multiple deprivation areas, which is where we keep targeting our resources—I dare say that Scottish Enterprise has done the same. That is not to say that people in areas such as Upper Nithsdale and Stranraer are not in need, but there is a lot of need outside of those areas that are in the top 15 per cent. We must find ways of being more adept at identifying need and targeting it, and I hope that the south of Scotland agency will be able to take a leadership role in enabling and facilitating that.

Jamie Greene

I am keen to hear everyone’s view, so if witnesses keep their answers succinct, I will get through my questions. This question follows on from my original point about why there should be a dedicated agency. The panel will be aware that there is some debate around what constitutes “the south”. The Government has gone down the road of choosing two local authorities that it feels make up the south, but one could argue that anything south of the central belt is “the south”. Certainly, from a parliamentary point of view, the South Scotland region incorporates other areas. Although it is clear that there is a need for the new agency, what will its focus on the Borders and Dumfries and Galloway do for surrounding areas that fall into the gap between existing and new agencies? What is it that makes, say, Kelso or Selkirk so different from Maybole or Dalry in North Ayrshire, where there are similar economic problems?

Matt Lancashire

Thank you for that one.

The Convener

I knew that you were waiting for it.

Matt Lancashire

I know. How do we define any place? How do we define “place”? I think that what Jamie Greene is getting at is that “place” could refer to someone’s village, to a city or to a region. Those defined boundaries are hard to describe and secure. The south of Scotland enterprise agency is to cover the two local authority areas that are right next to the border. I am unsure of what criteria were used to achieve that definition of the south. Comment on that is probably more for the politicians and policymakers who have suggested that that is the case. I cannot give you a definitive answer as to why that area is defined as the south.

I will keep my answer to the first question brief and succinct as well. The new agency represents a recognition of the unique challenges and opportunities—we should not forget that bit—in the south of Scotland in terms of where we are trying to drive forward. We have spent a lot of time focusing on the negatives of the south of Scotland, but there are tremendous positives around some of the new industries that have been created there in, for example, textiles and renewables, which we need to latch on to. The place-making approach allows us to achieve that probably more easily than an approach by a wider, more national agency that might not be as nimble, agile and effective in getting into things. However, Scottish Enterprise still offers opportunity, because it links businesses to those bigger opportunities that exist outwith the region. As I said earlier, the south of Scotland agency should work in an autonomous way, but with a link to Scottish Enterprise to drive aspects of its economic needs. I think that that is what the bill aims to achieve.

I will stop there, given that the convener asked for brevity.

The Convener

Does Margaret Simpson want to add anything?

10:45  
Margaret Simpson

I came from Midlothian, which was a mining area and had much more community. In the Borders, there is still the attitude whereby people say, “A day out of Hawick is a day wasted.” We are up against that mentality at times.

I would like the whole of the south of Scotland to be involved. That would not worry me one bit. I would like us all to tap into what I see as a real innovation and an opportunity. If we walk down the streets in our small towns at the moment, we find that most of the shops are closing. We need to find a way of getting things back to the level that the towns were at when the mills, which have completely gone, were still running, to give people hope. In so many families we find third and fourth generations that have never worked, which speaks volumes.

I do not know whether that has answered Jamie Greene’s question. I think that Ayrshire was able to tap into regeneration in relation to the coalfields. We have not had that to the extent that would get us back to a level playing field with the rest of Scotland.

Jamie Greene

That is a good point.

I think that people are saying that the council areas that adjoin the two that will participate in the agency and benefit from its activities will be precluded from participation and receipt of financial intervention. There is a wider question about whether towns that are culturally and economically similar in nature will look across their borders into neighbouring council areas and wonder why they are not getting the same level of support. That is not a criticism of the new agency; it is just an observation.

Margaret Simpson

I totally agree with you. I would be shouting out for the same for those towns, too, to be honest.

The Convener

That might be a question for the minister when he gives evidence to the committee. I am sure that Jamie Greene’s point will be relayed back to him. Let us move on.

Peter Chapman (North East Scotland) (Con)

I want to ask about the process that led up to the introduction of the bill. Were the organisations that the witnesses represent, as well as other businesses and third sector organisations, sufficiently involved in the consultation and planning stages? Was the consultation wide enough? Is it reflected in what you see in the bill?

The Convener

The answer might be a simple yes. If it is a no, do not hold back.

Matt Lancashire

Yes—it is the simple answer, but let me quickly add to it. It was not just about sending out a consultation paper. I think that Russel Griggs and Rob Dickson ran about 50 or 60 meetings in various towns and villages in the south of Scotland, which is magnificent. I understand that there was a high turnout at all the meetings and that there was a lot of feedback—positive, negative and challenging—about the aims and focus of the south of Scotland economic partnership and the opportunities for the future. I thought that it was a fantastic consultation exercise.

The Convener

I fear that the next answer might not be the same.

Margaret Simpson

No, it is certainly not. We are having our first real meeting with SOSEP in January, to see where we will fit in all this. Rob Dickson, from Scottish Borders Council, has always been a great ally, but I feel that we could have contributed a lot more if we had been asked. I will say no more on that, because I have to go back to the Borders.

Colin Smyth (South Scotland) (Lab)

Margaret Simpson and Matt Lancashire mentioned the agency that is currently in place, SOSEP, which has a budget of £10 million. You talked about the consultation on the development of the bill; have you been actively involved in the workings of SOSEP, which is obviously regarded as the precursor to the new agency? What say have you had in how it spends that £10 million? Have you been involved in the work of the new partnership?

Margaret Simpson

Definitely not. I would love to have been. I do not want to be negative—after all, the partnership has to cover a big area—but I think that we had a part to play, and if we had been involved, we could have contributed a lot more. I can tell you that we will be contributing a lot more as things move forward.

Norma Austin Hart

I was invited to sit on the communities theme group, which is one of the sub-groups of the executive part of the structure. Frankly, it is only because of my involvement in that that I have got to grips with the structure and, to some extent, the processes for deciding how to spend the £9 million.

A wider concern in the third sector is what it perceives to be a lack of transparency in decision making, accountability and so on. In reality, it is probably a case of inadequate communication about what is going on, although communication and transparency are, of course, closely linked. In short, I think that having a better communication strategy for what is happening now would be a considerable help in heralding the arrival of the new agency when it comes along. If we could start improving that, it would receive a more positive welcome.

Garry Clark

There has been a huge volume of consultation on this issue, and we have certainly been party to it. However, I think that the issue now is quality rather than volume, which is why I have talked about the need not only for the organisation to get going once the parliamentary process has moved on and to get a chairman and board in place but for it to go further than that and engage with all groups and businesses across the south of Scotland to ensure that its direction matches that of the local economy.

The Convener

Surprisingly, that answer leads perfectly to Peter Chapman’s next question.

Peter Chapman

There is obviously a disconnect between the various organisations, given the stark difference between the answers given by Matt Lancashire and, in part, by Garry Clark, and the response from Margaret Simpson. However, I will just park that comment.

There has been some debate over where the new agency’s headquarters should be located and whether it should be located in two places in order to deal with the geographical issues arising in the two areas, but those will be decisions for the Scottish ministers. What are your thoughts on that?

Garry Clark

We certainly think—

The Convener

I am sorry, Garry, but Norma Austin Hart indicated that she wanted to answer before you did. I will let her come in first.

Norma Austin Hart

Needless to say, this has been the subject of much discussion locally. As I am based in Dumfries, I am tempted to say that the new agency should be located there, and there are several options that have no doubt been discussed. That said, a more important question for me is how we can decide where the organisation should be located before we are clear about its remit, powers and objectives. I am slightly concerned about making decisions about form before we are clear about function.

I do not know whether we are going to be asked about staffing levels, but I have to say that I nearly fell off my chair when I saw that the intention was to employ 125 to 175 people. The decision about how many people will be employed or who will be employed cannot be made until there is a clearer understanding of what we want the organisation to do.

Peter Chapman

Do you have any thoughts on whether there should be one or two locations?

Norma Austin Hart

There are good arguments for having several bases across such a vast region. We may not have emphasised the sheer scale of the region, and the needs of Stranraer are quite different to those of Hawick, Dumfries or Eyemouth. There is also a good case for co-location with other organisations that have a south of Scotland remit.

The Convener

You are not saying that it should be a week in one place and a week in another.

Garry Clark

Co-location has to be the answer. There is a commonality across the south of Scotland, but there is enough diversity. In the Borders, every town is different and has its individual character, and the same can be said for Dumfries and Galloway.

If the location was Dumfries, people in Stranraer would complain that getting there is a four-hour round trip, and they would be right. In this day and age, does it matter where the nominal headquarters is? I dare say that there will be a nominal headquarters, but the organisation needs to exist in communities across the Borders from west to east and north to south. It needs to be where and when businesses need it; one single headquarters does not make sense in this day and age. If it is to integrate with the functions of Skills Development Scotland, the councils, business gateway and Scottish Enterprise, it needs to co-locate with those organisations.

Matt Lancashire

The location of service delivery needs to be where the highest support need is—that is generally how any service is delivered. However, we should not look at service delivery as just bricks and mortar. The world is changing and we are moving into a digital economy; we all access services in a digital format and the new south of Scotland agency needs to play to that to cover its vast area and to support people. Sometimes people want support virtually rather than face to face, and that needs to be thought through clearly.

The issue comes back to what the south is and ensuring that we have a vision and a mission for the south that is agreed on across the region. Once we have that, although location will still be an issue—and I get the sensitivities about that—it will be less of an issue because people will believe in the south of Scotland, as is the case with Highlands and Islands Enterprise.

There are a number of opportunities in the south to co-locate in SDS or old Scottish Enterprise buildings, and we should look at bringing those assets back into play. That in itself would create further economic development in those communities.

We should focus on need rather than just bricks and mortar, use the digital economy, and create a vision for the south that will lessen sensitivities over where it is placed.

The Convener

I have tried to give everyone a chance to answer each question, but we will have to be a bit tighter on the next section. We are halfway through the questions and very close to the full time that is allocated, but it is important that we continue.

Colin Smyth

I note that you said that just before my contribution.

The Convener

I am not saying that you are verbose.

Colin Smyth

Good morning to the panel. The bill proposes that the board of the new agency should be appointed by Government ministers. Is that the right approach? How do we ensure that the board has the experience and skills that properly reflect stakeholders in the south of Scotland? Crucially, on the point that was made by Margaret Simpson earlier, how do we make the board accountable to the south of Scotland, not just to Government ministers?

Margaret Simpson

I trust Government ministers to make that decision, but they cannot make it without discussion with the area and a real effort to get it right. Ideally, it would be done at a much lower level, but we are where we are. I have never had a problem with working with ministers in the past, so I am not really worried about that. It is more important that we get the right people involved on the board and that it covers the whole of the region. I keep saying that we should not be looking at the same old, same old. We need to get the quality right for the future of the south of Scotland.

11:00  
Garry Clark

I hope that the advice on which appointments to boards are made is sound, that local knowledge is very much part of it and that, once the overall board is in place, it will reflect the demographics and the nature of business and communities across the south of Scotland. However, the approach needs to go beyond the board and to have a defined connectivity into businesses and communities across the region. It cannot rely exclusively on the board. The board should be there, it should be knowledgeable, its members should be appointed on the basis of ability and it should reflect local needs. However, there must also be a link into communities and businesses across the area. In particular, as you might expect me to say, there must be a link into small businesses, because they make up such a huge part of the south of Scotland economy.

Colin Smyth

What would be the mechanism for achieving that? The bill does not cover it at the moment.

Garry Clark

It is not in the bill. I am not sure what the formal mechanism for that would look like if there were to be one. However, it would need to have connectivity in some way, to reflect the huge geography and range of businesses that the region has. Although I do not know what it would look like, I know that it needs to be there somehow.

The Convener

Colin, do you want to add to that?

Colin Smyth

I would like to hear from the rest of the panel first.

The Convener

As I said earlier, I cannot give everyone the chance to answer every question, but I am happy to bring in Norma Austin Hart.

Colin Smyth

Well, perhaps it would be helpful to make this point. Garry Clark has mentioned the role of businesses in relation to the new agency. Perhaps Norma Austin Hart and Margaret Simpson could talk about how they see the third sector, in Norma’s case, and social enterprise, in Margaret’s case, being involved in the activities of the new agency, which will be a new forum for their sectors.

Norma Austin Hart

On the question about ensuring that the ministerial process has influence from the local level, the existing SOSEP structure has mechanisms that could be used for discussion and for channelling views and influence. However, on the specific point on the third sector, I have quite a lot of concerns. There are 2,300 voluntary organisations in Dumfries and Galloway, and I suspect that there will be a similar number in the Scottish Borders. Of course, the third sector hopes for adequate representation on the board, but it seems to me—I speak from some experience, having been involved in different organisations—that it is very hard for one person to represent 2,300 organisations. I do not necessarily have an answer to that, but I think that it needs careful consideration.

Margaret Simpson

I totally agree with what Norma Austin Hart has just said. When I was recruited by the United Kingdom Government as an ambassador for disability, it was a long and arduous process, but I felt that we got there in the end. However, we need to ensure that we have representation from all of the third sector and especially from social enterprise. The committee might expect me to say that, but I feel that social enterprise is a business, so it is driven by business; it is just what it does with its profits that makes it different. If we can be on boards, we can be very good critical friends. We do that now for the local authority, the national health service and all our key partners, and we could do the same for the new agency.

The Convener

Colin, do you have more questions on that?

Colin Smyth

My point has been covered.

The Convener

Sorry—I thought that you had more questions.

Colin Smyth

I am sure that I could come up with more if you wish, convener.

The Convener

No, although I am sure that you could.

John Mason (Glasgow Shettleston) (SNP)

There has already been some mention of attracting small businesses, and of business gateway. I am also a member of the Economy, Energy and Fair Work Committee, which is doing a study on business gateway. We have found that business gateway and SE or HIE sometimes work together quite well but sometimes that is not the case. Sometimes there are overlaps, with the same business getting different help from both agencies, but more often there is a gap in the middle and neither business gateway or SE or HIE help. Should we put something in the bill to make that more joined up, or is it just impossible to help every business?

The Convener

There are some nods of agreement.

Norma Austin Hart

Formal clarity on the roles and responsibilities of all the agencies would be extremely helpful; it is not necessarily about removing roles and responsibilities but about being clear about what each organisation is responsible for and how they agree to work together through, for example, a memorandum of understanding. Third sector interfaces could be added to the mix, as well as, for example, the Scottish Enterprise network and Firstport, which also have a role in developing social and community enterprises. It would be extremely helpful if the bill could give formal recognition to, and clarity about, those different organisations and what they do.

Garry Clark

I am not sure that how the new organisation will relate to other bodies that provide services has to be in the bill. However, it will certainly have to be in the organisation’s plan, which we would hope to see come forward fairly quickly. It is important that the bodies talk to one another and that, as I have said, the new organisation delivers additionality.

It is important for a business seeking support that it has that one-stop shop that has been talked about in the business gateway debate as well. To such businesses, the structure does not matter, because they just want help when they require it. They need to be able to go to the new agency or to any part of the economic support in the south of Scotland and get that full range of services. If they pop into the local office, ring the number or go to the website, all that support should be there, whether it comes from business gateway, the south of Scotland enterprise agency, Scottish Enterprise or SDS. They need that support there and then.

We are looking for the south of Scotland enterprise agency to provide that additionality to ensure a better service for local businesses. We have an opportunity to get it right in the south of Scotland. The service from business gateway has been patchy in the rest of the country, because there are areas where it works brilliantly and areas where it does not work so well. The new enterprise agency is an opportunity to get it right in the south of Scotland.

John Mason

As I understand it, Scottish Enterprise focuses on growth and on specific sectors. Therefore, it would not look at a real growth business in retail or international recruitment because it would be in the wrong sector. Should that also apply to the south of Scotland enterprise agency?

Garry Clark

In terms of account management, the south of Scotland agency should be able to define its own sectors, and to provide support accordingly. Only a handful of businesses in the south of Scotland in key sectors such as tourism are supported by SE on an account managed basis. The south of Scotland agency will provide an opportunity for support to be given to a wider range of businesses, as reflected by the local business demographic.

Matt Lancashire

This goes back to what I said earlier about complementarity of support and a no-wrong-door approach. If a business in the south of Scotland walks through the new agency’s doors and finds that the agency can support the business on the basis of its being in a growth sector or give it business support, that is what it should do. If that is not within the new agency’s remit, it should give the business guidance and support to signpost it to agencies such as Scottish Enterprise and SDS that have an aligned approach. When we get caught up in a discussion about whose remit is what, people fall through the cracks quite quickly. There needs to be a collaborative no-wrong-door approach to move things forward.

The other interesting question is how we connect beyond those agencies to things like the UK industrial strategy and the Scottish national investment bank, which will drive investment in some of the great opportunities that exist in the region. I do not think that we have picked up that sort of focus yet in this conversation—it is probably a discussion for later.

My point is that we cannot be too rigid with regard to people’s remits and responsibilities. We need a complement of services that people can be signposted to and pushed towards when better support is available from, for example, Scottish Enterprise, SDS and others.

Margaret Simpson

I totally agree with Matt Lancashire. For organisations that we have started up, we have brought business gateway in for support. We do not bring in Scottish Enterprise to the same extent, but that is because of size. There is no wrong approach: we simply have to ensure that whoever is best placed to offer support to businesses does so when businesses are starting up or looking to grow. My real hope is that we will start to see some real growth.

John Mason

I also want to ask about attracting investment. Do we want more big branches of international organisations in the south of Scotland? I think that you had a bad experience with Pinneys of Scotland. To put 400 jobs all in one factory sounds a bit like putting all your eggs in one basket. Would you prefer to keep lots of small businesses and help them to do better? I clarify that I include social enterprises in “businesses”.

Matt Lancashire

Business is good in terms of providing jobs and economic growth whether it is an indigenous microbusiness, a 10-person business or a 1,000-person business. The agency should focus on supporting and driving high quality fair-work jobs in the region, as well as on supporting indigenous businesses that want to scale up.

That support requires investment in infrastructure, including transport infrastructure—roads and railways. There is a role for the Government and for private and public sector investment in enabling opportunities to attract global or national companies, and in enabling the scaling up of businesses in the area. There should be a twofold role.

I am not saying that we should run after every international business, but would anyone come here if they did not think that there were skills in the area and that there were good transport links and so on? We cannot think about attracting large corporate entities in isolation from thinking about the other needs of the area and the requirements for infrastructure investment, which also allows indigenous businesses to grow. Digital connectivity is part of that infrastructure investment.

Norma Austin Hart

The short answer is that we need both. This is an opportunity for the new agency to show leadership. Success will depend on the new agency developing close links with the Scottish Government, Scottish Enterprise and the other agencies that attract inward investment, so that it can ensure that the priorities for the emerging south of Scotland economy, which will continue to change as the economy grows, are known and understood at national agency level. That will mean that the investment will come, if it is available.

John Mason

Has Scottish Enterprise been keener to get businesses into East Kilbride or Fife than into the south of Scotland? Has it forgotten about the south of Scotland?

Norma Austin Hart

You have to judge Scottish Enterprise on its results. The economy of the south of Scotland is clearly not flourishing.

Margaret Simpson

I am all for inward investment, because I believe that we have to build on the infrastructure. I hope that the city region deal will benefit us in that regard. However, I do not want to see again what happened in the past, with investment in the area being taken by organisations that then just go away and leave us to pick up the pieces. That is not the kind of investment that I want for my region. I want us to have sustainable and long term skills-based investment.

11:15  
Richard Lyle (Uddingston and Bellshill) (SNP)

Margaret Simpson is right that investment should be sustainable and long term.

Two weeks ago, the Scottish Government bill team confirmed that the Government does not propose to give south of Scotland enterprise

“compulsory purchase powers, powers to enter on to land without permission, and powers to require people to give information under penalty of criminal sanction for not providing it ... those powers are not being pursued for the south of Scotland agency.”

Do you believe—I am sure that you do—that for south of Scotland enterprise to work, succeed and drive investment in the region, it should have the same powers as Scottish Enterprise and HIE have, which include

“compulsory purchase powers, powers to enter on to land and powers to require people to give information”?—[Official Report, Rural Economy and Connectivity Committee, 28 November 2018; c 13.]

In my view, south of Scotland enterprise should start with full powers, not partial powers.

The Convener

I am sure that that was not a leading question. Who would like to respond?

Norma Austin Hart

My answer is yes.

Margaret Simpson

Why would we want to tie the agency’s hands in any way? It should be given all the powers that it needs.

Matt Lancashire

To be frank, I cannot really answer the question, because I have not read the relevant part of the bill, but I can come back to Richard Lyle. There are different thoughts on whether compulsory purchase powers and so on should be in the bill. The SCDI does not have a position on that, but I can get back to you after the meeting.

Garry Clark

I have not had people constantly on the phone asking about such powers, but I think that the organisation will need to be agile. Whatever happens south of the border today, we face an uncertain economic period. The new agency will probably come on stream in the middle of all that, so it will need to be agile and able to deal with economic shocks across the south of Scotland. Scottish Enterprise was, perhaps, slow to act in the wake of the big recession of 2008 to 2009.

The Convener

Does Richard Lyle have more questions?

Richard Lyle

I have a comment rather than a question. Since we started looking at the bill, my view has been that we must give the agency full powers. When I worked for the Royal Bank of Scotland, I was in Dumfries and Galloway and in the Scottish Borders. I know all the towns that the witnesses have talked about, which all have different needs. Stranraer has more need than Dumfries. Do the witnesses want something that will work rather than be just a sop?

Witnesses indicated agreement.

The Convener

Everyone is nodding.

Richard Lyle

I think that that is a yes.

Jamie Greene

I will follow on from those questions, but my points are not necessarily about the powers that the agency should have. We often hear complaints from small and medium-sized businesses about access to working capital to grow their businesses. Will the agency have additional resource for that, or will it just co-ordinate the work of existing Government bodies that can provide funds for businesses?

Norma Austin Hart

The agency absolutely must have money to invest. I would be concerned if the amount that was spent on running the agency dwarfed the amount that it had to give out for business and social enterprise development.

The Convener

That is an important point.

Margaret Simpson

I totally agree with Norma Austin Hart. The amounts do not need to be massive; a small amount can make a big difference. A combination of that and support is needed.

Matt Lancashire

I agree.

Garry Clark

There are many pots of money out there that businesses can access, although some are restricted to particular types of business. If the agency can help to co-ordinate and ensure easy access to those funds—and perhaps provide additionality; I keep making that point—that will be great.

The Convener

It is coming up to Christmas, and we are all used to writing wish lists. I am not in the Government, so I cannot promise to deliver your wishes, but is there anything that has not been included in the bill that you feel should be included? You can each add one thing that is on your wish list, if you would like to add anything.

Garry Clark

I would not necessarily add anything to the bill, which is enabling legislation. However, we want to see a plan. Businesses in the south of Scotland need to be part of the development of a plan, which we want to see as soon as possible.

The Convener

Is it important that the bill does not mention a plan and reviews?

Garry Clark

I do not think so. The bill will create the agency; it is a means to an end. Businesses will want a clear say in how the agency operates.

The Convener

I will go straight down the line and call Matt Lancashire.

Matt Lancashire

To follow on from what Garry Clark said, my point is not about adding to the bill. As I have said, the new agency needs a clear vision that people, including businesses, can get behind. Outcomes on economic growth, productivity and so on, which we have discussed, need to be attached to the operating plan that it comes up with. The agency also needs to look beyond the region: the danger is that its thinking will become too local. Such thinking is good at the start, but it will need to get past that and consider opportunities beyond its local boundaries.

Margaret Simpson

I echo everything that has been said, but I also make a plea for my sector—the third sector—to be involved.

Norma Austin Hart

I am not sure whether a per capita approach to funding should be in the bill, although I would like it to be. The agency should be given funding that relates to the population, as HIE has had. We have never had that before. It would be a good starting point.

The Convener

I thank the witnesses for coming to give evidence on this important bill.

I suspend the meeting to allow the witnesses to depart.

11:21 Meeting suspended.  11:27 On resuming—  
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Third meeting transcript

The Convener (Edward Mountain)

Good morning and welcome to the Rural Economy and Connectivity Committee’s 34th meeting in 2018. I ask everyone to make sure that mobile phones are on silent—he says, reaching for his mobile phone to make sure that he has done so, which he has not. No apologies have been received.

Agenda item 1 is our third evidence session on the South of Scotland Enterprise Bill, and our witnesses today are from enterprise and development agencies. I welcome Steve Dunlop, chief executive of Scottish Enterprise; Douglas Cowan, director of strengthening communities at Highlands and Islands Enterprise; Chris Brodie, head of skills planning and sector development at Skills Development Scotland; Malcolm Roughead, chief executive of VisitScotland; and Michael Cross, director of access, skills and outcome agreements at the Scottish Further and Higher Education Funding Council.

Those of you who have given evidence previously will know that you do not need to touch any buttons—your microphones will become live when I bring you in. We have a big panel and this is a big committee, so it is a question of trying to manage the time. If you see my pen twitching vigorously, you will know that I am trying to get you to wind up. I am not sure what will happen if you ignore it, because no one has done that yet, but you should wind up in the interest of trying to get everyone in.

If you want to come in on a particular question, just look at me. Committee members might ask all of you to comment on a question. If you do not get the chance to come in, I will bring you in later. If you all look away, the last person to look away will be the person who answers the question first. I hope that I have set the ground rules. The first question is from John Finnie.

John Finnie (Highlands and Islands) (Green)

The witnesses might have looked at the previous evidence, but I start by quoting a little passage from the résumé of the evidence that we took last time:

“It was felt, especially among the third sector witnesses, that support for social enterprises has been ‘minimal’ up to now. The view was expressed that because many of the enterprises in the South are small, often employing fewer than 5 people, that Scottish Enterprise is not interested in supporting them. There was also a belief that Scottish Enterprise—as well as other central-belt based organisations—do not have a grip or understanding of rural issues ... The Enterprise and Skills Review spoke about the area’s ‘distinct economic needs’”.

What major economic and social challenges are faced by the south?

The Convener

Who would like to start? You are all looking away. That is always dangerous, but I was not paying attention to see the last person to look away.

Steve Dunlop (Scottish Enterprise)

Scottish Enterprise is certainly interested in social enterprises. We have a dedicated and very capable resource that focuses on them. We see social enterprises through the same lens as any other business so, if a social enterprise is of scale and has growth potential, we will support it. We account manage 20 or so social enterprises, and about six of those are in the south of Scotland. We would like to see more activity in social enterprises and anything that we can do to allow them to grow is certainly on our agenda. We do not have anything against social enterprise—quite the contrary.

Scottish Enterprise has a resource that looks at the rural economy. That unit helps us to gather statistics and evidence, which then point us towards our investment in the rural economy. It will be vital to tap into that and grow it as the south of Scotland economic partnership grows. Has that unit done enough in the past? Has it been a major focus for us? We can talk and argue about that, but it is certainly there and it is something that we can build on.

Chris Brodie (Skills Development Scotland)

We have been doing some work with the south of Scotland partnership and partners including the local authorities to understand the economy in the south of Scotland. I will offer a few remarks.

First, it is clear that the economy in the south of Scotland is different from the economy in the rest of Scotland. It has lots of jobs in sectors that have not been growing over the past five or six years—tourism is the exception to that. It is a pretty low-wage economy and it has the highest levels of underutilisation of skills. We think that that points to challenges for job creation in the south. It also faces a number of challenges that other rural areas face due to its digital infrastructure not being what it should and could be.

Secondly, there are challenges in relation to transport not just in and out of the region but, critically, within and across it. In our conversations with employers and college and university students, we have found that transport is a major barrier to people accessing jobs and education.

Thirdly, the demographics of the region are challenging. No doubt we will move on to talk about that. The working-age population is expected to fall by about 8 per cent or 12,000 people over the next 10 years, and a big driver of that is that too many young people are leaving the region for work or study.

The final thing is that we must be careful not to see the south of Scotland as a homogenous whole. There are huge differences between how those issues play out in Dumfries, the north Borders and Stranraer, so a lot of the early work that we have been doing with the partnership has aimed to understand the different dynamics and what the agency might do around that.

John Finnie

Mr Dunlop, I wonder about the perception. In the evidence that I referred to, the view that was expressed was about social enterprise, but it is broader than just that. You qualified what you said by saying that Scottish Enterprise will support a social enterprise if it is of scale and it has growth potential. Is that in itself a challenge? It is perhaps seen that Scottish Enterprise deals with the top, more prestigious companies, whereas I am particularly interested in the social element of the new agency, which will be similar to that of HIE. Is it a presentational issue? Basically, has Scottish Enterprise failed the south? There might be a view that it has.

Steve Dunlop

There are a couple of questions there. I will come back to whether we have failed the south. Our criteria for helping a business, whether it is a social enterprise or any other type of business, have related to the size of the company, its capability to grow and whether it is in one of our priority territories, so that is where our energy and our investment have gone. Clearly, that has meant that not everyone can get the support that Scottish Enterprise has to offer. That has been true of all our investment across the patch. I will maybe talk about how we are going forward a bit later, but we will certainly be looking at how we begin to address the needs of the economy wherever issues are faced, and we will do that through different partnering arrangements. I will maybe develop that point later.

I challenge the suggestion that we have failed the south of Scotland. We have not done that. We have stuck to our investment priorities, and I would argue that we have performed well. Have we been doing the right things at the right time? I am going to try to address some of that as we move forward as part of the whole approach to creating a more systematic economy with our fellow partners. All of that will be up for rethought.

John Finnie

What do members of the panel see as the key strengths and assets of the south that can be built on?

Michael Cross (Scottish Further and Higher Education Funding Council)

I suppose that I would say this because I am from the Scottish funding council, but we have two vibrant, powerful colleges in the south, in which we invest over £20 million, and they serve thousands of learners each year with a broad curricular offer. As has been acknowledged, they do so with imagination in a diverse region that is characterised by remote locations and rurality.

One of the terrific outcomes from the south of Scotland economic partnership, in which I think all of us on the panel are represented, is an investment in digital capacity for the two colleges. Throughout the south of Scotland, the colleges will be able to create a virtual hub of learning. We can think of it as three hubs from which 20 spokes will spin into different locations across the geography of the south, and those spokes will be sited in schools, businesses and community centres. Building on the capacity of the colleges and not having that locked down in a physical location but having a broad and diverse offer is a great opportunity that we can seize.

Douglas Cowan (Highland and Islands Enterprise)

I will say a bit from the Highlands and Islands Enterprise perspective and will touch on the social elements as well. The strengthening communities and social development aspect has been key to what HIE has done since our predecessor organisation was set up 53 years ago, and it remains vital to what we do and how we do it today. It helps us to get to all parts of the region and it is particularly important in our more rural and remote areas, many of whose issues are mirrored in the south of Scotland.

Social enterprise is an important opportunity in remote communities. We account manage about 150 social enterprises across the Highlands and Islands, and about 40 of those are almost community account managed enterprises, where we work with whole communities, taking a concentrated, place-based approach. I see that approach as a real opportunity in the south of Scotland, particularly for the more remote and economically challenged parts.

Malcolm Roughead (VisitScotland)

I will touch on the tourism aspect. Small businesses are the backbone of the tourism industry not just in the south but across the country. Down in the south, we work together—and we have done for a number of years—with over 2,000 businesses. The challenge is to get them to join up so that the total product offering is seamless for visitors to access. There is a rich tapestry of cultural and social events across the south of Scotland and, with the main players down there, we are trying to join it up so that the south of Scotland becomes a year-round destination. One of the weaknesses is that tourism in the south is seasonal, as it is in certain other areas.

The south of Scotland has a fairly diversified business base. A lot of that stemmed from the foot-and-mouth outbreak all those years back, which members might remember. In particular, farms went into tourism, which meant that they started to engage with the food and drink industry down there, which has a rich offering. However, there are infrastructure, connectivity and skills challenges in the south. Almost 13 per cent of the workforce in Dumfries and Galloway is involved in tourism, and over 11 per cent in the Borders. We face a major challenge with skills shortages in the months and years ahead, and we need to ensure that tourism is seen as a career for young people who live in the area to adopt.

John Finnie

Thank you, panel.

The Convener

Members have a few follow-up questions.

Jamie Greene (West Scotland) (Con)

My question is for Mr Brodie. Did you say that one economic pressure that is facing the area is an underutilisation of skills? Is that the phrase that you used? Will you explain what you mean by it? Underutilisation of skills is very different from a lack of necessary skills or available skills.

10:15  
Chris Brodie

That is what I said. If you will allow me to go technical for a moment, skills underutilisation is where someone is working in a job at a level that is below the qualification that they hold. We track that across Scotland through the employer skills survey, and skills underutilisation is highlighted as a major issue in the analysis for the regional skills investment plan for the south of Scotland. Our sense is that that is a demand-side issue. The answer is not necessarily to say, “Let’s skill people to lower levels.” There is a challenge to do with the quality of work and jobs in the region.

Mike Rumbles (North East Scotland) (LD)

I want to follow up on John Finnie’s rather direct question to Steve Dunlop about whether Scottish Enterprise has failed the south of Scotland. Your response was, “No, we have not”, but—forgive me—you would say that, wouldn’t you? If you have not failed the south of Scotland, why are we looking at a bill that will set up a south of Scotland enterprise agency? Why is the demand there? Surely the bill will fill a gap, and surely Scottish Enterprise cannot just say, “Well, that’s not our fault.”

Steve Dunlop

Thank you for that. We have limited resources within which to work, and over the past 10 years we have focused those resources on sectors and on growing companies that we thought would have the maximum impact on growth for Scotland. On that basis, we have considered demands for our support and we have supported companies that have the capability to grow in certain places and sectors. Under that model, fewer of those companies have come from the south than have come from other parts of Scotland. That is a fact. It has meant that there is a gap, but we are not the only people who supply business support: there is business gateway and there are local authorities and so on.

However, we want to do more on place and the economies of place, and we are reorganising ourselves with a view to considering, first, how we promote Scotland and its regions and places on an international basis, and secondly how we participate much more fully in regional economic partnerships. Quite soon, Scotland will be covered by regional economic partnerships of one form or another, and I want Scottish Enterprise to be a full participant in those partnerships. We will move back into considering place. We cannot work nationally, regionally and locally, so we will need to partner with the south, with HIE—as we currently do—and with other regional economic partnerships on a systematic basis.

I recognise that there have been gaps in our provision. That is probably not unusual, given our limited resources. However, as we go forward, I will deploy our resources in a way that recognises the importance of regions. Our relationship with the emerging south of Scotland partnership will be key as we differentiate between what we do locally, regionally and nationally. I commit that, through our core skills on international business, business growth and many other things, Scottish Enterprise will continue to support the south fully.

Mike Rumbles

Thank you.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

We have talked about rurality and agriculture. South-west Scotland has become—more or less—the hub of milk production, and there is huge potential for added value in that regard. What discussions have you had with the rural leaders forum about growing markets for milk and value-added milk products?

The Convener

Who wants to go first? Michael Cross, are you trying to catch my eye or avoid it?

Michael Cross

I was trying to avoid it, convener. I can give an answer to the question, but it is not terribly positive. I simply say that the SFC has had no such discussions. When we develop outcome agreements with colleges, we ask them to illustrate how they are responding to the demands of businesses in the regions that they serve. I do not recall specific provision for dairying in either of the relevant outcome agreements, but I will check that for Maureen Watt and report back.

Steve Dunlop

It is a very specific question. I do not have the answer to it, but I would be delighted to find out and respond to you separately.

The Convener

On the basis that all the witnesses are definitely now looking away from me, we will move on to a question from John Mason.

John Mason (Glasgow Shettleston) (SNP)

From our perspective, there are certainly some challenges in the south. For example, one figure that we have been given is that there are only 31 business start-ups per 10,000 people in Dumfries and Galloway, whereas the Scottish average is 50 per 10,000 people. As well as business start-ups, another challenge seems to be that there is a lack of medium and larger enterprises in the south of Scotland. Do you see those as the major challenges? Can you give any reasons why they are major challenges? Are there other challenges that you can identify?

Steve Dunlop

There is a lower start-up rate in the south. I would defer to business gateway colleagues on that front. The pipeline for that mechanism is not that strong either, so that is definitely a challenge for us.

Having said that, the companies that are started up seem to have greater resilience. The survival rate is ahead of that of most other parts of Scotland, which is good. There are many businesses and, as a proportion of the total, there are more businesses in the south that have 50-plus employees.

I think that one of my colleagues said that the picture is very mixed. It is not a homogenous place, but those underlying characteristics are indeed a challenge.

John Mason

Is it better to have a larger number of small and medium-sized businesses rather than one big business? We lost Pinneys of Scotland recently. Is having one big business a case of putting all your eggs in one basket?

Steve Dunlop

I would support an economy that is very adaptive and resilient to change. We see the consequences of having single major employers all the time. It is much more difficult for the economy to adapt when there are single major employers.

In regions in which there is a real diversity of many small and medium-sized businesses, the economy can adapt and flex. That is not to say that we do not want some major businesses underpinning the economy. As with all things, it is about having a balance.

When I look at the statistics, I see that there is a culture of business and self-employment—albeit microbusiness—so there is something positive to work on there. We would be keen to support the new partnership in looking into that business base.

Another point—which is more of a reflection on what we do and what I would like to support the new agency in doing—is that we have been passive in the sense that businesses come to us looking for support. As an agency—I would certainly want to collaborate with the south on this—we need to go hunting and gathering for that talent, dig it out, spot where the talent is and wrap support around it. We need to go looking for talent in a much more proactive way. That is a culture change for us, which we need to step into.

