Jobs bodies 'must back economy', says Holyrood probe

Highlands and Islands Enterprise should not be merged with Scottish Enterprise, said the review

Scotland's enterprise agencies must do more to support economic recovery, a review by MSPs has warned.

Holyrood's economy committee said Scottish Enterprise and Highlands and Islands Enterprise must tackle a chronic lack of finance to businesses.

But despite political pressure to merge the two bodies, the probe said the economic situation in the Highlands merited its own development agency.

The government embarked on reforms to the enterprise network in 2007.

A report published by the cross-party economy committee, which also looked at the work done by Scottish Development International and Skills Development Scotland, warned the current set-up of the agencies may be hindering economic growth.

Committee convener Liberal Democrat MSP Iain Smith said: "We found failings and problems with the enterprise network, and sticking with the status quo carries the risk that businesses with potential for growth will be left out in the cold.

"However, we have not recommended significant structural reform of the network and the disruption that may bring, particularly in light of major changes in recent years.

"While there could be efficiencies made from replacing HIE and SE with a single agency, the issues facing the Highlands and Islands are substantial enough to merit a dedicated regional agency."

The committee urged the government to address "patchy" provision of services across the country and warned there was a lack of clarity over who was delivering the strategy on skills.

Enterprise reforms

Shortly after the SNP came to power in 2007, Finance Secretary John Swinney embarked on major reforms to scrap the 21 local enterprise networks, with Scottish Enterprise and Highlands and Islands Enterprise overseeing six regional operations.

The Scottish government said it would consider the report, but a spokesman, said: "Recession in Scotland has been shorter and shallower than the rest of the UK and we are the only nation in the UK to have rising employment and falling unemployment.

"That is clear evidence of the successful operation of the enterprise networks and our focus on economic recovery and growth."

The government also said the committee report failed to take account of economic growth spending outside the enterprise networks, such as the bonus scheme for small businesses.

The government said Scottish Enterprise made savings of £8.5m in 2009-10, while running costs at HIE have reduced by about 30%.