Felly dyma'r tawr iaith yn y trafnodol trwy'r mirio amdanoag yw Fywrdd. Fy ei ddych chi i fynd i ymweld ar y cyfnodadur sydd wedi buddwl am y cyfnodol llwyddiadau a'i meddwl am y llwyddiadau, a fyddwn i mi bod i'n gafoddiad rylan organismu'n blaen nhw i'n mynd i'r digwydd o'r llwyddiadau a nhw i'r cynhyrch. Mae'n cyfnodol wedi'i ddechrau i fynd i ddoddiadau. four and five on the agenda in private later this morning. I agree to begin with the agenda draft budget is Citizenry in 2014-15, and we agree previously that影片 might take some full-on evidence on the Scottish government's draft budget for the current year from the enterprise agency. I want to welcome therefore the deputy executive of the council, Sheaf executive, Ian Scott, chief financial officer from Scottish Enterprise, Alex Patterson, chief executive and Forbes Duthey director of finance and corporate services, Hyland's and Hyland's Enterprise. Welcome back to the committee, to all of you. It's a change for the committee not to be discussing Scotland's constitutional future, so we'll try and steer off that subject this morning, if that's at all possible. Before we get into questions, I wonder, perhaps Lina Wilson and Alex Patterson, you might want to just take a couple of minutes to set the scene and see where you think things are with the Scottish economy and with the enterprise agencies and how you are contributing to our shared ambition of economic growth. Lina Wilson, do you want to start off? Thank you, convener, and good morning, everyone. It's nice to be back. Just maybe some brief context, first of all, with the general economy. Things are definitely picking up pace. We've seen GDP growth for seven successive quarters. We've got the Fraser of Allander Institute saying that GDP growth forecast at 2.3% for the next two years. Unemployment rates are up and unemployment is down. However, that sustained growth that we're all looking for, that shift from consumer spending to increased business investments, exports and productivity still needs to be worked at very hard, and weak growth in the euro is also a continued risk. That backdrop is very important to understand that in terms of the economic development decisions that we take. Scottish Enterprise has had, along with our colleagues in high, a very strong performance in the last year. We've had 117 RSA offers, over 6,000 jobs created or safeguarded. FDI Scotland has a very strong year, and we're investing still over 7,300 jobs. With the Scottish Investment Bank, we've invested £27 million into 104 companies. That's in the Scottish Enterprise area, and the high have had some great investments there, too. With our financial readiness, we talked about this a couple of committees ago, helping companies access finance. It wasn't just the availability of finance, it was the companies that were able to access finance and have the capacity. We've assisted 378 companies to do that. Finally, our trade and investment support for companies has almost doubled. We've helped 2,500 companies with trade and investment support, and that's 96% up on the year previous, so that big push on internationalisation. In terms of efficiencies and stavings, we've had a strong rack track record of service innovation and driving efficiency into Scottish Enterprise and to every aspect of the business, and we've exceeded the Government's targets in terms of our efficiencies, but all of that is about maximising economic impact. Finally, our plan going forward for the next three years is about, if I could use one word, it would be more. It would be more confidence, more working sectors, more jobs, more innovation, more internationalisation, which is at the heart of Scotland's competitiveness, much more ambition, connectivity and opportunities. Every single penny counts our Sib work. We know that our leverage is 1 to 3.3, and we know that we can turn every pound that we invest up to about £9 GVA in the economy, and that will determine every decision that we make based on evidence. We'll invest over £330 million into the Scottish economy, and 2014, aside from the constitutional interest, is also a big year for Scotland in so many other ways, so taking every single advantage from homecoming, from the Ryder Cup and from the Commonwealth Games, and we've got some very interesting statistics about how Scottish companies are doing in terms of that. Maybe that helps you to set the scene for the on-going discussion. Good. Thank you very much. Alex Paterson. Good morning. Thank you for the invitation to come back. Just a couple of comments. First, to reflect on the year that's just finished, from an HIE perspective, a good year in terms of hitting both our financial and non-financial targets. Over £93 million was invested in Highlands Islands economy last year, both through our resources and also resources brought in from elsewhere to take forward significant projects, and through investments made, over 2,000 jobs will be created, significant growth and turnover both at home, but a third of that for export markets and many good community projects progressed as well. As you know, we've got a lot of big significant RSIs, as we call them, regionally significant investments, so a number of them made good progress. Last year, Inverness Campus has gone from being an infrastructure project to buildings now going up, and Enterprise Park and Forest, which was the beneficiary of significance, shall already funds. There's now 600 people employed in that park, which is hugely significant for the murray economy. Last year saw the roll-out of broadband start, something that I suspect will probably be one of the most significant investments that Highlands Islands has seen over many years. Over 10,000 premises are already benefiting from the roll-out of broadband. Our plan for 1417 was launched just a few weeks ago. We've called it building our future. It's the first time we've given our plan a name, but I think it says a number of things. One is we do see the economy recovering, and I won't repeat what Lena says, but in terms of Highlands and Islands, unemployment rates are 2 per cent across the board. Employment rates are high. We know from our account managed companies that optimism and confidence going forward is increasing, so we think there is lots to build on, as well as this very significant opportunity that the region has. Our plan just sets out our four priorities, if you like, the building blocks, which we've had for two or three years now, which we think are the right ones. Our focus is just making sure that we drive increased impact through the delivery of these four priorities. Our budget was approved by the High Board last month. We're now two months into the new financial year, and we're motoring on all cylinders to make sure that we deliver the best economic and community outputs for the Highlands and Islands. I think that we've got some questions to follow up with some of the observations and recommendations in our previous budget report that looked around efficiency savings in particular, and then I think that we can open it up to broader issues looking forward and how we're going to utilise your budget for the current year to develop some of the ideas that you've just talked about. I want to run this till about 11 o'clock, so we have a little time in hand, but I would ask members if they would to keep their questions short and to the point, and if we could have answers that are as short and focused as possible, that would be very helpful, given that we've got a lot of ground to cover. Can I maybe just start off, maybe direct this to Lleona Wilson, a Scottish Enterprise, picking up an issue that we covered in our budget report, which was this issue of the 26.3 million of asset disposals that you were requiring to make in the current year in order to make up the level of income that was required. Now, you've helpfully provided us a table on structured disposal process of non-strategic assets, which is on page 16 of my papers, but I'm sure you'll have that there, I hope, which is a table of various properties. If I look at that table, I see the estimated income figure comes to, in aggregate, 27.5 million. So, just so I'm clear about this, that is the amount of money you hope to make by disposing of these assets, is that right? Yes. Okay, can you explain what the figure then is along to the right where it says disposals, and there's a figure at the bottom of 20.3 million? How does that relate? The 20.3 million figure in the box is the accumulation of three of the columns that are above it there. So, it's the cost of the asset adding on any additional cost that we have incurred on the asset since we bought it, and then taken away any of the assets we've disposed of, or partial disposals of that asset. So, that shows the net value or the net cost of those three things. Thanks for that clarity. Okay, and then, so this list of assets, is this the totality of your property disposals for the year? Well, of the year, but this is a list of what we would determine non-strategic assets. So, obviously, we've got some legacy assets that have been around for a while, and these would be assets that the sale of them would not impact negatively any investment that we want to make. So, there's a whole range of assets that we will hold, and, in fact, we'll keep investing in assets. So, for example, in Peterhead for the Energetica project, we'll actually invest in new assets there, the Inovo building at Tres Traffclyde University for Renewable Energy, we're investing in that building. So, these are what we would determine to be non-strategic assets that we would hope to dispose of this year. That said, the market is still tight, and we will, some of them, will have to be improved in order to sell, and perhaps not all of them will be disposed of, but these are certainly our intentions. Okay, because if I then look at a separate section that we looked at previously in our budget scrutiny, which is the strategic forum savings, for 2014-15, your strategic forum savings are to be £17.3 million, and according to the breakdown you've provided, property asset disposals represent £14.8 million off that, is that correct? So, that's another £14.8 million on top of the £27 million in this table. No, the £14.8 million is the element of the £27.5 million that is required to meet a strategic forum savings target. The target is £17.3 million in total, so the £14.8 million is the element out of the £27.5 million that we're likely to sell that can be attributed towards the strategic forum savings. We will generate more income than the strategic forum savings total. Some of it will be based on the asset sales. Some of those asset sales will go to other income. Sorry, I'm just a bit confused now. Are you not double counting here? My understanding