ECONOMY, ENERGY AND TOURISM COMMITTEE AGENDA. 16th Meeting, 2011 (Session 4) Wednesday 14 December 2011

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1 EET/S4/11/16/A ECONOMY, ENERGY AND TOURISM COMMITTEE AGENDA 16th Meeting, 2011 (Session 4) Wednesday 14 December 2011 The Committee will meet at 9.30 am in Committee Room Decision on taking business in private: The Committee will decide whether to take item 3 in private. 2. Business Gateway inquiry - contract renewals: The Committee will consider responses to its report, published in October. 3. Land Registration etc. (Scotland) Bill: The Committee will consider its approach to the scrutiny of the Bill at Stage 1. Stephen Imrie Clerk to the Economy, Energy and Tourism Committee Room TG.01 The Scottish Parliament Edinburgh Tel: stephen.imrie@scottish.parliament.uk

2 EET/S4/11/16/A The papers for this meeting are as follows Agenda item 2 Responses to the Committee's Business Gateway inquiry EET/S4/11/16/1 Agenda item 3 PRIVATE PAPER EET/S4/11/16/2 (P)

3 Economy, Energy and Tourism Committee 16 th Meeting, 2011 (Session 4), Wednesday, 14 December 2011 Background Business Gateway Contract Renewals 1. The Committee published its report into the Business Gateway contract renewal process on 10 October Attached to this paper are responses from the Minister from Energy, Enterprise and Tourism and the Business Gateway Scotland Board (BGSB). Recommendation 2. The Committee is asked to: Discuss the responses; and Agree any further follow up action. Joanna Hardy Senior Assistant Clerk December

4 Murdo Fraser MSP Convener Economy, Energy and Tourism Committee The Scottish Parliament EDINBURGH EH99 1SP 30 th November 2011 Dear Murdo, Thank you for the Economy, Energy and Tourism Committee s report, Business Gateway contract renewals which sets out the recommendations from its recent inquiry. I know that the Committee needed to conduct the inquiry to a very short timetable and took evidence from a range of interests. I was pleased to be able to contribute to the process. The substance of the recommendations in the report is, of course, for local authorities to address given their responsibility for local economic development and the Business Gateway service. I understand that the Business Gateway Scotland Board (BGSB) has already submitted a full response to the Committee. I was pleased to be able to discuss that response with Dave Valentine, Chair of the Board and endorse its contents. I know that the BGSB has taken account of many of the Committee s helpful recommendations in moving forward, including the need for greater engagement with service users to ensure the future service continues to meet needs. I appreciate the Committee s concerns about the need for clear and accountable national structures. The BGSB has responded to those concerns and its response sets out how it will ensure: effective engagement with service users, through a service users forum; effective management of the service with a management board drawing together local authorities interests; and effective alignment across public sector organisations providing business support with a newly formed Partnership Board. That Board will also ensure political accountability and I look forward to co-chairing it with Councillor Alison Hay, COSLA spokesperson for Regeneration and Sustainability. I hope this is helpful in setting out the Government s position. Yours Sincerely Fergus Ewing 2

5 EET Committee - Business Gateway - contract renewals Business Gateway Scotland Board response to Committee - November 2011 KEY ISSUES AND CONCLUSIONS Introduction 16. Business Gateway represents the Scottish Government s flagship service to SMEs and it is, therefore, absolutely critical that we get the retendering process for the new contracts right. The Committee commends the hard work and successes of the many people involved in delivering Business Gateway services but also recognises that there are aspects of the current system which must be improved prior to the contracts being renewed. 19. The Committee feels that the poor response rate to the survey is not a sound basis for drawing such firm conclusions and, while it accepts that many success stories can be attributed to Business Gateway, the Committee has heard evidence from others to suggest that the model is far from perfect and that good experiences are not always the case. The Board welcomes the recognition that the Business Gateway represents the Government's flagship service to SME's and also welcomes the recognition of the hard work and successes achieved of those involved. The Board is also working to ensure that the service from October 2012 onwards will incorporate a number of improvements based on the feedback obtained from customers and those involved. The Board welcomes the recognition that the Business Gateway has generated a large number of success stories. It also accepts, there are a relatively small number of experiences where service delivery fails to meet customer expectations. In order to address such failings, the Board monitors the situation on a continuing basis. The Business Gateway National Unit conducts independent quality assurance work every month on every business that receives a service from the Business Gateway. The Quality Assurance activity is closely monitored at a national and local level, and demonstrates very high levels of satisfaction with the existing service, with satisfaction levels consistently reaching 90% or more each month. The independent evaluation of the Business Gateway service was carried out by a highly experienced economic development consultancy and, in the opinion of the board, resulted in a scientifically robust response rate. The methodology and survey 3