I think that, over the next few years in particular, there will be lots of economic shocks, and we need a business base that is capable of responding. Businesses can respond only if we as a system—a collective—can give advice about what is coming their way and presenting a state of readiness. That is a systemic response that we are beginning to build much greater capability around.

John Mason

Does SDS react to where the needs are, or does it try to consciously encourage people to start up businesses?

Chris Brodie

We do not have a remit relating to business start-ups per se. The skills challenges that we face in the south with the number of very small microbusinesses there present a number of challenges for us. The first challenge is getting those employers to understand and articulate what they need in relation to future skills. That is often a problem. We have recognised that smaller companies often have challenges in accessing training for their staff and taking on apprenticeships in particular. We are currently piloting approaches across rural Scotland that look at things such as shared apprenticeships and host apprenticeship models, which allow smaller companies to fully participate in those programmes. We have also introduced a rural uplift around provision for modern apprenticeship training in rural areas. That is targeted at rural areas, but recognises some of the challenges that very small companies face.

John Mason

The point about young people leaving the area is true of a lot of rural areas. Do you have any comments on young people in the south of Scotland in particular and how more young people can be attracted in? I would be interested to hear Mr Cowan’s views on what similarities and also what differences there are in that regard between the Highlands and Islands and the south of Scotland.

The Convener

Before Douglas Cowan comes in, I note that Michael Cross was keen to answer the previous question. I am sorry that I did not bring him in in time. Does Michael Cross want to answer the previous question and also the one that John Mason has just asked, if he feels that he can contribute on that? I will then bring in Douglas Cowan.

Michael Cross

I will do so briefly; my response will perhaps touch on the follow-up question, as well.

As Chris Brodie said, skills provision with respect to business start-ups is important. Over the summer, in joint work between Skills Development Scotland and the Scottish Further and Higher Education Funding Council, we talked about the skills that we need to inculcate in learners of the future. The notion of enterprise and entrepreneurship and the capacity to have a can-do outlook are very much at the core of that ambition. Although that is not a direct response to the question “What are you doing to stimulate business start-ups?”, the skills supply side is on to that. That also relates to the point about helping to keep young people in the region.

Douglas Cowan

I agree with much of what Steve Dunlop said about the business base and the lack of large businesses. We see that in our part of the country as well, so there are many similarities. I guess that the answer is about being adaptive and resilient, as Steve Dunlop said.

Young people are a focus for Highlands and Islands Enterprise. We have seen significant growth in our population—it has grown by 23 per cent over the past 50-odd years, compared with 3 per cent growth in Scotland as a whole—but the demographics look particularly challenging. Our population is older than that of Scotland and it is getting older more quickly—in some areas more than others. It tends to be the case that the more rural an area is, the older the population is and the fewer young people there are.

I guess that the answer is to work with partners. Education is important, as are employment and career opportunities. It is about creating the conditions to attract and retain young people. We have done a fair bit of research on that over the years, and we think that we know what some of the key drivers are.

However, it goes beyond that. There are housing challenges in some areas, and we cannot attract people unless there is accommodation for them. There is a mix of issues, and things work differently in different parts of the Highlands and Islands. I suspect that the same applies in the south of Scotland. It is about finding local solutions and working with partners to address the specific opportunities and challenges in local economies. Again, it is about taking a place-based approach, I am afraid.

John Mason

Your physical area is a lot bigger than the south of Scotland. If someone is in Lewis, they cannot get even to Inverness to shop or go to a college or whatever. As a central belt person, it seems to me that the challenges that the Highlands and Islands face are much greater than those that the south of Scotland faces. Is that your perspective too, or do you not want to say that?

Douglas Cowan

The geography is bigger, the population is smaller and the population density is significantly lower in the Highlands and Islands compared with the south of Scotland. The only place in Europe that is comparable to the Highlands and Islands is northern Scandinavia. We have different challenges in terms of population density and the islands. Having 90-ish inhabited islands adds to the challenge.

Part of the response to that a while ago was the creation of the University of the Highlands and Islands and the remote learning model to provide greater access across a greater part of the region. That has clearly had a significant impact. Again, the answers in the south of Scotland will be different because the geography and the issues are different, but that model is certainly worth looking at.

Chris Brodie

We talked to school and college students through the summer and the autumn to try to get a sense of why so many young people leave the area. It is fair to say that there are push factors and pull factors. We hear that it is about the lack of availability of higher education and that people feel the need to leave the region to study. There is a perception that there is a lack of good-quality jobs in the region and a sense that people need to leave in order to get ahead. It is also fair to say that there is a lack of awareness and understanding of the really good jobs that exist in the region. Therefore, there is a job of work to be done there.

10:30  

On the pull side, young people cite the attractions of city living and the university experience and all that they bring. That is a given, and it is hard to mitigate. What we can do about it is a really interesting question. We should not try to build a wall around the region and say that people cannot leave. Many things can be done, some of which are already under way. We can broaden the opportunities to stay, whether through apprenticeships or access to college provision, which Michael Cross talked about. Places can be made more attractive for people to live in.

Douglas Cowan mentioned work that we are doing in the Highlands and Islands. We are currently doing interesting work with Western Isles Council. Every secondary 5 and 6 student is being offered a foundation apprenticeship that is linked to a local job and, critically, to access to housing. That is about overcoming some of the barriers that do not relate to skills.

Finally, a critical role for the agencies will be to make the region an attractive place for people to come back to to live and work in, if they have gone away to study.

There is no single answer, but I counsel against trying to build a wall around the region and saying that people should not leave. In some cases, people leaving can be a good thing, if they come back.

Steve Dunlop

I will pick up and build on what Chris Brodie has said.

For us, having more and better jobs and accessible and visible jobs is clearly the answer. I go back to John Mason’s point about major employers. I hope that, not too far in the future, we can build regional prospectuses, that each of those prospectuses will add up to a prospectus for Scotland as a whole, and that that prospectus will be handed into our international sales force through Scottish Development International and sold internationally, whether for foreign direct investment, exports or human or financial capital. That would glue together all our Scottish capability in international markets. At the heart of the approach would be having a prospectus that says, “Here is what the south has to offer.” In that prospectus, there should be genuinely investable projects that deal with the complexity of making a place and join up all the opportunities. We want to progress that approach very quickly across the network in Scotland and therefore make it much easier to attract foreign direct investment of all scales to give us a chance to create more and better jobs.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

It has been suggested to me that one issue that relates to retention but more probably to attracting younger—if not young—people back to rural areas is partner preference and employment needs. In other words, someone whom we might want to get back to an area might have a partner who has a set of needs that cannot be met. I wonder about the extent to which the witnesses are addressing that issue. If the partner can be helped to find a position and have their needs met, there will be a two-for-one offer—that has just been whispered in my ear; I suppose that that is a reasonable way to put it. I do not want to go too far down the rabbit hole, but am I correct in assuming that that is part of the issue? Is anyone addressing that?

Douglas Cowan

We have picked up similar issues. Population issues are a priority in a couple of the community planning partnerships in our area. In particular, the Outer Hebrides is looking at a number of interventions with regard to population. I am pretty sure that one of those is concerned with how to join the dots to help the partners of people who are moving in to find appropriate employment. I do not know more details about that, but that has certainly been looked at in the Outer Hebrides and possibly in other areas. There is awareness of the issue, but that is quite difficult to do.

Colin Smyth (South Scotland) (Lab)

Good morning, panel. I will follow up on the questions about young people leaving the region. I appreciate that there are push and pull factors, but probably the single biggest challenge that we face is the demographics of the region. It is partly that people are leaving the region and partly that people are not being given the opportunities to come back to the region if they wish to. Does that not expose the failure of the existing agencies to support the south of Scotland?

I will pick up the point that Michael Cross made earlier about the investment that the new south of Scotland economic partnership is making in local colleges. We have a challenge in Dumfries and Galloway, because the number of people of working age with no skills at all in the south of Scotland is twice the number in the Highlands and Islands. It is not just a rural issue but a specific south of Scotland issue, which the existing agencies are not tackling. Is it not a criticism of the funding council to say that it took the new partnership to make that big investment? We do not have a south of Scotland university, but we have a Highlands and Islands university. Fortunately, the Crichton university campus is starting to show incremental growth, but that is not at a level that would make it attractive enough to get young people to stay in the region. Should the funding council not be tackling that?

The Convener

I will give everyone fair warning. Michael Cross can go first, Chris Brodie can go second and I will let Steve Dunlop come in at the end.

Michael Cross

The creation of the hub and spoke model is not a failing of the funding council. The fact is that there is limited resource, as Steve Dunlop said earlier, and we try to distribute it as fairly as we can across colleges and universities throughout the country. That said, the priorities that we adopt for that resource are changing. Increasingly, we are asking our colleges and universities to focus on upskilling to deliver more accessible chunks of learning to those who are already in work so that they can develop their skills.

Chris Brodie is right to say that there is not enough of this, but we have a wide range of HE provision in the south. As you note, the Crichton partnership, which is led by Barbara Kelly, who is an ardent supporter of the south of Scotland partnership, and which has representation from the University of the West of Scotland, the University of Glasgow and the Open University, is a vibrant presence in the region that works with the two colleges. In the east, there is the equally vibrant offer from Heriot-Watt University. If Mr Smyth is asking whether we can do more, the answer is that yes, we can, and we will focus on that.

Chris Brodie

I return briefly to my initial remarks about the reasons why young people leave. There is no single reason for that and, therefore, looking for a single solution to adopt to fix the problem will probably not get us where we need to be.

We did some work with Highlands and Islands Enterprise about four years ago on that very issue and we got to an interesting place: there is absolutely a role for broadening the HE and apprenticeship offer in the Highlands and Islands to encourage people to stay, but we also have to look at the extent to which we use that offer and at providing good-quality jobs to bring people into the region.

The demographic challenge is stark. In the next 20 years, the south of Scotland is likely to have one of the country’s highest dependency ratios of people out of work to people in work. That requires a focus that goes beyond young people and looks at what we are doing to keep people in the workforce, keep them healthy, connect them to jobs and, as Michael Cross said, upskill and reskill them so that they have opportunities to be part of the workforce longer into their careers.

Colin Smyth

On that point, have the products that SDS has been delivering across Scotland in the past few years met the needs of the south of Scotland?

Chris Brodie

Our primary product is the modern apprenticeship programme. When Skills Development Scotland was formed in 2008, we delivered 500 MAs across the south of Scotland. Last year, we delivered nearly 1,400 MA starts across the region. Those modern apprenticeships are determined by demand: if there is a demand from employers, we will fund it.

We have been working hard to establish foundation apprenticeships in the region. It is fair to say that we have a toehold. We have not quite got to where we would like to get to, but we are working hard with the local authorities and the colleges to see how we can broaden the apprenticeships offer in the region.

Steve Dunlop

We support around 110 account managed companies in the south, but we have also helped more than 220 companies with regard to exporting and invested in 150 companies with regard to their capability to innovate. At the heart of all that activity is encouraging, persuading and investing in companies to drive up their leadership, management and skills capability. That is about us trying to stimulate demand for the right type of skills, and it points to our need to continue to work together with a more systematic approach.

Colin Smyth

What proportion of Scottish Enterprise resources are invested in the south of Scotland?

Steve Dunlop

It goes up and down every year, subject to demand. Last year, we spent around £4 million in the south of Scotland, and the year before that, it was around £5 million. I have tracked the spend and the level is fairly consistent. That is the money that goes directly into companies in the south. It does not account for the cost of the headquarters and the 60 members of staff who are based there, and it does not track the level of investment that we make in companies that are headquartered elsewhere but deploy labour in the south. Those are the figures at base level.

Colin Smyth

What is the overall percentage of your resources that supports the economy in the south of Scotland?

Steve Dunlop

It would be very difficult to say. We do not account in those terms, so if I gave you a figure, it would most likely be wrong. I am happy to give you different strands of figures, which might help to build a picture.

Colin Smyth

The way that I look at it is that the population of the south of Scotland as defined by the bill—that is, the Scottish Borders and Dumfries and Galloway—is about 5 per cent of the population of Scotland. Do you spend as much as 5 per cent of your overall budget in support of the south of Scotland?

Steve Dunlop

Yes, I think so.

Colin Smyth

At the moment, £3 million to £4 million is about 1 per cent of your budget.

Steve Dunlop

Yes, but our budget is complicated. As I said, I am very happy to give you the detail behind it. We are able to say that our spend in some areas is proportionate to our spend in other areas. In some areas, it is more and, in others, it is less.

Colin Smyth

Earlier, you touched on the criteria for your investment in businesses, such as their capability to grow, their size and the sector. Clearly, that rules out a huge number of businesses in the south of Scotland, because, with the best will in the world, regenerating Stranraer waterfront will not grow the Scottish economy. However, it will grow the Wigtownshire economy, which is really struggling. Frankly, that is not your role, so is that a failure by Scottish Enterprise, or is it a failure of the direction that you are given at a national level as to what your priorities should be?

Steve Dunlop

I am uncomfortable talking about that in relation to failure. As an organisation, we have prioritised where our investment should go and we have followed that. It is true to say that, over the past 10 years, we have got out of regeneration and investing in physical places, but there is a role for us if we go back into that space. Equally, there is a role for the emerging south of Scotland partnership in that space. It is an area in which we can partner, and that partnership will be driven by the scale of the opportunity.

Colin Smyth

I have a final question on that. One issue that has been raised is about the boundary of the new agency, which is the Scottish Borders and Dumfries and Galloway—there are strong reasons for that. If the agency’s role is to fill the gap around place and regeneration that has not been filled by Scottish Enterprise, what will you do for areas such as south Clydesdale and south Ayrshire that are not within the boundary of the new partnership? Will you have to change your focus? A lot of the challenges that those areas face are similar to the challenges for the Borders and Dumfries and Galloway.

Steve Dunlop

As I said earlier, in the not-too-distant future, Scotland will be covered by different forms of economic partnership, whether driven by city deals or growth deals. The Ayrshires have a growth deal, and we will participate with the Ayrshires in that deal. The solutions that we partner with the regional economic partnerships will vary subject to what the economy needs of us.

I am interested in us as an agency beginning to ask the question of what the economy needs of us, rather than what we are prepared to offer it. I think that what the Ayrshires will require from us might be different from what is required in the Aberdeen or Edinburgh communities. I am prepared for us to begin to flex and change, and to focus on what is required from us in those circumstances.

The Convener

Colin Smyth will have to apologise to Jamie Greene after the meeting for taking a question that Jamie wanted to ask.

10:45  
Stewart Stevenson

We have had some discussion about Scottish Enterprise’s account management and I want to develop that a little bit, though not at huge depth.

I have heard that there will be a shift in the approach, which will create more flexibility, and we have also heard that significant support has been given to companies that are not account managed. It would be useful to understand how the non-account managed part of what Scottish Enterprise has been doing will be managed in the future. In particular, we heard that companies that are headquartered elsewhere are often supported. If a headquarters is, for the sake of argument, in Perth, but the main employment is in the Borders, how will that work in the future? Will it be led by Scottish Enterprise or the new agency? In other words, how has account management been working, particularly in the south? Has it been flexible enough? How will it work in the future? I am looking for a relatively concise answer.

The Convener

To a relatively long question. That is probably for Steve Dunlop, and Douglas Cowan may want to contribute briefly to the short answer.

Steve Dunlop

Our approach is to look at companies of a certain scale and make-up that we believe could grow and stimulate Scotland’s economy. We recognise that many companies have been left outwith that arrangement. We plan to create a digital platform, along with our partner agencies, giving all businesses across Scotland access to high-quality business support and quick access to grants through that system. That will mean that, in partnership, we reach more businesses and support them more consistently, in many ways.

That will free up our human capability and capacity to focus on the companies that we think can deliver the best outcomes for Scotland. However, we will not restrict ourselves to certain sectors or areas. We will open that up and be more opportunity driven. We will work hard with our partner agencies to work out where the hand-offs are. Those happen already between business gateway and Scottish Enterprise, and between HIE and SE; they happen day in and day out and we need to make that more transparent.

Douglas Cowan

Frequently, with business clients that have growth potential and where we share geography in some way, we engage by working through account teams. There will be a lead, which may be in HIE or SE, and other support around that. We have been working collaboratively like that for a number of years. An example that I know well is Arran Aromatics. Arran is in the Highlands and Islands, but the company has premises in the central belt, and we work closely and collaboratively in supporting that client.

Maureen Watt

Can I get a sense of the current footprint of Scottish Enterprise in the Borders and Dumfries and Galloway? You said that you have 60 staff at headquarters. What do you currently have in the south of Scotland?

Steve Dunlop

We have two offices—one in Selkirk and one in Dumfries and Galloway.

Maureen Watt

Whereabouts is that?

Steve Dunlop

It is a shared office. I have been there but I cannot tell you the address. Those are the two assets that we have at the moment. The people in those offices work for Scottish Enterprise, but in some places they share space with business gateway, and they deliver a range of national services for us.

Maureen Watt

Are the 60 staff in one of those offices or across the south of Scotland?

Steve Dunlop

They are across both of them—40 and 20, roughly speaking; they move around. As I say, those people are delivering pan-Scotland services. Although they are at HQ, we have very flexible working arrangements and 11 offices across Scotland. People move, subject to their workload and subject matter.

Maureen Watt

At the beginning, John Finnie briefly mentioned social enterprise support. You said that Scottish Enterprise has 20 account managed social enterprises across Scotland, six of which are in the south of Scotland. Can you tell me what sectors those six are in?

Steve Dunlop

I know that two of them are housing associations, but I cannot remember what the others are.

Maureen Watt

An issue that came up in a previous evidence session was the fact that other businesses regard social enterprises as organisations that will do something for very little money, instead of giving them due weight and the respect that they deserve. How can the new body help to grow social enterprises?

Steve Dunlop

I would not agree with that distinction. Some of the most innovative businesses in Scotland at the moment are social enterprises. I think that they do good by doing good business. They are not charities—they are businesses. That is why, when we view a social enterprise, we view it as a business.

As I said, we have excellent capability when it comes to growing the scale and ambition of the social enterprise sector. I would be very uncomfortable about categorising social enterprises as organisations that do not do business in the way that other businesses do. There is a huge talent base in Scotland in social enterprise—we see that every day—and we will continue to support the sector.

Maureen Watt

Are there social enterprises in the Highlands and Islands that could be replicated in the south of Scotland?

Douglas Cowan

I would think that there is scope for that to happen. The social enterprise sector is particularly strong in the Highlands and Islands. We have a disproportionately large number of social enterprises, and they add significantly to the economy—I think that social enterprise delivers £144 million-worth of gross value added to the Highlands and Islands economy.

A census on social enterprise in Scotland was carried out in 2017. We asked for some of the data for the south of Scotland to be pulled out through the work of the south of Scotland economic partnership. According to that data, there were 441 social enterprises in the south of Scotland at the time, which delivered more than £70 million-worth of GVA, so there is certainly something there to work with. I think that there is an opportunity for the new agency to engage with that sector in a different way from the way in which it has been engaged with in the past.

Maureen Watt

Has the success of the social enterprise sector been helped by a gradual shift in the way in which land is owned in the Highlands compared with how it is owned in the south of Scotland, where there are quite a few very large landowners?

Douglas Cowan

That might be part—but not, I suspect, a massive part—of it. Land reform has certainly made a bigger difference in some parts of the Highlands and Islands than it has in others.

We look after the Scottish land fund. When I looked at the Scottish land fund data, I saw that the third-largest number of inquiries per local authority is in Dumfries and Galloway at the moment, so in parts of the south, at least, there is quite a lot of interest in communities acquiring land and assets.

The Convener

The next question is from Jamie Greene.

Jamie Greene

I will do my best to recover my question. I want to pursue the same theme. I will try not to stray on to the issue of reallocation of staff and resources, on which I know that a question will be asked later, although it might be a good place to kick off that conversation.

The Convener

You would be perfectly entitled to stray into that area, given that your question was taken from you.

Jamie Greene

The panel has on it representatives of a number of national agencies that have a remit that extends across Scotland, including the south of Scotland and the bordering areas that Colin Smyth talked about. When the new agency comes into play, is it your expectation that the staff and resources that you have deployed in the south at the moment will be reallocated? Will you be able to redeploy some of those staff and targeted resources to surrounding areas, such as the Ayrshires, which will not be under the remit of the new agency but might benefit from increased focus from your agencies?

Malcolm Roughead

As a national agency, we have 12 offices across Scotland, two of which are in the south of Scotland—one at Whitesands in Dumfries and one in Selkirk—so we already have a resource there. We will look to contract with the south of Scotland agency to consider how we can deliver for tourism, not necessarily by increasing head count but perhaps by utilising the resources and skill sets that already exist in VisitScotland and making those available to the new agency. As I mentioned, we work with more than 2,000 businesses in the south of Scotland and more than 540 are in the quality assurance scheme. We already have broad coverage in the area. We are also delivering the see south Scotland marketing campaign. It is not necessarily about physically moving people, but about utilising the resource.

Jamie Greene

Before other witnesses come in, perhaps I could be more specific. I appreciate that you all already work in the south of Scotland—that is the point of my question. If the new agency deploys additional resource and capital in the area, will that free up any resource, finance or capital from your agencies that you will be able to redeploy into the surrounding areas that will not benefit from the new agency? That is my specific question.

Michael Cross

The Scottish funding council is a headquarters-based organisation operating out of Edinburgh. We will have no staff to deploy to the new agency and it will not free up any staff. A related point is that, as a result of the creation of the new agency, we have appointed a new member of staff at assistant director level to manage the region as an entity. That will take some additional resource in the early years of the new agency.

Steve Dunlop

It is simply too early for us to say how our staff in the south will be deployed. As I said in answer to a previous question, the 60 staff whom we have in the south work for us on a programme that serves all of Scotland. Some of those folks serve all of Scotland and deal with issues that will be retained by Scottish Enterprise. It is simply too early to make those kinds of calculations or assumptions. We absolutely want to take all the staff in Scottish Enterprise with us, along with the trade unions, and have positive discussions with the emerging agency. It is simply too early to say.

On your point about how we support other regions and places, as I said, I am keen and willing for us to begin to examine how we deploy our account management, business support and support for exports in the regions where there is a demand for those services. That does not mean that we will move back to what we did before as local economic agencies that had dedicated offices in places that served only those places, but we will be more focused on how we support the regions. I want to keep an open mind on how best to make use of our human capital in that respect.

Chris Brodie

We have 45 staff who are based in the region, most of whom work in schools as careers advisers or in one of our careers centres. In a sense, they are already based in the region. I have a team of about half a dozen staff who are all based in Glasgow, Edinburgh or the north of Scotland and who support me in the work that we are doing to develop the regional skills investment plan. I am clear that, when the agency comes into view, we will still have our local staff working in the region and we will support the agency through some of the national teams that I manage. We invest about £7 million in the region in staff, property and apprenticeship funding, and we see that staying. We do not see the agency as duplicating or replacing what we do; we see it as an important complement to what we do. The agency has an important role in helping to change the dynamic of the economy in the south and, from a very parochial point of view, in helping us with some of our ambitions on skills, which we share with the funding council.

11:00  
Jamie Greene

Is it therefore the case that you see the new agency’s work as being in addition to all the work that you currently do and not instead of it in any way?

Chris Brodie

I do not speak for others, but certainly from a Skills Development Scotland perspective that is absolutely how we see the work of the new agency. I am a member of the SOSEP board, and a strong theme for us is that the new agency is not about replacing or taking away. The problems of the south are deep seated and will require a long-term commitment from all the partners around this table.

Steve Dunlop

I echo that point. We will still serve all of Scotland from the south, so the new agency’s work will be in addition to that, and there will be partnership. There will be some areas where we will partner very closely.

Gail Ross (Caithness, Sutherland and Ross) (SNP)

Good morning, panel. I have a question for Malcolm Roughead. As you will know, and as Douglas Cowan will be very aware, the north coast 500 route in the Highlands has been extremely successful, but is not without its challenges. It has been suggested that something like that might also work in the south of Scotland. I do not know whether that idea has been explored. Obviously, HIE does not lead on the NC 500; a private company does so. Has a similar idea for the south of Scotland been discussed? Is it possible? Would it be welcomed and would it work?

Malcolm Roughead

Yes. The key learnings from the success of the NC 500 have been taken on board. There is no shortage of trails being developed across the whole of Scotland but, to my mind, that idea has potential for the Borders and Dumfries and Galloway in terms of slow touring rather than racing round that part of the country. The average length of stay of a visitor in the south of Scotland is 4.3 nights, but the average in Scotland is 7.2 nights. If we get the infrastructure in place and take the learnings from the NC 500, such as having passing places and ensuring that facilities are all in play at the same time, there is a great opportunity. I would like that area to take the lead in electric vehicles, for example, so that it could do something very different and position itself as a destination apart from the rest of Scotland.

Gail Ross

I put on the record that we are trying to promote the NC 500 as a slow touring route rather than as a race track.

Malcolm Roughead

Keep the potholes.

The Convener

It sounds like you are trying to promote competition to it, Mr Roughead.

John Finnie has signalled that he wants to come in. On the basis that it is Christmas, he can do so.

John Finnie

You are very kind, convener. Mr Roughead, you have obviously taken cognisance of all the deficiencies in aspects of the NC 500, the most significant of which was that people felt that it was something that was imposed on communities. There are many communities, particularly in Wester Ross, whose citizens find it difficult to understand what the benefit of the NC 500 is, particularly as there have been a lot of challenges. Further, I am sure that you are alert to the fact that, regardless of the mode of propulsion—electric or whatever—we still get traffic congestion. I would like an assurance that you are alert to all the downsides of the heavily promoted NC 500.

The Convener

Malcolm, you can give a very brief answer, because I am not sure that the NC 500 is specifically included in the bill.

Malcolm Roughead

Very briefly, we have done an analysis of what we can do better and what we can learn from.

The Convener

I am now thinking about that question and answer, but Richard Lyle can come in anyway.

Richard Lyle (Uddingston and Bellshill) (SNP)

I thought that that was a constituency question, but anyway.

The Convener

I thought that it was, but—

Richard Lyle

That is just a joke from a couple weeks ago.

The Convener

I did think that it was a constituency question, which is why I was very thankful that Malcolm Roughead did not say that there was a way that he could do the north coast 500 better in the south of Scotland. However, Richard Lyle now has a question.

Richard Lyle

The bill makes provision for the Scottish Government to appoint a chair and members of the south of Scotland enterprise board but does not specify what skills and experience are required of them. My experience is that everybody wants to be on the board. Given your experience, who would you suggest should be on the board? Should it include people from small businesses, such as family-run enterprises; people from the third sector and trade unions; and young people? What are your boards like in that respect?

The Convener

That question could be for everyone but we could end up repeating ourselves. Let us start with Steve Dunlop and work along the panel. Who are some of the people you think should be on the board?

Steve Dunlop

That is clearly a matter for ministers. They have all the experience in that so I will not speak to how the board should be made up.

My experience of the boards that I have worked with, under and on is that they are diverse and balanced. They understand what the organisation needs of them, but not necessarily what the skill set is that they bring. They very quickly form cohesive teams to deal with complex and challenging issues that can sometimes face opposite ways. For me, therefore, diversity and balance across all those issues is a good thing.

Douglas Cowan

A board needs a broad range of skills, knowledge and experience, including a knowledge of the area, as well as an overall balance in terms of diversity and equalities. I say that rather than naming individuals.

Chris Brodie

I echo Steve Dunlop’s initial comment that this is ultimately a matter for ministers. I refer to the experience of the SOSEP board that has been formed for the period between the announcement of the agency and its establishment. It has a mix of public sector partners and, critically, private sector partners. It has people of and from the area who know the area. One of the interesting things that Russel Griggs has tried to do is to make the board reach out to groups and communities that would not normally find themselves around such tables.

SDS has established a youth board. Finding a way to allow the voices of young people to be heard around the agency will be important in the future.

Malcolm Roughead

I totally agree with everything that has been said. Once a direction has been set, we can look at the skill set that will be required to assist the executive team, however it looks, to deliver the strategy and policy.

Michael Cross

We have run out of things to say, convener. I agree with everything that has been said. It is clearly a matter for Scottish ministers. I agree with the characteristics that colleagues have defined. To those I add that there needs to be an understanding of the big picture or the strategic objective of board, and a commitment to its mission. That commitment is important, and it is a feature of SFC’s board.

The Convener

Can you just clarify for the committee—I know that Richard Lyle would like to push you on this—that the issue is not so much about what business or business sector someone comes from, and that it is more important that a person has the right skills and a knowledge of the area than that they come from the third sector, a trade union or a small business or whatever? I see that everyone is nodding.

Douglas Cowan

The only exception to that is that a board needs a broad mix.

Richard Lyle

A board needs people who know what they are doing, are interested in the area and have an interest in driving the organisation forward.

With the greatest respect to Steve Dunlop, the question was asked earlier about Scottish Enterprise failing the south of Scotland. However, we also have to remember that there are councils in Scotland that do a lot of business and work with businesses. Given that business gateway provides support for new and existing businesses, and that councils and organisations such as Skills Development Scotland deal with businesses, how can we ensure that the business support landscape does not become cluttered with this new enterprise agency and that it is the sole agency that drives businesses forward? How do we avoid that cluttered landscape and possible duplication?

The Convener

Steve Dunlop, do you want to take that? I expect that Douglas Cowan will have some comments to make from HIE’s experience.

Steve Dunlop

For the past few years, a strategic board has brought together the family of agencies that focus on these issues—Scottish Enterprise, HIE, the emerging south of Scotland economic partnership in its current form, Skills Development Scotland and the Scottish funding council. That has solely been about driving that interrelationship and cohesion to ensure that we do not work as separate organisations, but instead become a system. I am confident that we have made great strides in that direction and that we will continue to do so. Through that approach, we have agreed that one of the priorities is to involve, engage and manage that interface with local authorities, particularly through business gateway. That is why I spoke earlier about the creation of a single-stop digital platform, which we will share with all those partners.

I am extremely confident that we will see a less cluttered landscape. I expect the hand-offs and sharing of resource to be invisible to the customer—people should simply see the system and wherever they come into it, they should get excellent service. We are all committed to delivering that.

In many ways, the south of Scotland is fresh ground where we can begin to model new economic development approaches and be comfortable taking risks. We should consider the south of Scotland as a pioneering area that we can all learn from.

Richard Lyle

Before we hear from other witnesses, and while we have you here, Mr Dunlop, one of my concerns is that the new agency will not have the same powers. Perhaps this question should be for Douglas Cowan—

Peter Chapman (North East Scotland) (Con)

That is my question.

Richard Lyle

Am I straying into someone else’s question, convener?

The Convener

You are indeed. There is a sort of festive spirit of people taking everyone else’s questions.

Richard Lyle

I withdraw it.

The Convener

I will let Douglas Cowan answer the previous question and then let Peter Chapman ask his question in due course.

Douglas Cowan

I pretty much agree with Steve Dunlop. The work of the enterprise and skills review and the board is to try to streamline access to services and make that all work better.

From my perspective, the relationship with business gateway works best when there is co-location. I see that that is one of the principles of the new south of Scotland agency. I support that because it is a way to help things to work smoothly.

The Convener

I am happy to let other people come in, but you are all nodding, so it seems as though you agree. Does anyone have anything specific to add?

Chris Brodie

I completely agree with what Steve Dunlop and Douglas Cowan have just said, so rather than repeat that, I will offer two specific examples of our attempts to declutter the landscape. First, we have just agreed with Scottish Enterprise that we will operate a shared customer relationship management system across both agencies for the first time. We expect that to be something that the south of Scotland agency will be interested in. Secondly—I am going to get into trouble for mentioning the B word—over the last six months we have been working across Scottish Enterprise, HIE, the funding council and VisitScotland to develop a prepare-for-Brexit campaign. That was launched six weeks ago and it draws together the knowledge and expertise of the respective agencies into one portal. That must be the way forward.

Peter Chapman

I have a couple of questions, following on from Richard Lyle’s comment. I remain to be convinced of what the new body can give to the area. Given that many of the bodies that are represented here will continue to represent the south, and given that the core aims of the new body are really nothing new—supporting inclusive economic growth, providing, maintaining and safeguarding employment, enhancing skills and so on—is there a danger that we are just inventing a body for the sake of it that will replicate what is already there?

Michael Cross

One of the things that struck me was the momentum that Russel Griggs and Rob Dickson have lent to the agenda. They have convened the right stakeholders around one table and have developed a clear focus on accelerating growth in the south of Scotland.

As I said earlier, the funding council has devoted a member of staff to tackling the two colleges as operators in one region. We have also seen the new articulation agreement—that is the technical term—between Dumfries and Galloway College and Glasgow School of Art. Those things may have happened in time, but the creation of the new agency has lent the focus that has accelerated that progress. I am quite optimistic about the prospects.

Peter Chapman

Does anyone else want to comment on that?

The Convener

Steve, I am surprised that you are not commenting.

11:15  
Steve Dunlop

I am interested in thinking horizontally across all the agencies to see how they can work in a more seamless, integrated and joined-up way. I think that we have begun that journey, but that system has to be applied at local, regional and national levels. I think that, in the south of Scotland, we are seeing that focus being brought to some of those fundamental challenges that we spoke about earlier. I therefore think that, when the capacity that is being brought in focuses on the south of Scotland, it will make a difference. It is not about cluttering or substitution, because it can add value. However, it is important that we work cohesively on the hand-offs. When we are presenting the south of Scotland to the international market, I think that we can add a lot of value and layers. We need to be careful, though, that we do not trip over one another.

Peter Chapman

We will leave that there. The committee has also heard that the new agency will not be given certain powers that Scottish Enterprise and Highlands and Islands Enterprise have, such as compulsory purchase and information request powers. Has either Scottish Enterprise or Highlands and Islands Enterprise ever used those powers? Is there any concern that the new agency will be disadvantaged because it does not have them?

Steve Dunlop

We have compulsory purchase order powers, but in all the years since we were established we have never used them. I am not sure whether we have threatened to use them—quite often, that is a stimulus—but we have not used them. Our approach—we have just such an issue at the moment—is that, through partnership with the local authority, we will harness its capability because it has CPO expertise and utilises it regularly. It is a very complicated process, however, and the new Planning (Scotland) Bill will have an impact on all that.

If there is a genuine partnership in the south of Scotland and the local authorities are part of that, the new agency can utilise the skills of the partnership, including the CPO power that rests with the local authority. I do not regard it as an impediment that the new agency will not have that power. We have the power, but we have never used it.

Douglas Cowan

Similarly, we have the power but have never used it. We considered doing so on a couple of occasions in the past but managed to navigate and negotiate our way through without it. I agree with what Steve Dunlop said about the power. The Town and Country Planning (Scotland) Act 1997 introduced specific CPO powers and communities now have greater powers to acquire land. When the new agency is working collaboratively with partners, I do not think that not having CPO powers will inhibit its work.

Peter Chapman

Does the fact that you have those powers in your back pocket focus minds? You have never used those powers, but has the threat that you might do so come into play on occasion?

The Convener

Steve Dunlop can answer that. It would be helpful to understand whether the CPO powers replicate what is already in planning legislation. Surely your agency could just go to a local authority and ask it to use CPO powers on your behalf. Is that right?

Steve Dunlop

That is what we would typically do. If someone holding land were an economic inhibitor and a barrier to growth, we would undertake compulsory purchase in partnership with the local authority. We would have a shared vision and approach with the local authority, which would be motivated to support that compulsory purchase. At the end of the day, if we are moving towards a much more collaborative space and we do not want to clutter or duplicate, we should use the tool that is already in the system.

Douglas Cowan

I agree with that view.

The Convener

We will leave that there. Colin Smyth has the next sequence of questions.

Colin Smyth

I will just follow up on that final point first. The HIE legislation is a lot more detailed about HIE’s powers than the bill is about the powers that the south of Scotland agency will have. However, it has been argued that HIE’s very detailed powers and aims have meant that it has not been able to do things that it would have liked to do. That was certainly the response from Government officials when we asked why the bill is so general and not as detailed and specific as the HIE legislation. They said that the Government wants to give the south of Scotland agency more flexibility because, potentially, HIE is unable to do some things because the legislation that set it up is very specific. Can you think of an example in which HIE was unable to do something because of the powers in the legislation that set it up?

Douglas Cowan

No, I do not think that I can. The powers are detailed, but they remain broad. We have very broad powers to do anything for the general economic and social development of the region. A number of specifics are mentioned in the act, but those are not exclusive, and the powers are broad.

If there is one area that can sometimes get in the way—although it is not a major inhibitor—it is the restriction on our ability to work beyond the boundaries of the Highlands and Islands. We deliver a couple of things nationally, and we need to go through specific arrangements to enable us to do that. An obvious example of that is the Scottish land fund.

Colin Smyth

Government ministers will have to decide where the new agency will be based physically. From what has been mentioned so far, I get the impression that it is important that organisations should be co-located and that there should not necessarily be a single headquarters in the south of Scotland. Does the panel share that view?

More widely, the bill is silent on how this will all work in practical terms, but you represent agencies that work in the south of Scotland, and we are talking about another agency that will work there. What practical measures need to be taken to ensure that there is no duplication and, probably more importantly, that there are no gaps as a result of all the agencies working together?

The Convener

That is a massive question that raises several issues. Who would like to start on co-location?