was that the strategic forum money was top-sliced from your budget. In addition to that, you have to find another £26.3 million from extraordinary asset disposals. Not in addition to that. To be able to manage that top-slicing from our budget, we need to be able to generate £26 million. Per the final business plan, the figure is actually £23 million now, but that's what we need to generate to achieve the total income that's required this year after taking off the strategic forum savings. Do you quite understand that? Will I have another go at that? I think I'm going to repeat what Ian did say, but the strategic forum savings, you're absolutely right, top-slicing from the budget. Then we have to balance that budget and show how we will make those savings. The contribution will come from various ways that could be reduced headcount, it could be reductions in premises, it could be any number of efficiencies, and indeed generating additional income through disposal of assets. This year, how we're going to meet it is to take a portion of many things that we do, and the portion that we're going to take from our strategic assets is less than the total £27 million that we'll reinvest in our work. It's an accounting, I suppose it's a way of balancing it and accounting for it. But there is no double counting, convener, none at all. You won't probably have it in front of you, but I could refer you to the financial summary in our published business plan that maybe makes it easier to understand how those figures work, because that starts with the amount of grant and aid income baseline that we get for a budget from the government this year. We then take off of that strategic forum savings amount to come to the net figure that we'll get from the government. We then add back on the income that we need to generate to get to our total income for the year, which is then used for the expenditure. That shows both the 17.3 reduction in our grant and aid, and then adds back on the property disposal income to get back to our total income for the year. That might help the committee to understand that. We're actually seeking to be incredibly transparent, so I do want to make sure that that's the case. I'm just trying to understand the figures. Going back to your table on page 16 of all the assets to be disposed, we're just taking the top one there, a Prestwick International Aerospace Park. You've got an estimated income of £1 million against that, and yet the cost of the asset is £2.3 million? Is that not what we're representing a pretty substantial loss on? Well, I'll explain that. If you look at the columns that add up to the market value of £1.05, which is why we think we'll get a million for that, we did buy that asset at £2.3 million back in 2005-2006. We have had a partial disposal of that of £600,000, so there's not a loss involved in that. We've already disposed of that and got money for that, but we are looking at valuation adjustment reduction of about £685,000, so that's the reduction in value since 2005-06 for the land that we've got left that we are going to dispose of this year. However, the market value today is only just over £1 million, so that's what we think we can get for that. But similarly, that's balanced out by other properties and assets in which we'll have gains. So to an extent, as the market operates, it swings around abouts? True, but then perhaps if you weren't in effect being forced to sell in the current year in order to make a shortfall on your income, you could have held on to that for a few years until the market had improved. We could always hold on to something and we could find ourselves in the same situation, you're absolutely right. So this is a judgment call based on lots of years of experience about when is the right time to sell. I suppose one never really knows with hindsight. Okay, thanks. I'll bring in Chick Brody, I think, for some questions. The market valuation, when were they all done? It's part of our year-end account site exercise for this year, so they're valid as of end of March. By whom? Er, our independent values. I can't, I can't connect to that as I can get that to you. Can I, just to, we've talked about the numbers and I don't go, I'm confused already, but the forum savings had 17.3 million. Part of the income generation was disposals of 14.8 in the schedule that we have. I then go to, if we can find it, the published plan versus the current income projections, which shows the contribution of the strategic forum savings of the 17.3 million I mentioned. Then further down, it talks about another £4 million of property disposals. How have you differentiated between, why haven't they contributed to the strategic forum savings? Why have you differentiated between the two property disposal savings? I don't know the exact table that you're looking at there, Chick, but the facts are, we are going to sell somewhere in the region of £23 million. We're going to get generate income of £23 million from our assets. The target for strategic forum savings is less than that, so we've allocated an element of that 23 to explain how we're going to meet that target. We could have equally, and at one stage we did, put in the 23 million into the strategic forum savings target table, and it was shown, sorry. Why did you take it out? Well, it showed that we could have a total of, it would have been about £26 million. I think the question we were asked was, how are you going to achieve the 17.3 million target? So we showed how we're going to achieve that target. I could equally have said, and we'll exceed that by another £9 million from further property sales that we're going to have. I understand the cosmetic presentation. If I may just look at the 23 million, there is one item there that represents 7.4 million, which is 35 per cent of the total. How likely is that to happen? This is the Carrickston park, Cumbernauld. Our business infrastructure team have accepted the challenge from us to generate that level of income this year. It's a challenging target, we all know that. They've put that property on there, as being a non-strategic asset, that they believe they can generate that value this year, until we sign the deal that sells it for that amount. I can't say that we'll 100% do that, but the property team are confident that they're going to deliver that list for us this year. How much will the property agent get if he sells that or if she sells it? I don't know the detail on that, Chick. If we are using a property agent for that, it will be the normal level of fees that we would pay for that. There's an report that the property agent has been competitively procured under the marketing sale of the asset on our behalf. The reason I'm asking this is that it's such a high proportion of your targeted savings. Clearly, there has to be some railing centre to ensure that that 7.4 million is safe. That brings into play the cost of that sale. I can't quote the exact figure because I don't know it, but I'm sure it will be competitive as were any kind of market sale for that type of activity. As it says, we've procured that openly, so it will be a competitive price that will pay for that. Thank you, convener. I'm interested in, you know, and it's a question actually for both Alec and Lina. I'm interested in, I think particularly in your Britain submission, Lina, you talked about this problem of ensuring best value, if you know what I mean. If you're selling property and the fact that the market hasn't recovered and therefore there may be a loss entailed of selling property at this time, rather than waiting for a couple of years maybe till the market picks up. I absolutely accept that, but I just wonder to what extent you look at the wider economics of property disposal in terms of if you've got one big shed and you select a sitting tenant and then you use those resources to build another big shed, then it seems to me there's a greater public good being served than waiting for a couple of years to get another 10% on the disposal of that property. To what extent do you undertake that kind of analysis prior to making the decisions whether to sell or not to sell, or indeed which properties to sell? I'm trying to put it in women's language rather than economic terms. I think this is pertinent to Alec as well in terms of your disposals. Do you look at that wider economic impact? Absolutely, it's fundamentally that's really important. Just to explain to the committee, we don't build many big sheds anymore so we built the Innova building in Glasgow for a particular neat sector opportunity around renewables, but Scottish Enterprise is much more about incentivising the private sector to operate and to develop, so a lot of these are legacy sites. We also take into consideration the cost of maintaining those sites, so these sites sit annually with a cost, security costs or other maintenance costs or the future cost of decontamination. You have to take all of that into consideration as well as the economic benefit, but we would absolutely look at on one hand if we sell this and get some income, what can we invest it into, and so especially the stuff that's beyond the strategic forum savings, that's our key investment opportunity to invest that in sectors. Just to give us a more general feel for this then, in terms of proportion, or the proportion of overall value of the properties that you currently hold, what proportion and value terms are you disposing of? The total value in this year's year end accounts will be somewhere in the region about £140 million, £150 million, so if we dispose 20 odd million of that, then that's a seventh and eighth of that, but it's the proportion that we're looking at. You correct me if I'm wrong, but you said that you hope not to dispose of properties that has got a strategic importance, what proportion of those remaining properties would you ring fence in terms of disposing, not disposing, because of that strategic importance? It's under the 80-20 ratio, isn't it? So 20% non-strategic? 