6 results were scrutinised by economists from the Scottish Government, Scottish Enterprise and Highland and Islands Enterprise. The strength of the approach taken was the reason this consultancy firm was chosen and they have indicated that the response to the survey was the best they have had in ten years of undertaking such work. The evaluation surveyed 17,959 service users from a population of 24,657. Statistically the response of 1,605 is very significant (99% confidence limit with 3.11% margin for error). The level of confidence achieved in the evaluation is similar to that used for other government surveys. Consultation with service users 24. The Committee acknowledges the engagement work undertaken by those responsible for the retendering exercise. However, the evidence received from users of Business Gateway services, or those who represent their views, indicates that the opportunities for them to become properly involved in the specification of the new tenders rather than merely to take part in the evaluation exercise have been too limited thus far. Following the evaluation, a number of steps have already taken place and more are planned to ensure that where possible there continues to be consultation with service users and those who represent their views. The Board has been keen to ensure ongoing consultation throughout the process whilst being mindful of the potential legal challenges in cases where some stakeholders may also be potential bidders for the forthcoming tenders. Through the evaluation, service users, partners and stakeholders indicated that the service is overall 'fit for purpose' but that some changes were needed especially e.g. in relation to the need for local flexibility. The proposed service specification currently reflects this by allowing for local flexibility along side national service elements. In a recent press statement (Scotsman 24th October 2011) Andy Willox, Policy Convener for the Federation of Small Businesses, highlighted the need for the new service to focus less on support for start-ups and more on existing businesses and repeated calls for flexibility. The Board is encouraged by this statement as current proposals are to use the enhanced web-site being developed as part of the Business Portal Programme and the advent of the My New Business tools for start-ups on the web-site which will allow more resources to be focused on work with existing 4

7 businesses and to meet local flexibilities. In relation to service users, further focus groups took place during July and August, which included businesses which do not currently use Business Gateway services. The feedback highlighted that the services offered are well received but provided further insights into the desirability of some additional services. One of these was a call for aftercare for start-up businesses. This echoed the findings of the evaluation as well as the views of organisations such as BES and FSB and the Board have proposed that the new contracts will incorporate a cost effective aftercare programme. Consultation on the findings of the evaluation has also taken place with current contractors (through Business Enterprise Scotland) on 28 June The comments from this exercise are also being considered in the development of the specification for the new contract frameworks. The ongoing independent quality assurance work is continuing to provide feedback from existing service users on a monthly basis. However, accepting the recommendations of the EET Committee, the Board have taken additional steps to engage with existing and potential service users and for example a further two consultation events are planned for 18 th November that will allow a wide range of organisations to provide input into future service development: 1. Business Gateway: Work On The Gap - Engagement With Stakeholders Event - 18 November The event will bring together a wide range of key people with an interest in Business Gateway to discuss the existence of a service gap within the Enterprise Networks. This was highlighted as a significant issue in the Review of the Enterprise Networks carried out by the Economy, Energy and Tourism Committee in March. Conclusions from the event will help to inform considerations about how the service can be developed in the future. They will also help shape the future direction 5