Malcolm Roughead

Co-location is important, although I am sure that there will be somewhere with a nameplate on it as the designated registered office. As has been said, the sense of ownership of the new agency in the south is quite strong at the moment. If we are to build on that and keep the momentum going, people will have to see it and feel it—it will have to be a tangible part of their lives. The easiest way to do that is through co-location to ensure that there are people across the region and they are not just based in one place. The ambition of the SOSEP board is that we will look at how we can all work together.

On how we avoid duplication, clearly, there needs to be business planning where we all get together and consider what we are contributing. To make the difference that is required, it will be about the sum of the parts, and we can maximise that only if we work together and not against one another.

Steve Dunlop

I back Malcolm Roughead’s point. Each year, we get a letter of strategic guidance from our minister, and I expect that the letters will begin to look very similar across the agencies and that they will direct us towards our shared ambitions. Over time, our corporate plans and operating plans will begin to major on those points of alignment. I think that there will be much more visibility of that collaboration that the strategic board is trying to drive. That letter of guidance each year is where we will see the commonality, the share of resources and the share of intent, and it is what we will collectively be held to account for by Parliament.

I absolutely agree with co-location, because the approach will work best with integrated teams. Clearly, part of the issue is about rurality and how to disperse the assets to make the agency and all of us accessible to all the people in the south. There will be an HQ, but the assets will need to be distributed.

Chris Brodie

Steve Dunlop has just made some of the points that I was about to make.

Steve Dunlop

Sorry.

Chris Brodie

Not at all.

Ultimately, the location is a matter for the agency, but I echo the point that co-location is important. That is for three reasons: from a financial perspective, for getting people to work together and to address rurality. We have co-location arrangements in place in the south of Scotland and right across Scotland.

On the practical measures that we take to avoid tripping over one another, we should not underestimate the strength of the work that is being undertaken at the moment through the south of Scotland economic partnership. The various agencies are going through a work planning exercise to look at where we fit together and, critically, what we think our offer will be when the new agency is set up. That principle of collaboration will be critical. It will change over time—where we start is not where we will end up. Like Michael Cross, I am enthusiastic and hopeful about the next few years.

Colin Smyth

I will come back to the issue of accountability. The agencies that members of the panel represent are ultimately accountable to Government ministers. People in the south of Scotland are asking how the new agency will be accountable to the people of the south of Scotland. How will we make sure that what it delivers is in line with what people in the south of Scotland want and not necessarily with what Government ministers direct it to deliver?

A stakeholder criticism of SOSEP is that, although it involves a lot of agencies working together and talking to one another, they are not talking to small businesses and the wider community. For example, if a member of the public wanted to look at the minutes of a SOSEP meeting, they would have to be Sherlock Holmes to track them down. The information is not there to notify people in the south of Scotland about the work of the new economic partnership. That is a concern for the new agency. How do we make sure that the new agency is fully transparent and, more importantly, accountable to the people of the south of Scotland and not just in the form of direction from Government?

The Convener

Colin Smyth’s questions seem to be getting longer. Who would like to answer that?

Douglas Cowan

One of the key elements is our broad visibility and presence across the whole region. In HIE’s experience, that is important. We have eight area teams dotted about the patch, with fairly high degrees of delegated authority to flex regional policy to reflect local circumstances. A key part of the role of those teams is to engage with the businesses and communities on their patch to understand what the issues are locally, so that they can reflect those issues in what they do and feed them into the agency. The role of the board is also important in that. The board gets around the patch and engages with businesses and communities through its regular cycle of board meetings. It is a key part of what we do, and I suggest that—if not a replication of that—a similar model would be important in order to deliver similar results in the south.

Steve Dunlop

I do not have anything to add to that. The visibility of the new board will be key. Ministers will take the temperature of what businesses and communities think of it. That will be a key measure of the support that the new agency gets. It has already started; the process feels very engaged and I think that the new agency will want to maintain that. If that work is not transparent now, someone needs to take that point away and make sure that it is.

The Convener

I will widen that out a bit. So that everyone can see what is going on, would the development of a strategic plan for the body that is laid before Parliament be a useful document that would add to the transparency?

Michael Cross

Transparency in an agency’s strategic plan is a good thing. All members of the south of Scotland economic partnership were impressed by the way in which Russel Griggs and Rob Dickson went around the region. They had 26 or 30-odd sessions in town halls and village halls across the region to engage with local people and local communities and hear what they thought. They brought that evidence back to the economic partnership as the basis for thinking about the strategic plan, so we can be confident that the current leadership of SOSEP is absolutely seized of the notion of transparency and will want to take that into its formal planning, once it attains full agency status.

The Convener

That brings us to the end of our evidence session. I thank you all for coming and for the evidence that you have given.

11:29 Meeting suspended.  11:35 On resuming—  
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Fourth meeting transcript

The Convener (Edward Mountain)

Good evening, everyone, and welcome to the Rural Economy and Connectivity Committee’s first meeting in 2019. We are very pleased to be in Dumfries to discuss the South of Scotland Enterprise Bill, which is the first item on our agenda. I ask everyone to ensure that their mobile phones are on silent. We will hear evidence from two panels of witnesses—first, from local authority witnesses and related representatives and secondly, from representatives of community organisations and small businesses.

We move straight to the first panel. I welcome from Dumfries and Galloway Council Elaine Murray, who is a councillor, and Gavin Stevenson, who is chief executive; from Scottish Borders Council, Mark Rowley, who is a councillor and executive member for business and economic development, and Bryan McGrath, who is chief officer for economic development; and from the south of Scotland economic partnership, Professor Russel Griggs, who is chair, and Rob Dickson, who is lead officer.

Before the meeting, I had my arm twisted to get me to agree that an opening statement would be made on the panel’s behalf. I believe that Elaine Murray will make a brief statement.

Councillor Elaine Murray (Dumfries and Galloway Council)

Thank you, convener—

The Convener

Do not touch the button—the microphone will be activated for you.

Councillor Murray

That is grand, convener. I assure you that, as a former member of the Scottish Parliament, I know how to count my words and be very brief.

On behalf of Dumfries and Galloway Council and Scottish Borders Council, we very much welcome the bill to establish an enterprise agency. We, along with the south of Scotland alliance of which both councils are part, have long campaigned for such an agency. We believe that its establishment can transform the efforts of current partners and drive forward the economy of the south by connecting efforts around a regional agenda and providing structure, focus, alignment and momentum. The agency must be built in and for the south of Scotland, so that it gives us collectively the power to address the social and economic challenges that bedevil our large and distinctive rural region and to maximise the potential of our considerable assets.

We are not here to ask for handouts. We are ambitious to transform the south of Scotland into one of the most vibrant rural economies in Europe, which will make a significant contribution to both the Scottish and UK economies. The committee might want to explore some issues further—for example, whether the bill should be more specific on the region’s problems and potential or whether those issues are better addressed in the action plan; whether there should be consultation with the board before ministerial directions are issued; and how local accountability is best achieved. There are issues around the bill, but in principle we support it.

The Convener

Thank you. The committee has a series of questions for you all. To save any confusion, your microphones will be activated for you. I have been at pains to stress to committee members that they should keep their questions as short as possible, and short answers are therefore also appreciated. If you want to come in, you can try to catch my eye. I will not necessarily be able to bring you all in on every single question, but I will try to ensure that the time is fairly distributed. I have warned members at previous meetings that if I waggle my pen at you, it means that you have nearly expended your time; the waggling gets more vigorous as time goes on. I have not yet had to launch my pen at anyone, but I ask you to bear it in mind that if the waggling gets very vigorous, your time is up, as we want to get through all the questions. The first question is from John Mason.

John Mason (Glasgow Shettleston) (SNP)

Elaine Murray said in her opening statement that she would like the south of Scotland to be

“one of the most vibrant … economies in Europe.”

Can you give us a feeling for where you currently are, and tell us what needs to happen, and what should change, over the next 10 or 20 years?

Councillor Murray

I will kick off on that. The south has tremendous potential—it has enterprising communities and wonderful natural assets—but we have not so far managed to capitalise on that as much as we could do. Some of the structures for economic support do not respond to some of the challenges that we face. We currently have problems such as demographic change, low wages and poor connectivity that we need assistance to overcome. We believe that, if we can get the correct support for our economy, the region’s potential can make a tremendous contribution to the Scottish economy. It is about how we move forward and succeed, and how, in doing so, we help to bring success to the rest of the country.

Councillor Mark Rowley (Scottish Borders Council)

John Mason asked about change over 20 years. It will be tricky to get significant change going quickly, so it is right that we look at the long term. In 20 years’ time, in addition to a more prosperous and vibrant economy in the south, I would like to see a change in some of the demographic trends. For example, we would no longer be losing all our young people and our population would be growing rather than shrinking. We need to encourage people to come to this part of Scotland to live. It is not just about the south of Scotland alone—the region needs to play its part in the wider Scottish economy, and I would like us to make a significantly greater contribution in that regard over the next 10 to 20 years.

John Mason

I will play devil’s advocate for a minute. Mark Rowley and Elaine Murray both spoke about demographic challenges. Everywhere that I have heard of, including Germany, is facing such challenges. What is different about the south of Scotland? Do you face extra challenges that other places do not experience?

Councillor Rowley

Yes.

Councillor Murray

Yes—the problem is more severe in the south than it is in the rest of the country. Our young people leave to go to university and tend not to come back again, and we do not replace them with other young people.

John Mason

What about the trend of an ageing population? Again, that is a common problem.

Councillor Murray

I am not saying that an ageing population is a problem. The south of Scotland is a beautiful rural area and a lot of people like to retire here. Our region is not as expensive as the lake district or the Yorkshire dales, so it is a popular place for people to come to live. That brings a lot of potential, but there are obviously issues as people get older if we do not have the economy to sustain them.

Professor Russel Griggs (South of Scotland Economic Partnership)

John Mason asked about our long-term vision. Last year, as we were considering what the new agency should do, we went round and spoke to around 600 local people about what they saw as the future for the south of Scotland. One of the challenges, in their opinion, was how the region is viewed from elsewhere in Scotland. The region is sometimes seen, as John Mason said, as having a lot of challenges to put right, whereas a lot of people in the south think that there are already a lot of strengths here on which we can build.

It was interesting to listen to the comments from the audience in the session before the meeting. If we start to mesh our social side with our farming and forestry, our tourism, our food and drink and everything else that we have, we will have a really strong foundation on which to build our economy over the next 20 years. Over the past few years, we have been missing a different type of connectivity, and we need to look at how all the different parts of our economy work together so that the farmers support the local shops, the community and local tourism. The crafts sector is now at the hub of all that we do in the south. In many ways, it is the force from the bottom, rather than something from the top, that will drive our economy. It was interesting that people raised no real negatives as we went round the region. The people of the south feel that there is a huge opportunity if everything can coalesce into one economy, with everyone talking in the same way.

No one is denying that we face all those challenges, but we should not forget that we have an awful lot of opportunities, some great industries and people, and some great communities. By bringing in our communities, we will create a huge future. Our vision for the next 20 years is to build on the energy that exists among the people of the south of Scotland and turn it into something that they themselves will create.

Councillor Rowley

On the point about demographics, it is true that everywhere has challenges, but in this region they are very specific. In parts of the south, the population is shrinking and there is a huge imbalance between young and old. Our written submissions include expected projections for the proportion of people over 75. The mix has to change, and we need to think—a young gentleman made this case eloquently in the earlier session—about focusing more on building a younger society. Part of that will involve making our towns more vibrant and addressing the connectivity issues, which are about not just the number of roads but the number of buses that run on them. There is a huge job of work to do, and the new agency could be incredibly helpful in that regard.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I have a brief question, to which there will probably be a brief answer. Elaine Murray said that the region aims to be the best in Europe. Are there any ideas about which parts of Europe might have comparable problems and profiles while actually doing well? Given that we are looking at structural change, what are such areas doing structurally that might guide us in how to help the south of Scotland most effectively?

Councillor Murray

I cannot answer that question off the top of my head, but the new agency will be able to look for examples of good practice elsewhere and see how they can be adapted to the south.

Bryan McGrath (Scottish Borders Council)

The productivity challenge that we face is the flipside of the strong productivity in certain locations in Europe. We need to focus on entrepreneurship, and the new agency needs to drive forward innovation in the broadest sense. That means looking at business improvement rather than just the development of new products, which is what many people mean when they talk about innovation. In that way, we can pull the economy forward and encourage a more diverse range of businesses, including larger and growing businesses, to come to the area.

John Mason

Professor Griggs touched on the idea of building the economy from the grass roots up. On that theme, I want to ask about business start-up. The new enterprise board will focus quite a lot on businesses. In the south, is the main issue that we need to get more businesses started—although there have perhaps been more start-ups here than in the rest of Scotland—or do we need to grow existing businesses or bring in big businesses?

The Convener

Gavin Stevenson wants to come in, and then I will bring Professor Griggs back in. I am trying to steer a very tight course so that everyone gets a chance to speak. I apologise if I do not get it right—it is very difficult.

Gavin Stevenson (Dumfries and Galloway Council)

The creation of the new agency is a fundamental opportunity. My answer to John Mason’s question would be to say yes on all three points, but I would say that, would I not?

In the past, we have had a problem with access and reach and the availability of markets. We have a geography of many small communities that are not themselves economic drivers, and that has been difficult for business start-ups. The region has more businesses per head than elsewhere in Scotland, and they do not normally come through the public sector. We need to think about how we count them. The main sectors in the region are traditional, with long-established supply chains, and in a low-wage economy people do not have the ability to start up new businesses.

Without digital, which is now coming, access to markets—especially as one moves further west—has been almost impossible. The situation with businesses became almost a self-fulfilling prophecy—dumbing down took place over a period of years. In recognising that we want the agency to be everywhere, in every community, with all the partners present, we have an opportunity to be where the young entrepreneurs are. The R100 digital connectivity programme will enable our businesses in the creative industries and in new industries to connect. If we make those connections, it will be like the moons aligning at once. If that happens, why would people whose market is Scandinavia, for example, not want to live in a beautiful place like the south of Scotland?

The agency can provide significant capacity in that respect. The councils have done what they can, but our business start-up teams contain less than a handful of people. If we have everybody working in every community in one large connected partnership team, we will start to pick out the people with skills and attract entrepreneurs to come to live here. Why would Tesla not want to build its products here? We are the green lungs—we sit between the central belt and the northern powerhouse. Why would a green company not want to locate itself here, if we can provide the skills and the technology? The enterprise agency can bring together connections in that respect.

18:45  
Professor Griggs

We want to stop talking about businesses and talk instead about growing enterprises. It does not matter whether the enterprise is a community, a social enterprise, a small business or a large one. We want to see a culture of change through the new enterprise agency, with an understanding that we give support to everybody who wants to help to grow the economy.

Across our patch, there are as many growing communities as there are growing businesses. Those communities are a mix of small micro-businesses, community enterprises and all sorts of things, and we will need a very different support system to work with them. It could be similar to the system that operates in the Highlands and Islands—we went up to look at that, and we saw some good examples that we could take back to our region. We need to recognise that an economy such as ours relies not only on businesses; much of the thought and the growth comes from across the whole community. If we do not recognise a community as a business or as something that we can grow, that will have a detrimental effect, and we will not be doing our work properly.

We will do all those things, but we have to stop thinking that economic development is only about businesses. It is about a raft of other things that we need to grow at the same time.

Jamie Greene (West Scotland) (Con)

We have heard about why people leave the area—it is partly to do with issues such as local housing supply and transport connectivity, of which there has been criticism. The new agency will not be the great panacea for those problems, many of which are already under local authority control. What makes you think that the agency will be able to tackle such problems when you, as local authority representatives, have been criticised for not being able to do so?

Councillor Rowley

The essence of the agency will be its scale—it will be significantly larger than a small local authority that acts by itself with a relatively restricted budget. Over the past year, SOSEP has been ensuring that all the other agencies are aligned.

In the earlier session today, and in the committee’s previous evidence sessions, there were questions about why X or Y agency is not doing more in the area. All those agencies—including VisitScotland, Scottish Enterprise and Skills Development Scotland—will still exist, and will continue to operate across the south. However, the new enterprise agency will provide us with an opportunity to drive those agencies forward and align them, and to call them to account effectively in a way that local authorities sometimes struggle to do. It is the additional heft that the new agency will bring to the work of the other agencies across the south that will make a big difference and start to drive significant and noticeable change.

Councillor Murray

I agree with Mark Rowley that it is about alignment. There are already many different agencies working in the region, and the south of Scotland enterprise agency will be an additional body, but it is the final part of the jigsaw. In order for the agency to work successfully, it is important that everybody knows what everyone else contributes and what everyone needs to do. Some consideration must be given to how that is done in practice, because otherwise we could end up with councils doing the same thing as the new agency and bodies not working together properly. The structure will be quite important when the new agency comes into play.

Joan McAlpine (South Scotland) (SNP)

Thank you for having me at your committee today, convener. I have a brief question for Professor Griggs, who drew a comparison with the area that is covered by Highlands and Islands Enterprise. Can he confirm on the record that the new south of Scotland enterprise agency will have the same per capita funding as HIE, which has been very successful in that particular region of Scotland?

Professor Griggs

I can give a very short answer. My understanding is that that is what it says in the financial memorandum to the bill, so that would indeed be the case.

Colin Smyth (South Scotland) (Lab)

I am interested in the fact that the new agency will exist alongside Scottish Enterprise, SDS and Dumfries and Galloway Council. The bill is currently silent on what mechanism would be put in place to ensure that there is no duplication or—more significantly—that there are no gaps. At present, the biggest criticism is that there are gaps in the support that is provided to enterprises in the region. Do you have any views on what mechanisms could be put in the bill to ensure that all the agencies work together and that—as Elaine Murray said—everybody knows what everyone else is doing?

Councillor Murray

I will volunteer an idea. It could be done through some sort of memorandum of understanding between the different partners on what we all bring to the table and what we expect one another to contribute. That is probably quite important, and the committee may want to discuss it with the Cabinet Secretary for the Rural Economy. We will need to have something in place to ensure that the agency works as effectively as possible.

The Convener

Some of it will surely be to do with the dynamics of the person who leads the agency.

Professor Griggs

Part of the mechanism is already in place. As is the case with the bill, we are trying to give ourselves room to move as we grow. For example, we have so far agreed with Scottish Enterprise that, on day 1, the new agency will have the same relationship with SE as HIE currently has. The stuff that is done at national level—the Scottish manufacturing advisory service, overseas trade and so on—will carry on. However, as currently happens with HIE, all local services will be provided by the local agency.

As the agency develops, it may well develop some skill sets that are useful to the rest of Scotland. As we grow the three economic development agencies across Scotland, we want to see better sharing of expertise between them; we do not need an expert for everything that we do in every one of the agencies. That will get round the issue of duplication.

The agreement between ourselves and Scottish Enterprise is that, on day 1, our relationship will be exactly the same as SE’s current relationship with HIE. The national programmes, including the ones that are operated with HIE, will stay where they are, and the new agency will take over the local services.

The Convener

Mike Rumbles will lead the next set of questions.

Mike Rumbles (North East Scotland) (LD)

As Jamie Greene has kindly asked question 4, which was my first question, I will go straight to question 5. Why should the new agency cover only the Dumfries and Galloway and Scottish Borders council areas, and not South Ayrshire or South Lanarkshire, which—I would imagine—face many of the same problems?

The Convener

I do not know who wants to go first—I hope that the fighting among committee members will not extend to fighting between the two councils on the panel. Perhaps Gavin Stevenson would like to start off on that question.

Gavin Stevenson

On wage levels, Dumfries and Galloway Council now sits at the bottom of the list of 32 councils—it is below even Western Isles Council—so we need to move apace. By working together through the south of Scotland alliance, we have proven that we have long-developed working relationships. We know and trust each other, and we have shared aims regardless of each council’s political colour—we have been able to come together around a shared objective. That will all help us to move apace.

The nature of the economy here is different—it has a different make-up, and there is no dominant large urban centre to draw on. The design for the new agency will allow us to move apace, but that does not mean that, where we see an opportunity to work across borders—for example, between Carsphairn and Dalmellington—the agency would not be stretched. That is a key point in the way in which the south of Scotland economic partnership currently works.

However, the agency needs to be able to move quickly, otherwise our area will be unable to recover. The working relationships that we have developed—in particular, the multi-agency way in which SOSEP currently works under the leadership of Russel Griggs—prove that we can work together at this level. Moving beyond that would start to dilute the agency’s ability to move apace. Nevertheless, that does not mean that, on the edges, our opportunities and projects would not extend into the deep rural areas of Ayrshire, as they currently do.

The Convener

Do Mark Rowley and Bryan McGrath want to say anything, or do they totally agree?

Councillor Rowley

I would always agree with Gavin Stevenson. The south of Scotland—if you look at it as the two local authority areas—is a distinct and understandable proposition. As soon as it starts to take in parts of other local authorities, the picture becomes confused.

John Finnie (Highlands and Islands) (Green)

Good evening, panel. I have a question for Professor Griggs or Rob Dickson on the SOSEP submission. When I read the “Key messages” section, I wrote, “Where is the south of Scotland?” across it. Key message 9 states:

“The suggested geographic area for the new Agency is correct, but the new Agency must be everywhere in the South.”

Can one of you expand on that? The example of Highlands and Islands Enterprise—along with its predecessor, the Highlands and Islands Development Board—is often cited, but there are already historical and clear boundaries for that region, which are analogous with the crofting counties. What is meant by key message 9?

Rob Dickson (South of Scotland Economic Partnership)

As Mark Rowley and Gavin Stevenson said, the basis for bringing the Scottish Borders Council and Dumfries and Galloway Council areas together is the consistent partnership that has existed for quite a long period of time—10 years or more—through the south of Scotland alliance. We definitely believe that the proposition, as framed in the bill, that the agency should cover those two council areas is correct because of the unique nature of the geographic area. Rurality is greater across those two council areas than in the areas that extend into South Ayrshire or South Lanarkshire, or the other Ayrshires. Even on a measure of population density, one can see that the changes are quite stark when one crosses into those other areas.

That is not to say that those areas do not have their own challenges—they absolutely do—but we are clear that the Dumfries and Galloway Council and Scottish Borders Council areas face similar challenges, and have a similar operational base and a similar position on current economic potential and challenges. That is why it makes good sense to bring the two council areas together in SOSEP, as is currently the case, and in the agency as it is formed.

John Finnie

The point has been raised in evidence that no matter where we draw a line on a map, people will have comments to make. I will continue to play devil’s advocate. People in Peebles, for instance, might identify more with Edinburgh than with Stranraer. Similarly, people in South Ayrshire and South Lanarkshire might more readily identify with Dumfries and Galloway. Do you see any latitude in that regard?

Professor Griggs

I will try to answer that. We went to Peebles and spoke to people about the matter. All that I can say is that you are right, but they are also right when they say that they associate themselves with the Borders. Across the whole of the south, a lot of people think that they are different, but as we have gone round and spoken to them, we have found that there are a lot of key issues that affect everybody. I think that the people of Peebles see themselves not only as being drawn to Edinburgh but as playing a key part in the tourism offer in the south. Indeed, if we look down towards Galashiels at what has happened through cycling—which people now see as the key tourism driver for the whole economy in that area—we see that it is very much driven by the south of Scotland and not from Edinburgh.

One of the challenges in doing anything in an area such as ours is that of understanding the key drivers in each community. I go back to what I said about having communities lead what we do, rather than having somebody try to make a decision for all the communities. Nonetheless, while there might well be differences in detail between communities, there will be similar issues across them all.

Emma Harper (South Scotland) (SNP)

Dumfries happens to be the town where I live—I welcome everybody who is here tonight. It is great that the committee has come to Dumfries.

Gavin Stevenson mentioned political colours. The agency will cover the Scottish Borders and Dumfries and Galloway council areas. When we explore long-term plans and key aims, priorities and goals, how do we ensure that the councils’ political colours do not interfere with those objectives? Two local authority areas are involved, and there is all the history that comes with years of election cycles, but we need to ensure that goals are established and that people stick to the plan for the greater good of the whole of the south of Scotland.

The Convener

Should Gavin Stevenson answer that question, or would it put him in a difficult position? Perhaps a councillor should answer it.

Gavin Stevenson

I am always in a difficult position, convener. I would like to start on the question of politics. My answer is the same as it was in response to a previous question: we need to align the planning processes. I do not believe that anyone of any political colour does not want the same outcomes or does not define success in the same way—for example, having high-skilled jobs, and retaining our young people and providing them with opportunity and choice. If we keep to those strategic aims, how we get there will always be a matter of political debate. However, the critical point for the agency is to have a plan that enables other plans to feed into it in the same language. Too often, especially in the south of Scotland, the language gets in the way, and we end up talking about the same thing in different ways. We need to set high-level strategic outcomes and describe what success will look like in 10 or 20 years’ time, align the planning processes and ensure that all the plans take account of one another. The agency will be a statutory community planning partner, and we will use that mechanism to ensure that everybody focuses on the key high-level aims. I have never met a politician who does not want our children to have opportunities, our elderly to be well fed and our area to benefit from good, well-paid jobs. It is important that we get the planning right at that level; there will always be politics lower down.

The Convener

It looks as if we are excluding politicians and moving straight to Bryan McGrath.

19:00  
Bryan McGrath

I want to look backwards in this instance. The south of Scotland has, through the alliance, demonstrated a strong, cross-party, shared view on where it wants to get to. The chairmanship of the south of Scotland alliance rotates between councils each year, and different parties are represented around the table. That has worked effectively, and it demonstrates that there is a shared vision across the political spectrum.

Councillor Rowley

Emma Harper asks an interesting question. I have never seen these issues in terms of party politics—in fact, this is the first such discussion that I can remember. Elaine Murray and I are of slightly different political hues. From a Scottish Borders Council perspective, my predecessor in the role that I currently occupy was also from another party but, if he were here, he would be equally enthusiastic about what we are asking for the south. I do not see that issues of small-scale party politics come into the discussion at all.

The Convener

For balance, I invite Elaine Murray to comment.

Councillor Murray

The establishment of an independent agency might mean that the economic strategy is less subject to the vagaries of the electoral cycle, as it would not be determined by local councils. That said, I agree with the other witnesses. The establishment of a south of Scotland enterprise agency has been in the manifestos of all the political parties—in this region, we have all campaigned for it. When I was in Parliament, I found that members of different parties were prepared to work together for the area’s benefit. All politicians across the south of Scotland tend to put the region first and, when it is necessary to do so, they put aside their political allegiance in order to further its interests.

The Convener

The next interesting question comes from Peter Chapman.

Peter Chapman (North East Scotland) (Con)

Good evening, panel. I am interested in the practicalities of the set-up of the new agency, and I have some questions about offices. We want the new agency to be accessible, and it is felt that it should have more than one office. If a headquarters is needed for legal purposes, where should it be? Unlike in the Highlands and Islands, there is no natural capital of the south.

Councillor Murray

The headquarters is nominal—it is required for legal purposes, and therefore it does not really matter where the building is situated. What matters is that the agency works across the south and co-locates in offices, whether that is with the public sector, the private sector or social enterprises—whichever location is most appropriate in a particular community. It will work throughout the south rather than from a spanking new headquarters building in Dumfries, Peebles or wherever.

Councillor Rowley

I echo that. The bill tells us that the Scottish ministers will make a decision on where the nominal headquarters will be. However, rather than seeing one big shiny brass plaque and a reception desk somewhere in the south of Scotland, I want to see plaques across the region that say “South of Scotland Enterprise is here”. The agency needs to be absolutely embedded in communities across the region. It might go to a tiny community only on a Tuesday afternoon or when it has specific appointments, but the vital point is that it should get out there.

Members have already drawn our attention to challenges around the scale and extent of the agency’s reach, issues of rurality and the differences between communities. That is why the south of Scotland enterprise agency needs to be in all those places across the south.

Professor Griggs

The headquarters will really be just a mailing address. We do not use the word “everywhere” lightly—we strongly believe that, whenever people need to access the new south of Scotland enterprise agency, they must have the means to do so locally. I go back to a point that Jamie Greene made in the earlier session about how we use our resource. A lot of our resource will go on co-location with community organisations, social enterprises and businesses; we will have hot desks everywhere. That will allow us to use our resource funding to create an economic driver by providing extra income to those places. Of course we will have a place to which all the mail will go, but it is really important that everybody in the south of Scotland believes that they can access the agency locally. That will guide resource planning for our infrastructure or—as somebody called it the other day—our Tube map for what happens across the region.

Peter Chapman

I have a lot of sympathy with that idea; co-location is one way to do it. If you want to run as many offices as you possibly can in a cost-effective way, it is probably the only option. However, if the new agency co-locates across the south, how do you see it developing its own identity? Will it lose its identity somewhat if it is always located alongside other organisations? Is that a possible danger?

The Convener

I see that Rob Dickson is nodding.

Rob Dickson

It is a challenge, but—as the committee has heard from the way in which the questions have been answered and from the discussions in the earlier session—the agency is keenly anticipated. I was sitting at the back of the room earlier when the convener asked for a show of hands in favour of the agency’s establishment, and the vote was unanimous—or perhaps not quite; I might be exaggerating slightly, as there was perhaps one person against it.

The fact that people in the south want the agency to be established means that there is fertile territory for its creation. Of course, as a new organisation, it needs to do an excellent professional job of raising awareness and building a strong identity, but I believe that the existing public sector players genuinely want that to happen because they see the agency as helpful. In addition, businesses and communities want it to happen. We visited 26 events around the south, and we were told so unequivocally in every location.

Peter Chapman

That is fine.

The Convener

Perfect—we move to the next question, which is from Stewart Stevenson.

Stewart Stevenson

I am looking at the wording of the bill. Section 5(1) sets out four aims, which are to do with

“economic and social development … amenity and environment”.

Section 5(2) gives a long list of further actions that the new agency would take; I will focus on one or two of them. They include

“encouraging business start-ups and entrepreneurship”

and

“enhancing skills”.

However, those areas are clearly the responsibility of other bodies, and may remain so. We heard from Russel Griggs and Elaine Murray about a memorandum of understanding. However, given the granularity of those various cross-cutting actions, are there particular challenges in how we ensure that they are on the list not only for the new enterprise agency but for other agencies? Alternatively, should we simply eliminate them from other agencies’ lists?

The Convener

Who would like to go first? I should have said at the beginning that, if you all look the other way when a difficult question is asked, I will end up nominating somebody. On the basis that you all looked the other way, I nominate Mark Rowley to start.

Councillor Rowley

Thank you, convener. No, I do not think that we should take responsibility for various things away from other agencies. When the agency is established, it is very much for the board to draw up a work plan and define who is doing what and who will push particular projects. I think that Russel Griggs and Rob Dickson would do better than me at answering the question. The indications are that the south of Scotland economic partnership, which is the interim body leading up to the establishment of the new agency, has been successful in bringing national organisations to the table and asking them to do some heavy lifting, and in co-ordinating work with local authorities.

The Convener

Before I bring in Rob Dickson, I see that Gavin Stevenson has half-offered to answer the question.

Gavin Stevenson

I thought that Rob Dickson would jump in first. If we simply shove everything in one basket, we might create another beast, given that a public body, by its very nature, will grow itself. We want something that is focused. In the past year, we have proved, by working with Russel Griggs and Rob Dickson, that we can keep responsibility where it is and retain single accountability. Within the partnership, we all feel singly accountable.

Our experience has proved that we can work together if we have a framework for doing so. The partnership arrangements have given us a framework that enables us to build trust between bodies. Let us not create another beast with a life of its own—we need to split responsibilities with a scalpel, but we also need underlying joint accountability among all the partners. That needs to be framed in the planning and accountability processes. We want to be accountable as a partnership for the economy of the south, and we view the enterprise agency as essential to fill the gap that currently exists.

Stewart Stevenson

Before we move on, I want to be absolutely clear about something. You referred to responsibility and accountability. Are you looking for the other agencies with which the new body will work to be formally accountable to the new enterprise agency, or were you trying to say something slightly different?

Gavin Stevenson

Bodies are singly accountable. Everybody needs to agree on the plan that is created. For example, Skills Development Scotland is preparing a south of Scotland skills plan, and we need to ensure that everybody who commits to the plan is accountable for delivering it. It is not about us being accountable to the enterprise agency—as partners under community planning legislation, we should all be accountable to one another. In the past 12 months, we have been testing the ability of the partnership to withstand those tensions.

Stewart Stevenson

Sorry—I really want to bottom the issue out. Are you suggesting that, if SDS has developed a plan, possibly at the behest of the new agency, it should be appearing before, and reporting and accounting directly to, the new body? Shared accountability is no accountability—forgive me, but with my business experience, that is how I look at things.

Gavin Stevenson

We should not create a governance beast, but you are quite right—if I agreed to deliver a plan as part of a partnership, I would expect to be called before others if I failed to deliver.

Stewart Stevenson

That is fine.

The Convener

I will bring in Rob Dickson, and then John Finnie will ask a supplementary. Rob, I ask you to be brief—you might get another bite when John has asked his question.

Rob Dickson

Thank you, convener. Gavin Stevenson has put his finger on the essence of the issue. We, under the partnership as a temporary arrangement, have been asked to build a new model and take a new approach. At an official level, I am charged with bringing together and co-ordinating the work of the seven public sector agencies.

At present, we are working in a partnership—that is our title. The willingness of the partners to sit around the table and contribute their resources in new and different ways has been one of the most exciting things that the partnership has been able to achieve in the past year. Initiatives such as a new assistant director for the Scottish Further and Higher Education Funding Council, which the committee heard about earlier from Michael Cross; the additional money that VisitScotland has been able to invest in the south; the SDS regional skills investment plan; and the £6.6 million that we have invested with the colleges have all been enabled by the new model.

The focus on delivery has been brought about by the presence of the partnership, but the organisation that is responsible for the delivery of each element remains the best-placed agency to do that particular job. I think that that is what Stewart Stevenson was driving at. The accountability needs to sit with each agency, which is positioned clearly as delivering something in the south for which it should be accountable, in time, to the south of Scotland enterprise agency.

The Convener

Stewart Stevenson’s question has sparked a lot of supplementary questions.

John Finnie

With regard to the question about duplication, the one aspect that would mark the proposed agency as different from the current set-up is its social remit. I apologise for repeating what some people will have heard in the earlier session. Section 5(2) of the bill sets out six actions, five of which relate to economic and social development and only one of which relates solely to social development—it is quite narrow and refers to

“supporting community organisations to help them meet their communities’ needs.”

In my view, that last action is key. Is there an opportunity to look at things differently? One of the contributors to the discussion in the previous session talked about indicators for wellbeing. Is there an opportunity to consider that, although we want jobs, we might perhaps move our focus away from the balance sheet and concentrate on some of the fairly intrinsic things that make a community a good place in which to live?

19:15  
Professor Griggs

I heard the earlier discussion, but I do not agree that the action to which John Finnie refers is the only such aim in the bill. His view rests on an assumption that only business can achieve the other listed aims in section 5(2), and I do not believe that that is the case. I believe that communities, social enterprises and all sorts of other bodies can be involved in the actions that are listed under paragraphs (a), (b), (c), (d) and (e). There is a spread of organisations. We are fixated on the idea that only businesses can deliver on those aims, and I do not agree with that. The bill is fine, as long as we place it in the context of what we are talking about, which is the need to get everybody, not just businesses, to contribute to economic development in the south of Scotland.

John Finnie

I should have said that my question was based on evidence that the committee received. Would you like to comment on whether there is an opportunity to view things differently? People talk about the humankind index and factors such as wellbeing that do not show up regularly on a balance sheet, but which are very important.

Professor Griggs

They are indeed. When we were asked to create the new agency through the partnership, we were asked to be creative and innovative, and to look at what was already there and decide whether we wanted to change it. We will do a lot of that. For example, with regard to the aim in the bill of “supporting inclusive economic growth”, we are just about to finish a big piece of work in the south of Scotland that involves asking what that looks like for the region. I would be happy to share that work with the committee.

Gary Gillespie’s economics team has pulled up all the stuff on inclusive growth, and we have had people talking to businesses and communities about what an inclusive growth model would look like for an area such as ours. We are trying to be innovative and see what we can change about how some of the bodies work and how we do things. We are now going to speak to farmers, foresters and small rural retailers and bring them into the way that we support businesses and communities in the south. We need to look at how we do that and consider the changes to the rule book that we might have to make.

John Finnie

You always have to include the word “growth”, presumably.

Professor Griggs

Growth is an interesting word. If every business in the south of Scotland grew by 2.5 per cent, we would not be sitting here having this discussion.

John Finnie

If communities grew—

Councillor Rowley

If communities grew, we would not necessarily be having this discussion.

Professor Griggs

That is absolutely correct—I am contradicting myself. Growth is an interesting word, but the trouble is that it gets hooked up with the idea of businesses that want to grow at huge rates. That is not what growth is about. The little arts centre in my community of Sanquhar has grown from a small place to the point at which it has re-established Sanquhar knitting throughout the world, which has spun off another two businesses. In our little community, that is huge growth. That is the type of thing that we have to support. We need to understand that growth is not just about growing big companies.

The Convener

I think that we have taken that issue as far as we can in the time that we have available. Finlay Carson has a quick question.

Finlay Carson (Galloway and West Dumfries) (Con)

I want to go back to what Rob Dickson said about all the different agencies coming together to deliver a plan. Would that plan be put together by the agency and subsequently approved by the Scottish Government? Would the various agencies be held to account for the plan or the enterprise board’s aspirations, or would they simply be expected to deliver on it? Who, ultimately, would make the plan? I presume that it would be the agency, and that the plan would then be approved by the Government. Would VisitScotland, SDS or Scottish Natural Heritage have to deliver on the aspirations in that plan?