80% strategic? To be fair, we're maximising this year the non-strategic side of things, so by default the ones that remain are pretty well on the strategic list, Mike. But when it comes to next year's savings, part of those savings will be realised by future property sales, am I correct in that assumption? Most likely, yes. The other thing I think that's fairly critical here, because you mentioned the Prestwick Airport situation, and obviously there's a wee bit of a hit there or a significant hit, perhaps. Given that part of Scottish Government policy is about reducing regional inequality, and maybe I'll like my comment on this as well. To what extent are you affected by that when you make property investments in areas that, like in Vernes, for instance, there's been a growing area given rise to higher property values as opposed to making investments in areas where the economy is languishing, and therefore property values are lower? Because in a sense you're not talking about the sheds that you put on top of the ground, it's the land under the ground where you see those differences in values actually arising. Well, maybe from a high point of view, just one or two comments on the number of these points, and I'll come back to that. We're quite clear that we value our assets in the exact same way as part of the annual accounts, and we don't sell below asset value, and we go out and test the market whenever we're selling a property. The comment about, do you consider the wider economic issues when you're disposing the property? Yes, we do, and we've had examples where we've actually decided not to progress with some property sales because we thought either the economic benefit wasn't sufficiently great, or it could be detrimental, particularly to some of our more remote and fragile areas. I think the other thing to bear in mind is that whenever we sell an asset then it's for reinvestment in other projects, so they are contributing towards new projects, and we have a strategic infrastructure plan which sets out where we think we want to make investments in property or land preparation to encourage new build. In terms of the regional economy or regional inequalities, that is a really important consideration because, sure, there are headline projects on the Inverness campus, but I can equally take you to projects about to go in site in Dunun right now to expand the business part down there. There are buildings up in Ornay. We've partnered with private sector developers in Campbelltown. We've contributed towards the community's development of industrial units in Galsony State in the western Isles, likewise in Ulipwil. I am of the view that strategic investments or well-chosen investments in property and infrastructure are actually catalysts for economic development across the Highlands and Islands, but we have a very clear focus on making sure that it doesn't become in the Inverness centric thing. Those are just a few examples, Mike, of infrastructure and investments, property investments that we've made across the Highlands and Islands to make sure that opportunities are spread fairly. The floor is not going to make additional comment. The other important element is market failure. In terms of wanting to build something in western Isles for argument's sake, quite often the reality is that it costs more to build something in western Isles and it ends up being worth in a commercial operation. If we didn't step in there and actually do that, then the private sector would not come in, so that's very much developing and pushing our economic development role in that aspect. In terms of the impact that has on our accounts and such like, that's well recognised by the West Scottish Government and we get our non-cash allocations for depreciation and for write-offs and such like accepting that reality. But as Alex rightly says, we don't wish to be long-term landlords. What we want to do is promote a commercial property market and therefore if we can get an exit that makes economic sense for the area in the region, then we'll take that at every opportunity. So really that's what it is, but we turn over probably about 10% of our property every year in that sort of context. Our property portfolio is probably in the region of 45 million. We sell about 4.5 million of capital receipts a year, so it's that sort of reinvestment to look for more opportunity because once a business park is let and established, it would be wrong for us to sit there in the longer term if we can release that funding and go and do something else. And I'm getting that picture. Just one further brief question, convener, is a compound question. But I just wondered that you mentioned in the written submissions that one of the problems sometimes in disposing of properties is that you may have a sitting tenant who would love to acquire it, but they're unable in these difficult times to raise the finance. I wonder if you've considered or employ shared equity schemes similar to some of the social housing schemes that allow people to buy progressively. And a final comment, my ears picked up when Alec mentioned 2% unemployment rate in the Highlands and Islands. Are you sure about that figure? Are you not referring to the claimant rate which understates unemployment? And you'd agree with me that it understates unemployment to perhaps to the extent of maybe 50% or so? There are two different measures, so I can just use the claimant count one, but it is lower than the other one. You know, if John Swinney's listening, I would hate him to form the impression that everything's rosy that that represents true unemployment, that I would hate him not to recognise that we export a lot of our unemployment in the Highlands and Islands. I would hate him not to recognise that things might be, present a different picture, were it not for the renewal of oil and gas activity in Shetland to quite a significant degree. So I just thought it was worth putting that on to the record. That really doesn't represent a true picture of Highlands and Islands. There are two different measures. I've used the claimant count one. However, on the 18 travel to work areas across the Highlands and Islands, unemployment has fallen year and year since last table to this year, it's 17 out of the 18. So there is an underlying reduction in unemployment, which is good. So, yeah, let's not pretend everything in the gardens rosy. There are challenges, but you know, that's not a bad position to be in. Yeah, but then it's going briefly in any check. Just a brief one on that, just because we're looking at figures. I mean, you've also, if I remember right from the figures, was at 7.5% increase in the population growth. Is that population growth due mainly to people coming in from the skills sector? Or is there other reasons? It's a combination of things. We should maybe give you a week. We've got a wee profile of the whole population changes in the Highlands and Islands. There are issues underneath it. The population of the Highlands and Islands is marginally older than the rest of Scotland. We still have an imbalance in young people who leave for higher education, which is why UHI and other things are so important. But on every other age range beyond that, there is a net growth. I'm just looking at the increase aspect, because there is an increase in the population figures, isn't it? Yes, there is. And it's not universal. So, you know, if you look at places like Gail and Butte, there's been a decline, but Highland Council area, Western Isles, Orkney, Shetland, significant increases over the last population census. Thanks. I should probably want to come back in. Just if I may come back to Alec and Forbes. By the way, I should have said good morning. When I look at the properties that you've disposed of, there are about 2.1 million according to the sale price. And the asset valuation, there's a difference of 25%. Now, that's either a good selling and marketing, or the valuations are wrong. I'm confused by the comments, by the commercial sales that make economic sense. And Alec said, you'll never sell below asset value. That comes back to, again, to the accuracy of the valuation. I mean, what is the policy? Is it you will not sell below asset value, or given all of the other attendant costs of buildings lying empty in terms of energy, need for maintenance, loss of interest on cash?  Is it cost of ownership? Is it simply an asset valuation? What is it? The baseline is we cannot sell, we will not sell below asset value. That's the starting point. And then you're looking at what price will the market pay for different for different properties. So you're right. We've asked ourselves the question, are the asset values correct? But they are done independently. It's part of the annual accounts in Audit Scotland. We're comfortable with that approach. But the basic absolute ground is we do not sell below asset value. I don't even allow to. No, no, no. I've made the point about valuation. Scottish Enterprise, what's the same policy? Yeah, absolutely. It's the public finance manual policy that market value. You can't dispose of some below market value. Clearly, all of the costs that you outlined there will form part of that independent valuation. Just before, and we need to move on and talk about other issues, but I just want to go back and just get some, try and get some clarity on this property disposal issue because I've been looking again at the table. It's on page eight of my papers, but it's headed table one 2013-14 published plan versus 2014-15 current income projections for Scottish Enterprise. I don't know, Ian, if you've got that one in front of you, but this is the one that shows your 2014-15 draft budget, starting with grant and aid baseline of 220 million, of which the contribution to strategic forum savings of 17.3 million comes off it. And there is then added in 46.1 in your transfers, giving you a total anticipated grant and aid of £248.9 million. Now, if I look at that second column of the strategic forum savings, there's 14.8, there are property disposals. There's a further property disposal line of four million, and then additional income from further asset realisations of 26.3 million. Now, it's a long time since I did O-grade mass or, sorry, arithmetic, but I make that 45.1 million in asset disposals. Is that, am I right? I'm still trying to find the table. I'm sorry. Yeah, for the record, I got an A in O-grade arithmetic, but it was a long time ago. I'm happy to come back to you on a more written basis on that one, if that would help to... Could you help us with exactly what table you're looking at so that we're looking at the same thing? We'll get a copy, don't you? It's from your submission to the budget. That was the original submission that we did before the previous committee. That's right, yes. I'm looking at the second column there in which is the draft budget for the year we're talking about, and what I'm saying is you've got 17.3 strategic forum savings of which we know 15.8 is asset disposals. You've got a subsequent line below that for property disposals of four million, and then you've got 26.3 additional income. Now, I make that an aggregate 45.1 million in property disposals. Is that correct? No, it's not correct. You can't add those things together. As I outlined earlier on, there's a minus 17.3, sorry, I'm looking at the right figures here then. The minus 17.3 comes off our grant in aid, so that reduces the amount of grant in aid available to us from the government to try and make that up to maintain our expenditure levels. We then add back on the property disposals that we're going to have. Per that table, you would be right to add the four million and the 26.3 at that time to say that we needed to generate about 30 million from that. No, I'm sorry. I simply don't agree with your arithmetic. I think you're double counting. It's a very simple mathematical equation. In fact, it's not even that. It's an mathematical equation. To make your right, your 17.3 is top-slized off, but you're making up that 17.3 by 14.8 in property disposals. You can't count the same figure twice. I'm not seeing a figure of 14.8, sorry. No, 14.8 is included in your 17.3. The information you gave us was your 17.3 was made up of 14.8 in property asset disposals and property income. Can you maybe come back to us about this, because I think we need to get an understanding of it. The 14.8 is definitely included within the 26.3. I think in that case you're double counting it. You can't count the same figure twice. No, we're not double counting it. I'm happy to come back. Okay, thank you very much. And what's the total value of Scottish enterprises property holdings? I think it's about £140 million to £150 million is what we'll probably have in our year-end accounts this year. Right.  