8 of the Business Gateway service. The event will consider recent work that has been carried out to gather evidence on the gap and to explore potential ways it can be addressed. 2. A Prior Information Notice (PIN) was issued by COSLA in advance of the forthcoming contracts to undertake a market consultation event. This will also take place on 18 th November. The purpose of this event is to engage with the market to test the proposals that have been developed. The event seeks to obtain the views of interested parties who may either consider submitting a tender to deliver these services or wish to represent industry interests regarding the proposals prior to commencing the formal procurement process. The EET Committee is asked to note that despite a desire to be more open about proposed changes, the Board must follow legal advice and ensure that we do not divulge information that would result in a legal challenge before the proposed PIN meeting on 18 th November. There will be ongoing efforts to gauge feedback from existing and potential service users on the draft final specification. This would allow the Board to capture their views on clear proposals about the future shape of the service and what it will provide and give the Board a chance to reflect on those comments before the tenders issue in early The Committee suggests COSLA delay the procurement and tender process until it has conducted a more thorough consultation with businesses, social enterprises and their representatives with first-hand experience of the service and listened to their suggestions on how it can be improved. This could be achieved by the establishment of a short-life working group. The Board has carefully considered this recommendation which is founded on the EET Committee s opinion that there is a need for more effective engagement with service users. For this reason the Board has taken steps to accelerate and expand engagement with service users and representative bodies in a number of ways so that the agreed timeline can be adhered to. Since the publication of the EET Committee s findings, a meeting has been held with FSB when a full briefing was given to them on the Board s deliberations to date. This 6

9 Membership of such a group should major on businesses and other service users. We do not suggest that we cease the retendering exercise, but there must, in our view, be more input from users at this stage before the contracts go out to tender. The Business Gateway national structures 28. In its written submission the Committee, BES said that the present arrangements for the management of Business Gateway are confused and unclear and added that it is still not clear where ownership really lies and who indeed makes final decisions. Other written evidence lamented the time it takes for delivery to be adapted to new circumstances. Glasgow City Council called for Fairer representation from across all local authorities on BG board was done with the benefit of a Non Disclosure Agreement. Steps have been taken to meet with BES on a 1:1 basis and a meeting has been arranged for 10 th November although because of commercial sensitivities a full briefing on the specifications for the new contracts must wait until the Prior Information Notice meeting organised for 18 th November. The Board is confident that the measures outlined in this response will enable a frank and meaningful opportunity for service users to respond to what is now being proposed (rather than what was delivered previously/currently) and that this can be done within the critical timeline for implementation of the new contract framework. The Business Gateway service is owned, managed and delivered by local authorities and decision making lies with local authorities through the aegis of COSLA. The Board, comprising local authorities and key partners, provides strategic and operational direction which is scrutinised through COSLA's political structures. After transfer of responsibility of the Business Gateway service to local authorities the Board took immediate steps to change what it could to meet new circumstances but from a legal perspective the Board had to act within the legal constraints pertaining to the newly tendered contracts it had inherited. The new contracts will firmly embed the need for greater local flexibility and individual local authorities will (through their shared service arrangements) have greater autonomy to adjust Business Gateway priorities to meet local needs within agreed parameters. We accept the Committee s recommendation that the governance of the Gateway be improved. Reflecting this, we intend to introduce a new governance structure for Business Gateway that reflects the lead role played by local authorities in managing the delivery including a stronger representation of local authorities in the make-up of the Business Gateway Board. 7