The Convener

We will come on to plans in greater detail because there is a wider question there. Rob Dickson can answer the question briefly, but I would be happy to park the issue of accountability for plans until slightly later in the meeting.

Rob Dickson

I can answer the question in one word, which is yes.

The Convener

Perfect—it never happens on this committee that someone keeps an answer to one word. Let us see if we can get a short question from Joan McAlpine to follow it up.

Joan McAlpine

I go back to Stewart Stevenson’s original question about the different agencies and partnerships. The creative industries have come up in a lot of the submissions—I know that that sector is a priority for a lot of stakeholders in the region. I wear another hat as convener of the Culture, Tourism, Europe and External Affairs Committee, and I know that there is enormous potential for job creation in the creative industries. However, we also know that there are tensions in the way that the creative industries are currently dealt with by different agencies, given that responsibility for them falls between Scottish Enterprise and Creative Scotland. I wonder whether Professor Griggs is aware of the existing tensions, and if he could say how they will be addressed when responsibility for the creative industries passes to the new agency?

Professor Griggs

Yes, we are aware of those tensions and yes, they will be dealt with when responsibility passes to the new agency. I have tried to keep my answer brief.

The Convener

So that is all under control and it has been dealt with. On that note, Stewart Stevenson has a follow-up question.

Stewart Stevenson

I will make this my last question for the panel. We have talked about what is in the bill and what the new body will do. However, Newcastleton & District Community Trust has told us—I suspect that others might say the same—that it has concerns that the bill does not cover certain areas such as infrastructure decisions on transport and connectivity. Given that such matters will be important in ensuring that the agency is a successful innovation, what relationship to decision making on those subjects, and perhaps one or two others, should the board and the agency have?

Councillor Murray

It is difficult to say what should be in the bill and what should be in the action plan; there is a tension there. We could include in the bill other important matters that we have spoken about today, such as the need to reverse demographic change, improve connectivity and promote cultural and natural heritage—

Stewart Stevenson

I will help you out a little bit. I am looking at section 5(2), which simply sets out a list of what the agency’s remit “includes”. The things that I mentioned are not on that list. Should they be?

Councillor Murray

There is an argument that they could be on the list; the committee would probably want to discuss with the Cabinet Secretary for the Rural Economy where exactly such matters should sit. As I said, some of them will be very important to the agency’s success.

With regard to the earlier question about accountability, there is an important issue there. The new agency will be accountable to ministers, but it does not say anywhere in the bill that it will be accountable to the people of the south of Scotland. That merits some discussion as well.

The Convener

I guarantee that we will come on to that point later.

Councillor Rowley

I would hope that topics such as connectivity, and digital connectivity in particular, would drop off the work plan in a few short years, as they will have been sorted out. There is no bigger critic of rural broadband in my part of the world than I. However, it is important that the bill is a high-level and enabling piece of legislation, and that it looks forward across 10, 20 and even 30 years and will still be relevant then. The topics that have been mentioned are very much for the board to tackle through its work plan.

The Convener

Everyone hopes that the issue of broadband connectivity will be fixed very shortly.

Richard Lyle (Uddingston and Bellshill) (SNP)

It is clear that the panel members have high expectations for the new agency. I remind them that no council will be running it. How should the agency be managed, given that positive outcomes may take years to achieve?

The Convener

Who would like to lead on that? You are all doing it again—you are looking away.

Councillor Murray

To be honest, I am not sure that I totally understand the question. Richard Lyle said that no council will be managing the agency. I do not have any aspirations for the agency to be somehow managed by local authorities. The local authorities will work with the agency.

Richard Lyle

I have known you for a long time, Elaine, and I am sitting here with the feeling that the council wants to get its fingers into the management.

That aside, if we take on board the idea that there will not be positive outcomes for many years, who should be managing things?

Councillor Rowley

I disagree—I think that positive outcomes will come very quickly. This week, SOSEP announced that, in partnership with Scottish Borders Council, we are opening a textile centre of excellence in Hawick. The centre will start its work in a few weeks, so a good outcome will be delivered before the agency is even up and running. However, the benefits will not only be short term. Many big structural changes, and the region-wide demographic and economic challenges, will take longer to implement and address. On the simple question of who is there to run things, the agency will be there to do so once it has been established by ministers. That is why it is important that there is an incredibly good and rigorously chosen board that will hold the agency’s officers to account.

Richard Lyle

Should the councils be represented on the board?

Councillor Rowley

I initially thought that the councils should be represented on the board, but now I do not think that they should. The board has to run things, and councils have to become very good and critical friends of the agency once it is established. We will probably have a much louder voice if we direct our comments to the agency from outside, rather than being on the board and having to sit on our council hands.

It was mentioned in the earlier session that the board needs to be packed with people who have exactly the right skills; I suspect that, if we were to stick a couple of councillors on the board, they would not be high on that list. The Scottish Borders Council submission makes it clear that we want to see local accountability through an expanded south of Scotland alliance that is heading towards the Highlands and Islands accountability model.

Professor Griggs

In the end, it is the people of the south of Scotland who should manage the new agency while a governing body runs it from day to day. It is no coincidence that the first large amount of money that SOSEP spent, which will go through into the new agency, was directed at ensuring that more young people in the south were trained in various skills. That came about as a result of listening to the people—we spoke to 600-odd people about what they most wanted us to do in the region, and they said, “We want to keep our young people.” One of the ways that we can do that is by ensuring that young people receive skills training here.

As was discussed in the earlier session, the board of the new agency will need to have tentacles or set up groups—however we want to do it—to reach out to the business community and the community in general, as well as to the whole population. In many ways, my answer to Richard Lyle’s question is that the agency has to be run by the people in the south of Scotland. In the end, if they do not like the south of Scotland enterprise agency, it should not have been set up in the first place.

Richard Lyle

I totally agree with you in that regard.

I will move on to my next question. The committee has heard that the new agency will not be given specific powers that both Scottish Enterprise and Highlands and Islands Enterprise currently have, such as the power of compulsory purchase and the power of information request. Do panel members agree that the new agency should have the same powers as SE and HIE in that regard, or perhaps even more powers?

The Convener

I will take one answer from a representative of each council and from Professor Griggs or Rob Dickson. Who would like to head off on that?

Bryan McGrath

We have closely considered the issue that Richard Lyle raises, and we do not think that there are any broad powers missing. Compulsory purchase is a classic example of an area in which the agency could meet its aims through partnership work with local authorities. It could build on the strong partnerships that would be in place to ensure that the powers that are currently vested in local authorities could be used in any rare instance in which compulsory purchase was required. If there is close partnership working, those additional powers are not needed.

The Convener

Does Elaine Murray want to come in? I should point out that HIE has never used its power of compulsory purchase.

Councillor Murray

I am not hugely exercised about whether the new agency has a power of compulsory purchase or whether it can compel people to give information under criminal law. I do not think that those powers will be crucial to the new agency’s work.

On the issue of accountability, a case could be made for having councillors on the board; there is a parallel with health boards and so on. I am more concerned about how people are held to account by local communities, and I would like reports on the action plan to be sent back—as they are from Police Scotland and the Scottish Fire and Rescue Service—to local authorities or to area committees, so that people in Wigtownshire or wherever can see how the agency is working for them and their community.

Mike Rumbles

Let us go back to the first question that Richard Lyle posed. He asked about managing the very high expectations that people have of the bill. There was a similar situation with the bill that became the Islands (Scotland) Act 2018, which the committee considered. The legislation before us is an enabling bill that sets up an agency, but nowhere does it discuss resources or money. From what I heard in the earlier session, it is clear that expectations are very high. Does anyone have any comments to make about the lack of any mention of resources in the bill?

19:30  
Councillor Rowley

The financial memorandum makes it clear that ministers are looking, at least initially, to ensure that there is direct parity on a per capita basis with the budget for Highlands and Islands Enterprise.

Mike Rumbles

Would that not lead to a reduction in the Scottish Enterprise budget?

Councillor Rowley

You will have heard, in some of the discussions at the committee’s previous meetings and in the earlier session today, that there has not been quite as much Scottish Enterprise activity in the south as a lot of people would have liked. However, I would not expect the SE budget to be cut just because the new agency is being created. The creation of a south of Scotland enterprise agency is about holding those national agencies to account at a regional level.

Mike Rumbles

Sorry, but I think—

The Convener

I would like to bring in John Mason on that point, and I know that Gavin Stevenson and Russel Griggs want to answer the question. I will try to spread the discussion out a bit.

John Mason

My question is on the financial side—I will play devil’s advocate a little. Can any of the panellists justify the new agency getting the same amount of funding as HIE gets? Highlands and Islands Enterprise covers an incredibly big area with umpteen islands, which presents it with huge challenges. Surely the challenges in the south of Scotland are not as great.

Councillor Murray

The suggestion is that there should be funding parity with HIE per capita rather the new agency getting exactly the same level of funding.

John Mason

Yes.

Councillor Murray

We may not have islands here, but we have some extremely remote communities in both Dumfries and Galloway and the Scottish Borders.

Mike Rumbles

I would like to pursue the point. It seems to me that the witnesses are engaging in creating very high expectations. Perhaps that is a good thing, but I am worried. The same situation arose with the Islands (Scotland) Bill. We went to Orkney and Mull, where people had equally high expectations. They believed that, when the bill was passed and island proofing was put in place, things would magically change immediately and everything would get better. Resources were not mentioned in that bill, nor are they mentioned in the bill that is before us. I find it strange that the witnesses believe that an awful lot of extra money is going to come from somewhere and that the Scottish Enterprise budget is not going to be cut. Is it not the same money?

The Convener

I will bring in Gavin Stevenson. I am afraid that we will then have to move on to the next question, purely because time is limited.

Gavin Stevenson

First, we have entered the process in good faith over the past 10 years, and we are looking for additional funding—it must be an addition to what we currently get. It is about having a larger rather than a smaller cake. Funding will be a matter for the cabinet secretary to decide in his bill, and we will hold him to account locally.

Secondly, the funding must be sustained. Highlands and Islands Enterprise was not a success overnight—there was sustained investment to enable it to make long-term plans. We have suffered from the lack of such investment. It is also recognised that an agency cannot spend the whole budget from day 1, given the vagaries of Government accounting. We are asking for a commitment that the cake must be larger than the one that we currently have.

The Convener

Russel Griggs is nodding.

Professor Griggs

I could not say anything else on that issue.

The Convener

Thank goodness—I am not going to fall out with you over not bringing you in. Colin Smyth will ask the next question.

Colin Smyth

Let us return to the issue of local accountability. Rob Dickson mentioned that it is important that the new agency is accountable to the south of Scotland, and Russel Griggs said that, to be frank, if the people of the region do not like the agency, it should not exist. I have the bill in front of me. In the section on accountability, there is absolutely no mention whatsoever of any local accountability. How should the agency be held to account locally? There is no mechanism in the bill to allow that to happen. Good will is fine, but it may not always be there.

The bill states that ministers will appoint all the members, and it goes on to say that the agency

“must comply with any direction issued … by the Scottish Ministers.”

It also states that the agency’s action plan can be changed by ministers. Unlike the situation with Highlands and Islands Enterprise, there is no legal requirement to consult the agency before such changes are made. There is a lot in the bill about the agency’s accountability to ministers, but there is nothing at all about its accountability to the most important people in the process: those who live in the south of Scotland.

Rob Dickson

Councillor Murray touched on that point earlier. My way of addressing that challenge—which is legitimate and important—is to describe what I see as almost a triple lock. There is ministerial accountability on the organisation. In addition, as Councillor Rowley and Councillor Murray said, it must be accountable to local elected members. The evolution of the south of Scotland alliance into something similar to the convention of the Highlands and Islands, in order to allow that to happen, will be very successful. The structure will take some time to develop, but I think that it will work.

My understanding is that the new agency will be a statutory partner in the community planning partnership. As Councillor Murray said, I expect and anticipate that it is absolutely four-square a prerequisite of the agency that it reports area by area to whatever area arrangements each council has. Those arrangements could include area committees or the local area partnerships that we have in the Scottish Borders. In other words, the agency should be visible to those people who will make the judgment that Russel Griggs identified. Those to whom the agency is accountable will include senior councillors, through a convention model; local ward councillors and community interests, through a local area partnership discussion; and the minister. That triple lock provides accountability across a range of needs.

The Convener

If there is to be a plan—a 10-year plan was suggested in the earlier session as a reasonable timeframe—should Parliament scrutinise or oversee it, or is it sufficient that scrutiny will take place at a local level?

Rob Dickson

I expect the agency to have to plan in a similar way to Scottish Enterprise and HIE. My understanding is that that planning process works pretty well. I believe that, with local development and discussion, and with the board agreeing a plan, it would be beyond comprehension that that plan would arrive without any public consultation with the minister or local stakeholders. I cannot foresee that that would happen. At that point, the minister would be accountable for the plan. I expect that the minister and the chair and chief executive of the agency will sit here in years to come while the committee has a look at the plan and at what has been delivered in the previous year.

Colin Smyth

I hear the phrase “triple lock”. However, the bill is clear that the agency is accountable to Government ministers, who can change the action plan without even consulting the agency, never mind the local council or other stakeholders having a say on the matter. Where is the lock in the legislation? Do we need a mechanism in the bill to underpin what you are saying? There is currently nothing at all in the legislation to ensure that what you say you want to happen will actually happen. The bill as it currently stands does not mention local accountability. Other panel members may have views on how local accountability can be ensured. We can have a lot of ideas, but, unless they are underpinned by legislation, we are wishing for something to happen rather than making it happen.

Rob Dickson

I genuinely think that that is a question for the cabinet secretary to answer. I have set out how arrangements could be made locally that should satisfy the needs of local populations, communities and elected members.

Councillor Murray

I do not think that the ministers should issue directions without consultation. I understand that such consultation is in the legislation that relates to HIE, and I think that the same respect ought to be shown to the board of the new agency. It might be well worth considering whether local accountability should be included in the bill, because that is currently an omission.

Colin Smyth

Let us turn to the issue of engagement and the need to involve the community in the board’s decisions. There has been a lot of discussion about the importance of young people and the demographic challenge that we face. Is there sufficient provision in the bill to ensure that the new agency consults key stakeholders, such as young people, in the region?

Professor Griggs

That goes back to the point that Stewart Stevenson made earlier and the comment from Mike Rumbles that the legislation is an enabling bill. There is enough in there, especially given all the conversations that we have had. Over the next six months, Rob Dickson and I will visit every high school in the area to ensure that young people have a say in the process. How we then proceed as the board comes into play will relate to all the enabling work that we do as a result of such consultation.

There is plenty in the bill. If we include young people in the bill, we will start to get into the question of who else we should include. I am content that there is enough in the bill, and in all that we have heard from everybody else, to enable us to say that, if we do not have young people at the centre of what we are trying to do—not just through the partnership but through the agency that will follow it—we should not be doing what we are doing.

The Convener

I am sorry, but we have run out of time. I know that I have upset two members of the committee because I cannot bring them in, but I am afraid that our time is up because we have another panel today. I thank those people who have come along to give evidence. I overheard someone speculating earlier on whether Professor Griggs would be made to squirm during the meeting. I do not think that that has been the case—all your evidence has been very useful, and I thank you very much for attending.

19:40 Meeting suspended.  19:43 On resuming—  
The Convener

We move to our second evidence session this evening. I thank you all for coming. Pip Tabor is partnership manager for the Southern Uplands Partnership; Ian Cooke is director of the Development Trust Association Scotland; Dr Calum Macleod is policy director for Community Land Scotland; and then we have Neale McQuistin—I hope that I did not get his name wrong. Have I pronounced it right?

Neale McQuistin (New Luce Community Trust)

That is exactly right.

The Convener

Thank goodness for that. Neale McQuistin is a board member of the New Luce Community Trust; Barbara Elborn is secretary of Newcastleton & District Community Trust; and Lorna Young is a consultant for Indigo Words.

You will have seen some of the previous session—you do not need to push the buttons on your microphones, as they will be activated for you. If you want to say something, you should try to catch my eye and I will bring you in. We are quite tight for time, so I hope that short answers will follow short questions. The first question is from the committee’s deputy convener, Gail Ross.

Gail Ross (Caithness, Sutherland and Ross) (SNP)

I thought that it was John Mason next.

The Convener

No, it is you. I am sorry—I have now wrong-footed the deputy convener.

Gail Ross

Apologies. Thank you for keeping me right, convener.

We have heard a lot during the committee’s previous evidence sessions, the earlier session today and the evidence session that has just ended about the major challenges that face the south. However, we have also heard about all your assets and strengths. What are the major strengths and assets on which we can build, and what are the major challenges that the bill, by creating the new agency, can seek to address?

19:45  
Dr Calum Macleod (Community Land Scotland)

I thank the committee for the opportunity to give evidence in a really important session on a really important bill. There are, of course, challenges—demography is one such challenge; I am sure that you have heard much about that already

One of the south’s interesting assets is land. It is mentioned in the policy memorandum to the bill but it has not, in my recollection, been discussed very much in the committee’s evidence sessions—perhaps you will correct me if I am wrong about that. Land as an asset is integral to the south of Scotland, and it is important that the region builds on that asset and has opportunities to make the most of it in relation to economic development and the social aspects that tie into the new enterprise agency’s remit.

In that context, Community Land Scotland suggests—the committee would perhaps expect us to say this—that the agency should build on the land asset by providing support for community land ownership and asset ownership, and by looking at how such policies might be implemented in practice within its ambit. Highlands and Islands Enterprise has a clear remit in that regard, and it has had a community assets team in place since 1997. Community Land Scotland argues strongly that the new agency should have that type of resource within its own structure to enable it to build on an asset that has been identified as very important for the south of Scotland.

Barbara Elborn (Newcastleton & District Community Trust)

Newcastleton has recently taken on and established its own community assets, and that ownership has engendered a feeling in the community to drive things forward. I whole-heartedly agree with what has just been said. In response to the first part of the question, about the strengths of the south, I would say that our strength is people. Without the strength of our people and communities, which are the backbone that make up the whole of the south, there is ultimately no strength at all. If the agency understands that and works with the public sector to give people the opportunity to share their wisdom and knowledge and to determine their own needs, it will have the strength that it needs.

Ian Cooke (Development Trust Association Scotland)

The challenges have been well articulated in the committee’s previous evidence sessions and in the earlier discussions today. I would like to build on what has been said about the area’s strengths. Across not only the Borders and Dumfries and Galloway but the whole of Scotland, one Scottish success story is what is happening through community-led development and regeneration. A lot of that has been happening already, even before the agency has been set up. It was good to hear Professor Griggs talking about that.

The vision for the agency involves a fresh approach. My question is, where is that going to come from? The answer lies very much in the communities that are displaying amazing enterprise, creativity and innovation in the face of market failure. In my view, that is the key strength.

Gail Ross

Comparisons have been drawn with HIE and the whole Highlands and Islands area, but we have also heard that there are a lot of differences between that region and the south of Scotland, and the new enterprise agency will work differently from HIE in some respects. Nonetheless, we have just seen a really good report that was commissioned by HIE—it says that the number of young people who want to remain in the Highlands has gone up significantly. Why do you think so many people leave this area? What will the new enterprise agency bring that will enable or encourage people to stay?

Pip Tabor (Southern Uplands Partnership)

The Southern Uplands Partnership, which I manage, has been lobbying for something like the new agency for about 20 years. We have looked on with huge envy at what has been going on in the north of Scotland, where communities have been supported to develop all sorts of new enterprises, whether they are based on land, renewable energy or anything else. The new agency will have to spend quite a lot of time and energy on catching up, but we have the same assets and potential in the south. We can nurture that potential by working with communities that are already doing exciting things; I fully agree that there are some really good examples of good practice in this part of the world. However, a lot of our communities are starting from a very low baseline, so there is a lot of catching up to be done. I hope that the agency can start to work with high-capacity communities while also nurturing the lower-capacity communities. If it does so effectively, young people will want to stay in the region, because they will start to see huge opportunities that they can take advantage of. The reason that they have been leaving in recent years is that those options have not been visible.

Barbara Elborn

Our community is miles—hours—away from access to education, so it is a challenge to get our young people to attend college or stay on in further education. It takes an hour just to get them to senior school, and it takes two hours for them to get to college. Having an outreach education programme as part of the new agency initiative is fundamental to ensuring that we keep young people in the catchment area. I do not know how that will manifest itself, but the ability for young people to do local apprenticeships without having to go to college would make a massive difference.

Lorna Young (Indigo Words)

In the longer term, the answer is not necessarily to try to keep our young people in the region, because they will naturally want to experience living elsewhere, as I did. I left the region and came back when I was in my mid-20s. What we need is a more balanced demographic. One reason that young people move away is that they want to experience other places and cultures and develop skills that are perhaps more easily developed in an urban area than in a rural setting. We need to provide opportunities for people who want to come back, perhaps to start a family or to experience the high quality of life in the south of Scotland. We need to understand our region’s broader offer to people in every demographic.

Gail Ross

We heard from Michael Gowan in the discussion before the meeting about the need to consult with young people. In the past, legislators have faced a challenge in trying to design bottom-up rather than top-down legislation. Russel Griggs said that he will go into every high school and speak to young people, which is fantastic. How do we engage more with young people to ensure that we do stuff that will benefit them, and that we do what they want rather than what we think we should be doing for them?

The Convener

I will bring in Neale McQuistin and Ian Cooke, and we will see where we go from there.

Neale McQuistin

I have some first-hand experience with young people who want to leave the area—in fact, I encouraged my children to go and see the rest of the world. However, I want to make the south of Scotland a place to which they will want to come back someday. When they have gathered experiences all over the world, I want them to want to come back here.

We have a lot of unrealised potential in the south, which it would not be difficult to realise with a little bit of imagination. I like the idea of community that Russel Griggs spoke about—the feeling of pride in our community and our area. It is about making the region a very attractive place.

On the question of how we engage with young people, I believe that, all too often, when we go to engage and consult with people, we spend far too much time talking and not enough time listening. There is not enough listening going on, and we are not going around to listen. Although the south of Scotland economic partnership has done its very best to get everybody’s attention and get people talking, I think that we need to go around again. We have fired a volley—a warning shot—and attracted people’s attention, so now is the time for us to start listening.

Ian Cooke

To pick up the engagement theme, there are already some great examples in the south of how we should engage with communities, whether that involves young people or the adult population. We are in Dumfries, where the Stove Network has a fantastic track record in such engagement. The use of creative arts activities is a really successful way to engage with people.

One key lesson from HIE’s experience that is often missed is that, in the agency’s early years in particular, there was a great emphasis on cultural development. The cultural renaissance that took place provided a backbone and gave young people a stronger sense of place. They have come back to the region, and they have a stronger affinity with place. I agree with what has been said, but I add that point to the evidence.

Finlay Carson

I want to go back to a comment that Dr Macleod made. Where are the barriers in relation to community land assets in the south of Scotland? We have heard about fantastic examples such as the Mull of Galloway Trust. What legislation around the new agency would overcome those barriers?

Dr Macleod

Some of the barriers are cultural, to a degree, with regard to where communities themselves see opportunities to engage in purchasing land or assets. Historically, community land ownership—and land reform in general—has been portrayed as a rural issue that affects the north-west Highlands. However, if we have learned anything over the past four or five years, it is that community ownership is for all of Scotland, rural and urban.

In Scotland, we currently have 562,000 acres—give or take a few acres—in community land ownership. The vast majority of that land is in the region where I come from—the Western Isles—and across the broader Highlands and Islands area. We have 794 acres of land in community ownership in Dumfries and Galloway and the Scottish Borders combined. I would suggest, and Community Land Scotland would argue, that one of the main barriers lies in the culture and our thinking about where opportunities might lie.

As Finlay Carson said, there are some fantastic examples of community ownership in the region. We need a domino effect throughout the south in which people see and learn from other examples, and engage with community ownership where there are opportunities to do so. That is critical. We have legislation on the community right to buy, and the Scottish land fund is fundamentally important in supporting that right. However, it is also important that we have in place the institutional support that can enable communities to see where the opportunities are.

The Scottish Land Commission has just sent recommendations to the Scottish Government on the future of community land ownership. It recommended strongly that the new south of Scotland enterprise agency should have a remit and role that is equivalent to that of HIE’s community assets team, which I mentioned earlier. That aspect will be critical in helping to move the agenda forward in a collectively beneficial way.

Barbara Elborn

One of the key barriers to community asset ownership is community capacity. Believe me—I have been there and done it, and I have run my own business. To be held accountable for something that you believe in, and to add real strength to your community, is a challenge. It is an enormous responsibility to get funders to have confidence in you as a group, support the idea and the acquisition and give you the budget to be able to develop the asset. It is fundamentally important that the new agency includes community capacity somewhere in its remit. We desperately need support to help communities to drive that agenda forward.

Gail Ross

That leads me nicely on to my next question. Do you have any experiences or perceptions of the support that is currently available from the colleges and from agencies such as Scottish Enterprise, business gateway and Skills Development Scotland?

The Convener

I am guessing that Barbara Elborn might have a view on that.

Barbara Elborn

Yes. Going back to 2004, my community has struggled to get a development officer—or whatever you want to call it—appointed. We have worked as individuals and as voluntary organisations to drive forward projects, but we still do not have a development officer. We have been turned down by public sector agencies because we did not meet the pre-set criteria. It is critical that the new agency offers the opportunity to change that criteria. We have been turned down by funders because we did not meet the right agenda. They often have a prescriptive agenda that is right for them in awarding the budgets, but not for us. The new agency gives us an opportunity to start a new ball game and give communities the opportunity to get that support.

The Convener

There seemed to be a lot of nodding in response to that answer. Is there going to be some good news from someone?

Lorna Young

I have two points to make. First, I deal with a lot of small businesses and I work with a lot of community development trusts, so I see both sides. The current provision is quite segmented. All is well if a community fits the pre-defined boxes, but most people do not. That can be quite frustrating for people who are trying to access support.

20:00  

The other big issue that we face in the south is sustainability, and the ability to plan for the longer term. A lot of community development trusts in the region are on annual funding, so they cannot make any long-term plans because they do not know whether they will have an officer in post this time next year. The agency should address those two issues as a matter of urgency.

Pip Tabor

I would back up Lorna Young’s point. In our experience of working with communities, one of the key problems is that most community development workers—when one can be secured—are project funded and therefore time limited to one or two years maximum. If we are serious about growing community capacity, as I think we all are, we need to remember that it is a long-term process—it cannot be done in a limited period of time. I hope that the new agency will take a long-term approach to community asset growth, because that is where the future is.

Stewart Stevenson

I have a fairly brief point. Under section 5(2)(f), the new agency must, among other things, engage in

“supporting community organisations to help them meet their communities’ needs.”

Is that provision sufficient? Section 5(2) sets out a list of things that the new agency has to do, but it does not tell us how they need to be done, because that will be the responsibility of the body itself.

Dr Macleod

The short answer to that is no, it is not sufficient. Community Land Scotland would argue strongly that it would be most beneficial to include in the bill a reference to support for community organisations—as I mentioned earlier—with regard to ownership of land and assets. As Stewart Stevenson says, those are broad aims—

Stewart Stevenson

May I intervene?

Dr Macleod

Of course.

Stewart Stevenson

Can you give me some specific words that you think should be in the bill?

Dr Macleod

The enterprise agency’s remit should include—I am happy to finesse the wording later—responsibility for supporting community land and asset ownership.

Stewart Stevenson

That is fine. Thank you.

The Convener

That was a quick answer—well done.

Mike Rumbles

I am going to ask a basic devil’s advocate question. In a previous committee session, we heard evidence from Scottish Enterprise, and we have just heard evidence from the two local authorities and the south of Scotland economic partnership. All four of those organisations have remits that are similar to—although not the same as—the remit of the new agency, and they already have responsibilities for economic development. We are going to create a fifth body in statute. My question to the previous panel was about resources and budgets. We are now going to spread the budget between five different organisations rather than four. Do you have any comments on that? In other words, why is it important for the south to have its own enterprise agency in addition to all those other bodies?

Neale McQuistin

We need a complete change of culture here. I heard some lofty ambitions from some of the witnesses on the previous panel. Some of them want the area to be the best in the world, or the best in Europe. To be perfectly honest, I would simply like our area to be the best in Scotland. That is achievable—I think—but it will not be achieved if we simply do more of what we have been doing so far. As has been proved, we will not end up as the best area in Scotland if we keep on doing the same thing.

There is currently a perception that all the heat that is being generated in the south is in the middle, and we are feeling quite cold out on the edges. There is huge potential in those edges. I live out in the west—the Rhins of Galloway peninsula is practically an island community. That in itself is a huge asset that could be developed. If people in Drummore—which is as far west as you can go—wake up in two years’ time and discover that the south of Scotland enterprise agency is in Dumfries, we will have failed. If people in Eyemouth wake up in two years’ time and discover that the agency is in St Boswells, we will have failed. We need to ensure that the whole of the south is feeling the heat. In that way, we will all prosper. The whole of Scotland, not just the south, will benefit from that, but there needs to be a complete change in the culture.

Ian Cooke

I was going to make a broadly similar point. To be honest, a lot of what has happened in Scotland in community-led development and regeneration has taken place in spite of Scottish Enterprise, business gateway and so on. The exception is probably Highlands and Islands Enterprise. There is a desperate need for cultural change right across the public sector. We need to change attitudes and ensure that communities are taken seriously. We need to move beyond the rhetoric.

I have worked in regeneration for 30-odd years. Communities are always at the heart of policy documents, but that seldom translates to the reality of what communities face and how things work out. A change in culture and attitude is crucial, and there is a key role for the new agency in that regard.

The Convener

Richard Lyle has a supplementary.

Richard Lyle

I will be very quick. I was a councillor in local government for 36 years. I totally agree with what has been said, especially the point that has just been made. We need to spread the jam.

I go back to my original quick question. Should councils be represented on the board of the new agency, or have any control over the board?

Neale McQuistin

My answer to the question is no.

Richard Lyle

Thank you.

The Convener

I love short answers. Does anyone else want to comment on that?

Dr Macleod

My apologies, convener—I came in towards the tail end of the previous evidence session. Local accountability for the agency is fundamentally important. To go back to Mike Rumbles’s point about why another body is necessary, that is one of the reasons why we need a new agency.

There needs to be a broad representation of skills on the board—the representatives should not simply be the usual suspects. It should certainly include community interests in the broadest sense. We are talking about doing things differently. If we want the new agency to actually address economic, social, environmental and cultural issues, we need it to have bottom-up, grass-roots accountability.

The Convener

Does Pip Tabor want to come in on that?

Pip Tabor

Not particularly. In my experience, where the council treads, it tends to create suspicion and angst. If we do not have to have council members on the board, it might be better if they were not included. That is just my personal view.

The Convener

I will park that there without taking it any further.

Jamie Greene

I will keep my questions brief, because we are short on time this evening. Some of the people in this room have been campaigning for a new agency for decades. Does the bill deliver on what you have been asking for? If it does not, is that because you have not been properly consulted during the process? In other words, could the bill be better?

Pip Tabor

It does not fully satisfy us yet. We were happy to work with Rob Dickson and Russel Griggs on the community consultation that they undertook across southern Scotland. The messages that came out of that consultation exercise were loud and clear: people wanted to be engaged, they wanted a new agency and they wanted that agency to reflect the culture, heritage and values of the region. There was a huge amount of excitement and positivity. There were strong calls for clear accountability, and everybody wanted the new organisation to be as transparent and as close to people as possible. The message that the agency needs to address community issues came through extremely loudly. My concern is that the community and environmental components are very weak in the bill. I would like both those parts to be strengthened, as we mentioned in our written submission.

The Convener

There is quite a lot of nodding from the panel. Does anyone want to add anything?

Barbara Elborn

I concur with what has been said. In addition, as was mentioned in the previous session, the agency needs to have arms and legs in order to be able to influence infrastructure decisions. Newcastleton, like many other communities in the south, describes itself as a landlocked island. In areas such as accessibility and deliverables, we face insurmountable challenges. The agency must be able to work with others in a streamlined process so that there is joined-up working among all the public sector agencies. We cannot continue to go into battle and fight every single war as individual communities, which is what it feels like sometimes.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

Good evening, panel. To follow on from Barbara Elborn’s comments, I note that her written submission said—others may take the same view—that the bill lacks powers to enable the agency to influence decisions on infrastructure for transport and connectivity. We could add housing to the mix. Can I have the views of the rest of the panel on that point? Why would the new agency make a difference in that regard, given that powers already lie with other bodies?

The Convener

The previous panel said that broadband connectivity did not need to be specifically included in the bill, as the issues would all be solved shortly. I see that a few people are shaking their heads. Perhaps they will help to answer Maureen Watt’s question.

Dr Macleod

It is clear that, as other panel members have mentioned, the agency will have an important role to play in helping to connect different elements in respect of development. It is a laudable ambition to want to sort out digital connectivity imminently, but I am not sure that that will happen. Connectivity is fundamental—that takes us back to the earlier points about people being the region’s most important resource and the need to ensure that we retain people and maintain our population. The agency will have a very important partnership role in connecting with areas for development such as housing, job opportunities and cultural and social opportunities, in order to play to the strengths of the region and build on its asset base.

Ian Cooke

Communities take a holistic view of place when they consider how they will move forward and address quality-of-life issues. It is about more than just economics—it is about place. We almost touched on that in the previous evidence session. A key challenge for the new agency will be to look at what it can do beyond its narrow economic remit. Unless there is more affordable housing, young people will leave or will not come back to the south. The agency needs to have a wider vision and look at how economics sits within the creation of good-quality places where folk want to work and live.

Dr Macleod

I want to come back on what Ian Cooke said, because it is important. The idea of placemaking and the need to look at the assets in a place that make it attractive and ultimately sustainable are very important points. Over the past 18 months or so, Community Land Scotland has been engaged in work on what we refer to as people’s legitimate place in the landscape. We are asking what it is about rural areas, which are often sparsely populated—there are many such areas in the southern uplands—that will improve the prospects for rural repopulation. The solution needs to focus on placemaking and on having in place the right conditions and infrastructure, and the opportunities for jobs and for the wellbeing of communities more broadly. People need to experience that in their everyday lives. It is clear that the agency has an important part to play, if not an exclusive remit, at the regional level in that regard.

Neale McQuistin

The agency does not need to be loaded up with superpowers. As has been mentioned, it will have a 10-year plan, so change will be a marathon rather than a sprint. As long as the agency gets off to a good start and creates a good environment to work in, it does not need to be top-heavy with powers. It will work, but it is not going to work overnight.

Lorna Young

It is important to be aware that the new enterprise agency will be transformative because we will have a public body that will put the south of Scotland first. That in itself is new and different, and it will change how other public agencies are influenced. It will act as a conduit or link between the south and the rest of Scotland.

20:15  

Secondly, rural development in general works well where the area is understood as an ecosystem in itself. Support is traditionally segmented in different agencies with a sectoral focus. The south of Scotland agency will look at the south as an ecosystem in itself—an economic ecosystem and a network of communities. The systems approach is new and different, and fairly radical. That takes us back to a key point that was raised earlier. As we move forward, it is how things are done rather than what is done that will be more important.

Maureen Watt

We had an idea of that from the previous evidence session, in which comparisons were drawn with Highlands and Islands Enterprise. There are probably more social enterprises in the Highlands and Islands because there is a different land ownership system in many parts of the region. Is the current land ownership system in the south of Scotland a bit of a brake on development and economic growth? Are there opportunities to bring about more community land ownership, and therefore more social enterprises and a bit of growth in the economy?

Dr Macleod

Thank you for that question. I was reading the evidence from the committee’s previous meetings, and I noticed that you asked the same question of Douglas Cowan from HIE. I was interested in one of the points that he made in response, which was about applications to the Scottish land fund. He said that Dumfries and Galloway was the local authority area with the third-highest number of applications to the fund. To my mind, that indicates interest among communities in the south, or in Dumfries and Galloway at least, in the possibilities for community land ownership as a mechanism for sustainability and placemaking.

That is important, because you will hear different arguments about the place or otherwise of community land ownership in development. Some will argue that it does not matter who owns the land—it is how it is used that counts. To be sure, it is important how land is used. Nevertheless, ownership gives communities an element of control and enables them to shape their own destiny to a large extent, because they are able to think about the choices that might be made to make places more coherent and more suited to the aspirations of the people who live in them.

At the start of the session, I mentioned the glaring disparity between the levels of community land ownership in the Highlands and Islands and the south of Scotland. A total of 794 acres of land in community ownership across Dumfries and Galloway and the Borders combined is not indicative of a flow towards that model. There are issues and opportunities that the agency could help to address in that respect.

The Convener

I am sorry to cut people short, but we have more questions, and short answers will allow me to get through them all. That will keep the committee members talking to me. I think that Ian Cooke wants to come in with a short answer.

Ian Cooke

I will be brief. As has been said, economic development and regeneration require the efficient recycling of land and property in a legal sense. Whether it is an empty shop in the high street, a gap site or whatever, the important point is how that is done. We need to get property out of the hands of people who are not doing anything with it and into the hands of people—in communities, the public sector or wherever—who will do something constructive with it. That is a crucial task for the new agency.

Maureen Watt

Pip Tabor’s organisation, the Southern Uplands Partnership, took the view in its submission that the aim of improving

“the amenity and environment of the South of Scotland”

needs further interpretation in the bill. Can you expand on that a little, please?