As Forbes says, Forbes normally turns over about 10%. We normally turn over a bit less than that. It's normally been about £4 or £5 million for the last few years. I think our three-year business plan that was published shows that for next year we are increasing that significantly because of those additional reductions up to 23, but then it goes down to about 8.8 the next year and about 3.4 the year after that. So we're probably in the region of about £6 million a year if you want to average that out normally, but we're increasing that significantly next year because of the additional reductions that we've got. Okay. Your strategic forum savings for next year will be another £17 million, you would expect? We think it will be at the moment, yeah. We're anticipating that. There has been no confirmation of any savings next year. Which presumably will require more property disposals? Well, there'll be some property disposals. Again, I think the plan that we've published shows that we're looking at £8.8 million next year. You'll actually see an increase in the investment disposals next year. We hold equity in companies and we believe that we're now at the stage where we can get some return on those assets as well, so it's probably going to be more on the equity side next year than it is on the property disposal side. Right. Okay. Okay. I can tell on at least one side of the committee there is kind of disquiet in terms of these figures, and that really is not our intention today. So we are seeking to be very, very transparent. There is no double counting, but I wonder if between committees we can find a way to iron some of this out so that we're not sitting here, not looking at the same table sometimes, and not looking at the same figures, because I don't think that's in anyone's interest, so I mean I would be willing for us to be as open as possible, sit with members and really go through all of this so that we don't have this scenario, which we do seem to keep coming back to, and it's not satisfying for anyone. Yeah. Okay. Well, we can follow that up with you. Thank you. Okay. I think we can really move on to talk about other issues unless Emily wants to follow this up further. I'll bring in Dennis Robertson. Good morning. Highland Islands. You've got a very ambitious or aspirational programme for the future. How much of that future projection in terms of income generation is attributed now to the roll-out of broadband? If you're looking at the budget table in our submission, then the roll-out of broadband, the income we will get to roll-out broadband is not in these figures. So that is over and above the figures which we've got there. So the superfast broadband, community broadband and our contributions to Scottish land fund is in addition to what's noted there. Equally, the expenditure is net of these figures too. Do you see broadband as an opportunity for bringing in additional business? Broadband is, from my point of view, the most important thing we're trying to do in Highlands and Islands because it both transforms what current businesses can do. It makes the region more attractive to emerald investment and we know that's an important factor. It makes some of the issues of distance and geography less relevant because you can do things over digital connectivity. So, as I've probably said here before but said in many other places, getting the fibre on the ground is just to start exploiting it for economic community benefit is really where we'll start to see the difference. So, yes, the infrastructure is a means to an end, not an end in itself. I'll come back to you in a second as well. With Scottish Enterprise, you actually see that as a bit of a challenge, don't you, in terms of... I think one of the part of your submission was saying that part of the challenge for you is the fact that there's not adequate digital connectivity in broadband in certain areas. That's right and we are working a lot with the Scottish Government's digital team on that very front. It's such a key to competitiveness access to that speed and capacity of connectivity, Dennis, that's right. I'm just wondering how much that does impact on in terms of future development and how off-putting it is for maybe encouraging business to come in. Would you be able to sort of project a figure on that? So far, I mean, I don't think any inward investment hasn't been able to come to Scotland because of a lack of connectivity. So, I mean, it's not tampered any investment. I wouldn't be fair to say that I can put my hand on heart and say that it stopped any business from growing and certainly we talk to businesses a lot about their communications issues and the way that we did with the banks, we intervene with the providers, we influence on their behalf, we do all of that with their account managers, but we haven't lost any investment to Scotland because of lack of connectivity to my knowledge. SNE basically are looking at having an increasing global market and part of that would be the exports. I think you used a term smart exporter programme. Can you maybe explain what smart exporter programme is? This is a programme that runs actually throughout Scotland and has been one of the reasons why we've been able to almost double our activity. So we've reached thousands and thousands of businesses that really haven't had any, paid any attention to exporting. So this is the programme to get new exporters exporting because as we've talked to this committee about before, the issue is that most of our exports come from a couple of big sectors and we've got too few companies exporting. So this is the initiative to, from awareness raising, market development, product development, into advisory services to reach as many companies as possible, often very small companies. Moving the innovation side and some sort of new entrepreneurial developments, yeah? Yes, everything from how you export, so very basic awareness to awareness of what markets you could export to, how your product could be packaged, how the technical side of exporting guarantees, licences. It's really that step-by-step approach to open up minds to exporting because all of our research tells us that companies think it's more difficult than it is to export. So when they become more aware, when they understand when they meet other companies who are doing it, they're more likely to do it themselves. How fragile is that because I think, again, your submission, you're saying that a lot of this is based on partnership and collaboration? I don't think it's fragile at all, Dennis. I think the fact that we are collaborating and that there's such robust support throughout Scotland now, I think that's a very good thing from business gateway all the way through. I think there's a very joined up team of Scotland approach to making Scotland much more international. So I think it's actually stronger than it ever was, the collaboration. That's great. Highlands and Islands, I mean basically again, I think you're hoping to develop new export opportunities, is that right? Yeah, I mean there's two basic strands to the exporting approach. One is to help those who are currently exporting do more and the second is to help companies who don't export to consider exporting and that's, as Lina says, actually what the smart exporter programme is designed to do, help those to take the first steps towards exporting. So that's the twin track of our internationalisation support. Grow what we've already got into new markets and secondly to encourage and help support those who don't to look at exporting, because as Lina said, the risks are often overemphasised and the benefits maybe under-emphasised, so that's our plan. I mean you've got traditional companies that are exporting so you're continuing to support them and you're looking at new opportunities. Okay and is that primarily within the food and drink for yourselves? It's across the board, food and drink is important and we're in the access to market programme for food and drink companies so that is vitally important. Not but it's across the board. I think one of our most internationalised sectors is the creative industries and so we're doing a lot of work, a new strategy of creative industries, a major part of which will be international trade but any company that we work with, a co-managed company who have aspirations to export, we will support them irrespective of the sector they're in. Maybe lastly again just looking at the export market, S&E are looking at new areas, China and the Asian continent and I think you may mentioned in your submission again that although you're still looking at the European market because of the problems in around the Euro, you are looking towards the other markets as a sort of preference in terms of export market, they'll be right. I think Dennis it's a both and strategy not either or so some of the European markets are still very very important for Scotland, France, Germany for example but if you look at what's happening to Scotland sectors this massive internationalisation of oil and gas so we've got an office now with the SDI in Calgary in Ghana, we'll be opening up in Kenya so following that market opportunity where the sectors are growing Perth West in Australia it's very very opportunity led and that will continue to be the case. Will you anticipate the value of that to be in terms of? It's very hard to say, I mean we're not going to turn this around in a year, we're going to, this is about you know some of it's quite frontier stuff, some of it's about building capacity, some of