10 31. The Committee believes that the current structures involved in the governance of Business Gateway are far too numerous and resource intensive which could divert scarce resources from the key aim of directly supporting businesses. The current structures involved in the governance of Business Gateway provide both local and national accountability reflecting the local and national delivery of the service. The arrangements are designed to ensure that the best and most cost effective use is made of the scarce resources available. There are two main structures in place 1. The Business Gateway Scotland Board The Board consists of key partners involved in providing business support services throughout Scotland (comprising local authorities, Scottish Government, Scottish Enterprise and Highlands and Islands Enterprise). The board is supported by a national unit (based in COSLA) and the Business Gateway Operational Network comprising the 13 lead LA representatives and representatives from the Highlands and Islands local authorities. 2. The Stakeholder s Group This consists of key organisations which represent service users. 32. The Committee recommends that, given that an objective of the reforms was to decentralise power and decision-making to the local area, consideration should be given to the streamlining and simplifying of Business Gateway governance structures in a way that will deliver a more agile, speedy response to changing circumstances. The main aim of the transfer of responsibility for Business Gateway to local authorities was seen to be the delivery of a business support and start up service; delivered consistently across Scotland to a set of national standards; and integrated with a range of local council and related economic development services as well as with the services delivered by the government s national agencies. It was decided that central arrangements were essential to achieve this - the alternative would have been for the government to allocate resources to each of the 32 individual councils. Clearly the latter would have required complex arrangements to ensure a consistent service delivery across Scotland. As we move forward there is a 8

11 growing need for alignment of services across Scotland and local authorities have acknowledged that with Business Gateway, a balance must be struck between delivery of a national service and how the service must be flexed to meet the needs and opportunities of local areas. The existing contracts that local authorities inherited were not designed with flexibility in mind. However, acting within the legal constraints of the existing contracts, Local Authorities provided the leadership required to make significant changes in the way the existing contracts were delivered to address the downturn at both national and local level. The agility and flexibility sought by the EET Committee is welcomed by local authorities who, through the new contract frameworks, will provide more agility at a strategic operational level coupled with an increased local flexibility as highlighted above. Other changes in the governance arrangements will provide a wider Board participation by local authorities on the Board and together these measures will allow a more agile and speedy response to changing circumstances ensuring a consistent national core service with a local flexible solution as sought by the EET Committee. 33. A simplified structure could consist of a single operational unit, overseen by a Board on which business people, other service users and elected representatives of local authorities sit as non executives. Broadening membership of the Board in this way would bring more on-the ground experience to decision-making and address what is perceived by some as a democratic deficit. As has been previously stated Business Gateway is a national service delivered locally. As such the management of local delivery falls to Lead Local Authorities. This provides the ability to deliver the local flexibility that has been called for. The current structures overlay this with a strategic Board and the appropriate political oversight of COSLA to provide both local and national ownership and accountability. However, as stated, the Board welcomes the opportunity to review the structures. As highlighted earlier the Board will consider strengthening its membership of Local Authorities. In response to the EET Committee s suggestions the Stakeholders Group will change to become a Service Users Forum. The quarterly meetings will be coupled to a structured and systematic 1:1 engagement with key representative members of the 9

12 Forum such as FSB, Scottish Chambers and SCDI. Although not a service user BES have a significant role to play given that a number of its members deliver Business Gateway services and are therefore close to Business Gateway s customers on a daily basis. It is therefore crucial that Business Gateway have a strategic dialogue with BES on an ongoing basis to discuss issues and other matters relevant to the cost effective delivery and operation of the service. To achieve this Business Gateway will take steps immediately to engage on a one to one basis with BES in relation to current contracts. In addition the Board will also expand membership of the Forum to include the Scottish Social Enterprise Coalition, as suggested by the EET Committee, and an invitation will also be extended to the Institute of Directors, Scotland. The Forum and the 1:1 meetings will provide valuable engagement and the ideas and views generated from this will be considered by the Board. The Forum will continue to receive performance reports as is currently the case. SE and HIE, as key service delivery partners, will also be represented on the Forum. Elected representatives are already embedded in the process through COSLA but the Board recognise the EET Committee s position in regard to accountability. As has been said, however, Business Gateway is only one player in the economic development landscape. Consequently the Board propose a Partnership Board cochaired by the Minister and the relevant COSLA Spokesperson. Flexibility versus a minimum national standard 38. Alongside creating the room to adapt to dynamic local and economic circumstances, a core minimum standard should be a feature of the contracts. The Committee therefore endorses BGSB s intention that the new contracts will ensure a consistent national core service with a local flexible solution. The Business Gateway Scotland Board welcomes that endorsement. As highlighted earlier the current thinking will see the potential for local flexibility to increase and be more responsive to local circumstances. 10