Pip Tabor

Our concern is that the wording is a bit passive. It slightly suggests that the land and nature are there to be capitalised on. To some extent, that is absolutely fine, because we want to see southern Scotland making more of the assets to which it has access. Equally, however, we think that it is important to capitalise on those assets in ways that will not damage them. Our feeling is that the bill should be a bit more specific about how we value our environment and our natural and cultural assets. We should use those assets by all means, as creatively and innovatively as we can, but we should do so in a way that is not going to harm them. It would be valuable to make that explicit in the bill.

The Convener

I am afraid that we have to move on.

Maureen Watt

I have a final point to make, convener. You did not let me in during the previous session. Can I just ask—

The Convener

With the greatest respect, I am sorry, but we have four more questions to get through in four minutes.

Maureen Watt

You did not let me in earlier.

The Convener

I am going to have to move on. I am really sorry—I apologise. The next question is from Colin Smyth.

Colin Smyth

Do panel members have any thoughts or views on how we can ensure the local accountability of the new agency? Specifically, how do we ensure that the board reflects the make-up of the south of Scotland? For example, we need people who have experience of small businesses, family-run enterprises, the third sector and trade unions as well as young people and community groups. How do we ensure that they are on the board of the new agency? Should that be specified in the bill?

The Convener

I saw that Pip Tabor was nodding furiously.

Pip Tabor

I am sorry, convener—I beg your pardon if I was. I agree completely. Those are all important audiences for the agency, and we need to find a mechanism for engaging with and being accountable to them. As to how we do that, I am afraid that I do not have a magic solution. It is a huge task, as the south is a big geographic area. There is a very broad audience, and the agency will be delivering on a very broad agenda. The partnership has started well by going out on the road and speaking to communities across southern Scotland. That is an excellent way to begin. Repeating that exercise regularly would be one way to listen to what people are saying. Someone has already said how important it is that we listen—the agency needs to take that message on board.

Dr Macleod

It is critically important that the agency has local accountability and is accountable to communities themselves. I do not have an obvious answer to the question, but the bill must not lose sight of that point.

Barbara Elborn

It is important that the board is made up of people who are of the right calibre to do the job. Representation must be skills based first. The board must be inclusive in order to deliver on the job that it has to do in the marketplace in which it is operating. By definition, it must include representation from communities, social enterprise companies and so forth.

Richard Lyle

I know that we are running out of time, so I will keep my question tight. How would you ensure that the south of Scotland economy benefits from the employment and procurement opportunities that the new agency could bring to the region? Imagine that you have all just been elected to the board and tell me what you would do.

Ian Cooke

Procurement is a huge frustration for communities. For the past seven or eight years, the Scottish Government has been talking about creating opportunities for communities. Communities want to run local services and create local jobs. I do not understand the barriers in detail; the issues are blamed partly on procurement directives from the European Union, and I do not quite understand that. We have to push contracts and tenders down to the lowest possible community level. If we do not do so, the same companies will come in and mop up, and the money will not stay in local communities. We have to build local economies, and procurement is key to that.

Barbara Elborn

Again, I speak from experience. We have had to go out to public procurement, which has added hundreds of thousands of pounds to the cost of projects that we could have better administrated ourselves locally. We understand the need to be accountable to the public purse, but we could look at procurement in a new way to ensure that it is done within a catchment area.

Richard Lyle

Thank you—you are all employed. [Laughter.]

The Convener

Normally, the final question is mine, but I am afraid that we have run out of time. That is not because we do not want to hear more evidence from the witnesses—it is purely a logistical matter. We need to get people back to Edinburgh; I am thinking about trains and connectivity. I thank you all for giving evidence to the committee. The session has been hugely informative, so I thank you for your time. I previously made an offer to witnesses that, if I had missed anything or anyone felt rushed, they could submit more evidence to the clerks via email by the end of the week. I ask everyone to remain seated while we move on to the next item on our agenda.

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Fifth meeting transcript

The Convener (Edward Mountain)

Good morning and welcome to the fourth meeting in 2019 of the Rural Economy and Connectivity Committee. I ask everyone to make sure that their mobile phones are in silent mode.

Agenda item 2 is the South of Scotland Enterprise Bill. This is the committee’s final evidence session on the bill. I welcome Fergus Ewing, the Cabinet Secretary for the Rural Economy, and, from the Scottish Government, Sandra Reid, who is the bill team leader; Karen Jackson, who is the south of Scotland economic development team leader; and Felicity Cullen, who is from the legal directorate.

The cabinet secretary has asked to give an opening statement. Please limit it to no more than three minutes.

The Cabinet Secretary for the Rural Economy (Fergus Ewing)

I am pleased to give evidence today. The south of Scotland has a different and distinct rural economy. A new south of Scotland enterprise agency is a great opportunity to do things differently for the south, building on its strengths and traditions. We want the agency to deliver a fresh approach to economic development—to unlock potential, address opportunities and respond to needs to make sure that the south has the strong role in Scotland’s economy that it deserves.

The bill provides the structure and legal framework for a new body in the south of Scotland to drive inclusive growth. It sets out the high-level aims and powers that are necessary to enable the body to support that growth. It provides maximum flexibility for the new body to shape its activities and to respond to the circumstances of the south. This is an opportunity to set the future direction for the south of Scotland and to drive the economy forward with growth that creates opportunities for all, sustains and grows communities and harnesses the potential of people and resources.

Our proposals have been developed through extensive engagement with the people who live, study and work in the south. About 250 people replied to our written consultation, overwhelmingly welcoming the proposal and ambitions for the new agency. Working with the south of Scotland economic partnership, we heard from 536 people at 26 engagement events across the south. We will continue to work closely with stakeholders as the functions and shape of the new body are developed, to make sure that it is accountable to the people of the south.

We are responding to the needs, ad interim, by investing almost £6.7 million in the south of Scotland skills and learning network, which will be delivered through the colleges, to provide better access to training to a wider range of students. Last week, investment of £156,000 was confirmed to support the development of skills through developing land-based training across the south of Scotland.

I am sure that there are many questions for us today. The south of Scotland enterprise agency will play a vital role in delivering our ambitions for the area, driving inclusive growth and supporting the rural economy.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

Good morning, cabinet secretary. When we were taking evidence, especially when we went to Dumfries, there seemed to be a general dissatisfaction with the current operation of Scottish Enterprise in the south of Scotland. That was perhaps due to a bit of a misunderstanding about what Scottish Enterprise is tasked to do and the differences between it, business gateway and local authority functions. Do you have any views on why that might be the case? What is your expectation of how the new agency will approach the enterprise problems in the south?

Fergus Ewing

I think that there is a desire for a locally accountable body. Scottish Enterprise has worked hard to discharge its duties across the geographical range of its responsibilities, which is the whole of Scotland other than the area covered by Highlands and Islands Enterprise. That is a massive area. Scottish Enterprise has a presence in the south of Scotland, but it is perhaps perceived as not being based in and of the south of Scotland. Over the years, it has done good work, in which I was involved when I was the enterprise minister. Most recently, I was involved in working with Steve Dunlop and colleagues in relation to Spark Energy. I assure you that the officers—at senior level and all levels of Scottish Enterprise—are devoted to their task, are good public servants and have done a lot of work to discharge their duties. Nonetheless, it is not a locally headquartered body.

In response to the second part of the question, I believe that the new body, which will be based in the south, can be shaped and adapted to meet the local needs and to work closely with business gateway and the local authorities. The south of Scotland economic partnership, which is chaired by Professor Griggs, has built up very good relations with the leadership of the councils and all the agencies, particularly the colleges and universities that are based in the south of Scotland. I am therefore optimistic that the new body will be able to provide the local feel, accountability and presence that Scottish Enterprise has perhaps been perceived by some not to have had, despite all the good work that it has done over the years.

Maureen Watt

The new body will be tasked with growing indigenous business, which is key to economic growth in the south of Scotland. What will the relationship be with inward investment? Will HIE, Scottish Enterprise and the south of Scotland enterprise agency be competing for inward investment in Scotland? How is it going to work?

Fergus Ewing

There is collaboration between the existing agencies. For example, Scottish Development International often takes the lead in making first contact with an inward investor, which often happens at its offices throughout the world, and the strategic economic partnership plays an oversight role. In my experience, the bodies work well together when they are required to. There is no real element of poaching or aggressive competition; rather, there is collaborative working. Therefore, I do not think that that is an issue.

There are opportunities for inward investment, but there is a feeling that the smaller businesses, which are the bedrock of the south of Scotland’s rural economy, could have a closer relationship with the new body and that it should reach out to the traditional areas of strength and build on those. In the farming community, in forestry, in tourism, in transportation and logistics and in other areas, there are a lot of active small and medium-sized businesses, and I think that the new body will be better able to reach out to those businesses and work more closely with them than happens under the existing arrangements.

Maureen Watt

The problems and issues that face the economy of the Borders and Dumfries and Galloway are also faced by the communities in South Ayrshire, East Ayrshire and South Lanarkshire. How confident are you that those other rural areas in the south of Scotland will be adequately served by Scottish Enterprise?

Fergus Ewing

I am confident that they will be. At the consultation stage, quite rightly, consideration was given to the geographical boundaries that should apply. In particular, consideration was given to the Ayrshires and South Lanarkshire. The three Ayrshire councils co-operate and are all working to achieve the Ayrshire growth deal, and South Lanarkshire is linked to the Glasgow city region deal. There are also proposals for regional economic partnerships that will ensure that there is a regional voice at all levels.

My view is that the majority response from people in the south of Scotland—in Dumfries and Galloway, in the Borders and in Ayrshire and South Lanarkshire—is that the new body should have the geographical boundaries that are proposed in the bill, with the two local authorities comprising the south of Scotland area. That was the prevailing and majority view, and that is the basis on which we are proceeding.

The last point that I want to make in response to Ms Watt’s questions is that we are mindful of the fact that there should always be, and is, close working between public sector bodies of all sorts at all levels. Collaboration—working in a positive, constructive and collaborative spirit—is the key to getting things done, and I have spent thousands of hours in trying to do that, working with colleagues and friends in local government.

The Convener

Jamie Greene has a supplementary question.

Jamie Greene (West Scotland) (Con)

Good morning, cabinet secretary. I appreciate what you said about close collaboration, which will be welcomed. However, there is a view in the Lanarkshire and Ayrshire authorities that, because they will sit on the other side of the boundary of the new agency, they will be able to benefit only from the agencies that exist under the present set-up. Many criticisms were made of how those agencies served the south of Scotland, which led to the moves to create a new agency. Will the new agency make any tangible difference to how the Lanarkshire and Ayrshire authorities access services, or will they simply see things being done in a better way across the boundary in the Dumfries and Galloway Council and Scottish Borders Council areas and be stuck with the old system?

Fergus Ewing

We are not proposing that any local authority should receive an inferior service, and I do not believe that any authority receives a lower-level service at the moment. I have worked closely with Scottish Enterprise in relation to investments, proposals and businesses in every part of Scotland, including the Ayrshires and South Lanarkshire, over the years, not least in respect of investments in the steel industry, aerospace and food and drink businesses in Ayrshire. Together with Scottish Enterprise, I have convened meetings in Ayrshire, in many ways to provide a local presence from time to time. I could give members many examples if they wish. I vigorously defend the role of Scottish Enterprise in covering all of its areas, and I think that that good work will continue.

The growth deals in the bordering areas provide one set of opportunities. I have quite a lot detail on how the growth deals—which do not fall within my portfolio—are operating, but perhaps members can take that as read so that I do not use up too much of the committee’s time. The regional economic partnerships are designed to ensure that there is good performance on economic development in every part of the country.

Mr Greene raises an issue on which questions will be asked by many others. We must keep a watching brief to make sure that the bordering areas that will not be in the south of Scotland enterprise area do not lose out. I am sure that we will monitor and keep an eye on that as we proceed.

The Convener

The point was made to us in evidence that it is important that the new agency will be able to encourage businesses just outwith the area that it will cover so that businesses within that area can benefit from services such as the provision of skills or apprenticeships. Will the bill allow for that? Businesses in the area that the new agency will cover might have to rely on businesses in other areas to supply some of the raw materials that they need.

Fergus Ewing

Yes. At present, a flexible approach is taken where there are cross-border issues. I will give an example, which might or might not be apt. As members from the north-east of Scotland will know, Glenshee falls just within the Scottish Enterprise area but the other four outdoor ski resorts are in the Highlands and Islands. Therefore, when we sought to assist all five resorts to avail themselves of finance to upgrade their facilities, Scottish Enterprise and HIE worked very closely together to work out a common scheme. Initially, the agencies had two different ideas, but I understand that, through collaboration and discussion, they came up with a scheme that ensured that Glenshee was not disadvantaged in comparison with the other resorts, which are in HIE’s area.

10:45  

My experience is that there is no question but that the ministers who have oversight and the chief executives who run these important bodies all want to work together—that is absolutely at the heart of successful economic development and is how we all seek to work in Scotland. In general, that works fairly well in practice. We cannot foresee the future, and situations will arise, but that co-operative approach allows us to do everything that is practical in most circumstances.

I do not know whether Karen Jackson or Felicity Cullen is keen to add something to the mix, if that is in order.

Felicity Cullen (Scottish Government)

The body will operate in Dumfries and Galloway and in the Scottish Borders, but section 7 has been drafted deliberately to allow it to do things that will help it to undertake its functions without limiting it to those areas. The convener gave an example of the need for a bit of pliability to include something in an area that is just outwith the boundary, in order to benefit the south of Scotland. It will be entirely available to the body to deal with that.

The Convener

That is perfect, and it answers the question nicely.

John Finnie (Highlands and Islands) (Green)

The bill, which is welcome, lays out the aims of south of Scotland enterprise. The first is to

“further the economic and social development of the South of Scotland”,

which is comprehensively explained in six points. The second aim is to

“improve the amenity and environment of the South of Scotland”,

which is not explained. We have had a number of representations about that, including the comment that the provision is weak. Bodies such as the Solway Firth Partnership and the Southern Uplands Partnership have suggested what that aim should cover. Is the lack of an explanation a shortcoming of the bill?

Fergus Ewing

The aims in section 5 are framed in a general way that is designed to cover just about everything. The section avoids delimiting or restricting the scope by avoiding specificity—by avoiding a long list of specifics. That is the current mode of drafting, which has been used deliberately. As Mr Finnie said, the section gives examples of furthering economic and social development, but they are illustrative, as we want to ensure that the body has sufficient flexibility to shape its activities.

Improving the amenity and the environment is the second of the two aims. The fact that there are two aims—one on economic and social development and the other on the amenity and the environment—gives the aim on the amenity and the environment equivalence with the one on economic and social development.

It would be unnecessary to have a long list of things that will be dealt with in implementing the powers; it will be for the action plan to go into that later. However, I reassure Mr Finnie that the powers have been framed correctly, so that the agency will have the widest powers to assist in improving the amenity and the environment.

We might come back to that at stage 2, when we can have a more detailed discussion, but I am extremely confident that the new body will have the power—if it is so advised and if it decides to do so—to advance

“the amenity and environment of the South of Scotland”

and to do that in conjunction with pursuing its other aim.

Jamie Greene

I will follow on from Mr Finnie’s line of questioning. I appreciate what the cabinet secretary said about the bill not being overly prescriptive on what should be in the action plan and not going into great detail on what the agency’s aims should be. However, I have a sense of déjà vu. The cabinet secretary will recall the work that the committee did on the Islands (Scotland) Bill, and we had the same argument about whether matters such as transport and digital connectivity should be mentioned in that bill. The feedback that we got from the sessions that we had in the south of Scotland was very much that those are two of the main issues so they should be addressed and highlighted in the bill. Why are they not?

Fergus Ewing

As Mr Greene said, the South of Scotland Enterprise Bill has been framed very widely. For example, section 5(2) amplifies what is meant by

“furthering ... economic and social development”,

which includes

“(a) supporting inclusive economic growth,

“(b) providing, maintaining and safeguarding employment,

“(c) enhancing skills and capacities,

“(d) encouraging business start-ups and entrepreneurship,

“(e) promoting commercial and industrial—

(i) efficiency

(ii) innovativeness, and

(iii) international competitiveness,”

and

“(f) supporting community organisations”.

Those are the aims of the body. Of course, it will work alongside Transport Scotland, which has national responsibility for trunk roads, railways and other modes of transport, and alongside the work that the Scottish Government is doing in partnership with local authorities on the reaching 100 per cent programme, which has the aim of providing access to superfast broadband to all in Scotland, and especially to remote areas.

It is a case of horses for courses. We already have bodies that have expertise in those other areas and we expect that they will continue to carry out their work there. They also have the budgets for transport and connectivity. The south of Scotland agency will not have the budget to do that work. It will not have the executive responsibility, and the budget follows that responsibility.

As you know, convener, I never wish to go on for too long, but—

The Convener

No comment. [Laughter.]

Fergus Ewing

Members should feel free to laugh, but my final point is a serious one.

I absolutely accept that the concerns that Jamie Greene has expressed are those that one would hear at public engagement meetings. However, the key thing is to work collaboratively with all the other bodies and, where necessary, bring them together to work towards delivering improved transport projects and the R100 project. That is how to do things successfully.

Jamie Greene

Notwithstanding what the cabinet secretary has said, I refer again to discussions on previous bills, in which we heard the argument that we should not be prescriptive. We ended up in a place where part 2 of the Islands (Scotland) Act 2018 specifically mentions improving transport services and digital connectivity, among many other things, so it is incumbent on the agency to deliver on those, regardless of who owns the budget. There is precedent for putting such issues in the bill. If the community wants those two specific issues to be in the bill, one could argue that there is still scope for them to appear.

Fergus Ewing

No doubt we will debate those matters in more detail at stage 2. That is absolutely right, and the Parliament and individual members are perfectly entitled to lodge amendments. I did not steer the Islands (Scotland) Bill through the Parliament, so I cannot speak from that knowledge or experience.

The approach that we have set out in no way constricts the body in the achievement of those aims. However, there is a risk in setting out duties for a body with no budget. If one does that, it can unfairly raise expectations of the body that has been charged with duties but does not have the budget to deliver them. As a matter of common sense, we should be canny about doing so. We should call to account, as I am sure committees do, Transport Scotland and other agencies that have the budgets, staff, expertise and knowledge to deal with such important matters. I guess that this conversation is one that is to be continued.

Gail Ross (Caithness, Sutherland and Ross) (SNP)

The aims of the new agency, which we have touched on already, are in two separate parts: to further the economic and social development of the south of Scotland and to improve the amenity and environment of the south of Scotland. What timetable and criteria are set out to assess whether the agency is a success? Section 5(2) sets out in detail how the economic and social side will be addressed, but there is little or no detail about the amenity and environment side. How will we assess that?

Fergus Ewing

Obviously, the body has not yet been set up, so we need to get it set up and running. The bill provides for various formal requirements that are all parts of the accountability of the new body. For example, section 6 deals with an action plan and section 14 deals with an annual report. I know that Councillor Elaine Murray expressed the view that reporting back to the communities is extremely important, and I agree with that view. I believe that the more effectively a body communicates with those whom it serves, the better things tend to be.

I think that, as the body discharges its functions, its performance will be assessed. It will be accountable to Scottish ministers and, through ministers, to the Scottish Parliament. This committee will be able to call its office-bearers to give evidence at any time so that you can scrutinise the agency’s performance. Those are all tried and tested methods of ensuring that there is accountability in relation to the assessment of performance. There is also a requirement to submit proper accounts and accounting records and to send copies of those to the Auditor General for Scotland. In the normal way, the new body will be subject to scrutiny by Audit Scotland, which is entirely independent of Government.

That is how all these matters have been dealt with. I would expect the action plan to deal specifically with the environmental responsibility, and that will form part of the scrutiny that the Parliament and Audit Scotland will carry out. The emphasis will be on local accountability. The desire for that has been expressed to this committee and others in the work leading up to today.

Richard Lyle (Uddingston and Bellshill) (SNP)

On the new agency’s powers, the committee received a submission from a former solicitor in the legal section of Scottish Enterprise, and he expressed concerns about the decision to exclude from the bill compulsory land purchase and information-gathering powers. He said:

“these are important powers and should be clearly set out in the primary legislation”.

Why does the bill not grant powers to acquire land by compulsory purchase nor powers of entry to land or powers to obtain information? I know that you wish the new agency to have the same powers as Scottish Enterprise and Highlands and Islands Enterprise, which, you have said, will drive the economy forward. If the agencies are going to work together, should they not all have the same powers?

Fergus Ewing

There is a principled argument that there should be an equivalence of powers. However, experience has tended to suggest that the powers of compulsory purchase have never actually been used by either Scottish Enterprise or Highlands and Islands Enterprise. The way in which they have worked has never required those powers to be used. We do not believe that the power of compulsory purchase is a necessary one for the south of Scotland agency to have, because we expect it to work collaboratively.

Compulsory purchase is very much a last resort. Indeed, as I said, it has not been resorted to at all by the other economic development agencies. The new agency will have the ability to purchase and sell its own assets and to work with other bodies that have separate statutory powers, including local authorities. I know that Bryan McGrath from Scottish Borders Council and Elaine Murray from Dumfries and Galloway Council have expressed the view that the arrangements that we are setting out are adequate and that the way round any issues will be through working with local authorities, which have the necessary powers.

For the sake of completeness, I will address the two other issues that Mr Lyle mentioned, which were the power to enter land and the power to acquire information. I would like to reflect on those aspects separately and discuss what we did in preparation for stage 1. We have spent some time looking at compulsory purchase because there has been a lot of focus on and discussion about that. Maybe we need to spend a bit more time looking at those other areas to see whether there is a need to do anything about those particular aspects. We can come back to that. If we have anything useful to add, we will write to the committee thereanent.

11:00  
Richard Lyle

I welcome your comments. I know that members have pressed you on compulsory powers in considering previous bills.

Colin Smyth (South Scotland) (Lab)

Good morning to the panel. At present, the bill gives ministers the powers to appoint the chair of the agency, all the members of the board and the agency’s first chief executive. In gathering evidence on the bill, we have heard calls for local communities and stakeholders to have more say on who is appointed to the board. Are you considering that?

Fergus Ewing

The appointments will be made on merit, regulated by the Public Appointments and Public Bodies etc (Scotland) Act 2003, overseen by the Commissioner for Ethical Standards in Public Life in Scotland and subject to the code of practice for ministerial appointments to public bodies in Scotland. The process for appointments is therefore heavily regulated by statute.

Ministers will make the decisions, but it should be made clear that those decisions will be heavily influenced and circumscribed by the legislative framework that has been set out. In practice, the minister very often approves a set of recommendations that emerges from a structured process that was designed to provide fairness, transparency and accountability. I cannot emphasise that enough.

I have heard Elaine Murray’s evidence, for example, and she is less concerned about ministerial appointments and more concerned about reporting back. That goes back to my previous issue. I have much sympathy with that point of view.

It is plain that, if the bill is passed, we will need to appoint a chair and a chief executive in preparation for the setting up of the body, and that will be done in stages. The appointments process and the full legislative regulations will apply to the appointments of the chair and the chief executive. The minister will not pick whoever he or she wants—that is not how it works. That would not be appropriate and I would not conceive of proceeding in that way. There is a formal process that must be observed. Parliament set it out. I believe that it is fair, and we will follow it.

I hope that Mr Smyth and other members will welcome my final point. We must ensure that we reach out to attract people of the south of Scotland in the south of Scotland—particularly those who might not think of themselves as having a role as a board member of the agency but who have an awful lot to offer. Many people—the leaders of the councils, I believe, and others—have suggested that we should have a recruitment campaign that is advertised in local papers, and we should pursue that suggestion. There is a budget for that. In order to deliver on what I understand to be a commonly expressed view, I will say to officials that the recruitment campaign should reach out not just in Dumfries and Hawick but across the area, using local papers and other forms of communication including, I expect, social media, although that is not my particular area of expertise.

We must reach out to try to get people beyond the usual suspects. That is not easy to do because, in general, people who have a lot to do are extremely busy doing what they are already doing—they may run businesses or hold down important posts in public bodies. However, a common view has been expressed that we should do that, and I am determined that that will be the practical way by which we will get the best calibre and contribution of local people to the south of Scotland enterprise agency.

Colin Smyth

It is clear that young people will be a key group in that work. In the south of Scotland, we have a huge problem with the outward migration of young people and a real demographic challenge. What mechanisms will be in place to involve young people in the running of the agency?

Fergus Ewing

There is a particular issue relating to young people at the strategic level. There is a propensity—it is common in the Highlands and Islands—for young people to see their future and career prospects as being outwith their area; they see their lives being lived outside the Highlands and Islands. One of the successes of Highlands and Islands Enterprise and others has been to stem that trend. For the first time, I think, a significant majority of young people in the Highlands and Islands think that they have a future there, and that is a terrific thing.

That is the overall, strategic aim on which we want to deliver. I am not sure quite how many people will necessarily want to be a board member of south of Scotland enterprise, but we should reach out to everyone to ensure that people have the opportunity to do that. We are engaged with organisations such as Young Scot and the Scottish Youth Parliament and I regularly meet representatives of such bodies at public events—they are reaching out and playing a part in public policy. If Mr Smyth or other members have specific suggestions about what else we should do, we will be open to them. We are willing to consider how we can do what is suggested as effectively as we can.

Colin Smyth

The key will be how people, whether we are talking about young people or other key stakeholders, can hold the agency to account. The bill gives ministers the power by regulations to alter the agency’s aims, to approve the action plan, to decide on the location of the headquarters and to issue directions to the agency, without consulting it. That is slightly different from how HIE works. The bill is clear on how the agency will report to and be held to account by Government ministers, but what mechanisms are in place to ensure that the agency will be held to account by stakeholders in the local community?

Fergus Ewing

It is right that all public agencies are held to account through ministers and, in turn, the Parliament. We are all elected, and that is why we are here. As members of the Scottish Parliament, you hold the Executive to account, and that must always be the principal way in which accountability is exercised through our democratic system.

The key element of the question that you quite fairly ask is how local communities will feel that they are being served by the new body. In part, it will be up to the body to develop methods of communication. For example, although there has to be a headquarters, I understand that the intention is that the body will have a presence in many parts of the south of Scotland enterprise area and will not be based in one office in Newtown St Boswells, Dumfries or anywhere else. It will co-locate with other public bodies.

The south of Scotland economic partnership issues a newsletter and it has held 26 meetings—that is a power of work. Colleagues of mine have attended a great many of those meetings in the evenings after their working days have been over. A tremendous amount of positive work has been done so far, which I am sure you welcome, Mr Smyth, and the partnership, as the precursor to the statutory body, has already shown that it is absolutely determined to reach out to local communities.

I think that the action plan will deal with that, too, and the oversight from this Parliament and from me will ensure that local engagement and local accountability are very much at the heart of the operations of the new statutory body.

Colin Smyth

However, the bill is silent on local accountability. Is that not a fair observation? It is clear on Government accountability, but when it comes to how we develop local accountability, it is silent. Is it enough simply to say that we hope that the agency will do that? Should the bill not place an obligation on the agency in that regard? Should mechanisms not be put in place to hold the body to account locally?

Fergus Ewing

I do not accept your characterisation of the bill. This is not a plot against local accountability. The aims of the agency are set out in section 5, and one of them is

“supporting community organisations to help them meet their communities’ needs.”

The south of Scotland economic partnership is already reaching out to communities. I think that it will be up to the agency to develop the best ways to do that given the unique geography and circumstances of Dumfries and Galloway and the Borders.

If the committee has particular suggestions or specific examples regarding how to set up a framework to deliver local accountability, I will be happy to work with you and consider whether these are matters for the bill, for the action plan or for the body itself. We are actively working on how to make the body as accountable as possible but, to be fair, it would really help to get specific suggestions about how we can best do that, rather than just general remarks on the topic.

Gail Ross

Will a member of the agency sit on the local community planning partnership, as happens with HIE?

Fergus Ewing

There will be close links with community planning. I am glad that Ms Ross has mentioned that because, in fairness to Mr Smyth, I should perhaps have mentioned that working with community planning partnerships will very much be a way of ensuring local accountability.

I will give an example from HIE that I know Mr Finnie is aware of and has an interest in—the funicular railway. HIE officials have been working with the local community in the area served by the funicular to navigate the very significant challenges that have arisen from certain structural problems, and what they are doing is a model of how to work with communities. HIE has received widespread recognition from community leaders—councillors and others—that it has reached out to the community and set up meetings to discuss something of real concern.

People do not really want to have a south of Scotland enterprise official chapping at their door for no reason, but when a problem or an issue arises, there is an expectation that an enterprise body should really get in aboot it—as I would say—and speak to people and hear what they have to say. The funicular is a difficult topic, but it is an excellent example of how community engagement should operate at that level.

The Convener

In the various evidence sessions that we have had, we have heard conflicting views on whether the two councils should be represented on the board. A representative from one of the councils thought that it was a bad idea, while a representative from the other council thought that it might be a good idea. Do you have a view?

Fergus Ewing

It would not be desirable for councils to have automatic positions on the board but of course councillors are welcome to apply for membership of the board and have their applications considered along with everybody else’s.

There are many public bodies that arguably have an interest in this, a perspective on it and a contribution to make. I think that our public appointments system is designed to pick the best people who apply, and the real challenge is to get the best people to put their names forward in the first place. I think that Elaine Murray suggested that ministerial appointment was the way to go and, as a former minister, she will be aware of and familiar with the public appointments process.

Councillors play a part in many public bodies, such as Scottish Natural Heritage, and I know that Councillor Stephen Hagan from Orkney sits on the VisitScotland board. There are many examples of councillors playing an active part in many other public bodies, and I think that that is the model that we should follow.

Peter Chapman (North East Scotland) (Con)

The enterprise and skills review recommended the establishment of a strategic board to align and co-ordinate the activities of Scotland’s enterprise and skills agencies. The board was created in November 2017 and published its strategic plan in November 2018, and the bill team confirmed that the south of Scotland agency would be part of it. Given the importance of the board to the Scottish Government’s enterprise and skills reform agenda, why is there no mention of it in either the bill or the policy memorandum?

Fergus Ewing

As I understand it, the strategic board is not a creature of statute, but an arrangement that has been set up in partnership. Therefore, it does not appear in any act of Parliament. Of course, that is no reason for not mentioning it in the bill, if it is felt that doing so would be useful, but the arrangements for the strategic board—although I was not the minister who set it up; it was Keith Brown—are agreed and are informal. Both HIE and SOSE will automatically have a place on the strategic board and will be represented by, I think, the chairman and the chief executive. That is only right and proper.

11:15  

You have raised an interesting point that I will check and pursue, just in case there is anything that I have missed. However, the answer is that the strategic board is not a creature of statute, so we would not expect it to appear in statutes. As far as I am aware, it was not necessary to amend the acts of Parliament that set up Scottish Enterprise and HIE, so there was no real need to mention the strategic board in the bill. That said, given that the committee has raised the point, we will give it further thought and come back to you if we have anything else to add.

Peter Chapman

I welcome the cabinet secretary’s useful answer. Let us see where we end up.

What involvement will the Scottish Government have in setting and approving the new agency’s business plans and budgets? I would say that that subject is probably meatier than the last one I highlighted.

Fergus Ewing

Obviously, the Scottish Government, working with the Parliament, has responsibility for the budget, which we are acutely aware of at the moment. As with the budgets for Scottish Enterprise and Highlands and Islands Enterprise, the new agency’s budget will be decided through the normal budget process. The action plan has to be prepared by SOSE, and it—and any modification to it—must be approved by ministers. That process exists for both Scottish Enterprise and HIE. It works fairly smoothly and, of course, parliamentary committees are entitled to—and do—hold me and the heads of those bodies to account whenever the occasion arises.

The action plan is the basis for the management of day-to-day operations and is an executive function that is—rightly, I think—performed by the statutory agencies involved, subject to oversight by the minister. Having that oversight ensures that the aims of the action plan are fulfilled and that the budget is deployed in the most effective manner to deliver those aims in the most effective way.

Peter Chapman

Do you have a figure in mind for what the new agency’s budget is likely to be?

Fergus Ewing

We do—and not only in mind, but in writing. The detail is set out in the financial memorandum. The figures are the figures, and they are on the record.

That said, I will make two points. First, although different views were expressed on the matter, there was broad agreement that there should be an equivalence of budget between the south of Scotland agency and HIE. That was the broad conclusion reached by most people. Initially, people in the south of Scotland were perhaps concerned that they were—to put it bluntly—going to be short changed, but the commitment that the Scottish Government has made in principle in respect of the budget has assuaged any such concerns.

Secondly, there has to be a gradual assumption of responsibilities by the new agency, and we envisage that happening as follows: the new body has to be set up and then it has to acquire staff and premises, which will take time. It has to find its feet. The board will be appointed gradually, not in a oner. Therefore, it will take time before the agency is ready to fully assume its responsibilities and, equally, before it is ready to fully operate its budget.

I hope that I have kept those two points quite general. I am quite sure that the officials can fill in the rest of the time with more detail if the committee would like, and I am happy to answer any supplementary questions on the matter.

The Convener

We certainly do not need to fill in time. We have a lot of questions on the budget, which we will move on to now.

John Mason (Glasgow Shettleston) (SNP)

Peter Chapman’s question has taken us to the financial memorandum and the issue of comparability with HIE. Having recently passed the Islands (Scotland) Act 2018, we know that the islands, in particular, clearly face huge challenges, but there are challenges for the Highlands, too. For a start, it is a very remote area, with some places miles away from a railway or anything like that. Let me play the part of devil’s advocate by suggesting that the issues in the south of Scotland are surely not of the same scale as those in the Highlands and Islands, so it is not justifiable to have the same funding per head in the south of Scotland.

Fergus Ewing

It is interesting to hear that observation from a Glasgow MSP. Broadly speaking, the consensus is correct that, in principle, there should be equivalence. The south of Scotland has many similarities with the Highlands and Islands in terms of sparsity of population, predominance of very small businesses and the number of very small communities. In that respect, it has more in common with the Highlands and Islands than with the central belt, where the composition of the population is entirely different.

The population density in the south of Scotland is 24 people per km2, which makes it the most sparsely populated area outside the Highlands and Islands, and some 53 per cent of that population live in remote small towns. That is an entirely different situation from what is going on in the central belt. Mr Mason is well aware of issues of deprivation and poverty in general, and he works on them assiduously, but there is hidden poverty in rural areas. It is not so obvious—or, perhaps, so vocal—but it is there. Some of the most deprived areas are in rural parts of Scotland.

My last point is a general one: HIE has helped to promote the Highlands and Islands with regard to tourism, renewable energy and the use of its marine resource. Those have been big success stories. There is a feeling in the south of Scotland that, although they have had great success stories, they have not had the same coverage, air time or promotion. That is what has struck me at many engagements in the south of Scotland. Whether that view is right or wrong, having a budget at roughly the same level as that for HIE will, over time, allow the new body to do what HIE has helped to do in its more than five decades of existence. I hope—in fact, I am sure—that it will not take that long, but there is that feeling that the south of Scotland needs stronger recognition, and the budget is necessary to deliver on that.

John Mason

I completely agree with what the cabinet secretary has just said. It is a rural area; there is poverty in such areas; a lot of the area is very remote; and the issues that it faces are similar to those that HIE deals with. I agree with all of that.

However, it is a question of scale. Last Wednesday, we got to Galashiels in an hour on a perfectly good train and came back likewise. There is nowhere in the Highlands and Islands that I can get to from this Parliament within an hour.

It is also a question of degree. HIE has roughly one member of staff for every 1,500 members of the population, while Scottish Enterprise has about one for every 3,000. That is fine—I am happy with that. I agree that south of Scotland enterprise should have more than SE, but my question is whether it should have the same as HIE or whether it should come somewhere in the middle. Speaking as somebody from the central belt who is happy to support there being an emphasis on the south of Scotland, I just wonder whether it needs to be at the same level as HIE.

Fergus Ewing

No doubt the arguments will run and run, but our proposal is for broad equivalence. The proposed total budget allocation for 2020-21, 2021-22 and 2022-23 is £32 million, £37 million and £42 million respectively to reflect a gradual ramping up of responsibilities and to ensure that, once the agency is able to discharge them, it will have the budget to do so. It will be important for the new body to impress, act and make a difference quickly, which will show that it is worth while. We envisage a budget that will enable it to do that. I am confident that that will happen in a variety of ways, but I take the general points that the devil’s advocate made.

The Convener

I would point out that, although we went down to Galashiels on a perfectly good train, half the committee members, like a huge amount of other people on it, had to stand. The train might have been good, but it was somewhat overcrowded—that is a phenomenal problem down there. However, we will pass over that.

Mike Rumbles (North East Scotland) (LD)

When we were in Dumfries and Galashiels, the people from whom we took formal and informal evidence seemed tremendously confused about the £42 million that the cabinet secretary just mentioned. According to the financial memorandum, staff costs will be about £10 million, and the budget will build to £42 million, as the cabinet secretary said. Is that new money? That is the term that people used with us. Are we talking about additional money for setting up the agency, or is it money that would have been allocated to other agencies and to council development functions anyway? My question is simple, but important: is the money new or does it come from other development budgets?

Fergus Ewing

The budgets for 2020 and 2021 have not been set so, in the strictest and purest terms, the money cannot come from any other budget, because there is none. A simple answer is that the £42 million, which would be the budget in year 3 of the agency’s operation, represents an increase in the overall funding for the area.