these are quite you know challenging markets in terms of lots of opportunity but difficult to work in so. It's absolutely and you know in terms of some of the results we've seen I think we've got you know tens of Scottish companies already in Perth Western Australia you know track oil telling us they wouldn't be in Australia but we're not for the support that they got from us, this is very important on the ground particularly in challenging markets like Western Africa. I mean is there any way that you could project any sort of projected figures in terms of how beneficial it would be to SNE in terms of projected income? Yes you could look and see in terms of what exports, so you could look at what is Scotland's export to Ghana last year and what will Scotland have exported to Ghana in two years time and you'd be able to tell quite quickly year on year how many Scottish companies are getting into to markets. And Highland Islands is the same in terms of your global market you're looking right across that new new areas? Yep, we work together in partnership through SDI you know we know that Highlands and Islands businesses for them the European market is still vitally important but the Asian market and the emerging markets particularly for oil and gas that are as relevant to us the rest of Scotland. Lastly SNE you've restructured your account management profile is that right? We have we've brought in a very even more differentiated approach really looking at the value so putting the best resource into the most likely value focusing on high growth and internationalisation and we have just embedded that very recently so it's taking a step further on that segmentation if you like. You anticipate that that will give you a higher return at the end of the day? Well that's what we're looking for I mean we had quite a record year for the increase in turnover through our account managed companies and what all of that we did a very big evaluation into account management which showed us you know 70 satisfaction showed us that companies that we work with are likely to grow at a much faster rate showing us that 70% of those companies are SMEs and we used all of that evaluation again this this obsession with evidence to allow us even further to differentiate and segment so this idea of global account teams Dennis if a company is looking internationally they won't just have the Scottish Enterprise account manager that account manager will be leading often a global account team with SDI personnel with sector specialists and so putting as much resource behind Scotland's greatest opportunities as possible which will yield greater economic impact. You mentioned this year is a particularly important year and yeah just and you're taking full advantage of it. We are we are we've had I think 20 odd million pounds already of business for companies out of the Commonwealth Games we've got a whole range of Scottish companies who've already got business through the Ryder Cup and that's been you know much more than the proportion around the Olympics where we did well as well so that's really important. I mean the account management it's about five pounds 50 gva for every pound we spend now in account management so it's very significant and the aim is to get that figure you know up as the years go on. Very generous time allocation for me. Exceedingly generous Deputy convener. Okay I need to move on Margaret McDougall. Thank you and I wanted to ask you questions around the account management as well part of that has has been answered on you know the ratio between SMEs and multinationals or national companies who are on your books. Do you think you said it was 70 percent of our SMEs is that correct? 76 percent of our portfolio Margaret to our SMEs. Yeah so does that mean that 24 percent are then multinationals or? Well unfortunately they won't quite be multinationals this Scotland SME you know beyond an SME isn't often quite a multinational but some of them could be multinationals so for example companies like FMC from Houston Texas and the oil industry they are account managed by Scottish Enterprise but we've you know helped them create hundreds of jobs in Scotland and R&D centre in Bells Hill and so they would get the same service. I think I said to this committee before when you're in Scotland we regard you as a Scottish company and we want to see you expand. A lot of our inward investment comes to Scotland to then export from Scotland so it's very very important as part of Scotland's internationalisation. Amazon yes is company we support. How do you balance that you know given that Amazon are one of the companies who are not paying all the taxes that you should be? Well we've recovered this extensively at this committee before and I think I'll just be giving the same answer as before obviously you know company taxation is I don't set that it's not a matter for Scottish Enterprise what's really important to me is the economic impact that companies like Amazon make in Scotland and you know Amazon are a big contributor in terms of jobs to the Scottish economy they've got their service centre in Edinburgh in addition to the fulfilment centres so you know the taxation element is is is beyond me, Margaret. It's just it's a pity that these things are not looked into when we're looking at funding these organisations. It's very clear so they have they met all the criteria for regional selective assistance in terms of the nature of jobs that they were creating and so in terms of the existing criteria they met all of that. So in account managed companies how many new companies have you taken on in the last year into to be account managed? So in the last year I'm going to have to put my glasses on to look at this one we had 273 companies come in to the portfolio of around the 2200 and I think I've told the committee before we want to keep growing that amount but interestingly we had 183 leaving the portfolio that churn is very important it's not a static portfolio so we're looking for new companies that are growing to come in but there are maybe some companies that aren't growing so fast or don't have the ambition or don't want to work internationally and it's very important that they you know leave that portfolio as well so 273 joined it so that's an increase of over 10%. On entrepreneurship how many companies have you helped entrepreneurship? I mean I'm reading some figures and they seemed not terribly high for you know entrepreneurs and it was around 50 who had helped is there any way that you can boost that number? I would hope we could boost it I mean we should I've said to the committee before I'll never be hampered by the number of resource we can put into companies that can grow I'll find that from somewhere so the key to entrepreneurship is Scottish Enterprise is about high impact entrepreneurship and I want to differentiate between entrepreneurship and startup startup support is the domain of the business gateway which is doing a very good job there and what we're saying is the flow through from some of those companies that grow from business gateway into account management that's where some of the 273 is coming from the kind of entrepreneurship Scottish Enterprise is about is about high growth and you're right we supported 43 companies with their specialist high growth unit and those are companies that are going to become account management in addition to that we've had seen 54 companies get edge awards through that very specialised entrepreneurial support so Scottish Enterprise's role in this is about high impact entrepreneurship high growth entrepreneurs that will be you know growing companies employing lots of people in fast growing markets in Scotland's key sectors the business startup side of it is for business gateway you have a good working relationship with business gateway we have a very good working relationship with business gateway and you know throughout the country that's really really important our market if you like for our source of new companies to work with a huge part of that should come from business gateway do you give us an example of what these new companies are that entrepreneurs that are now being established well they're in a whole range of scotland's key sectors and you know life sciences in energy we've seen so in the food market angelic gluten free foods who got 50 000 pounds to start up so they tend to follow market opportunities and new trends like premium food or gluten free food or you know so a whole range of a whole range of companies some of the work you do is around banking and you're you're working with banking and helping small sms to to get loans and you know to be financed do you find that banks are helpful in this i've been very impressed with how much the banks want to work with us and i have outlined this to the committee before we began a programme a couple of years ago on on access to finance and we have these specialist access to finance advisors we've worked with several of the banks now getting their relationship managers together with our account managers making all of our information available to them running seminars on how businesses grow so i've been you know very impressed with how much the banks want to engage and we are seeing some improvements in terms of the range of companies that apply for finance and get finance that has been steadily improving it's good to hear that banks are lending where they should be um and highlands and islands alex do you have any comments on those same questions same questions oh blimey right just picking up one or two and i think in terms of the situation with banks we've formed really good relationships with a lot of banks over the last sort of year 80 months there's more liquidity in the banking system now than there's been for a long time and you know in terms of our businesses when we asked them what are the big issues for them access to finance is still there but it's not as big an issue as it was a year or so ago so i wouldn't say the problem has been fixed because for those to whom it is a problem it is still a major problem but the the extent seems to have diminished somewhat and you know what we are finding working with the bank says that where we have clients in common sitting down with the client together with the bank and putting together some deals that maybe individually we might not been able to do but we've both been able to invest in a business and move and move things forward in terms of account management um i think i said to the committee last time i was here we were you know undertaking a review of account management which is not yet complete about all i would say is that certainly the initial indications are very positive in terms of the difference it's making in additionality that's that's been you