13 39. The Committee also endorses BGSB s commitment to allow for regional flexibility in the criteria to qualify for growth support and believes that regional flexibility must also be sufficient to take account of region-specific opportunities, for example, those in renewable energy. The Business Gateway Scotland Board welcomes this endorsement. Current thinking within the service specification has incorporated three elements: 1. Start-up Advisory service 2. Growth Advisory Service 3. Local Service There will be a standard service offered through start-up and growth with regional flexibility in the criteria to qualify for growth. The Local Services package will be designed in each area (by each area) to offer services which are complementary to the national service and where they do not duplicate existing provision. This may include services such as advisor support, expert help, workshops or events and will inevitably be promoted to key sectors e.g. renewable, tourism, social enterprise etc When specifying the new services to be added to the new Business Gateway contracts, the Committee recommends that the following additional services be added to the core services currently on offer in every region: Aftercare support Support for business sustainability and survival / retention of jobs However, the Board recognises that Business Gateway represents only one element of a wider range of business support. Business Gateway at a national and local level will continue to integrate with that wider support to ensure that region specific opportunities are grasped. As indicated in the evidence session, the Board has already taken these requirements on board and fully accepts the recommendation of the EET Committee. Aftercare, particularly in relation to start-ups, was a key finding within the evaluation and the Board welcomes the Committee's recognition of this. This also featured in the feedback from FSB and from the recent focus groups. Consideration is therefore being given to the development of a cost effective aftercare service that will engage with businesses at regular intervals and ensure that further potential assistance from Business Gateway and partner organisations is highlighted and taken up. Coupled to 11

14 A service for small businesses who are neither start-up nor growing this, consideration is also being given to the potential for an additional on-line advisor service. The core services that will be delivered support the thrust of the Government's Economic Strategy which is about growth. The increased scope for local flexibility that is envisaged will ensure that at a local level support for business sustainability and survival, where it is needed, can de delivered. A key element of the service will continue to be the web-site and the business information service both of which have a wealth of information, guides and tools available to all businesses. In addition Business Gateway will continue to deliver its valuable programme of workshops on key business issues which are open to any business. Methodologies for defining eligibility, setting targets and measuring impact 47. Potential for growth expressed solely by turnover is too blunt a tool for identifying those businesses which will most benefit the economy. The Committee wishes to see a radical overhaul of the criteria used for determining eligibility for support. These should be broadened to take account of such factors as job creation, ability to innovate, potential to export, job retention etc and they must reflect regional conditions and local opportunities Growth in turnover is used by Scottish Enterprise and HIE as an entry level for consideration of additional products and services and Business Gateway provides pipeline services geared to support these. However Business Gateway already provides services to existing businesses at all levels irrespective of turnover and sector. The Board agrees that factors such as job creation/retention, the ability to innovate and potential to export are critical to support economic growth and all play an important role. In accordance with the EET Committee s recommendation, performance against these factors will be monitored in the future and a method will be employed to incentivise contractors to focus on these factors. Wherever possible, Business Gateway will widen priority criteria to reflect these factors e.g. when servicing the needs of start-ups and/or aftercare clients. For this reason the Board are proposing that within the service specification for the new 12