Mr Rumbles makes the point that this is a new body. It will provide a function that we all believe could do a lot of good, but the amount of good that it can do will relate to how effectively it works with other bodies, particularly the councils. A key issue will be how the councils and the statutory body co-operate and how the business gateway services—which, as Mr Rumbles knows, are local authority led and are designed to assist smaller businesses—dovetail with the statutory body’s activities.

That process and those relationships have been the subject of constructive and amicable discussion between the Scottish Government and the local authorities at a high level, but further discussion will be needed about how to get the best deal for the public and for all sizes of business. As a result, some people who work in local economic development roles in local authorities might decide to take up positions in the new agency. Whether local authorities will wish to continue as is or whether they will wish to reshape their economic development functions and departments is a matter for active discussion among all, to get the best overall outcome.

I hope that that gives an overview of the answer to Mr Rumbles’s question. Overall, there will be an increase in the funding for economic development in the area.

Mike Rumbles

I can imagine that the funding would increase. My question is not critical; I am keen for the agency to succeed, and I think that the agency and the Government’s bill are good. I am just trying to ensure that expectations are not being raised unduly among the people who gave evidence and with whom we have engaged. When I was in Galashiels with other committee members, I certainly felt that the understanding was that the money would all be extra.

You have just said that there will be more money, but some of it will be new money. I know that budgets have not been set for 2020 and that we will vote tomorrow on next year’s budget, but can the cabinet secretary give us an idea of how much of the budget in question is new money, so that we can make it clear to people who have approached us on the matter?

11:30  
Fergus Ewing

That computation would be extremely complex. This is not meant to be a Sir Humphrey concoction, but I am not sure that that statistical evidence is available in the form that the member seeks. That is because I am not sure that Scottish Enterprise has done a geographical analysis of the deployment of its budget over the years. Even if it had done so, such an analysis would show massively differing amounts of money, because large investments in one year might be followed by a lack of large investments in subsequent years.

Overall, there will be a quite substantial increase in funding for the area, but I am not able to say how much more it would be. However, we are listening to the points that the committee is making—after all, that is the point of accountability—and we will go back and have another look at that question in preparation for stage 2.

Lastly, I point out that it is up to us all to provide leadership in explaining the opportunities presented by the new body and communicating that locally. I am quite sure that that will be done and that an element of interest and expectation will, quite rightly, be engendered. We have to fulfil expectations once we raise them—that is one of our responsibilities.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

An issue that has been brought up with the committee is that Scottish Enterprise will still have a role in the south of Scotland, but there seems to be a bit of confusion about that. I note that Scottish Enterprise, for example, will continue to be responsible for things such as regional selective assistance and the Scottish manufacturing advisory service in the south of Scotland. In her evidence to the committee, Dr Murray talked about having a memorandum of understanding between various agencies. Is that likely to be the most effective method of ensuring that there is good collaboration and neither underlap nor overlap?

Fergus Ewing

A memorandum of understanding is one way of doing it. You are right that Scottish Enterprise will have a continuing role in the south of Scotland, in the same way that Scottish Enterprise works with Highlands and Islands Enterprise in areas where it has the expertise, for example, through the Scottish manufacturing advisory service. There is no point in duplicating an expert range of services in every single economic development agency. The Scottish Investment Bank is another example, because one would not expect there to be three Scottish investment banks serving three economic areas that have their own development agency.

Whether collaboration is done through an MOU or other means, the key thing is effective joint working. Generally, that is a factor of how the chief executives, chairmen or chairwomen, ministers and officials all act together. There are many areas in which there is a shared, overlapping function between HIE and SE, for example. Where necessary, ad hoc arrangements are made; for example, a task force was set up for the Lochaber delivery group, which I chair and in which the Scottish Government works with Highland Council, HIE, Scottish Natural Heritage, the Scottish Environment Protection Agency and a variety of other bodies.

When needs must and there is a need to have collaborative working, it exists. An MOU is one way of doing it but, at the end of the day, it is the individuals involved who make these things work—or not, as the case may be. We are not a huge country, so being able to get everybody in a room is one of the advantages that we have over our good friends down south when it comes to tackling serious issues as they arise.

Stewart Stevenson

One of the balancing concerns that have been raised with the committee is about the additional bureaucracy that is associated with the introduction of a new board that is not displacing in entirety some existing services. How would the cabinet secretary respond to concerns that have been expressed about additional bureaucracy?

Fergus Ewing

An element of bureaucracy will always be with us. Sometimes, I wish that that were not the truth. The aim is to ensure that the body operates as efficiently as possible and that the rulebook is the servant, not the master. That is how things should operate—quickly and responsively and by going out to speak to people and find out what is happening. That is how things are achieved. If there are any specific examples of bureaucracy, I am happy to look into them and see what can be done about them.

The real problem of bureaucracy rests in more complex schemes and their administration. I hesitate to mention the common agricultural policy or the administration of forestry grant applications. However, in my experience, where one has a complex process for the administration of public money, the consequence tends to be that the process seems to take too long and becomes the object, rather than the fulfilment, of the process.

Although the administration of grant applications can sometimes give air to concerns and issues, I have not detected in many cases that bureaucracy is a significant issue with the enterprise functions, which tend to be more proactive and ad hoc in their arrangements.

We are all elected people. In part, we exist to hold public bodies to account, to get answers and to get things done as quickly and efficiently as they can be. That is an important and necessary part of the roles that we all fulfil.

Jamie Greene

Following Mr Stevenson’s question, I note that there was genuine concern about the confusion over whether this agency will sit as another layer on top of Scottish Enterprise or whether it will sit alongside it. Given that there is some comparison between the aims and objectives of each agency and dubiety over whether any funds will be redirected from Scottish Enterprise to the new south of Scotland agency, does the cabinet secretary accept that there might be confusion over lines of accountability, given the objectives of each of the agencies?

Fergus Ewing

I do not see why there should be any such confusion. The two bodies will sit alongside each other; they will be equals. The south of Scotland body will not be subservient. There will be an equality of relationship. They are different bodies. SE will be bigger—it will have a bigger budget and it will serve a bigger population—but they will be equals. Scottish Enterprise will not run the new agency. The new agency will run itself and be the master of its own fate, and it will be accountable to ministers and Parliament.

The Convener

Those are all the questions that we have on that item. Huge expectations have been voiced for the bill, and the committee will have to reflect on its report. Thank you for your evidence and for the time that you and your team have given us this morning.

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28 November 2018

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12 December 2018

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19 December 2019

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14 January 2019

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30 January 2019

Committee Findings

Rural Economy and Connectivity Committee's Stage 1 report

What is secondary legislation?

Secondary legislation is sometimes called 'subordinate' or 'delegated' legislation. It can be used to:

  • bring a section or sections of a law that’s already been passed, into force
  • give details of how a law will be applied
  • make changes to the law without a new Act having to be passed

An Act is a Bill that’s been approved by Parliament and given Royal Assent (formally approved).

Debate on the Bill

A debate for MSPs to discuss what the South of Scotland Enterprise Bill aims to do and how it'll do it.

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Stage 1 debate transcript

The Presiding Officer (Ken Macintosh)

The next item of business is a stage 1 debate on motion S5M-16542, in the name of Fergus Ewing, on the South of Scotland Enterprise Bill. I invite all members who wish to contribute to the debate to press their request-to-speak buttons as soon as possible.

14:29  
The Cabinet Secretary for the Rural Economy (Fergus Ewing)

I am delighted to open the stage 1 debate on the South of Scotland Enterprise Bill on a significant day for the south of Scotland. Members will recall that, in May 2016, the First Minister announced an end-to-end review of the enterprise and skills system, as we wanted to ensure that it was delivering effectively for the people of Scotland. One of the review’s key recommendations was to establish a new enterprise agency for the south of Scotland. This bill establishes that new body: an organisation that will focus on inclusive growth and supporting a diverse and resilient economy, that is able to respond to the different and distinct rural economy of the south of Scotland, and that is welcomed by the south.

I am proud to be the minister who is leading the bill through Parliament. I wish to thank the Rural Economy and Connectivity Committee for its careful and thorough stage 1 scrutiny, and I thank the other committees that contributed. The REC Committee’s report

“fully supports the creation of a new enterprise agency for the south of Scotland”

and

“supports the general principles of the Bill and recommends to the Parliament that they be agreed to.”

The report goes on to make a number of helpful recommendations and observations about the detail of the bill, on which I have offered the committee a written response. I look forward to further consideration of its recommendations and points that might be made today.

We could not have got here without the support of people in the south of Scotland. Our work has been informed by the people of the south of Scotland—we listened to what they said and have responded. Many people offered their views and I am particularly grateful to the 268 folk who took the time to respond to our pre-legislative consultation, almost 90 per cent of whom agreed with our vision. More than 500 people attended public meetings last year, and the committee benefited from the 120 responses that were submitted in response to its call for views. Continuing engagement remains key as the bill progresses and we take forward work to establish the agency. I want to make sure that the agency is rooted in the south and driven by the south. Last week, my officials were in Galashiels and Kirkcudbright to hear from more than 50 community representatives. I welcome the future events that the south of Scotland economic partnership will run later in spring and early summer, which will provide an opportunity for individuals and businesses to continue to shape our work.

Let me say a little about the south of Scotland economic partnership. We established it as an interim measure while we are taking through legislation to establish the agency. The partnership brings together the public, private, third and education sectors to support activity across the area. In its first year, it is bringing a fresh approach to economic development, delivering strong stakeholder engagement and paving the way for the south of Scotland enterprise agency. I look forward to that continuing over the next year as we move to the agency.

I thank the partnership’s chair, Professor Russel Griggs, for his energy and personal commitment. I should also like to thank his board. I welcome its members’ deep understanding of the region’s needs and their commitment to working with us to make a difference. I met them and attended a board meeting, and I was thoroughly impressed by the diligence, imagination and energy that they have brought to their task. Finally, I recognise the contribution of the public sector partners and the support that they have brought. The partnership’s activities have been shaped around local needs and priorities, responding to consultation with businesses and communities from across the region.

We are supporting the work of the partnership with additional investment of £10 million in this financial year and £12.7 million in the next financial year. At this point, I should express my gratitude to the gentleman on my right—the finance secretary—for making that possible. That investment is supporting activity that would not otherwise have been possible, responding to the needs of the south of Scotland. We are investing in skills, with more than £6 million supporting the development of a learning network to make it easier for people to access opportunities. There are also projects across communities in the south, helping to build their economic capacity and future success.

We are all aware of the issues that are impacting on the economy of the south of Scotland. Its population is ageing, meaning that there are fewer people of working age. Its young people are, in some cases, leaving the region and are not seeing opportunities to return. Wages are low, with the council areas ranking 30 and 32 for median weekly earnings. However, it is an area with many natural advantages, which makes it attractive for residents, businesses and visitors. It is strategically well placed. It has significant land assets and energy resources. It has active further and higher education sectors and innovative businesses operating across the sectors. It has vibrant communities with a rich history and culture.

The creation of the new agency builds on our commitment to the south, including our investments of £353 million in the Borders railway; over £32 million since 2017 in the development of school campuses; £275 million in the state-of-the-art Dumfries and Galloway royal infirmary, which was completed in December 2017; and £133 million by the end of 2021 to improve internet connectivity in the south, which is the biggest public investment ever made in a United Kingdom broadband project. It also builds on our commitment of £85 million to deliver the Borderlands inclusive growth deal.

The new agency will bring additional investment to the region. We have committed to funding it on the same per capita basis on which we fund Highlands and Islands Enterprise, recognising the similarity of both remits and challenges.

Oliver Mundell (Dumfriesshire) (Con)

I would be very grateful to the minister if he was able to set out what the budget would have been this year on that basis, in order to give businesses in the south of Scotland an idea of the type of investment that will come once the agency is with us.

Fergus Ewing

It might be my fault, but I am not quite sure that I understood the question. I mentioned the current budget of £10 million and the budget of £12.7 million for next year.

Oliver Mundell

Will the cabinet secretary take an intervention?

Fergus Ewing

I want to move on. I will come back the matter in closing, perhaps, if the member wishes. The financial memorandum sets out more detail. I do not have time to go into it now, but the financial memorandum sets out the facts as to the process. As I recall—we will hear shortly from the convener of the committee—there was agreement in the committee on the principle that governs our process, which is that, pro rata, the funding should move over time to be at the same level as HIE’s, but that a new body needs to learn to walk before it can run, and it will take some time for that to be implemented. I say to Mr Mundell that that is all set out clearly in both the memorandum and, I think, the evidence to the committee, and I think that it is broadly the right approach. However, it is a fair point, and no doubt we will come back to it during the afternoon.

The bill will establish a new enterprise body for the south of Scotland. Our vision is for a body that will drive inclusive growth, increase competitiveness and tackle inequality in the south of Scotland through maximising the area’s contribution to Scotland’s inclusive growth; supporting a diverse and resilient economy; sustaining, growing, building and strengthening communities with joined-up economic and community support; harnessing the potential of people and resources; developing skills; promoting assets and resources; and maximising the impact of investment in the area.

The bill is deliberately high level and enabling. It sets out the body’s overarching strategic aim, which is to

“further the economic and social development ... and ... improve the amenity and environment of the South of Scotland.”

It gives a few examples of the sorts of activities that the body could undertake, but it does not suggest an exhaustive list. That approach ensures maximum flexibility for the new body to shape the activities that it takes forward and respond to the circumstances of the south.

As well as setting out the aims of the new body, the bill makes provision for its structure and legal framework to ensure that it can operate effectively.

I will touch on some of the committee’s recommendations. First, it recommended that we develop

“appropriate mechanisms to facilitate collaboration and coordination”

between agencies. The new agency will be part of the Enterprise and Skills Strategic Board, ensuring national alignment, and we will ensure that it works collaboratively with other organisations.

The committee also recommended

“that the new agency carries out to work obtain feedback on its performance and effectiveness from communities and other stakeholders”.

It is crucial that the new body is accountable to local people, and we are working with stakeholders to put in place arrangements to deliver that when the body is operational. It is important that we build on existing successful regional structures, such as the south of Scotland alliance.

Of course, as well as establishing the legislative framework for the new agency, we need to take forward work to deliver the new body. If the Parliament agrees to the principles of the bill today, that activity will increase. Our work here will ensure that we have a credible agency that is ready to assume its legislative functions on 1 April next year.

The practical arrangements that are put in place for the new agency will enable it to begin to develop and deliver its vision, building its capacity and capability from its establishment. If Parliament approves the principles of the bill, we will begin the appointments process for the new chair, which will ensure that the future leaders of the agency are involved in the decisions to establish the body.

We will also ensure that the new agency is able to operate everywhere across the south of Scotland. Those who contributed to the consultation expressed the strong view that that accessibility was needed.

Establishing a new enterprise agency for the south of Scotland is a great opportunity to do things differently in the south. I will continue to work with members from across the chamber to ensure that the legislation establishes a body that is as successful as it can be, helping to drive transformational inclusive growth, increase competitiveness, promote fair work and tackle inequality for all in the south of Scotland.

I move,

That the Parliament agrees to the general principles of the South of Scotland Enterprise Bill.

14:41  
Edward Mountain (Highlands and Islands) (Con)

I am pleased to contribute to the debate in my capacity as the convener of the Rural Economy and Connectivity Committee.

The committee’s stage 1 report was published on 4 March, and the report makes it clear that the committee fully supports the creation of a new enterprise agency for the south of Scotland. I am grateful to the cabinet secretary for his letter of 21 March, in which he responds to the various recommendations in the report.

When the committee started its stage 1 scrutiny, it became very clear that there was a high level of interest in the proposals among all sectors in the Scottish Borders and Dumfries and Galloway. The committee is extremely grateful to all the organisations and individuals who provided oral and written evidence to inform our deliberations.

As part of the evidence gathering, the committee held a formal external meeting and an informal workshop in Dumfries, as well as a discussion event in Galashiels. Those sessions were particularly well attended by a wide range of representatives of stakeholder groups and members of the public. More than 140 people attended the discussion events, and the committee is grateful to all those who participated, providing valuable input to the consideration of the bill. The committee’s formal meeting in Dumfries was held in the evening, to allow more local people to come along. Given that it was attended by more than 60 people, the committee felt that it was extremely worth while.

Overall, the committee heard strong support for the creation of the new enterprise agency. More than 80 per cent of respondents to the committee’s online survey also agreed with the idea of a new agency being established. That sentiment was mirrored by a significant majority of those who provided oral and written evidence and by those who attended the informal public meetings.

After taking evidence, the committee was in no doubt that the creation of a new enterprise agency in the south of Scotland is required. It is clear that the area faces a significant number of economic, social and geographic challenges, which have not been—and are not being—addressed through the current economic support mechanisms. The overwhelming view of most of those who gave evidence to or engaged with the committee was that the new agency will help to support the enterprise and skills needs of the area and will provide a vehicle by which to encourage economic growth.

The committee commends the south of Scotland economic partnership for the significant consultation and preparation work that it has carried out. It is clear to us that it provides a solid foundation on which to develop the new body.

On the issue of the area, the committee is satisfied, on the basis of the evidence that it received, with the proposal that the new enterprise agency should cover the Dumfries and Galloway Council and Scottish Borders Council areas only. However, the committee also heard views expressed that it should perhaps be extended to cover adjoining local authority areas, where communities may face challenges that are similar to those that are faced in Dumfries and Galloway and the Scottish Borders.

Although the committee did not believe that the area to be covered by the agency should be altered, it called on the Scottish Government and Scottish Enterprise to ensure that those other areas continue to have access to economic development opportunities that are appropriate to their needs. We welcome the cabinet secretary’s commitment to supporting all regional economies, which he set out in his letter.

The committee also heard that it is important that the new agency has sufficient flexibility to operate outwith its geographical boundaries and to collaborate with other enterprise agencies in order to fulfil its role. I welcome the confirmation in the cabinet secretary’s letter that the bill, as drafted, provides for that flexibility.

The committee also called on the Scottish Government to ensure the development of appropriate mechanisms to facilitate collaboration and co-ordination between the new agency and all the existing agencies that are operating in the region, building on the positive work that is already being carried out by the south of Scotland economic partnership. We are encouraged that the cabinet secretary has asked his officials to explore that matter with stakeholders and that he will respond to the committee formally in advance of stage 2.

The committee acknowledges that the broad aims for the new agency, which are set out in section 5 of the bill, have been drafted with the express purpose of avoiding a prescriptive approach and thus providing the agency with flexibility. However, in evidence and at its discussion events, the committee heard that it would be beneficial to have those aims supplemented to cover several key areas. In response to that, the committee called on the Scottish Government to amend at stage 2 the aim of improving the amenity and environment of the area that is covered by the new agency to make specific provision in relation to the sustainable use of the environment. The committee further called on the Scottish Government to amend the aim that involves furthering the economic and social development of the south of Scotland to make specific provision in relation to encouraging the development of a sustainable economy, supporting the enhancement of transport networks and digital connectivity, supporting community land ownership and assets ownership, furthering fair work and encouraging the creation of a more balanced demographic. We note that the cabinet secretary is to consider those recommendations further.

The location of the new agency was a recurring discussion point. It is clear, however, that there is strong support for co-locating it with other agencies where that is practical. The committee is of the view that that will bring significant benefits in terms of the agency’s presence across the area and the ability of people across the area to access it. That will aid the provision of a one-stop-shop approach as well as being more cost effective.

The committee received the clear message that getting the board membership of the new agency right was of huge importance. The committee agrees whole-heartedly with that and considers that it is essential that the board is made up of individuals with as wide a range as possible of interests, skills, expertise and experience that is relevant to the south of Scotland. I welcome the cabinet secretary’s indication that he will ensure that applications are encouraged from as wide a range of interests as possible.

In considering the bill, the committee reached the view that a mechanism was required to ensure that there was genuine local accountability for the new agency’s performance and effectiveness. It has, therefore, called on the Scottish Government to lodge an appropriate amendment requiring the new agency to obtain feedback on those issues to inform the action plan development process. I note, however, that the cabinet secretary has stopped short of saying that he will do so and that he has instead said that he has asked his officials to consider how that accountability will be delivered by the new agency once it is operational.

On funding, the committee considers that the Scottish Government’s intention to ensure that, initially, there is an equivalence between the budget that is provided for the new agency and that which is provided to HIE is an appropriate and proportionate approach. The committee also noted that the £42 million of funding for the new agency in 2022-23 will provide an overall increase in funding for the area. However, it asked the Scottish Government for an estimate of how much of an increase in funding that would represent. I note, from his written response, that the cabinet secretary will respond further to the committee on that issue.

The committee looks forward to considering at stage 2 amendments that will further enhance a bill that has a high level of support among stakeholders and communities in the south of Scotland. As it stated in its stage 1 report, the Rural Economy and Connectivity Committee supports the general principles of the bill and recommends to the Parliament that they be agreed to.

14:50  
Finlay Carson (Galloway and West Dumfries) (Con)

I am pleased to open this afternoon’s debate for the Scottish Conservatives.

I am the constituency MSP for Galloway and West Dumfries, and it is fair to say that the constituency that I serve is vast—it is 75 miles from Stranraer to Dumfries. A dedicated agency that recognises the unique needs of the south of Scotland is long overdue. For local people and businesses, today’s stage 1 debate is a hugely positive step in the right direction.

In our 2016 election manifesto, the Scottish Conservatives highlighted the urgent need to replicate the success of Highlands and Islands Enterprise by creating a south of Scotland enterprise agency. Such an agency, coupled with the Borderlands growth deal that was recently announced—another Conservative manifesto commitment for the south of Scotland—is now being delivered. The region stands on the cusp of a huge economic boost, which it badly needs.

I am delighted that, in light of increased Conservative representation in the region, the Scottish National Party Government has started to listen to the calls from members on the Conservative benches and has pressed ahead with plans to create the agency.

The Borderlands growth deal shows the strength of the UK Government and Scottish Government working together, with a total funding package of £345 million for the cross-border region. The communities that I represent in Galloway and West Dumfries link closely, on a daily basis, with the Scottish Borders and our friends and neighbours in Carlisle and Northumberland, and the approach can only strengthen those as-yet-not-fully-exploited economic and social ties. Indeed, the Borderlands partnership has described the plans as a “game changer” for the region.

The new agency will also be a game changer. It is important that members are aware of the stark facts of the economic situation in the south of Scotland. The business start-up rate in Dumfries and Galloway is significantly lower than it is in Scotland as a whole, with only 31 businesses per 10,000 people, compared with an average of 50 per 10,000 in Scotland as a whole. Even more concerning, gross value added is a whopping 24 per cent lower than the Scottish average, with median weekly earnings 10 per cent lower than the Scottish average.

The lack of sustained growth in the south of Scotland has sharpened the focus on my region and demonstrated the need for a dedicated agency to support businesses to fulfil their potential.

It is regrettable that my constituents are right when they say that the region is the forgotten corner of Scotland, given the lack of action from this Government, whether we are talking about digital infrastructure, road infrastructure, rail infrastructure or health and education provision, compared with the action that the Government has taken for our central belt neighbours.

The need to boost the infrastructure and provide a fertile environment for training and jobs in my region has never been greater. We must do that in tandem with a taxation policy that will encourage people to live and work in the region.

Fergus Ewing

On the member’s claim that we do not invest in the south of Scotland, is he aware that in the financial year 2017-18 the Scottish Government spent more than £1.2 billion in the south of Scotland? I gave examples of our spending in my opening speech.

Does the member agree that the recent success of Scottish Enterprise and Scottish Development International’s work with the Scottish Government and the local authority to find a new investor to take over the Pinneys of Scotland plant—in the shape of Atlantis-Pak—illustrates quite the opposite of his argument that we are not involved in active promotion of the economy of the south of Scotland?

Finlay Carson

If the cabinet secretary had been listening to my speech, he would have heard me say that it is only now that the Scottish Government is stepping up to the plate and starting to deliver, and that we are only getting parity with the rest of Scotland, action having sadly fallen short in the past.

The policies that this Government is pursuing, backed up by the Greens, are hitting workers close to the border with higher tax rates than people who live just a few miles away in Carlisle face. We run the risk of people who work here not wanting to pay the higher rate of tax and boosting the economy of not Dumfries but Carlisle. We have a great opportunity ahead of us with the agency and the Borderlands growth deal, so it will be very disappointing if we miss out on the very best talented individuals and businesses due to a misguided tax policy.

John Mason (Glasgow Shettleston) (SNP)

Will the member give way?

Finlay Carson

No—I want to make some progress.

At present, we have cross-border organisations and individuals who live in Scotland and work in Carlisle. It is hardly fair that people who do the same job and earn the same salary have quite different take-home pay.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

Will the member give way?

John Finnie (Highlands and Islands) (Green) rose—

Finlay Carson

I will give way now.

Maureen Watt

Why do so many people want to come from south of the border to north of the border to live here? Older people, especially, find it a great area to retire to.

Finlay Carson

The point about coming here to retire is very interesting. I knew that the Scottish Government would counter by talking about free higher education and free prescriptions on this side of the border. However, that is hardly relevant to the skilled workforce in the 25 to 45-year-old band, which is exactly the demography that we want to attract to fill the new jobs that are created in that area.

In one case, a relatively high earner is paying thousands of pounds more in tax than an equivalent partner on the same income. Should he live south of the border, and commute the short distance to Dumfries? How many other high earners across south or central Scotland might think the same thing?

I have already raised a couple of examples with the SNP Government in the Parliament. In June 2017, I stressed that the agency would have to have an autonomous board, similar to that of Highlands and Islands Enterprise. For far too long, we have had an SNP Government that is obsessed with centralisation, that takes away local accountability and that has heralded an attitude that central Government knows best. Government does not have a monopoly on good ideas and one size does not fit all; we need a local board with local accountability. I am delighted that the cabinet secretary shares that view.

This time last year, when the finance secretary announced £10 million of support for the south of Scotland economic partnership, I raised concerns and surprise that vital sectors including tourism and energy had not been included in the headline priorities at the time—covering such a vast region, we cannot afford for any sectors to miss out. Transparency and accountability will be key to the agency. I recognise the invaluable work in the consultations that the south of Scotland economic partnership has undertaken under its chair, Russel Griggs. However, I have spoken to many local businesses during the time that the interim partnership has been in operation and there is a clear sense of frustration at some of the process. Businesses have been unaware of where or to whom they can apply for funding, or of the reasons behind decisions that have been made about their applications. Lessons need to be learned. It is vital that business has a voice in shaping policy and giving the respective agencies a steer on where the investment may be best directed.

It has always been a concern of mine and others that the Borderlands growth deal has been council led, and I have to question whether enough people within the leadership there have had genuine experience of business and life at the coalface. I have concerns about the danger of there being too much public sector and council involvement. Businesses locally have no desire to see the public sector and councils control all their plans. They want an agency and the projects that it supports to be autonomous from council decision makers. Businesses do not want to run the risk of the agency being undermined in its striving for economic growth and investment. As the committee highlighted, the south of Scotland enterprise board must be made up of individuals much like some of the individuals on the south of Scotland enterprise partnership, who bring as much interest, skills, expertise and experience as possible. We must encourage interest from individuals who will ensure that the agency will deliver on its full potential.

Another note of caution concerns the vote in this Parliament two years ago, after a Conservative-led debate, which defeated plans to take away the Highlands and Islands Enterprise board and replace it with an overarching management committee. With a sense of relief, those plans were defeated, which allowed Highlands and Islands Enterprise to retain its local identity. As my colleague Edward Mountain said in the debate:

“HIE is not broken. It works. Stop trying to break it.”—[Official Report, 18 January 2017; c 41.]

All that said, the consultation process has given us a great starting point as we progress the bill through Parliament. Almost 90 per cent of responses to the consultation agreed with ambitious plans for the south of Scotland and outlined things that are already successful in the region that the agency can build on, including tourism, land management, heritage, natural capital and our history, as well as quality of life.

The Scottish Conservatives fully support the bill at stage 1, in line with the Rural Economy and Connectivity Committee’s report. The region needs a dedicated vehicle that will help to transform growth and provide more opportunities for people who live and work here, from Stranraer in the west to Eyemouth in the east.

We must have a clear communication strategy, so that businesses, colleges and universities and the third sector, including social enterprises, can be fully aware of the services that the agency will provide and how they will benefit from those services. That was highlighted in the conclusions of the committee’s report. When the committee was in Galashiels, it was highlighted that the agency must have a clear statement of ambition and resources, rather than simply being created with the hope that it will work.

We look forward to strengthening the bill further to meet the needs of local people, with amendments at stage 2 and stage 3. After far too long a waiting period, we owe it to the south of Scotland to ensure that this piece of legislation can truly meet its demands.

15:00  
Colin Smyth (South Scotland) (Lab)

It is a privilege to open the debate on the South of Scotland Enterprise Bill on behalf of Scottish Labour, and to welcome the bill. It is a decade since the Government abolished Dumfries and Galloway Enterprise and Scottish Borders Enterprise. I believe that, with hindsight, that decision will be seen as a mistake. Yes, it allowed more democratic accountability for the economic development functions that were subsequently transferred to local councils, but, when other powers were centralised to Scottish Enterprise, the remit and direction that were given to Scottish Enterprise from Government ministers meant that the south of Scotland lost out.

That is why since then I have, along with many others, campaigned vigorously for better support for the south of Scotland’s economy. In my first speech in the chamber in May 2016, I called for

“a radical change in the remit of Government agencies”

in order to deliver that better support. I made this point in that first speech:

“It is simply unfair that a business in the Highlands and Islands can receive support, but—because the remit of Highlands and Islands Enterprise is different from that of Scottish Enterprise—the same business would not receive the same support if it was based in the south of Scotland.”—[Official Report, 31 May 2016; c 40.]

I have campaigned against that fundamental inequality for a decade, including as chair of Dumfries and Galloway Council’s economy committee and as the chair of the south of Scotland alliance. It was clear to me in those roles that the south of Scotland was a forgotten region and that the substantial economic challenges that we faced were simply not being addressed.

One challenge is the chronic level of low pay. It is a scandal that average earnings in Dumfries and Galloway are £11.52 per hour, compared with a national average of £14.30, which makes the region the lowest paid in Scotland. There is also a real skills shortage in the area. Just over a quarter of the population of Dumfries and Galloway and the Borders are graduates, but the national figure is more than a third. There are also low levels of productivity and growth. Gross value added per person in Dumfries and Galloway is 21 per cent lower than the national average and is 26 per cent lower in the Borders.

As a result of those and many other economic weaknesses, many of our young people simply leave the area because of the lack of high-pay and high-skill employment opportunities. That has given the region a real demographic challenge. The percentage of the population that is of working age in Dumfries and Galloway is 59 per cent, compared with a national average of 64 per cent.

It is not just that those challenges are not being tackled: the opportunities, strengths and potential of the area are also currently not being realised. I am privileged to live in the south of Scotland. It is an area of outstanding natural beauty and it has historical and cultural heritage to rival that of anywhere in the country. However, tourism—important though it is to the region—is still in many ways untapped.

There are sectors that have a reputation for excellence—forestry, energy, arts and culture and more—that offer real opportunities for the future, but need better support in order to develop. We have a strong small-business base, although that has a negative as well as a positive effect. When the area is hit by an economic tsunami, such as the closure of Pinneys of Scotland, it is difficult for small businesses alone to absorb the number of people who are looking for employment. The number of small businesses means that there is potential for many of those businesses to grow, with the right level of support.

Our strategic location also means that parts of the region are just two hours’ travel from 14 million people—14 million potential customers in the central belt and the north of England.

Crucially, among the people who live there, there is a real community spirit, with desire and determination to make the south of Scotland better. That determination is one of the reasons why there is such strong support in the area for the bill to establish the south of Scotland enterprise agency.

Crucially, the agency will have a social element and will allow businesses and enterprises to receive support that they simply do not receive from the existing Scottish Enterprise model. Therefore, Labour very much supports the bill, and we will support its principles when we vote later today.

However, we would like it to be amended to make a number of significant improvements, as it makes its way through the parliamentary process. We believe that the aims of the agency should be strengthened. I appreciate that the cabinet secretary has said that the aims have been drafted to provide a high level of flexibility, but we believe that more direction is needed and that that should include a focus on inclusive growth and recognition of the demographic challenges that the area faces.

We support Community Land Scotland’s call for the bill to include specific reference to community ownership. In its submission, it rightly highlighted the huge discrepancy across Scotland in respect of the 560,000 acres of land in community ownership, almost 530,000 acres of which are in the Highlands and Islands, compared with just 800 acres in the south of Scotland. Supporting community ownership should be a key aim of the new agency.

We believe that supporting the enhancement of transport networks and supporting digital connectivity should also be key aims. I know that the cabinet secretary did not share that view when he gave evidence to the Rural Economy and Connectivity Committee; he pointed out that other agencies have that role. However, the same could be said about the proposed aim to enhance skills: it could be argued that Skills Development Scotland has that role. I believe that that approach ignores the leadership role that the new agency should have. I want the agency to take the lead—to bring people together and to drive the change that we need in order to grow the economy of the south of Scotland. Improvement of transport and digital infrastructure should always be at the heart of that change.

In creating the new agency, we have an opportunity to embed values and aspirations from the very start, including the principle of fair work. In its submission to the Rural Economy and Connectivity Committee, the Scottish Trades Union Congress rightly called for the bill to be amended so that the agency’s aims include specific commitments on promoting collective bargaining and advancing fair work, as defined by the fair work convention. It also called for proper workforce recognition on the board of the new agency. Labour fully endorses those suggested changes to the bill.

If the new agency is to work effectively, it needs to be driven by, and be accountable to, the communities that it serves. That was the overwhelming message from the people of the south of Scotland in submissions to the Rural Economy and Connectivity Committee. When the committee visited Dumfries and Galashiels, attendance levels at and engagement in the events highlighted the real support for the new agency.

In giving evidence to the committee in Dumfries, the leader of Dumfries and Galloway Council, Elaine Murray, noted:

“The new agency will be accountable to ministers, but it does not say anywhere in the bill that it will be accountable to the people of the south of Scotland.”

In the same session, the chair of the south of Scotland economic partnership, Professor Russel Griggs, stated:

“In the end, it is the people of the south of Scotland who should manage the new agency while a governing body runs it from day to day.”—[Official Report, Rural Economy and Connectivity Committee, 14 January 2019; c 19-20, 21.]

In its response to the committee, the Scottish Government said that it supports the principle of local accountability, but with ministers making decisions on the location of the headquarters, on the first chief executive, on the chair and members of the board, on signing off the action plan and on issuing of direction, that principle is not very obvious in the bill as drafted.

I hope that, as the bill progresses, it will be amended to include a clear legal requirement for the new agency to consult and report on performance to the most important people—that is, the people of the south of Scotland, who have the biggest stake in it. The new agency must be rooted in the south of Scotland: it needs to have the local membership, the budget and the powers that are required to deliver the real change that the south of Scotland needs. It must be an agency that is very much for the south and from the south.

15:08  
John Finnie (Highlands and Islands) (Green)

The Parliament is at its best when its members are doing scrutiny work in committees; that is where we see the best collaborative work. Not everyone will agree with every word of the report that the committee produced, but that is the nature of the process. We must try to find consensus: there was unanimity about the bill being very worth while. That is certainly the view of the Scottish Green Party, which will support its general principles at decision time tonight.

A couple of members have said that the south of Scotland has felt forgotten. If that was previously a perception or reality for people, it is certainly not the case now.

I was a bit confused by Finlay Carson, who I thought had inadvertently turned up at the wrong debate. However, after he had completed a lengthy list of demands of the public sector, but also referred to, I think, “too much public sector”, I realised that his speech was just the usual Tory contribution.

One issue that the Rural Economy and Connectivity Committee heard about, and which a couple of members have referred to, is where the south of Scotland is. That is written at the top of my notes. There was a lot of debate about the bill’s scope. The Highlands and Islands Development Board—Highlands and Islands Enterprise’s predecessor—had an advantage in that there was, very much, a binding together of the crofting communities. We heard representations about the needs of communities in South Ayrshire and South Lanarkshire. Another point is that we can have communities of interest, as well as geographic communities.

However, as we have heard from some members, the borders counties have a history of working together; they also have a close association and long-standing links with communities on the other side of the border, which are being strengthened. That suggests that the agency’s proposed scope is appropriate, and the committee took that on board. We heard that, as happens with Highlands and Islands Enterprise, there would be scope, when a common interest goes beyond the new agency’s geographic boundaries, to support that interest. Indeed, Highlands and Islands Enterprise has been assisting in relation to the bill.

When we were in Dumfries, I spoke to a great number of people and—typically—they spoke about issues in Dumfries, just as people elsewhere speak about their areas, because everything is local. The measure of the bill will be in how locals gauge its effect. The new agency is needed. Finlay Carson mentioned that it was in the Conservative manifesto; it was also in the Scottish Green Party manifesto. The committee’s report said that there is “no doubt” that the agency is required. Creating the agency sends a positive signal. If one signal is that the south of Scotland is not a forgotten part of Scotland, that will be positive.

I was interested to know about the existing arrangements with Scottish Enterprise, so I would be concerned if the bill lets it off the hook in any way. Scottish Enterprise has a role—albeit limited—in the Highlands and Islands, for example, so we will need to look at its role. The committee’s report said that the new

“agency should enhance the current support landscape”,

which includes Scottish Enterprise,

“rather than adversely impact on ... existing provision.”

We heard from the cabinet secretary that the bill was informed by the people of the south of Scotland. The committee’s convener talked about the huge level of support, and Colin Smyth talked about the community spirit in the region. The committee heard about the south of Scotland economic partnership and the solid foundation that it put in place. Credit is due to Professor Griggs and his team, because it was apparent from everything that we heard that they had been out and about and engaging with people.