know being achieved through through account management and the range of services that are provided seems to be well regarded by businesses in terms of entrepreneurship um exactly the same as leaner we focus on those entrepreneurs who are running businesses who can grow um we have two main ways of doing it one is through our leadership programme which we partner with the iod on and the second one is through a partnership with MIT and i think about 50 businesses roughly 50 entrepreneurs from the highlands have participated in the MIT programme over the last year either out there but increasingly through master classes run by um by it's part of an entrepreneurial entrepreneurial programme here in Scotland so entrepreneurship and leadership really really important as part of our support to businesses i'm not sure if i covered all your questions there Margaret with some of the menomins Alison Joseph has a supplementary i think if i can just pick up on on the amazon question i understand that you're saying it's it's not for you to decide whether or not giving money to amazon's a good thing there just seems there's an assumption that it's a good thing i mean obviously if we're giving funding that comes from the scottish taxpayer to a company and we're helping them buy property and so on but we don't appreciate what's happening when you know the taxes if those employed by amazon go to the x checker we might be having to boost some of the you know poor wages for example through tax credits and so on who would have the information overall i mean we had Hugh Andrew from Berlin books in this very committee and he pointed out that by giving money to amazon every book he sold was undercut by them putting him at a really serious competitive disadvantage and this is a small indigenous company so does it has someone done the maths at a higher level i'm not sure we have given amazon any money in the last year or not someone to i need to clarify that we did this about a year ago i think at the committee as well so i'm not sure amazon have had anything regional selective assistance looks at two things and without going into the economic jargon it looks at additionality and it looks at displacement and regional selective assistance would not be able to be given to a company if there was not a proof looking at all the calculations that this was truly additional to the Scottish economy so if it was merely causing displacement somewhere else in the case that you gave then regional selective assistance would be in question so i think to to to what you're saying Alison there is a bigger moral and philosophical issue here absolutely and so i'm not saying that that's not the case and i think i said this the last time too but my job in the stewardship of Scottish Enterprise with public funds is to look at economic impact and to make sure that everything we do yields a return and i know that for our activity is anything up to nine pounds back to the Scottish economy so i'm not saying there are not other issues that have to be looked into but in terms of everything we do we do look at displacement and we do look at whether it's additional to the economy if you have other questions convener but i don't know if you want to come back to me later okay i'm going back to you in a little while because i want to bring the colours in fine Joan McAlpine you mentioned earlier about the success of your focus on exports and growth and you talked about the sdi network can you give us some indication as to how the network has grown in recent years well we've opened five new offices just in the past couple of years so if i've talked to you about an sdi services both Scottish Enterprise and Tiles and Ells Enterprise so we've almost 100 people now throughout 28 or 29 28 offices throughout the world so Calgary, Ghana, Kenya, Saudi, Second Office in Shenzhen and China those would be examples of the the office network in addition to that we've got some 600 global scots throughout the world to we use extensively i think the term i used before was we ruthlessly exploit them for Scotland's advantage and we use them very well and then where we don't have sdi offices throughout the world we work with UKTI to use their office network throughout the world also okay in terms of the balance between the sdi network and your global scots and the use of embassies what would you say was the most useful in terms of delivering for scots? I mean our activity is almost really mostly through our overseas offices our office network of the 28 offices and all of our staff throughout the world i mean that's their job they are our foot soldiers they are our sales force they are our eyes and ears global scots all have day jobs they do a tremendous amount for us and they're an extension to our workforce but they're not our workforce so absolutely first and foremost it's our office network bang for your buck it's the it's the sdi network absolutely absolutely okay um that's great i just wanted to pick up on what you mentioned earlier in your submission about the number of uh Scottish companies that would benefit from the commonwealth games and that that being far greater than the olympics have you any idea why we've been more successful with the commonwealth games than we were with the olympics in terms of well i think commonwealth games is on on the doorstep so for some smaller companies it's it's easier and i think we learned a lot i mean Scottish companies did well we have had a lot of workshops they did well at the olympic games but i think we've learned a lot from that and we've had a really relentless focus we've run event after event we've had communications campaigns marketing campaigns we've made sure every account manager understands what the the program is all the business gateway officers understand so we've had a real kind of team scotland focus on that joan so i think it's it's here it's on our doorstep it's been real strapline for both organisations to take advantage of 2014 in every sense possible and view economic development through the lens of 2014 has been the language we've used and there's been this real focus we've learned a lot and it's on our doorstep obviously your focus on sectors and on exports has been successful well do you have a strategy for regional disparities across scotland in terms of you know some regions are doing a lot better than others perhaps because they have more of a focus on the sectors that you've chosen to concentrate on the issue of regional equity is really vitally important i think i have said this before that we won't have a successful scotland of you know large parts of scotland are not participating in that so for example if i think of the work that we've been doing in Asia with the three councils actually looking at additional account management support looking at the impact companies like GSK can have in the area working with East Asia particularly on the back of what's been happening on the coal industry so specialised programs there i myself was with the the Crichton campus leadership group a couple of weeks ago helping them with well what kind of assets do you have that we can exploit the advantage of scotland enterprise is that we can put our people and our resources anywhere in scotland but it's got to be about not just a needs-based approach it's got to be about what assets can we exploit for economic advantage because then we could be playing money into things and getting no return but where there are opportunities and i think it's our job to help areas of scotland to have that opportunity we also have a location director a very senior member of staff for every single local authority in our area now and i sit on the national community planning partnership steering group and we have a very senior member of every community planning partnership and i think that's a great opportunity for putting the economy at the heart of that and helping community planning partnerships particularly in areas of maybe more disadvantage look at the economic opportunity comparing what the structure then under the lex and now when you're working with different partners like local authorities do you think things have improved under the current system or do you think there was a clarity with the lex that allowed more of a regional focus i think well there was certainly a clarity in that you knew you had a scotland enterprise fourth valley or a scotland so but that was also a kind of ceiling on ambition so when i wasn't unfreased a couple of weeks ago and talking to them about that challenge we actually have actually we work with more companies than we did then we have no less staff in the area and if i think that the budget for scotland enterprise in frees and galloway was 10 million pounds that was a ceiling so we didn't spend any more than that into frees and galloway there is no ceiling now if the opportunities to spend 20 30 40 million into frees and galloway and we can help them do that we'll devote that resource to it so actually um we can we can do more for some areas of scotland now and also we can mobilise our staff all over the country and bring much more resource to bear so i think the results show that the impact is greater we also only have one finance director not 13 one hr director not 13 one chief executive not 13 so i think it's much the clarity is much greater and all the evidence would support that during our access to finance inquiry and i was going to go mention to access to finance earlier but we looked at some of your account managed companies and their access to finance um the beginning of the year and there was huge regional discrepancies in there were also sectoral discrepancies but there were big regional discrepancies in access to finance even amongst your account managed companies what are you doing to tackle that putting extra resource into that i mean the so it's not just access to finance i think a really important thing has been how a lot of rural companies are running what their ambitions are how many of them are participating internationally so we've had 1500 rural leaders through a very dedicated rural leadership programme alex talked about the importance of leadership and i think that we'll see that come through jones in terms of the ambition the ability the ability to have a growth plan for your company because access to finance isn't always about the availability of finances about the fact that the company doesn't have a business plan that can be supported and a lot of rural businesses are smaller businesses and you know haven't really been been through that so working in this community of them working together and i think that's that that whole approach to rural businesses is really important the rural businesses in terms of our account managed portfolio has also increased