15 contracts being developed, additional advisory services from Business Gateway will be available for those start-ups and businesses that show potential to achieve VAT or PAYE status. This takes account of both turnover and job creation. As indicated above, many of the products or services available to Business Gateway service users are provided by our partners, over which the Business Gateway board has no responsibility. For example, Scottish Enterprise will continue using turnover growth as a proxy for measuring growth and entering Account Management. Business Gateway services must therefore continue supporting customers within the available criteria. In accordance with the EET Committee s recommendations, every effort will be made within local services to address broader criteria defined for support. This will depend entirely on what aspect of local need is being addressed at any given time. 55. In setting the parameters for gauging success of the service, the Committee wishes to see the following outcomes incorporated in the new contracts: business survival rate numbers of job created and their value number of jobs safeguarded and their value social and environmental impact internationalisation efficiency, productivity and profitability innovation the promotion of an enterprising culture With the exception of innovation and the promotion of an enterprising culture the outcomes suggested, or proxies for these, can be, and in many cases are, captured either through ongoing monitoring by the Business Gateway Enquiry Service or in the existing IT recording system (known as CRM) and can therefore be assessed. In response to this recommendation, consideration will be given as to how best to capture outcomes not currently recorded. The Board recognises that there needs to be close links between Business Gateway and school/colleges etc to foster an entrepreneurial culture. Links between local authorities and colleges already exist within many Community Planning Partnerships and those existing links will assist the promotion of an enterprising culture. Further integration of the Business Gateway service into Curriculum for Excellence is supported by the local authority management of both these programmes. 13

16 58. The Committee, while accepting that geography and demographics account for some variation in costs, expects every effort to be made to ensure that the procurement process irons out the broad disparities which currently exist in payments made to contractors for the same outcome in different regions of the country. 63. The Committee understands the historical backdrop of the targets in remote and rural areas, and areas with traditionally low growth, but views the contract renewals as an opportunity to challenge such assumptions and ensure that ambitious targets are put in place that will underscore the need to pursue new opportunities in, for example, renewable energy. 64. As previously mentioned, the Committee views intensive support for businesses with the greatest growth potential as a critical state intervention to support the recovery. It would therefore be most concerned if HIE were being anything less than ambitious in the numbers of clients it accepts into account management. 66. While the Committee accepts that it is difficult to make accurate judgements about the impact of the service given the changing economic climate and the absence of the counterfactual, we believe that a more robust economic appraisal of the The Board recognises the Committee's concern and accepts it s recommendation. The variances in payments, as explained in evidence, are the product of an open and transparent procurement process. The objective is to ensure a consistent delivery of service across Scotland. Consequently, socio-economic factors and the prevailing market will determine what the price of that delivery will be tendered in the different regions of Scotland for specific aspects of the service. The Business Gateway Scotland Board welcomes that understanding; Local authorities will set ambitious, but realistic, targets on the basis of knowledge and experience, not assumptions. This also applies in the remote and rural areas where Business Gateway is a relatively new service, targets are developing as greater knowledge is gained of the areas capacity and service users become more aware of the service and make greater use of it. The Business Gateway Service is relatively new in the Highlands and Islands areas and partners are working hard to ensure that it integrates into the wide range of services available from local authorities, Highlands and Islands Enterprise and other partners. This must all happen within the context of reducing budgets and it is important that HIE set realistic targets with Business Gateway and not raise expectations beyond what can be delivered. The evaluation carried out and the economic impact that this evaluation identified has been reviewed by economists from Scottish Enterprise, Highlands and Islands Enterprise and Scottish Government. The Board is confident that the findings are sufficiently robust, demonstrating that the service is good value for money and compares favourably with similar services delivered elsewhere. 14

17 existing contracts is imperative before the retendering process proceeds. The analysis the Committee has heard to date is unconvincing and fails to address the question of how the services is performing relative to other models of delivery (past and present), and relative to a do nothing option. The evaluation results did consider the counterfactual and all impacts expressed take full account of deadweight, displacement, and substitution effects. The Board is confident that the impacts reported are those which would not have been achieved without the intervention of Business Gateway. Further, in modelling the impact of alternative service models, the evaluation was careful to consider a range of alternative approaches, including 'do nothing' and 'do minimum' scenarios. It is from this analysis, alongside the consultation from stakeholders and service users, that the recommendation to maintain the bulk of the current service model is based. Recently the monthly Quality Assurance activity has been extended to seek responses from customers exploring what additional services they would ideally want in addition to those already provided. Bearing in mind that a significant volume of customers access services on-line, these responses will be analysed to determine if the services asked for are, in fact, already available but not readily accessible and steps taken to address this. Where these are potential new services consideration will be given to the level of demand and the resource implications of introducing such a service. As part of performance monitoring the Board is currently looking at implementing an impact evaluation framework that will improve understanding of the impact achieved by the Business Gateway services. The framework will build up a picture of the impact achieved over the life of the contract. 70. It is the Committee s firm belief that the success of Business Gateway is not a simple matter of increases in company turnover and GDP and, as such, must be measured against the Government s wider stated characteristics of Business Gateway is clearly positioned as an important mechanism to address the goals of the Government Economic Strategy, reflecting its primary focus on increasing sustainable economic growth, while addressing other objectives such as Equity, Social Cohesion and Low Carbon. 15