Highlands and Islands Enterprise’s strength is very much in its community links and its social responsibility aspect. The new agency will produce an uplift in that in the south of Scotland.

I am a proud highlander and a representative of the Highlands and Islands, but this is not a competition with north versus south or Highlands versus Lowlands. The new agency should complement existing arrangements. We should all be keen to ensure that frailties in our communities are addressed.

There are huge differences between the north and the south, not least in relation to land and the traditional patterns of land ownership. In the short time that is left, I will talk about that. Dr Calum Macleod of Community Land Scotland gave us extremely interesting input. He said:

“One of the south’s interesting assets is land.”

It is interesting to compare the figures—I have them here—for community land ownership. Of the 562,000 acres of land that are in community ownership in Scotland, the vast majority is in the Highlands and Islands; in Dumfries and Galloway and the Scottish Borders, 794 acres of land are in community ownership. Community Land Scotland argues that one of the main barriers to changing that is in the culture and the thinking about where opportunities lie. I recall that Barbara Elborn of Newcastleton & District Community Trust gave evidence that

“Newcastleton has recently taken on and established its own community assets, and that ownership has engendered a feeling in the community to drive things forward.”—[Official Report, Rural Economy and Connectivity Committee, 14 January 2019; c 27, 28.]

I hope that the bill will do precisely that in respect of community ownership, community transport and the community spirit that has been referred to.

Continuing engagement will be required. The need to collaborate is clear; no one wants duplication, which is why co-location is important. This is not about having a new shiny headquarters; it is about people sitting side by side at desks to work for the benefit of the people of the south of Scotland.

The challenges, which are noted in our report, are demographics, wages and fragile communities. Those will remain, so further action on them will be needed. It was mentioned that the area is losing young people. The reverse is true in the Highlands and Islands, which is to be welcomed.

The Greens will support the general principles of the bill at decision time tonight.

15:15  
Mike Rumbles (North East Scotland) (LD)

I am very pleased to speak in this debate on behalf of the Liberal Democrats. There is no doubt in my mind of the real need for a south of Scotland enterprise agency—an agency that is based in the south of Scotland, for people who live in the south of Scotland.

As an MSP who represents the north-east of Scotland, I am somewhat jealous—if that is the right word—of the setting up of a new agency for the south of Scotland, given that I believe that having such an agency for the north-east would be of great benefit, too. I have no wish to add to the cabinet secretary’s huge workload, but perhaps that is an idea for a future Scottish Government bill.

The point about the new south of Scotland enterprise agency is that it will not replace Scottish Enterprise but will be complementary to it. However, perhaps we need to look again at how our agencies work together to achieve the aims that are set out in the bill. In particular, we need to look at the financial arrangements for each organisation that is involved in economic, social and environmental issues.

Edward Mountain, the convener of the Rural Economy and Connectivity Committee, of which I am a member, pointed out in his speech that the financial memorandum that accompanies the bill anticipates a budget of about £42 million for the agency. During the committee’s visits to the south of Scotland, there was much discussion in our evidence-taking sessions of whether that £42 million was new money and new investment for the region. I am not making a party-political point—the people who gave us evidence raised that as a genuine point, to which they wanted to know the answer.

When the cabinet secretary gave evidence to the committee, he told us that the £42 million would, indeed, be the agency’s budget in year 3, and that that would be an increase in the overall funding for the area. However, he was unable to say how much of an increase it would be. I find that surprising; I would have thought that if the cabinet secretary was able to say that it would be an increase in funding, logically, he should know the current funding for economic development in the south of Scotland.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

Notwithstanding the line of argument that the member is developing, does he agree that there would be some benefit in transferring control of existing funding to an agency that was based in the Borders?

Mike Rumbles

I heartily concur—there is obvious benefit in doing that. I repeat that I am not trying to be party political. The people from whom we took evidence—and the member was there—were interested to know whether there would be a genuine increase in funding. Some of the people who currently receive funding want to know whether their budgets will be cut, so it is a reasonable question to ask.

Fergus Ewing

Mr Rumbles makes a fair point, and I will revert to the committee, as I undertook to do, in due course.

Scottish Enterprise is the existing economic agency that serves the whole of Scotland, other than the HIE area. Not all of Scottish Enterprise’s expenditure is geographically identifiable. Much of its expenditure relates to schemes that apply to the whole country. Therefore, in order to compute the precise amount of money from the Scottish Enterprise budget that is attributable to the south of Scotland, it is necessary to make an apportionment of that part of its expenditure that is nationally based. That is one complexity.

Another complexity is that an awful lot of the expenditure, which totalled £1.2 billion over 2017-18, applies to economic development that was not in the grant of Scottish Enterprise but came from other agencies.

I am just saying that, as with so many things, government is more complicated than perhaps we would like.

Mike Rumbles

I entirely accept what the cabinet secretary has said—I just hope that work is being done to give us an estimate.

I turn to the issue of ensuring broad representation on the enterprise agency’s board, which is also a matter of particular concern to the people who gave us evidence on our visits to Dumfries and Galashiels.

The cabinet secretary will be pleased to hear—this surprised me—that there was little concern over the fact that Scottish ministers would appoint the board members. People seem to be quite happy with that approach. However, there was concern about exactly how the Scottish Government intended to ensure that a broad and representative board would be in place from the start. For instance, we were told that there are 2,300 voluntary organisations of one kind or another in the region—that is a heck of a lot—and that it would be difficult for just one person to represent such a wide variety of organisations.

Others said that they want the new agency to do things differently, and to actually address economic, social, environmental and cultural issues. If it was to do that, they said, it would need grass-roots accountability. We know what the cabinet secretary’s intentions are, but we would like to know exactly how he will ensure that he gets the membership of the board right, and how he envisages the board being accountable to the local people whom it will serve. Such things are not easy to do, and I would appreciate more certainty on how they are to be achieved.

This is a good bill and I congratulate the cabinet secretary on introducing it. The Liberal Democrats whole-heartedly support the bill and we look forward to voting for it at decision time, and to examining in detail some of the issues that I have raised today when it returns to the committee at stage 2.

I have kept just within my six minutes, Presiding Officer.

The Deputy Presiding Officer (Linda Fabiani)

Thank you, Mr Rumbles.

As is very typical, I have some time in hand today. We move to the open debate. I ask for speeches of six minutes, please, although I can allow extra time for interventions.

15:21  
Maureen Watt (Aberdeen South and North Kincardine) (SNP)

I believe that the proposal to create a bespoke south of Scotland enterprise agency was in the manifesto of not only the Scottish National Party at the most recent Scottish Parliament elections, which is probably why, from the outset, committee consideration of the bill has benefited from a large degree of consensus—something that is not afforded to many bills in the Parliament.

I, too, thank the clerks, security, the official report, broadcasting and all who made the official committee meeting in Dumfries such a success. I thank all members of the public who turned up to that meeting and to the evening meeting in Galashiels, and the witnesses who came before the committee, whose input was very valuable in our deliberations. The wide interest in the bill should remind Parliament how important it is for us to get oot and aboot.

We have already heard that the economy of the south of Scotland is unique and requires its own agency, and that the area requires more attention than perhaps it has had. The current agency, Scottish Enterprise, account manages 107 companies in the region—42 in Dumfries and Galloway and 65 in the Borders. In the past two years, Scottish Enterprise has spent between £3 million and £5 million annually in grants and services, and has supported companies that are either headquartered in the area or that are headquartered elsewhere but have operations in the area.

We have heard comparisons with Highlands and Islands Enterprise and what it has been able to achieve. However, in and of itself, the creation of an agency is not a panacea; the issue is what it can do. Not everyone in the Highlands is satisfied with HIE, but it is based in the Highlands, covers the Highlands, is staffed by people who live in the Highlands and is served by board members who have the interests of the Highlands very much at heart. There have been many successes there.

In the evidence that we have taken, there has been a degree of confusion about the role of Scottish Enterprise vis-à-vis the roles of other agencies. Encouraging economic growth is the work of a number of bodies, including Scottish Enterprise, Skills Development Scotland, the Scottish Further and Higher Education Funding Council and local authorities, and I am pleased that those bodies have been working together in the south of Scotland.

In some quarters, there is a notion that all would be well if Scottish Enterprise could attract a few big employers to the south of Scotland. I hope that we have learned from recent history, and indeed the current situation with Brexit, that although inward investment is very welcome—and Scottish Development International works hard on that—in a global world, companies can and will locate anywhere in the world. Those companies carry a degree of risk.

Therefore, I hope that the new south of Scotland enterprise agency will be a catalyst for the growth of indigenous companies, given the wealth of resources in the region. In other debates in Parliament, we increasingly talk about embedding the rural economy in everything that we do. That approach will be vital if we are to recognise the huge contribution that our rural areas make to our country through the provision of food and drink, including water, tackling climate change and protecting our environment. We have a great opportunity to support that work through the bill.

Let me give an example. As a dairy farmer’s daughter, I am puzzled as to why, in an area such as the south-west, with its abundance of grass and increasing concentration of Scotland’s dairy farmers, we do not see the emergence of companies like Mackie’s, which is based in the north-east, and Graham’s, which is based in the heart of Scotland. I know that there is great Galloway ice cream, and I am sure that there are opportunities to develop and grow companies in the area on the back of the success of dairy products.

Oliver Mundell

I thank the member for making the point about the importance of indigenous companies. However, does she acknowledge that we have Roan’s dairy and a number of cheese producers, such as Arla in Lockerbie in my constituency, which, together with the presence of Scotland’s Rural College, are examples of the dairy industry doing very well in the south of Scotland?

Maureen Watt

Yes. We should build on that success, but the fact is that too much of our milk still goes south of the border to be processed and made into other products.

With a little encouragement and support from the new south of Scotland enterprise agency and its partners, I am sure that the growth of similar enterprises is possible. We know from the National Council of Rural Advisers that there is the drive and ambition among our young people in agriculture and other land-based enterprises. We just need a catalyst and focus for that to happen. Similarly, downstream activities from the huge forest areas in Dumfries and Galloway and the Borders are ripe for development locally.

Land ownership was mentioned during the committee’s deliberations. There is little doubt that, in the Highlands and Islands, community buy-outs have provided an opportunity for new thinking and new ways of working. Like Colin Smyth, I would like further developments in that area, so that we can provide similar opportunities in the south of Scotland.

The tourism industry is also ripe for growth, as more and more people see Scotland as a great destination. I congratulate my colleague Emma Harper on her promotion of the south-west coastal 300—not to compete with the north coast 500, but to enhance tourism in Scotland. The bill should be a catalyst for improving tourist attractions and accommodation in the south of Scotland, in order to attract more tourists to the region.

Many people see the ageing population as a threat, but I would rather see it as an opportunity, as many older people have significant levels of disposable income. Community enterprises are building on that.

Throughout the committee’s evidence taking and deliberations, I was conscious that many businesses in the south of Scotland are in the low-wage economy. It is vital that more businesses pay the living wage and more, and that fair work is at the heart of what they do. That, in itself, will uplift the whole economy, as those who live in the area will have more disposable income.

The Deputy Presiding Officer

Draw to a close, please.

Maureen Watt

Like John Finnie, I congratulate Russel Griggs on providing the basis for the new enterprise agency.

Many people in the south of Scotland have a can-do attitude, rather than the woe-is-me attitude that we heard from Finlay Carson. I am sure that we can build on the positive mental attitude and drive that we have seen in the south of Scotland, and I look forward to further consideration of the bill at stage 2 and beyond.

15:29  
Oliver Mundell (Dumfriesshire) (Con)

I am pleased to speak in today’s debate and even more pleased that we have arrived at this point. Parliament’s recognition of the unique interests and needs of the south of Scotland has been long overdue, so, in this the 20th year of devolution, it is pleasing that Parliament and Government are finally recognising the ambition of Dumfries and Galloway and the Scottish Borders.

It is genuinely great—and it is greatly appreciated—to hear members across the chamber talking up the potential of the south of Scotland. There is no doubt that the creation of the new agency, alongside the recently announced Borderlands growth deal, has the potential to reverse the economic fortunes of our region. In many senses, it recognises for the first time the unique cross-border dynamics in the area and the fact that, for my constituents, what happens in Carlisle is every bit as important as what happens here in Edinburgh or, for that matter, Glasgow. In doing so, it says that a one-size-fits-all approach undervalues and underresources our communities and fails to capture the strength and potential that we have as a diverse nation.

In addition, the creation of the new agency takes on board the feeling of many people in the south of Scotland that our area is distinct from the central belt and that “remote and rural” is not a term that applies only in the Highlands and Islands. It also recognises that devolution was never just about centralising decision making and that, when it comes to important decisions about the future of our economy, local and regional views and perspectives really matter.

Beyond the geographical reason, the other vital reason for the creation of the new agency is to ensure that we have high-skilled opportunities for young people who want to join the workforce. Just as we struggle in other remote and rural parts of Scotland, it is clear that there has been an exodus of young people from the south of Scotland. Without a vibrant economy that creates high-skilled jobs and opportunities and has its eyes firmly set on the future, we stand no chance of reversing that trend. Equally, we need to ensure that the locally available skill set matches—in so far as that is possible—the needs of the businesses that are there already and are looking to grow and expand their operations.

I do not want to spend too much of my speech focusing on the negative, because the creation of the new agency is a good news story, but it would be remiss of me not to highlight to the Parliament and other members that, as the committee has concluded, there is a strong feeling in the south of Scotland that Scottish Enterprise has served our region poorly and has, in some senses, failed to meet the perceived needs of the business community and the local economy.

Mike Rumbles

Although that was true in Dumfries, it was not true of what the Rural Economy and Connectivity Committee heard when it went to Galashiels, as I am sure that the convener of our committee can confirm, where quite a number of people were positive about Scottish Enterprise.

Oliver Mundell

I appreciate Mike Rumbles’s input. Naturally, as the constituency member for Dumfriesshire, my knowledge is based and my attention is focused on what is happening in my community, where there is a feeling that Scottish Enterprise is predominantly interested in large companies and companies that create a large number of jobs.

Fergus Ewing

By its nature, Scottish Enterprise is interested in larger companies, because the business gateway, which is operated under the auspices of local authorities, serves smaller businesses.

Would Mr Mundell agree that the hard work of Scottish Enterprise and others contributed to the success in Annan, which he welcomed, where a promise of £9 million of investment and 120 jobs has been secured? Is that not an example of success by Scottish Enterprise and the very hard-working individuals who work for the organisation, who I think deserve a bit of credit?

Oliver Mundell

I take Mr Ewing’s point in the spirit in which it is offered. My experience since entering Parliament is that Scottish Enterprise failed to identify that Young’s Seafood was planning to leave the site in Annan and failed to identify in a timely manner that there were problems in Dumfries at Penman Engineering. On a number of other occasions, it failed to get on top of, and it underestimated the importance of, the problems that companies that employ large numbers of people in the region were facing. I think that most people who live in the region recognise that it is our small and medium-sized enterprises that will be the engine room for growth. Those are the companies that are there already and that have kept going and kept working hard when the south of Scotland has been unfashionable for Governments of different political colours in the Parliament over the past 20 years. They are dedicated and care passionately about our economy, and they love our region. They are the people who need to be supported by the Government.

Saying that small and medium-sized enterprises are a matter for council organisations with much smaller budgets than an enterprise agency, and without its resources, expertise and strategic overview across the whole region, does not match the ambition that I feel for my region. That is why I am pleased that, albeit belatedly, the Scottish Government has come to share the view of those who have been campaigning for the agency for the last few decades. Today is about those people, and I pay tribute to them, because this is their prize for all their hard work. We should not lose sight of that.

I want to see something that looks like Highland and Islands Enterprise agency. We in the south of Scotland are coming late to the table, but that does not mean that we cannot get there. I issue a word of caution: Highlands and Islands Enterprise has been around for a long time and we cannot expect the new agency to immediately replicate it. The biggest challenge that the new agency faces is that of expectation management. People are ready to see the step change. I hope that we can allow an organisation to come together that can share our ambition to grow and develop, that will bang the drum for our region and ensure a place-based approach that drives forward growth, as well as ensuring that our region is no longer forgotten.

15:36  
Joan McAlpine (South Scotland) (SNP)

I am delighted to speak in the debate and to welcome the new enterprise agency for the south of Scotland. I welcome the committee’s findings. I note that a number of comments have been made about the board of the future agency. I suggest that people look at what is happening at the moment with the south of Scotland enterprise partnership board, because that points to the direction of the future agency. The SOSEP board has been appointed by ministers and it includes some fantastic local entrepreneurs and social enterprise activists such as Tracey Roan from a family dairy business in Galloway, Amanda Burgauer from Scottish Rural Action and Professor Sir Russel Griggs, who is a resident of the south of Scotland.

I regularly speak to members of the SOSEP board, including Professor Sir Russel Griggs. Only this week, I raised an issue on behalf of my constituent, and he got back to me straight away. He also outlined a little bit about the direction of travel for SOSEP, which, if members will bear with me, merits quoting, because it was very encouraging. He pointed out that the consultation work that SOSEP did last year involved speaking to 90 businesses across the south, and he outlined some key themes that emerged, on which the significant amount of extra money that SOSEP has is being spent.

The first theme was

“Supporting our young people to learn new and different skills that they cannot currently access in the south”

which is key to the significant grant given to the colleges for that kind of learning. The second theme was

“focussed on growing enterprises and ... communities who have the ambition and desire to want to grow and ... create new businesses and help their existing businesses.”

The third theme was:

“An integrated public transport system”

that

“is at the top of businesses list”.

He intends to focus on that, which is particularly important for young people to access work and college. That gives an example of how in touch the current SOSEP board is and it bodes well for the future and the future agency.

Since I was elected to represent the south of Scotland in 2011, I have consistently raised the need to address its unique challenges. In particular, when I sat on the Economy, Energy and Tourism Committee in the 2011 to 2016 parliamentary session, I was repeatedly reminded that many communities and businesses in the south felt that their needs required business support that was more tailored to smaller companies.

Such businesses in rural areas may not grow as fast as those in cities, but they are often the linchpin of the community, sustaining not just jobs but schools, the high street and smaller businesses further down the supply chain. Small and medium-sized enterprises have found it hard to access support. That applies not only to public sector support: there have also been challenges with accessing bank lending post 2008. That issue came up a lot in the Economy, Energy and Tourism Committee in the previous session of Parliament and is another reason why a bespoke solution is needed.

I am therefore absolutely delighted that the Scottish National Party is delivering that bespoke solution and that it is focused on the community development approach that has been pioneered so successfully by Highlands and Islands Enterprise. Of course, the new agency will be by and from the south, while taking the best of what we have learned from HIE. I am delighted that we have a commitment from the cabinet secretary that the agency in the south will mirror HIE’s capital spending per head—that is really good news.

As has been said, the south of Scotland has a different and distinct rural economy, with wide-ranging and significant opportunities. It is a really beautiful area that has long played an important part in the history of the Scottish economy. It has nurtured our textile industry, its agriculture and forestry sectors are thriving and it has a growing tourism industry. VisitScotland’s new see south Scotland campaign is another initiative that is happening in the region as a result of action by the SNP Government. I was absolutely delighted to co-host an event about that campaign with my colleague Rachael Hamilton MSP. I think that we can agree that the level of enthusiasm at the event showed that things are happening in the south of Scotland, which has to be good for the young people of the region.

As has been said, support for the agency is echoed by people right across the south of Scotland, where the vast majority of people support it. I particularly welcome the committee’s finding that the new agency should build on the work of Scottish Enterprise in the south. I recognise the point that some small businesses make, which has also been made by members today, that the focus on high-growth companies has not always been appropriate for small family-owned businesses in rural areas. However, we should not take anything away from the fact that large manufacturing companies in the south that I have spoken to are very happy with the support that they receive from Scottish Enterprise.

To give just one example of that, I recently helped with an intervention relating to Jas P Wilson, which is a manufacturer of harvesting equipment for the forestry industry that is based in Dalbeattie. It has been working closely with the Government on developing the young workforce, and it hires a lot of local apprentices and provides high-quality jobs. Coming together with the banks and Scottish Enterprise has helped the company to develop its business so that it can have a proper sales office. The company serves the forestry industry not just in the south of Scotland but all over Europe. It is a good example of an exporter in the south of Scotland that is being helped by Scottish Enterprise. I know from speaking to the family that runs the company that they are keen that the level of expertise in Scottish Enterprise, which they appreciate, is continued in the new agency, and I have absolutely no doubt that it will be.

I welcome the new agency, which could not come at a more appropriate time, given the challenges that the south of Scotland faces from Brexit. No new agency can be a panacea for that, but I wish it all the best, and I am delighted to support the bill.

15:43  
Claudia Beamish (South Scotland) (Lab)

I welcome the bill, which will create the south of Scotland enterprise agency. I am pleased that the Rural Economy and Connectivity Committee agreed to the principles of the bill in its recent stage 1 report. I am not a member of that committee, but South Scotland is my region and I have taken the issue seriously for a long time. I am particularly happy that the committee has recommended amending the aim for the agency to

“improve the amenity and environment”,

and supplementing it at stage 2 to make specific mention of

“the sustainable use of the environment”.

It is imperative that that vital recommendation goes through at stage 2. I wish the committee well with that, and with its recommendations on

“encouraging the development of a sustainable economy ... supporting the enhancement of transport networks and digital connectivity”

and

“supporting community land ownership and assets ownership”.

I support those recommendations being taken forward as the bill progresses.

Community Land Scotland recently pointed out the staggering figure, which we have heard from other members today, that more than half a million acres of land in the Highlands and Islands are community owned. In contrast, the Scottish Government estimates that a mere 794 acres of land in the south of Scotland are in community ownership. Given that Dumfries and Galloway and the Scottish Borders, which are the areas that will be covered by the new enterprise agency, form only part of the south of Scotland, that is a very low figure.

Since the outset of the possibility of a new enterprise agency that is specific to the south of Scotland, I have argued that it must have a social and environmental remit, and I am pleased that the REC Committee has come to the same conclusion at stage 1. However, it is disappointing that that was not initially included in the bill, which perhaps shows a lack of focus on those important issues from the Government.

I and other members have already highlighted that land justice is one of the most important issues with regard to the bill. However, I will go into it a little more detail, as the issue is very important to Scottish Labour. A slightly longer quote from Community Land Scotland highlights the issue very well, so, if people will bear with me, I will read it.

“One of the most important factors in helping to nurture the growth of community land ownership in the Highlands and Islands was the creation of the Community Land Unit in Highlands and Islands Enterprise in 1997.

In the intervening period it has provided invaluable technical, financial and capacity-building support to community groups in terms of purchasing and managing land and other assets.

A comparable service is vital for the south of Scotland to help kick-start an expansion in community ownership there similar to the surge that has occurred in such ownership in the Highlands and Islands over the last 25 years.”

I thank members for bearing with me as I read that out. It makes an important point with regard to community development in the south. That development is happening, but it needs more support.

Last year, I met Professor Russel Griggs in Clydesdale to discuss the good work that the SOSEP was doing through the consultation process that it was carrying out at that point. We also discussed the need for better-connected rural communities—on which I am sure we can agree across the chamber—where good-quality education and jobs can be provided in the community. I was pleased to see the REC Committee’s report address those issues with regard to the purpose of the bill.

Can the cabinet secretary say how the agency will support co-operative development, which is important in my region, and the development of SMEs? I often hear that there is a big challenge regarding not just starting up SMEs, but their development. As my colleague Colin Smyth has often argued, tailored support is needed.

I welcome the assurances that were given to the REC Committee with regard to the remit and boundaries of the new agency, and that it will be flexible in working along its boundaries, as John Finnie highlighted. It will be of no surprise to anyone in this chamber that the less well-connected communities along the outside boundary of the proposed agency—such as Ayrshire and Clydesdale—feel left out. I am aware that the issues are addressed in the REC Committee’s report and I accept the reasons for the boundaries being where they are, in that they are coterminous with local authorities. However, I point out to the cabinet secretary that few people in Clydesdale feel that they are closely connected to Glasgow, and the idea that the Glasgow city region deal is somehow a replacement will not put many of my constituents in Clydesdale at ease.

I therefore call on the Scottish Government to do more to support those areas through Scottish Enterprise, as they are suffering the same real need for investment as the areas in the new agency’s geographical area, but will not get the same level of focused support under a social remit. I hope that the cabinet secretary will answer some of those concerns in his closing remarks. I support the principles of the bill, as does Scottish Labour, and I welcome this important development for part of my region.

15:49  
Alex Neil (Airdrie and Shotts) (SNP)

Like everyone else, I welcome the arrival of the South of Scotland Enterprise Bill. It is an excellent proposal, as we would expect from Mr Ewing, who has a great track record of bringing forward visionary proposals for the economy. However, I would like to make a number of points that might differ from what others have said, because I want to concentrate on what the new agency can do to galvanise the economies of Dumfries and Galloway and the Borders.

The first thing to say is that we are not dealing with one homogenous economy in the south of Scotland. In effect, we are dealing with two regional economies—those of Dumfries and Galloway and the Borders—and in their external communications they tend to orient themselves towards the north and the south, and sometimes the west in the case of Dumfries and Galloway and its connections to Northern Ireland, rather than to each other. In the future, we need to invest in cross-country roads and infrastructure to improve the connectivity between the east and the west. In Scotland, outside the central belt, the connectivity between the east and the west is much poorer than the connectivity running from north to south and from south to north.

Brian Whittle (South Scotland) (Con)

Will the member take an intervention?

Oliver Mundell

Will the member take an intervention?

Alex Neil

I will in a minute.

The economy of the south of Scotland would benefit from investment in cross-country roads and infrastructure.

Brian Whittle is going to ask me whether I agree that the A77 from Ayr to Stranraer should be dualled. My answer is, “Absolutely.” I give way to Mr Whittle.

Brian Whittle

I refer members to the answer that Mr Neil gave a moment ago. [Laughter.]

Alex Neil

I am not saying that the Tories are always predictable, but there we go.

The fundamental, serious point here is that the creation of the south of Scotland enterprise agency with the remit that it will have is essential to the regeneration of the south of Scotland economy in both Dumfries and Galloway and the Borders and will help to make it genuinely a much more homogenous economy. However, it will succeed in the long run only if there is a major—and I mean major—investment in infrastructure in both Dumfries and Galloway and the Borders.

Oliver Mundell

Will the member take an intervention?

Alex Neil

I will in a minute.

I will give an example. Cairnryan port is the single biggest port in Scotland, yet the A77 is a disgrace south of Ayr. The idea that we could grow Cairnryan port to its full potential without dualling the A77 is just nonsensical. That is a prerequisite. However, it cannot be done tomorrow morning. I suggest that, to support the work of the new enterprise agency, the local authorities and all the key players, there should be a 15 to 20-year national infrastructure investment plan for the south of Scotland, which should foresee major road improvements, including to the A77, the A75 and the A76 on the Dumfries and Galloway side and the A1 and numerous other roads in the Borders, and east-west connections.

John Finnie

I share the member’s view on east-west connections, but will he acknowledge that, with four of the parties in this Parliament being committed to £6 billion of expenditure on two roads, none of that is realistic?

Alex Neil

When I was the Cabinet Secretary for Infrastructure and Capital Investment, I was told by officials that it was not realistic to plan to dual the A9 and the A96. We are going to have the A9 done by 2025 and the A96 dualled between Inverness and Aberdeen by 2030. It took an SNP Government to actually do that, which had been promised for many years but never delivered.

Finlay Carson

Given that a review of the road and rail infrastructure in the south of Scotland is going to be published very soon, does the member agree that, if any projects are identified that it is important to bring forward quickly, they should be accelerated ahead of the national strategic transport review?

Alex Neil

My view is very simple and straightforward. It is that, to unleash the full potential of the south of Scotland economy in both Dumfries and Galloway and the Borders, we need a major—

Oliver Mundell

Will the member take an intervention?

Alex Neil

I have taken enough.

We need a major upgrade in infrastructure, and primarily transport infrastructure. I have said that that has to be done over a 15 to 20-year period for the reason that Mr Finnie suggested: that the resources are just not there to do it in the shorter term. If there are shorter-term opportunities, we should seize them as quickly as possible, because economic development relies on modern transport hubs and modern infrastructure. If we cannot get the investment for modern infrastructure, we will not realise the full potential that can be delivered by the new agency and, more widely, by the south of Scotland economy.

My second point relates to the remit of the agency, which Joan McAlpine touched on. One of the major reasons why the HIDB and, subsequently, HIE have been so successful in the past 54 years is that, unlike the Scottish Development Agency or Scottish Enterprise, they have always had a social and community development remit. In order to regenerate our rural communities, particularly remote rural communities, we need that combined remit. I welcome the fact that the Government has given the new agency the same kind of remit as was given to the Highlands and Islands Development Board in 1965.

My final point is in relation to the role of the agency and where it can add real value. It seems that there are two broad areas. One is that there are many indigenous resources—including the people, the land, forestry and tourism—in Dumfries and Galloway and in the Borders whose potential has come nowhere near being realised. Therefore, the broad remit should be to exploit those existing industries and that potential much more fully. The second area is that we also need to grow more new high-tech industries in Dumfries and Galloway and the Borders. If we are going to raise wages, gross value added and the business start-up rate, we need to be talking about the industries of tomorrow, which means moving into the tech area. Without going into too much detail, as I am just finishing, that is another area in which both Dumfries and Galloway and the Borders have huge potential, which has been grossly underrealised until now.

15:57  
Michelle Ballantyne (South Scotland) (Con)

I am pleased to represent my party and my constituents in the debate on the South of Scotland Enterprise Bill.

As others have mentioned, the bill seeks to set up a new public body with the aim of encouraging economic growth, business development and employment in the Borders. I declare an interest in that, 30 years ago, we came back to the Borders to do just that, and we were greeted then by an arrangement called the SDA, which was basically a couple of men in a small temporary building. I have to say that they were excellent. They were persuasive, very helpful and very active, and we went on to build our business in the Borders, where it continues to thrive.

Over 30 years, we have seen a lot of changes, with Scottish Enterprise coming in and its remit changing. I was a member of the south of Scotland economic partnership during my time as a councillor, and we had a lot of discussions about what we really needed in the south of Scotland. No matter whether someone was there as a business representative or as a political representative, the one thing on which we all agreed was that we needed an agency that was south of Scotland-centric. We needed someone who actually understood what we needed, looked at what was going on, worked closely with small, medium-sized and large enterprises and who did not have a focus that was only about a national strategic interest.

From a cross-party point of view, we are all going to support the bill. I hope that, as it goes through the various stages, the discussions will be very much focused on what is best for the south of Scotland. The Scottish Borders and Dumfries and Galloway face a particular set of economic challenges, which have been highlighted by some members in the debate. Therefore, those areas are particularly well suited to sustaining a local body that is dedicated to inclusive growth.

Nevertheless, I am heartened by the amount of investment that has gone into the south of Scotland recently. That investment has been made by the UK Government and the Scottish Government, and I hope that we will not get to the stage where we are arguing about who has done what and who is the most important, because that belittles what has been done. What is happening is very important. The next decade will see the Borderlands growth deal, with £150 million of funding dedicated to the Scottish Borders. I am hopeful that the south of Scotland enterprise agency will be at the forefront of assisting businesses and local groups with the management of that investment, however it is allocated.

Much has been made of the economic challenges that we face in the south of Scotland. I think that the new enterprise agency will be adept at highlighting local issues, but there are several areas on which I want to see a bit of a focus. One of the biggest areas of concern, certainly in the Scottish Borders, is digital connectivity. It is no secret that the Scottish Borders is lagging behind in the roll-out of superfast broadband. In fact, Borderers’ access to superfast broadband is 10 per cent below the national average. At the moment, the bill does not include any powers over digital connectivity. However, if business innovation and competition are to be treated holistically by the agency, it would be somewhat remiss not to mention digital connectivity in that connection. I appreciate that the Cabinet Secretary for the Rural Economy does not want the new agency to be lumbered with the expectation that it will solve issues around digital connectivity problems, particularly as it will lack the budget to do so, but I am concerned that the lack of any reference to digital connectivity will leave the agency hamstrung when it is trying to attract or assist new businesses, especially those that seek to break into the new technology industry, which Alex Neil talked about.

Fergus Ewing

I agree that digital connectivity and the physical connectivity that Alex Neil talked about are key to economic development. However, I point out that, under the reaching 100 per cent—R100—programme, a sum of £133 million has been earmarked to improve connectivity, and, in particular, access to superfast broadband at the level of, I think, 30 Mbps. That is entirely separate from the work that the Scottish Government is doing in relation to the south of Scotland enterprise agency. I would have thought that everybody, including the Scottish Tories, would welcome that £133 million investment in the south of Scotland, with the aim of providing access to superfast broadband extremely quickly.

Michelle Ballantyne

The point is not about not welcoming what has been done—we welcome what has been done. I am talking about joining up the thinking around it and not putting everything into silos. You cannot have enterprise development without digital connectivity embedded in it. There must be good connections, and there must be a role for the enterprise agency, which is trying to encourage enterprise and attract to the area industries and new businesses that want to go into technology. If the agency has to tell those businesses that another organisation deals with digital connectivity, those businesses will not be impressed. They do not want to have to go from door to door to find out what is happening with each element; they want to be able to work with the local agency, and the local agency must be able to cover all aspects.

That brings me nicely to my other point, which is on the need to ensure that the Borders and Dumfries and Galloway can cultivate and retain a young workforce. Several members have spoken about the difficulties around that, and the Scottish Borders certainly has an ageing population, with over-65s accounting for more than a quarter of the area’s residents. That will simply not be sustainable unless we have young people in the area who are developing businesses and can thereby support the provision of services. Because of high levels of outward migration of young people, we have to work even harder in the south of Scotland to ensure that the young, skilled workforce is retained and that young workers find the idea of moving to the Borders and Dumfries and Galloway an attractive prospect.

For that reason, I am keen to see the new agency work with local employability groups that are already active. If it does not—if it just sets up a new work stream—we will lose the benefits of a lot of the good work that has already been done. That includes the work that has been done in the textile industry—which is developing its own training programmes because it is having difficulty in attracting people—in agriculture, in schools and in Scotland’s Rural College. South of Scotland enterprise needs to become embedded with those bodies rather than come in over the top of them.

The Deputy Presiding Officer

You need to draw to a close, please.

Michelle Ballantyne

We must ensure that there are good connections in that regard, because, as we have heard, we are in danger of creating too many groups and therefore not working effectively.

It is fair to say that all members welcome what has happened and support the general principles of the bill. As always, the devil will be in the detail and the real test will come in determining how south of Scotland enterprise will be organised, where it will be based and how it will be funded.

The bill provides a chance to shape the economic future of the south of Scotland. If we are to make the most of that chance, we need to create an agency with teeth—

The Deputy Presiding Officer

You must draw to a close.

Michelle Ballantyne

The agency must have the power and the connections that are necessary if it is to support the south of Scotland not just now but in the future.

The Deputy Presiding Officer

Most of the additional time has now been used up. I ask the members who follow to be a bit more careful about timing.

16:05  
Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

As the committee proceeded with its scrutiny of the bill, it was an absolute delight to have the opportunity to visit the south of Scotland.

My personal connections with the area are extremely limited. My grandfather was married in Eyemouth on 2 May 1890, but he came from West Lothian and his wife came from Northumberland, so I have no idea how that happened. My first visit was on 20 January 1952; I was five, and my father was preaching at the church in Leitholm. Maureen Watt might be interested to know that, in the late 1960s, I had the first yoghurt of my entire life, on the harbour at Kippford, while participating in the Scottish OK dinghy sailing championships. I did not do too well in the championships but I enjoyed the yoghurt.

A number of issues have come up in the debate. Alex Neil properly identified that the border area that the new agency will cover is not a single, cohesive, homogenous area. When the committee went to Galashiels, we got a different response to what is going on to that which we got when we went to Dumfries.

I say immediately that Gala was substantially easier to get to. We got on the train to Galashiels and then walked and got a taxi to the venue, and we were able to return on the train, on a midweek evening. As for Dumfries, if the committee had not previously realised the important need for infrastructure investment in the area, the journey to Dumfries—for me, at least, coming from the north of Scotland—perfectly illustrated that need. I was not persuaded that I could get back from Dumfries to Linlithgow—where I have a house in which I live during the parliamentary week—in the evening, so I had to drive from the north of Scotland all the way down to Dumfries and then back to Edinburgh.

That was a minor inconvenience for me, on a single occasion, but it perfectly illustrates the need for investment for the people who live and work in the area. Transport is an important issue, and I think that there is a consensus on the need to do something about it. The new agency can take a lead in promoting the issue, working with the regional transport partnership.

We have talked a lot about Highlands and Islands Enterprise. I think that Kenny Gibson and I are the only constituency members in the chamber whose constituencies cross the boundary between the Scottish Enterprise and Highlands and Islands Enterprise areas. Some 15 per cent of my electors are in the Highlands and Islands Enterprise area. As a constituency MSP who is exposed to both agencies, I see how markedly different the two agencies’ priorities and modes of operation are.

We are right to consider Highlands and Islands Enterprise’s way of operating as the model for the south of Scotland agency. It is clear, for example, that there is an important emphasis on social responsibility and social enterprise. HIE’s documentation talks about its aim being to

“Support social enterprise and community-led development through our Community Account Management programme”.

I am not suggesting that that programme should be lifted, unchanged, to the Borders, but it is worth having a look at, especially given that the new agency is likely to be dealing with similar problems to those that were present at the time of the creation of the Highlands and Islands Development Board and, subsequently, HIE.