last year so bringing as many businesses as we can into account management but it's also going to be it's always going to be a challenge um Richard Baker thank you i'd like to ask what progress has been made through the the Scottish investment bank and Dr Wilson you talked at some length about your aspiration to grow your account management portfolio but why that scene as a as a priority rather than for example investing more through the Scottish investment bank or or your co-investment strategy so what's the balance what's the decision you make there in terms of where where provides the greatest bang for the buck for your for your budget it'll always be account management first because it's it's companies that grow the economy the existence of a Scottish investment bank in itself doesn't do anything we have to have companies to apply it to so we grow more companies and then we grow more demand for investment then we'll grow the Scottish investment bank accordingly but remember the Scottish investment bank is all about co-investment so actually it's about the leverage that we we create through that so Scottish investment bank is actually not just about public funds into companies it's about getting the market to operate so number one for me is growing the account managed companies growing the growth company base in scotland and then everything else follows that in terms of growing company activities in relationship with companies obviously you also have cooperative development scotland as well and what potential do you see for further activity by cooperative development scotland what progress is being made through that activity and do you find do you think there's more what scotland enterprise can do in terms of working with business of the keen to have non-traditional alternative business models including cooperatives um well last year cds supported 36 employee ownership and co-op ventures um and you know so i think that's that's up on the year before um the the cooperative development model or employee ownership model i think is really important and we'll do as much as we can to support that that the last meeting of all the industry leadership group chairs which the cabinet secretary for well mr swinney chairs and it's the leaders of all of the industries all of the regional advisory boards they had a presentation on cooperatives and you know in terms of how that could apply to the other sectors so that that's really getting out there Richard it's very important all and every business model should be looked at in terms of what's appropriate for a company and cooperatives and employee ownership are one such model very encouraging and returning just to the issue of account management and you said why that is such a priority for you and you mentioned earlier the um the evaluation of your engagement with account managed companies which published in september um that talked about several challenges that remain for scotland enterprise in terms of approach to account management um you've mentioned the issue of churn already what you say has improved the the um the issue of the number of companies exiting from account management in that report was still deemed to be low but i think you said there's been progress there but it also said that in spite of improvements there remain significant gaps in scotland enterprises management and performance data for account managed companies so how are you dressing that challenge and the other challenges which were actually outlined in that evaluation report in terms of your account managed companies well we take that take that very seriously i mean i was delighted that the the parliament Scottish parliament endorsed the work in the debate of the work of hounds and aisles and Scottish enterprise in terms of account management because i think it really is our flagship our flagship way of improving the economy um and my obsession with evidence means that i've got to be careful because i'm only as good as the data that i have so i think these were talking about improvements in what's already robust data but if you look at for example last year our account managed turnover growth from our portfolio was one point just under 1.4 billion compared to a billion the year before so it's that kind of data and a lot of it is down to the fact that when do companies have their annual accounts how good are their business plans and accounts how robust is all of that um but it's it's not something that concerns me it's about you know natural improvements that we should be making those improvements are ongoing yes i'm going through yes and my final question convener it's simply um Joe mccarpan raised the issue of the commonwealth gains it's very important i'm sure you'll agree that the benefit of that has felt by businesses throughout scotland and i understand that only two businesses in the northeast benefited from contracts for the commonwealth gains i don't know if that's an accurate figure or not but i mean do you are you confident that in fact the whole of scotland beyond Glasgow is fairly benefiting from the economic impact of the commonwealth gains i'm confident that the message went out to every single company that would be eligible i don't know if it was only two or not but i can tell you that they're not all companies in glasgo i mean they're all over scotland um i don't have the breakdown in front of me but i could get it to you so i'm confident that the opportunity has been there for every single organisation of scotland that would be relevant thank you can i just before i bring in allison johnson can i just ask a supplementary to richard baker's first question which was about the scottish investment bank now there were plans for the scottish business development bank which the scottish government announced two or three weeks ago was was not to proceed what was scottish enterprises involvement with that a scottish enterprise were involved as a part of a working group led by the scottish government looking into the feasibility of a scottish business development bank and we were providing evidence data looking at the market looking at what's been happening through scottish investment bank and looking at you know what what would be beneficial and what is disappointing to you that that didn't proceed um i mean again i work on the evidence i'm not disappointed one way or the other we need the institutions that we need to impact the economy and if there's an opportunity to grow the scottish investment bank even further because the market is there and the opportunity is there then that's a very good thing and what we call something i don't think we should get too hung up about is what's happening in the economy the leverage we're getting and the investment that we're making in growth companies um allison johnson okay we know that globally levels of company ownership amongst women stubbornly low and it's a problem that we have here too um out of the 43 high growth entrepreneurs we heard about earlier do is there a decent percentage of those are they women when you say a decent percentage i would imagine you would be disappointed with the answer i often find myself the only female chief executive in a room as well so it is an issue about how we bring women through we're working just now with a couple of groups in terms of how we get more of the high impact entrepreneurs as women so we're very mindful of that and is there any other tailoring of our support that we should be doing scottish enterprise for years has i has gathered a lot of evidence of of you know why women do or don't start businesses how they grow do the internationalize or not how do women access finance we've got a lot of data um there's been a lot of specialized support for women in starting up businesses in the last few years but i don't know how many of the high growth or the high impact are i don't know that specific question but we do obviously monitor the the connectivity issues right across the board and the companies and the businesses that we work with and i believe that of the the businesses accessing our services for the first time the number of women owned businesses increased from 26 percent in 2010 up to 35 percent in 2012 so that's also a good increase but obviously still more to go on that i would say then if that's a startup you want the flow through as they grow to make sure you keep capturing that 30 or percent and you know that would bode well for the future one of your key priorities is innovation and obviously that's got the potential to positively impact on your other key priorities but why do you think it remains the case that while our universities are sort of globally recognised for for the work they're doing that businesses aren't exploiting the opportunities to innovate what's holding them back and i notice as well that you're you're looking at a wider innovation approach to increase by 4 000 that's a big increase the number of Scottish companies actively developing new and improved products and that's obviously a great challenge but what's holding us back and how will we reach that target i think in terms of innovation a lot of companies think that innovation is product development or prototyping or r&d they don't think about it in terms of innovating their business model so employ ownership for example or you know day to day innovation inherent in the workplace or you know innovation around the workforce so it's about saying that it's not just kind of high floating r&d although that's really important because our baird statistic business expenditure in r&d in scotland is not high enough so we work extensively on that so i think there's a a message there it's almost the same thing around internationalisation and companies who innovate tend to be more tend to export more and companies export more tend to innovate so they really go hand in hand so working on the kind of ambition the leadership and that innovation it can be pervasive in a company it can be a route to growth and having more innovative companies and that's why we talk about being innovation active so it isn't just about r&d it is about getting that message that this is not a fancy thing for other companies it's a thing for you because you can do it and it's your route to business success so we now have 15 specialists supporting 1500 companies in scotland already and they are you know absolute experts in all aspects of innovation and they are part of our specialist team who support the account managers another issue looking at renewable energy and the the opportunities we have there you say we will support industry innovation to to lower the cost of offshore renewable energy and help them access finance for investment now that's obviously massively needed and you're saying that in 2014 to 15 you will through