18 growth, namely incorporating solidarity, cohesion and sustainability. The changes proposed for the new model reflects this focus. Some changes, such as the focus on start-ups capable of taking on employees and the introduction of the Growth Advisory Service, can be seen as an increased focus on growth. But the introduction of greater local flexibility, and the planned increase in resources devoted to meeting local business needs, addresses the wider challenges of the Government s Economic Strategy, including regional equity, social cohesion and sustainability. The new model clearly envisages greater flexibility in the management of the local contracts, introducing greater adaptability into the model, as local and national economic conditions change over time. It is also important to see the role Business Gateway plays as part of the wider economic development support system in Scotland. Business Gateway has an important role to play in servicing the volume end of the business support market and prospecting for clients that have the growth potential to benefit from the services from partners such as Scottish Enterprise and Highlands and Islands Enterprise. 71. Accordingly, targets for growth within the new contracts must look beyond simplistic numbers to the quality of the growth which is created. They should capture environmental sustainability, as well as community and social benefits such as the narrowing of wage differentials, the provision of a living wage and the provision of skilled, high quality jobs. Again the Board agrees with the principle of this. As has been stated earlier there are a range of measures that are captured within the IT (CRM) system which reflect environmental sustainability. The service creates the opportunity for community and social benefits by giving people the opportunity to take up self- employment or to grow their businesses thereby creating employment opportunities. However, as has been said, the nature of Business Gateway s engagement with companies means we have limited ability to impact on macro-economic factors such as wage differentials particularly in the current economic climate. The service operates mostly at the volume end of the business support market and while the creation of skilled, high quality jobs is a goal it is likely to be achieved through the more intensive interventions undertaken by our partners. Business Gateway s role is to advise customers on issues relating to business start-up and growth. Our role in terms of compliance with legislation is relatively limited, beyond some basic 16

19 information provision. 74. The substantial disparity in reported satisfaction rates between the Federation of Small Business and the BG national unit gives the Committee cause for concern. They cannot both be right Models of delivery 79. In light of the above, the Committee makes no specific recommendation as to the most desirable model of delivery. It is a matter for local authorities to determine the mode of delivery which best address the needs of the local area, while also delivering best value for the public purse 84. The Committee accepts the necessity to proceed with a full, competitive retendering for the Business Gateway contracts in order to avoid any legal challenge to the openness of the process. Whilst there may be some advantages in terms of administrative efficiency in a renegotiation of existing contracts, an open tendering exercise should procure the best organisation for the job and provide the best value for the taxpayer. The retendering process 86. The Committee believes that an element of competition in the retendering of the contracts is important in providing best value for money. The retendering process must therefore ensure that best value is interpreted in is broadest terms and not just the lowest bidder. Community benefit must The Business Gateway Scotland Board understands that the FSB have taken steps to clarify this matter with the EET Committee and confirm that there is no disparity. The Board are grateful for this. The Board welcomes this approach and confirms that local authorities will ensure that the delivery model chosen is most appropriate to the needs of the local area. The Board welcomes this. Tenders submitted for the contracts will be assessed on the basis of both price and quality, with greater emphasis placed on the quality which will comprise factors such as previous experience. Clearly the service provides a benefit to any community by encouraging entrepreneurial activity, assisting start-ups, growing businesses, creating employment and incomes. Consideration is being given to the inclusion of community benefit clauses and the nature of community benefit activity that could be delivered 17