The Highlands area now has Inverness, which has been fundamentally transformed in the 50 or so years since my wife left her home territory. It is now a very significant regional conurbation with a strong economy, but that still leaves a lot of the Highlands needing support. Dumfries has no equivalent of Inverness, but we might hope that the intervention of the new body might get us there.

The way in which Highlands and Islands Enterprise works is fundamentally different from Scottish Enterprise. It has a different account management structure whose focus reaches much closer to community bodies and small enterprises in a way that Scottish Enterprise does not.

The fact that incomes are lower in the border areas is a key indicator of the need to do what is proposed. It is important, too, that we look at helping communities to make their own decisions. Highlands and Islands Enterprise allows community account management to help

“communities to ... identify and realise their aspirations”.

In other words, it is not centralised decision making—the Highlands telling them what to do. We do not want that model in the border counties either.

It is very important that the constitution of the board and the way in which it works ensure strong lines of accountability from the board back to its communities and strong channels for input from communities, to allow the board to be demonstrably responsive to them. That is quite different from the idea of a board that is representative. I want people with the greatest skills and people who understand and, preferably, live in the area concerned. I want people to be there not simply as representatives but because of their skills and to sustain accountability and responsiveness.

The Deputy Presiding Officer (Christine Grahame)

Thank you.

Stewart Stevenson

I will be happy to support the motion at decision time.

16:12  
Rhoda Grant (Highlands and Islands) (Lab)

We, in the Scottish Labour Party, welcome the bill. It has been a long time coming, but I truly hope that it will bring to the south of Scotland the economic focus that it needs.

I cover the Highlands and Islands and feel that we have a constant battle to be heard. Centralisation devastates our communities and the Government sometimes treats us with a degree of arrogance that we would normally expect from an absentee landowner. I fight against that every day and put forward the case for my region. Imagine then my surprise when I speak to people from the south of Scotland; they look on us, in the Highlands and Islands, with envy and perhaps a small touch of resentment. We have our own enterprise body, Highlands and Islands Enterprise, while they have not had a focus on their economic needs and often feel ignored by Scottish Enterprise, because their needs appear paltry when compared to the large centres of population. Therefore, for people from the south of Scotland, getting their own enterprise company is a step in the right direction.

However, the new agency must have the same powers and breadth as Highlands and Islands Enterprise. The committee seemed relaxed at the lack of compulsory purchase powers, but I am not. I believe that the advantage in holding those powers is as powerful as the powers themselves. Scottish Enterprise and Highlands and Islands Enterprise have never used their compulsory purchase powers, but nor have we measured the impact that holding those powers has had. Does the knowledge that those powers exist bring people to the table?

Other powers are also omitted from the bill, and I ask that they be added at stage 2. Examples are the power to enter land and the power to acquire information, which are important to have in order to allow the south of Scotland enterprise agency to regulate those to whom it has provided support.

It is also important for the south of Scotland enterprise agency to have the same social remit as Highlands and Islands Enterprise, to allow it to take a more holistic approach, which is really important for our rural areas. Working with communities is as important as working with big business in those areas, and community ownership needs to be a priority.

I noted with interest the wishes of the community, which were echoed by Community Land Scotland, about the accountability of the board and who should select its members. There has been a tendency for this Government to choose yes-men for its boards. When the very existence of Highlands and Islands Enterprise was challenged, there was not a squeak from the board. I am pretty sure that that would not have happened in Jim Hunter’s day. Therefore, I understand the wish of the community to have its say in who is selected, and I ask the cabinet secretary to look at that to see how the community could be involved.

Evidence to the committee also suggested the involvement of young people, and I believe that to be right, because we are talking about their future. Too many young people from rural areas are forced away from home just to access education and a career. If we are to build the economy of the south of Scotland, young people need to be at the heart of it.

I would like to see a commitment to a 50:50 gender balance on the board from the outset. It is a new board, and we do not have to wait for a transition. I hope that the Scottish Government will start in the way that it means to go on. As other members have said, we must also see a commitment to fair work—those who receive assistance and grants from the south of Scotland enterprise agency must commit to fair work practices.

The new agency is welcome, but the Scottish Government also has tools at its hand to stop the economic decline and depopulation of our rural areas. It must step away from its centralisation agenda, which has done untold damage to our rural areas by removing high-quality jobs and therefore having a disproportionate impact on those economies. When decision makers are removed to urban areas, areas are disempowered and we end up with urban decisions as a result. The Government has introduced the Community Empowerment (Scotland) Act 2015 and the Islands (Scotland) Act 2018, but its style of management flies in the face of those aspirations. Until it loosens its grip on power, we will see continued centralisation.

Procurement is at the heart of this. Centralised contracts have no protection for SMEs. The Federation of Small Businesses points out in “Broken Contracts: Smaller Businesses and Scottish Procurement” that, despite the Procurement Reform (Scotland) Act 2014, small businesses are not winning any more contracts. They are actually receiving far fewer. The number of SMEs supplying goods and services to the Scottish Government has halved under the SNP.

In a letter to Jackie Baillie, the Cabinet Secretary for Finance, Economy and Fair Work confirmed that 1,502 SMEs supplied the Scottish Government in 2007-08 but that that figure had fallen to just 716 in 2017-18. Colin Smyth said that the south of Scotland enterprise agency will host a large number of SMEs. It is important that we support them, because they provide us with a far greater return. They have a vested interest in their communities and they are much less likely to leave. They are also likely to spend their money and procure goods in those same areas. Therefore, the decline in their number must be turned around.

Those are things that the Government can address now and which would have a disproportionate impact on the economy of our rural areas. I hope that the Government will act on that now.

16:18  
John Mason (Glasgow Shettleston) (SNP)

I, too, am happy to support the bill. It is clear that HIE is highly thought of in the Highlands and Islands; that was seen in particular when it was suggested that there might be some amalgamation of enterprise bodies covering the whole of Scotland. I agree that there has been a need for a more joined-up approach to the enterprise and skills sector, without going as far as amalgamation. I hope that the strategic board will provide that co-ordination without the regional and other bodies losing their identities.

There seem to be a lot of similarities between the Highlands and Islands and the south of Scotland. Both are largely rural, are at some distance from the central belt, have seen young people drifting off to the cities and not returning, and have had difficulty in attracting new businesses or growing existing ones. I very much agree that there is a strong argument for a new south of Scotland enterprise body. I confess that the south of Scotland can sometimes be overlooked by those of us in the central belt. If we were asked where in Scotland there is a big area with a sparse population, beautiful scenery and opportunities for getting away from it all, I think that many of us would think first of the north, rather than the south. However, all those things are true of the south as well.

The committee made two visits to the south of Scotland—as others have said, we went to Dumfries and to Galashiels. Those visits were very useful, and there were good turnouts in both places. There were very engaged audiences and there was real enthusiasm for the new agency. One or two folk questioned the need for a new agency, with the risk of increased bureaucracy and money being spent on administrative costs rather than front-line services, but my feeling was that they were very much in a minority.

Questions were raised about how much Dumfries and Galloway has in common with the Borders—Alex Neil touched on that. It is true that there are significant differences between Dumfries and Galloway and the Borders. At least parts of the Borders have a very strong link with Edinburgh and reasonably good transport. Galloway is considerably more remote. As has been said, members were able to travel to and from our evening meeting in Galashiels by train. That would not have been possible if we had gone to Stranraer.

It is also true that the east-west links across the south of Scotland are not strong and that many people may not think of the south of Scotland as one region. However, overall, there are a lot of common strengths and weaknesses, and it seems wise to have one agency for the two council areas.

Another factor that was discussed was whether the new agency should cover a wider area than just the two council areas. It is clear that there are similar challenges in South Lanarkshire and the south of Ayrshire, but boundaries have to be drawn somewhere, and I am afraid that they are often artificial. Therefore, I am comfortable with the proposal that the new agency’s boundaries match those of the two existing councils.

The people whom we met in Dumfries had little good to say about the existing work and profile of Scottish Enterprise. However, to be fair, the gathering in Galashiels was more positive. A show of hands indicated that a dozen or so businesses had had involvement with Scottish Enterprise, and most of those people were positive.

To be fair to Scottish Enterprise, I do not think that, with its budget, it can give the same level of personal or financial support to a more rural area with smaller enterprises that HIE can give to the Highlands and Islands. Fundamentally, that is why we need the new agency.

The question of the relationship with existing agencies such as Scottish Enterprise came up several times. I think that there is a lack of understanding that SE has a national role for certain specific tasks and it would not get involved on the ground in routine work in the south in the future. Maybe some work needs to be done on clarifying those roles.

The role of the strategic board is linked to that. The board is not set up in statute and, in many ways, it is still settling into its new role, so it is difficult to define too specifically what the relationship between the new agency and the board will be. However, we can make some general assumptions about that. I agree that it is probably not appropriate to refer to the strategic board in the bill, as it does not appear in other legislation.

The comparison with HIE was an underlying theme throughout the committee’s work on the bill. I have said that there are clear similarities between the north and the south, but that raises the question whether the funding per head in the two areas should be the same. The Government proposes that, and the committee agreed with that. I accept that there may be some catching up to do, because HIE has been in existence for five decades, and the south of Scotland has not had that input. However, I am not entirely convinced that funding per head in the south should be the same as that in the Highlands and Islands in the longer term. The distances in the Highlands are much greater, and people live in more remote areas there. As Colin Smyth said, people in the south live within two hours of 14 million people. That is not true of people in the Highlands and Islands.

Oliver Mundell

Will the member take an intervention?

John Mason

If I have time.

The Deputy Presiding Officer

Mr Mason is in his final minute.

John Mason

I am sorry; I am not allowed to take an intervention. I would be happy to discuss the matter with Oliver Mundell, and I am sure that it will come up in the future.

HIE covers many islands, which the south does not have. The Islands (Scotland) Act 2018, which the Rural Economy and Connectivity Committee also dealt with, requires that we take into account islands when we make any decisions, including decisions about funding. The fact that there are so many islands in the HIE area suggests that it needs higher funding. I find it a bit strange that HIE is to get no extra funding to take account of its islands, but I note that there is equivalence in the budget initially. I presume that there will be a review in the longer term.

In conclusion, I am delighted to support the bill, which will result in a third enterprise body to work alongside SE and HIE. Of all the bills that I have been involved with, I think that the South of Scotland Enterprise Bill has probably had the widest agreement. I hope that that will continue and that we will see a real boost to the economy and wellbeing of that important part of our country.

16:24  
Brian Whittle (South Scotland) (Con)

I am delighted to speak in the debate about this important bill. As we have heard from across the chamber, the south of Scotland—specifically the south-west—has long been the forgotten part of Scotland in terms of investment by the Scottish Government. The region certainly has its challenges—its GVA is low in comparison with the Scottish average; average earnings are 10 per cent lower than those for Scotland; the business start-up rate is considerably lower than the Scottish average; small businesses account for a greater share of employment and income than is the case in Scotland as a whole; and more people are self-employed.

However, the region has many strengths, not least of which are its natural environment and the quality of life. The region is also steeped in cultural heritage. It is therefore unsurprising that the sectors that are important to the region include tourism, agriculture, forestry and fishing. The proposed south of Scotland enterprise agency offers a fantastic opportunity to give the area a long-awaited shot in the arm.

I will focus on the Scottish Conservatives’ call for the agency to have the flexibility to work outside its geographical boundaries and to collaborate across agencies, so I would welcome a commitment from the cabinet secretary, in summing up, on the Government’s position on that.

The proposed enterprise zone is surrounded by areas that are the subject of three growth deals that are worth about £1.45 billion—the Borderlands growth deal, the Ayrshire growth deal and the Belfast region city deal. I include Belfast because it is directly connected to the area by the port of Cairnryan, through which some £1 billion of goods flow, including about 45 per cent of Northern Ireland exports. That significant investment should be a key element of any strategy that aims to regenerate the region’s economy. If the three growth deals had an element of collaboration with the potential of the proposed south of Scotland enterprise agency, benefit could be realised.

For a start, the investment—coupled with the business confidence that it might bring—would go a long way in encouraging business start-ups. Scottish Enterprise and the Scottish Investment Bank have expertise in developing start-ups. The enterprise investment scheme and seed enterprise investment scheme have evolved since I was involved in them, but they can still significantly influence inward investment. The schemes allow Scottish Enterprise to invest and take a shareholding in a company under the same investment protocols as private investors. Not only do private investors get the confidence that a Government agency is backing a new-start business, with all the advice and expertise that it brings to the table, but they receive significant tax breaks if they leave their investment with the new-start company for at least three years.

With its loans and grants scheme, Scottish Enterprise can help to ensure that there is appropriate funding for any new start or developing business, as well as giving businesses access to the best business advice. We need to encourage more would-be entrepreneurs, risk takers and job creators to consider the south of Scotland as a destination, so I encourage them to interact early with Scottish Enterprise to seek the help that it can give. The new enterprise agency can help to drive such interaction.

In the previous parliamentary recess, I travelled across to Belfast to meet politicians of all political persuasions and business leaders, to discuss how Scotland and Northern Ireland can increase trade between the two. After all, as we have heard, the biggest port in Scotland—and the third biggest in the UK—is Cairnryan, and it connects us with Belfast harbour.

Stena Line invested £240 million and P&O Ferries invested £90 million in Cairnryan based on the promise by the then First Minister, Alex Salmond, that the crumbling transport infrastructure in the south-west would be appropriately upgraded. That promise was made in 2010, but it remains unfulfilled.

The horrendous state of the trunk roads—the A75 and the A77, which connect Cairnryan with routes south to England and on into Europe, as well as those into the Scottish central belt—is nothing short of a scandal, and that is not to mention the A76. I agree with what Alex Neil said about infrastructure, but I gently remind him that he was a transport minister in the intervening time, and that he had the opportunity to do something about it.

John Finnie

I understand the concerns about infrastructure. Does Brian Whittle acknowledge that considerable benefit would be derived from putting in place rail as well as road infrastructure?

Brian Whittle

I definitely agree. I will come on to rail infrastructure, which is important.

Northern Ireland politicians and business leaders confirmed to me that the lack of infrastructure in south-west Scotland is having a negative impact on the Northern Ireland economy.

To date, we have had only an outline commitment of £30 million to build the long-awaited Maybole bypass. That has still to be started, despite many assurances from the Scottish Government that it would be. That compares with the £3 billion investment that was proposed for the A9 upgrade—100 times the investment that has been proposed so far for the whole south-west of Scotland.

We cannot look only through the prism of a new agency at developing and sustaining the economic prosperity of the south of Scotland, hence my focus in the debate on the requirement that the new agency have the flexibility to work outside its geography and to interact on a cross-agency basis. Furthermore, there is a big need to work across portfolios.

The Conservatives agree that the establishment of the agency has great potential for the south of Scotland. However, it is just one piece of the jigsaw, so I urge the Scottish Government to consider taking a much more holistic approach in order to address the long-term lack of investment in the south of Scotland, and ensure its sustainable economic health.

16:30  
Emma Harper (South Scotland) (SNP)

I am pleased to have the opportunity to speak in this afternoon’s stage 1 proceedings on the important South of Scotland Enterprise Bill. The bill is welcome. It is needed to benefit my South Scotland region—its businesses, people, towns, villages and rural areas—so I am pleased to have been involved in the legislative process.

I attended the Rural Economy and Connectivity Committee evidence-taking session in Dumfries at Easterbrook hall. I also attended various events of the interim south of Scotland economic partnership, and met its chair, Russel Griggs, and board members to hear formally and informally about the work that they have been doing.

I have supported the south of Scotland economic partnership by writing to the Scottish Government about its positives and negatives, to ensure that the new agency and the associated legislation are strong.

The Rural Economy and Connectivity Committee’s stage 1 report states:

“The Committee is in no doubt”—

I think that there is no doubt about this across the chamber today—

“that the creation of a new enterprise agency in the south of Scotland is required”

and that the agency is essential for the region.

The report also states:

“The Committee supports the general principles of the Bill and recommends to the Parliament that they be agreed to.”

I know that those comments will be extremely refreshing for people across the south of Scotland, and I certainly hope that members across the chamber will join me in echoing them today.

I will give some context to how the idea of a south of Scotland enterprise agency first came about. In 2016, the First Minister announced a review of the enterprise and skills bodies across Scotland, to allow the Government better to meet its objective to have a vibrant economy. The review’s terms of reference had the objective of enabling a transformational step change in performance across a range of economic outcomes.

The review process identified several challenges facing the economy of the Dumfries and Galloway and Scottish Borders area, about which members have spoken. Those challenges include the area having an older population and out-migration of young people; the relatively low levels of productivity and GDP growth; the transport and digital connectivity challenges, which I will come on to talk about, because the matter is really important; and the higher concentrations of low-paid and lower-skilled sectors. There are also several fragile communities across the region, and relatively low levels of private sector investment, research and development.

I will highlight a few of the challenges that constituencies and businesses across the region have conveyed to me as being the main barriers to the region flourishing.

The region has poor transport infrastructure. In my time here, I and members from across the chamber have lobbied the Scottish Government on, and secured members’ debates to highlight, the need for greater investment in the A75, A76 and A77, which are the main arterial routes connecting the south of Scotland to Northern Ireland, the north of England and wider Scotland. Alex Neil eloquently highlighted that point.

Last summer, I hosted in Stranraer a meeting that was attended by the Cabinet Secretary for Transport, Infrastructure and Connectivity. At the meeting, it was made clear by businesses including Stena Line and P&O Ferries, and various local action groups, that in order to attract investment, business and people to the region, the transport infrastructure must be improved. That is imperative. Therefore, I am pleased to see that one of the Rural Economy and Connectivity Committee’s asks in its report is a request to examine transport infrastructure. That work will be in addition to the south-west Scotland strategic transport study, the findings of which are to be published soon. I ask that the cabinet secretary give his commitment that improving transport infrastructure across south Scotland is a priority for the Government and will be part of the agency’s remit.

In addition to those challenges, the Scottish Government’s consultation recognised several strengths and assets that are enjoyed by the area. They include a strong community spirit that is characterised by a high degree of cohesion, resilience and commitment to the local area; a natural environment that provides a high quality of life, a good place to raise a family and plenty of opportunities for healthy living; a rich historical and cultural landscape, which is particularly important to the development of the area’s tourism industry; and a good strategic location, being relatively close to the north of England, the central belt of Scotland and Ireland.

I mentioned tourism. It is vital to the region that it attracts tourists. I agree with Oliver Mundell that the south of Scotland has many micro-enterprises and small and medium-sized enterprises in many sectors, including the food and drink sector, in which we have, for example, the Galloway Soup Company and Professor Pods chillies, which I visited yesterday. There is tourism and leisure at Laggan Outdoor Ltd’s centre, Cream o’ Galloway and Galloway Activity Centre Ltd at Loch Ken, part of whose remit is to offer activities in which everyone can participate. I would like the new south of Scotland enterprise agency to work to support SMEs and other businesses by helping to attract people to visit them and, ultimately, by improving transport links to them.

I could talk for hours about why the bill is important but, unfortunately, I do not have enough time. I congratulate everyone who worked to get the bill to Parliament and those who have been involved with the interim body—the south of Scotland economic partnership.

I hear what Finlay Carson and others have said about how people in the area feel forgotten. That is what I hear, too, across the whole region. I ask him to help to change that perception. The light is shining on the south of Scotland right now, so let us be positive and objective about promoting our beautiful region, and let us work together for the benefit of the whole area.

The Deputy Presiding Officer

I am sure that Mr Carson hears you.

16:37  
Colin Smyth

After years of work, this debate brings us one step closer to establishing the south of Scotland enterprise agency that the region badly needs. I hope that the agency will be locally led, embedded in the communities that it covers and responsive to the unique needs and assets of the south of Scotland.

I welcome the tone of most of the debate and the widespread consensus from members across the chamber on the need for and the role of the new agency. That consensus very much reflects the views of the people of the south of Scotland.

Of those who responded to the Rural Economy and Connectivity Committee’s consultation on the bill, 87 per cent agreed with the plans for a new agency. It is not surprising that there is such a strong appetite locally for change and a new approach. The new agency is an opportunity not just to improve the economic support that is available in the region but to encourage collaboration and develop a stronger voice to advocate for the south of Scotland at a national level. We need that new approach to respond to the economic challenges facing the south of Scotland and achieve the region’s potential.

As we have heard in the debate, productivity in the area is almost a quarter lower than the national average, and the business start-up rate is also below the Scottish average. Although the region has a flourishing small business sector, with more than 11,300 enterprises, not enough is being done to support and grow those businesses. It is that type of support—tailored to meet our local needs—that is simply not available at present.

Wages in the region are some of the lowest in the country, and the lack of well-paid, high-skill jobs is one of the key reasons for the continued outward migration of young people. We desperately need to retain young people and, perhaps more important, to attract young people to the area. The key to that is ensuring that young people have real career options locally. That means creating more high-quality jobs, but it also means ensuring that the training and education that young people need are available locally.

As several members have highlighted, the region has also suffered due to long-standing underinvestment in our infrastructure. I believe that the new agency should have a key role to play in advocating for and supporting better transport and digital connectivity in the region.

The region has huge potential. There are thousands of businesses and enterprises in the area and a great deal of potential for growth if the support that those businesses receive is genuinely tailored to meet their needs.

A new agency can also take a holistic approach that provides not only economic but social and environmental benefits. Highlands and Islands Enterprise has been effective in using that approach. In protecting communities and their natural environment, HIE has shown that the approach does not need to be in conflict with supporting the economy. The bill is a welcome step towards delivering that for the south of Scotland.

The bill sets out a strong framework for the new agency. However, as Labour has argued in the debate, and as the Rural Economy and Connectivity Committee’s stage 1 report sets out, we want improvements to be made to the bill to ensure that we have an agency that really is rooted in the south of Scotland. That means building on the agency’s proposed aims, so that they include tackling the demographic challenges that the region faces, taking a leadership role in improving transport and digital connectivity, supporting community land ownership and furthering the fair work agenda. It also means amending the bill to ensure that there is proper local accountability. The agency needs to be led from the south of Scotland but, as it stands, the board will answer far more to ministers in Edinburgh than it will to local stakeholders.

Mike Rumbles

Will the member outline his thoughts on how local accountability should operate through the bill?

Colin Smyth

I will come to that point in my closing comments. Crucially, local accountability needs to be underpinned by a legal requirement for consultation and reporting back. I will set out exactly how that could work in a second.

In his response to the committee’s stage 1 report, the cabinet secretary committed to lodging an amendment that will ensure that ministers cannot issue directions to the agency without consulting first, which I welcome. However, he did not respond to the calls from the committee and me for a formal mechanism, underpinned by a legal requirement, guaranteeing local input and accountability in the agency’s action plan and strategy.

The Government needs to be clearer about how we guarantee that the voices of local communities will be listened to and reflected. In response to Mike Rumbles’s specific point, I think that that could be done through, for example, a new regional economic partnership or a regular south of Scotland convention, underpinned by a programme of regular consultation by the agency in communities across the south of Scotland. We have already seen such engagement from the south of Scotland economic partnership. There is also the opportunity to take advantage of the local authorities’ committee structures, in order to report some of the performance figures at a local level. That is what Police Scotland and the Scottish Fire and Rescue Service do, and there is the opportunity for the new agency to do something similar. Whatever the mechanism is, it is crucial that we make local accountability a legally binding requirement for the new agency.

We need to ensure that the membership of the board is genuinely representative of the south of Scotland and reflects key stakeholders, from young people to proper workforce representation. The board must also be gender balanced, as Rhoda Grant rightly highlighted.

During the debate, members have made a number of other important points, which I will briefly touch on. There was clear support for the boundary of the new agency to cover Dumfries and Galloway and the Scottish Borders. However, Claudia Beamish made the point that areas on the periphery of Dumfries and Galloway and the Borders, such as Clydesdale and South Ayrshire, have a role to play. The Scottish Government and Scottish Enterprise need to look at the level of support that those areas receive and ensure that the economic development opportunities meet the needs of those areas.

The location of the new agency was touched on. There is a clear view that it should be co-located with other agencies, such as the councils, and that it should have a presence in communities across the two local authorities. In that way, it will provide a one-stop shop for businesses and enterprises that are seeking support.

In many ways, the debate on the bill has focused on the mechanism of having a new agency, but, ultimately, the real test will be what the new agency does from day 1. There is no question but that there will be a lot of expectation. When it does not deliver what we want it to deliver—

The Deputy Presiding Officer

I am sorry—

Colin Smyth

—I will be the first one to highlight that, but—

The Deputy Presiding Officer

Yes, that is your job. I am sorry, but you are finished. [Interruption.] I did not mean to be rude, Mr Smyth; you are holding the Government to account, quite rightly.

16:43  
Rachael Hamilton (Ettrick, Roxburgh and Berwickshire) (Con)

I declare an interest, as I am a business owner in the Scottish Borders.

In closing for the Scottish Conservatives, I thank the Rural Economy and Connectivity Committee for its work in gathering evidence from across the south of Scotland. From the speeches that have been made today, it is clear that the bill will enable economic growth and business expansion in the south, and we look forward to the establishment of the enterprise agency.

Some members have described the south of Scotland as a “forgotten” region. We have heard that the south of Scotland desperately needs an injection of skilled workers, infrastructure investment and additional business support. At a recent Borders business breakfast that I held, I spoke to business leaders who are desperate for an agency to help to deliver economic growth for the Borders. Engagement is to be encouraged. As we have heard, we need many businesses to get involved in that process, with parity between businesses, the public sector, educational establishments and the third sector.

Many members, including Joan McAlpine, have paid tribute to the good work of Russel Griggs. In the Rural Economy and Connectivity Committee’s report, Professor Griggs is quoted as saying:

“We want to stop talking about businesses and talk instead about growing enterprises. It does not matter whether the enterprise is a community, a social enterprise, a small business or a large one. We want to see a culture of change through the new enterprise agency, with an understanding that we give support to everybody who wants to help to grow the economy.”—[Official Report, Rural Economy and Connectivity Committee, 14 January 2019; c 6.]

The Scottish Conservatives believe that the new agency could be a fantastic catalyst for entrepreneurialism and driving the local economy. John Finnie mentioned Barbara Elborn of the Newcastleton & District Community Trust, and Barbara and Greg Cuthbert are energetic individuals who recently set up a community fuel station.

When it comes to community involvement, Colin Smyth, Finlay Carson and Mike Rumbles said that the new agency’s board must have members with a wide pool of experience and that it must be transparent, open and accountable to local communities. Stewart Stevenson agreed that there should be strong lines of accountability to the community and that the members of the board should have strong skills. Perhaps the cabinet secretary could reassure us that that will be the case when he closes the debate, as Colin Smyth requested.

Many Conservative members have welcomed the Borderlands growth deal, which was one of our manifesto commitments. The committee recommended that the agency should have the flexibility to operate outwith the geographical boundaries of the Dumfries and Galloway and Scottish Borders council areas, and we support that, as it will allow for greater collaboration with other enterprise agencies and will help to make the new agency a huge success, given the region’s proximity to the border.

In today’s debate, Scottish Enterprise has been a bit like Marmite—some members believe that it has done a good job, while others believe that it has not. Many businesses that I speak to find access to funding complicated, and that needs to be addressed. There should not be barriers to funding. We would like the new agency to make obtaining funding and support much simpler. Although we recognise that that will not solve all our problems, it might go some way in helping to heal them.

As many members have mentioned, low-paying jobs, the gender pay gap and a skills shortage are problems right across the region. Those three issues are not unique to the Borders, but they are definitely exacerbated in a rural area that suffers from not only poor digital connectivity, which Michelle Ballantyne mentioned, but poor physical connectivity, which Alex Neil and Brian Whittle mentioned. They drew attention to the importance of investment in transport infrastructure and, in particular, the A77, the A75, the A1, the A68 and the A7. East-west connectivity is very important, and the extension of the Borders railway line from Tweedbank to Carlisle would be helpful in that regard, as it would link the Borders to the north-west of England.

The new agency should be an enabler, not a disabler. It must be dynamic, and it must suit the needs of the south of Scotland. Although many members have said that the agency will be based on the model of Highlands and Islands Enterprise, it is important that we recognise that the south of Scotland is distinctive and different from the Highlands, even though we share common challenges, such as the lack of adequate infrastructure that I have mentioned.

Michelle Ballantyne and Oliver Mundell spoke about the need to attract young people to the area and the skills gap that exists. Our demographics are extremely challenging and are becoming more so. I highlight the fact that the dependency ratio—which applies to the proportion of the population under 16 and over 65—is 69 per cent, compared with 55 per cent for Scotland as whole. I welcome what Maureen Watt said about attracting retirees to the area, but given the rising number of older people, to maintain the working-age population of today, we need at least 800 working-age people to move to the south of Scotland per annum. That presents a real and growing problem that the agency must address, and it must be considered alongside skills development and business growth. That is especially important in the area of technology, as Alex Neil highlighted.

Finlay Carson talked about the poor business start-up rate in Dumfries and Galloway, and Brian Whittle told us that median weekly earnings are 10 per cent lower than the Scottish average. In addition, GVA per head is 24 per cent below the Scottish average. Therefore, we face a unique set of issues. The agency must create jobs through grants to businesses; in particular, it must create high-quality jobs that will attract young people. Crucially, we want to be able to retain those young people, and to grow a vibrant and dynamic local economy.

Many members have mentioned tourism. When it gave evidence to the committee at stage 1, Scottish Land & Estates emphasised that tourism should be a principal purpose that is written into the agency’s action plan. My colleague Finlay Carson also called for that.

Joan McAlpine talked about the new see south Scotland campaign, which is very important for attracting new tourism businesses and growing existing ones.

On the gender pay gap, although I was outside the chamber, I caught Rhoda Grant talking about the need to encourage more women to live, work and start a family in the area. We must address that. Engender’s evidence highlighted that, with the Scottish Government’s equality impact assessment—

The Deputy Presiding Officer

I am afraid that you have run out of time.

Rachael Hamilton

I will sit down, Presiding Officer, but we look forward to the agency—

The Deputy Presiding Officer

You will sit down now—so much for the gender pay gap. You have made your point.

I call Fergus Ewing to close the debate for the Government. You have until decision time, cabinet secretary.

16:50  
Fergus Ewing

I will endeavour to be on my very best behaviour.

I thank all members for their contributions to the debate, which have been largely positive. I very much welcome the cross-party support for the new agency, and I am indebted to the Rural Affairs, Climate Change and Environment Committee, and to everyone who contributed to all the hard work that led up to preparation of the bill and the evidence sessions that formed part of the stage 1 process.

Whenever I have visited the south of Scotland, over some years as a minister, I have been struck by the enormous energy, success and vibrancy of the people who take part in life and business there. I have never failed to be impressed by the sheer hard work, energy, good humour and resilience of the people whom I have had the privilege to meet in my various responsibilities over a range of areas including forestry, farming, transport, manufacturing, textiles and tourism. However, that potential has not been fully realised, and that is why we are here today.

I accept that many members across the parties have said that there is a perception that the south of Scotland has not received the attention that it deserves. I bow to those who represent the area in that regard. It is not for me to contradict that. I have heard that that feedback has come from the bill consultation process, and it is right that I have regard to that process, as Mr Finnie and others have suggested.

The level of wages and the gender gap problems that were raised by Rachael Hamilton, Claudia Beamish and many others are two of the most serious issues. Of course, we want to ensure that businesses can be as profitable as possible. In tourism—where Rachel Hamilton has done her life’s work—many businesses are hampered by a shoulder season. If we can extend the tourist season to 12 months, as we do in parts of the Highland, we can increase revenue, profitability and the capacity of businesses to pay the kind of wages that they would like to pay their workforce. Therefore, we should look at things in the round.

Many businesses in the south of Scotland do not require—or even want—help from the Government. They do perfectly well and run their businesses very successfully indeed, because they are providing services and goods that people want. Not all businesses need or want assistance from the public sector, but those that do should be able to access it. That is why, when I was in Annan recently to meet Keshav Bhagat, the owner of the food processing company Bhagat Holdings Ltd, I was delighted to acknowledge and praise the efforts of public servants to provide a bespoke overall package from Scottish Enterprise, Scottish Development International, the local council and the Scottish Government. Those efforts had the result that Mr Bhagat and his family, whom I had the pleasure of meeting, were persuaded to invest not in other locations that they had considered, but in Annan in Scotland. Thanks to the hard work of Scottish Enterprise and a proposed £1.7 million regional selective assistance grant investment, Mr Bhagat’s £9 million investment plan will bring around 120 jobs to Annan, with the potential for more.

Such inward investments are important to Scotland and to the diverse communities in the area. We have engaged widely across the south, with businesses, communities and individuals, as we want to ensure that everyone’s voices are heard. Meaningful engagement with those who are living, working and studying in the south remains a key component of our work. We will continue the engagement with young people and community representatives, which Claudia Beamish fairly emphasised.

As the bill states in describing the body’s aims, it will have regard to improving

“the amenity and environment of the South of Scotland”.

That is already in section 5(1). Regarding accountability, sections 13 and 14 require the preparation of accounts and an annual report, and section 6 requires an action plan. Those are ways in which public bodies are held to account. They are also held to account through the Parliament. All public bodies can be summoned to give evidence by committees of the Parliament. I see that Mr Mountain is nodding, and I know that he has done precisely that. The Parliament is the fulcrum of accountability in Scotland, and it will remain so. However, members rightly want us to explore how we can improve lines of accountability even further.

Alex Neil made the point, which has flitted through my cranium from time to time, that one issue for the south of Scotland is that, although there are connections between the Borders and Edinburgh and from Dumfries to the west and to Northern Ireland, the east-west connections between Dumfries and Galloway and the Borders are perhaps not good. That led to Mr Neil’s claim for rather a lot of expenditure of public money, although admittedly it would be over a period of two decades, which was a bit of a relief to Mr Mackay. That point was followed up by many other members. No doubt, we will consider the issue at stage 2, but I fully expect the new south of Scotland economic agency to give leadership on those matters.

That takes me on to Mr Smyth’s point in that regard. As far as I could gather, he suggested not that the body should have fiscal or budgetary responsibility for those issues but that it should have a say and take an interest in them. It should have an influence and a leadership role. It would be part of the agency’s work to consider connectivity, whether that is virtual, through the internet—which is of course of increasing importance—or through transport, both by road and by rail, as Mr Finnie was at pains to remind us more than once, and rightly so. The success of the Borders railway has been one of the stellar achievements over the past while.

I have been heartened to take part in the debate because, although I would not say that it was characterised by sweetness and light, there was rather less discord than in some of the debates that I have taken part in—I am not looking at anyone in particular. I do not wish to spoil that sweetness and light, but there is a serious job to be done in the remainder of the bill process. I have not had an opportunity to reply to all the points that have been made, particularly by Mr Rumbles, Mr Finnie, Mr Smyth and Mr Whittle, as I wished to do, but we will no doubt come back to the issues before the completion of the passage of the bill.

I pay tribute to Professor Russel Griggs and all those who have played a part in the partnership, which he has chaired. They have done a sterling job. Personally, I cannot recall any example in which there has been more public engagement leading up to the publication of a bill. The members of the partnership bring a wide range of business experience, third sector experience and experience of leadership in further and higher education.

The budget has rightly exercised the minds of members, and we have had a wide range of views on it. Mr Mason indicated that there are arguments with regard to budgetary priorities that we have not heard much about. However, the overwhelming view is that the approach that we are taking is correct, as it recognises that there should in principle be parity of esteem between all citizens in rural Scotland. That should have an influence, and it has had one in determining the approach that we are taking in our policy.

With regard to that approach, I think that I discerned a consensus that we need to walk before we can run. It will take time for the new agency to find its feet and to become established throughout the huge area of Dumfries and Galloway and the Scottish Borders, and to deliver and meet the expectations of the people of the south of Scotland.

I am delighted to have presided over such a cheerful debate—perhaps it is something to do with me; I do not know. [Laughter.] I commend the bill to the chamber.

Financial resolution

A financial resolution is needed for Bills that may have a large impact on the 'public purse'.

MSPs must agree to this for the Bill to proceed.

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Financial resolution transcript

The Presiding Officer (Ken Macintosh)

The next item of business is consideration of motion S5M-15863, in the name of Derek Mackay, on the financial resolution to the South of Scotland Enterprise Bill.

Motion moved,

That the Parliament, for the purposes of any Act of the Scottish Parliament resulting from the South of Scotland Enterprise Bill, agrees to any expenditure of a kind referred to in Rule 9.12.3(b) of the Parliament’s Standing Orders arising in consequence of the Act.—[Derek Mackay]

MSPs agreed that this Bill could continue

Stage 2 - Changes to detail 

MSPs can propose changes to the Bill. The changes are considered and then voted on by the committee. 

Changes to the Bill

MSPs can propose changes to a Bill  these are called 'amendments'. The changes are considered then voted on by the lead committee.

The lists of proposed changes are known as a 'marshalled list'. There's a separate list for each week that the committee is looking at proposed changes.

The 'groupings' document groups amendments together based on their subject matter. It shows the order in which the amendments will be debated by the committee and in the Chamber. This is to avoid repetition in the debates.

How is it decided whether the changes go into the Bill?

When MSPs want to make a change to a Bill, they propose an 'amendment'. This sets out the changes they want to make to a specific part of the Bill.

The group of MSPs that is examining the Bill (lead committee) votes on whether it thinks each amendment should be accepted or not.

Depending on the number of amendments, this can be done during one or more meetings.

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