Reef lever 50 to 70 million into renewable energy is that enough I think it's enough in terms of where the market is at the moment so a lot of this is about stimulating a market and I mean with the kind of uncertainties over EMR the military market reform it's held back some investment so you know reef is really important and again if we have to extend that because of the demand then that's a matter for Ian and I to work on in terms of our business plan but I think it's sufficient just now in terms of what the demand is and we do more to stimulate that stage of you know what stage does a project have to be at in order to access that finance does it have to be so far down the road before it can tap into that investment you know what could be a project from initiation used for community purposes used for you know all sorts of all sorts of issues a lot of communities have come forward to access it district heating things like that thank you um let me start with the overall overarching need for how we market Scotland there's the adage which I bore people with endlessly about a brand as a story to tell his meaning and the brand as meaning his impact on residents what's the story about Scotland brand as far as you're concerned well I think Scotland's brand is about premium so it's about premium and everything it's about high class and top notch universities in education outstanding people fantastic natural assets and wind wave tidal renewables are larger in terms of food health enhancing foods or fish or meat um and it's about added value and premium and if you look at the kind of foreign investment we're getting and how Scotland is being known internationally it is for that high quality high value things in our people our places and all of our other assets very much the same I think it's a combination of the of the natural and the historical values married with the real opportunities of the future talk about opportunities of the future with me we may have a difference in the view as to how we feed the pipeline and and also johnson mentioned innovation and knowledge transfer and the universities but they're um as I said we may differ about the varied regional performances of business gateway in terms of feeding through the winners um alec you mentioned in your paper supporting businesses and social enterprises to shape and realise their growth aspirations I chair the cross party group on social enterprise what's a social enterprise i think I wrote you about this after the after the session two two um two sessions ago when we mean we there are definitions of social enterprise I don't have them off the top of my head but we work with social enterprises in the exactly the same basis as we as we do with businesses when the the purpose is obviously for social social benefit so we account manage some of the 120 130 social enterprises across the highlands and islands and have access to the full range of our services just as any other sort of business model would have vitally important part of the regional economy thank you one of the things that the actual the social enterprise community is tussling with is qualifying what's a social enterprise what's not in Glasgow we now have 590 social enterprises their aspirations are not being fulfilled because they don't see where they fit in the pipeline and how they're qualified and one suggests that they're not qualified properly and do have the right support in fact don't have and they don't have a in all cases access to finance you know there seems to be a two tiered level I understand why you know given resources etc that a lot of focus from the agencies goes on high growth companies I'm not sure where your focus is in terms of picking up those small businesses through business gateway or indeed the very many good social enterprises that will be the champions of the future I mean how are you picking them up how do you engage those two questions in terms of where the new businesses come from in part of that is through business gateway so we're working with gateway to make sure that those businesses who are coming through the growth pipeline come out the other end into account management and I can't remember the figure off the top of my head but a high percentage of those that are proposed to us by business gateway we take into account management but that's only one aspect of it. Going back to something somebody else mentioned earlier we are seeing quite a number of good high growth potential startups across the highlands and islands just now they'll be in account management from a very early stage given the scale and the sectors that they're actually in and the third way is just our teams on the ground you know knowing what's happening out and about across the highlands and islands will be identifying new businesses and so on for account management but in terms of social enterprise it's exactly the same you know it's a fundamental part of our strength and communities remit we account manage roughly 50 communities and the organization that we work with to take forward communities is in many cases social enterprises so if a community has got an anchor organization social enterprise or other and has the plan for growth then we will support it financially advisory and other things as well as we would do if you like other mainstream businesses and we even go beyond that because in the last year we've actually launched a new program called community capacity building and it sort of does what it says in the tin there are many community groups and social enterprises who need a bit of extra help to actually get projects off the ground and into reality and therefore the community benefit to be derived so we're putting extra resource into that type of program into that type of organization community groups community enterprises social enterprises to actually leave it achieving further than we've done before the impact that that sort of organization can have and I could take you to summon Inverness such as you know you start highland or the the social enterprise that's going to build a new hotel on the campus but equally across the highlands and islands where you know they are significant organizations are we are investing significant businesses we're investing significant sums because they're delivering economic and community benefits that's my problem we're investing significant sums but my question really is how are we sure that we're picking the winners and not dissipating the funds that are the many funds that are available so that we are looking for an investment which will provide ultimately a return significant return as a high growth company managed by the enterprise agencies I don't see that engagement I mean I know you support social enterprises but I don't see the feed through and you talk about startups if I look at survival rates it then makes me more concerned about where we're placing our investments in terms of making sure that it's focused I mean how can we better that the current situation startups is not our core business that is business game but the point I was making there are some high growth startups of forgive me so they're clear Lena said early on you are responsible and I in my book you're the economic gurus that you ultimately are dependency and Scotland's enterprise in an economic future depends ultimately maybe wrongly ultimately in my opinion on the four people and your teams sitting in this room and that includes business gateways and that includes as far as I'm concerned the results speak for themselves so my job and Alex job on behalf of this entire country is to spend invest all of our tax funds wisely and we need to do that by investing in the things that are most likely to generate a return for the Scottish economy increase gva and give people high quality sustainable jobs that's our role and I am unapologetic about that and I am very proud of the work that's been done because the return to the Scottish economy shows that I'm sure we've got lots to learn and I'm not saying we'll never make mistakes but by and large I think we're getting greatest value of our economic development agencies than we ever ever did I'm questioning how you engage and bring through the winners from the lower tiers of your life so so we there is there is absolutely it doesn't matter what the business model is if you're a social enterprise and can be a high growth enterprise then we're blind to that trick it doesn't matter now if you're raising a question about how better access better communication how we can engage then maybe that's something we should look at but there is absolutely nothing stopping any social enterprise with high growth potential high growth potential from being supported by Scottish Enterprise and I'll speak for Highlands and LZ Enterprise too that is a myth that I absolutely want to bust we are there to help any and every high growth company for the pudding will be in the meeting just just just let me one last thing if I may one of the areas we talked about renewable energy we talked about energy one of the key ingredients for our economic growth is the skill of our people I mean again in terms of engagement with I mean how do you coordinate engagement with likes of SDS in terms of looking at forward at your plans and how to engage with their plans hand in glove so for every key section Scotland there is now an industry skills plan and we have regional skills plans too so that for renewables and for oil and gas and energy there is a skills plan that looks at future flow it looks at high level skills it looks at numbers of apprentices required and that's done hand in hand with our sector led industry led industry leadership groups it's stronger than it's ever been thank you right well that's almost precisely on time so very well done thank you to our witnesses for coming along this morning and helping us without inquiries and perhaps we can follow up afterwards the budget issues we were talking about at the start of the meeting um thank you at this point we'll have a short suspension reconvene please thank you very much okay we're on item um three on the agenda this is consideration of a piece of subordinate legislation and we have order order we have before us the insolvency scotland amendment rules 2014 ssi 2014 slash 114 which restate provision in the insolvency rules in relation to receivership and the process of liquidation to remove the application of provisions of the bankruptcy scotland act 1985 and also restating other rules in relation to liquidation and administration for that purpose do any members of any issues they want to raise in relation to this instrument have we ever content simply to note the terms of the instrument great thank you very much okay at this point we will go into private session thank you