20 be considered. Support for social enterprises and the third sector 91. The Committee appreciates that the original aim of Business Gateway was to encourage growth and acknowledges the more recent efforts by the Scottish Government to address the specific needs of social enterprises, which culminated in the recent launch of the complementary service, Just Enterprise. 92. While the Committee warmly welcomes the addition of Just Enterprise to the Government s suite of services, we believe that the new contracts must, nevertheless, ensure that Business Gateway is truly open to all and mainstreams the needs of social enterprises within its range of services. Consideration should be given to a distinctive set of eligibility criteria (e.g. a lowering of turnover thresholds) for enhanced support for social enterprises In order to achieve this 94. The Committee nevertheless believes that there are distinctive services which are required by social enterprises that should be provided by a specialist support service such as Just Enterprise and that these services should continue to work closely together to complement the Business through a Business Gateway contract. The Board welcomes that appreciation. The Business Gateway service is open to all irrespective of size, turnover or sector and there are already a great number of social enterprises that benefit from Business Gateway services. The Board welcomes the acknowledgement of the specific needs of social enterprises, which prompted the creation of the Just Enterprise service to provide specialised assistance that social enterprises required over what Business Gateway already offers. The Board is satisfied that the current arrangements whereby social enterprises can access the one to many services of Business Gateway or receive 1:1 support dependent on circumstances is acceptable and affordable. However, the Board is happy to engage in discussion with the Scottish Social Enterprise Coalition and Just Enterprise to consider what further support can be given to support and signpost social enterprises seeking additional products and services provided by them.. Business Gateway will continue to work closely with the Just Enterprise initiative to ensure that there is a joined-up service for social enterprises. We will ensure ongoing communication with Just Enterprise at a national and local level. Just Enterprise is currently represented on the Board through the Scottish Government. 18

21 Gateway service, with Just Enterprise being represented on the Business Gateway Scotland Board. 93. Furthermore, within its general support services, Business Gateway practitioners should assist start-ups to consider social and community benefits and the possibility of adopting a morethan-profit model. This role should become part of the accreditation of advisors. A business-friendly approach embedded in Local Authority services 100. Regardless of whether Business Gateway services are outsourced or inhouse, close partnership with other local authority services is vital to ensure the best customer experience and greatest benefit to the local economy The Committee recommends that the new Business Gateway contracts address the issue of the integration of business support with other relevant council services and specify, as a requirement of those tendering, the necessity to work closely with other local authority departments. Conclusions 105. The Committee therefore suggests that regular updates are provided by the Minister to the Accreditation of advisors is an important issue which the Board will discuss in the context of the Premier Advisor accreditation process requirements. The Board agree and considerable success has already been achieved across the network in doing so. This was recognised in the evaluation. The service specification being developed will require the successful contractor or inhouse team to ensure close working relationships and a well managed referral process not just within local authority services but with other partners as well. This will be a key management task for those managing the contracts. They will be required to monitor levels of referrals, evidence of joint working and integration with other relevant services to provide comprehensive support to local business. The Board welcomes this and to support the Minister propose the creation of a Partnership Board as highlighted at point 33 above. Recognising the EET 19

22 Committee during this important phase of Business Gateway s life. Committee s comments on accountability the Board will ensure greater accountability is achieved. A new Partnership Board will be established which will consider the wider economic development landscape within which Business Gateway sits. The Partnership Board will be separate from the governance of Business Gateway and will focus on the alignment of all public sector economic development services active across Scotland. The Partnership Board will meet regularly and will be co-chaired by the Minister for Energy, Enterprise and Tourism and the COSLA Spokesperson for Regeneration and Sustainable Development. The Business Gateway Management Board will be required to provide performance reports to the Partnership Board. The Partnership Board will be made up of representatives from COSLA, Business Gateway, SLAED, HIE, SE, VisitScotland and Skills Development Scotland. 20