Select Committee on Liaison First Report

Annex A



1.  The Committee's Report on Inward and Outward Investment expressed strong support for the strategy pursued by Scottish Enterprise, Locate in Scotland (LIS) and Scottish Trade International (STI), and made recommendations to further assist the implementation of the strategy. In its response of December 1999, the Scottish Executive was able to report considerable early progress on many of the suggestions. In the year following the publication of the report, LIS was able to announce record inward investment results, with an encouragingly high incidence of R, D&D activity. The activities of Scottish Trade International and the network of local Export Partnerships continue to add significantly to the number of new exporters in Scotland and companies entering new export markets. Initiatives also being undertaken to broaden the export base, establish international networks and to develop companies globally with assistance provided by STI to help companies establish overseas operations.

2.  The Scottish Executive and the UK Government have concurrent powers to promote trade and inward investment and LIS and STI work closely with Trade Partners UK and Invest UK in the delivery of their activities.

Development of Locate in Scotland's Strategic Knowledge and Partnerships

We believe that in future it will be necessary for Locate in Scotland, while retaining a small, highly-focused core team to develop long-term relationships with potential inward investors and to compete successfully for new greenfield projects, to acquire greater business knowledge and acumen to understand multi-national networks and build projects and alliances, and that it will need to work more closely with private sector teams and consultancies. We recommend that Locate in Scotland concentrate on these aspects of its approach (paragraph 41)

3.  As outlined in the Scottish Executive's response, LIS introduced a revised operational structure, which emphasises the importance of sector knowledge and expertise, engagement with the business community, and greater closeness to the corporate strategic thinking of key global clients. This structure has already impacted on the level and understanding within LIS of key clusters and industries, which contributes to the matching of Scotland's locational strengths and competitive advantage with the specific needs of business clients.

4.  LIS continues to establish close working relationships with a range of partners: the Scottish Enterprise Network; Scottish academia and higher education sectors; local authorities and relevant private sector partners. These enhanced relationships not only offer more integrated support for individual investors on specific projects, but also support local initiatives to further strengthen Scotland's locational attributes.

5.  The role and remit of the proposed Strategy and Knowledge Management team, mentioned in the December 1999 response, has recently been refined. In addition to improving the acquisition and application of information on key sectors and markets, gathered through both research and direct contact in the field, this team (now renamed LIS E­Business Development Team) also provides a focus for implications of e-commerce on the inward investment process. E-commerce is having a significant impact on the types of activity targeted, how we attract the interest of potential clients and how LIS delivers its service to clients.

Merger of Locate in Scotland and Scottish Trade International

We recommend that the Scottish Parliament gives serious consideration to merging Locate in Scotland and STI (paragraph 43)

6.  In its response to the Report, the Scottish Executive advised that it did not agree that a straightforward merger of LIS and STI was appropriate, but made it clear that greater operational synergy between the two organisations would be sought. LIS and STI have substantially increased their operational integration. Where appropriate, co-located Field Offices have been established in e.g. North America (Houston); Asia (Tokyo, Seoul, Taipei) and Europe (Dusseldorf). And in Singapore, the Field Representative carries out activities for both STI (80%) and LIS (20%).

7.  Further progress towards integration will arise out of the move by Scottish Enterprise to incorporate LIS and STI, plus other functions covering globalisation, Europe and international marketing, into a single directorate.

Additional Resources for LIS and STI

We received the strong impression from talking to Locate in Scotland and STI staff in post in the USA that additional resources would pay dividends in terms of additional investment into Scotland and more trading opportunities for Scottish firms and we therefore recommend that more funds should be made available to support these bodies, whether or not they are merged (paragraph 57)

8.  There is substantial competition for scarce resources in the economic development field. After a significant cut in inward investment resources prior to the Committee's investigation, LIS and STI have operated on a broadly "standstill" budget. Against this background, excellent results have been delivered and the issue of resources is under consideration.

Financial Assistance for Projects of Higher Value

It is clear that the system of financial assistance to industry should be reorganised to put more emphasis on attracting projects of high value and we recommend accordingly (paragraph 57)

9. There is a good deal of flexibility within current incentives to respond to the particular parameters of high value mobile projects. Scotland has, in fact, recorded substantial success in the past year in securing high value, R, D&D projects and jobs, but we shall keep the design of incentives under careful review.

Improving the Competitiveness of the Scottish Supply Base

There is great scope for improving the competitiveness of Scottish companies as suppliers to inward investors (paragraph 65)

10.  The December 1999 response noted the beneficial impacts of the "supplier developer programme" implemented by Scottish Enterprise. Although this is not, now, a discrete programme, its principles are embedded in the wide range of business development activities carried out by the Scottish Enterprise Network. Reference was made in the response to the forthcoming Scottish Executive initiatives concerning the Knowledge Economy Task Force, focussing in business innovation and skills and "Making It Work Together", which set targets for the establishment of a new business mentoring scheme and Scottish Institute of Enterprise. The Scottish Institute for Enterprise was opened in March 2000 and the business mentoring was launched in April 2000.

11.  It needs to be recognised, however, that the move to the global sourcing by large multi-nationals is making it increasingly difficult for local suppliers - unless they are prepared to "go global" themselves.

Greater Transparency in Publishing Financial Assistance

We believe that transparency informs public policy making and recommend that the concordats should ensure that the figures for the total assistance used to attract each project are subsequently published (paragraph 78)

12.  In our response in December 1999, Scottish Executive expressed its conclusion that current arrangements strike the correct balance between the right to know and commercial confidentiality coupled with protecting the public purse. The question of openness and accountability will continue to be kept under review.

Measurement of Success of Assisted Projects

We are glad to learn that Scottish Enterprise are already working on more helpful ways of measuring the success of assisted projects and we recommend that this continue (paragraph 81)

13.  In our response in December 1999, we confirmed additional data is collected and recorded by Locate in Scotland regarding average salary of jobs in new projects and R,D&D statistics. LIS now also records data on inward investment within Scotland's rural areas to support their strategic theme of contributing to the special challenges faced by the rural economies.

Aftercare of Existing Investors

We recommend that the agencies involved will continue to attach the highest importance to aftercare (paragraph 109)

14.  Locate in Scotland continues to place the highest importance to aftercare and support to existing investors. The LIS Investor Support Team, together with the Local Enterprise Companies and networks of local partners, now provide an enhanced support for the base of existing overseas investors in Scotland. As well as more "tailored" advice, support and financial packages for investors, there has been the introduction of joint initiatives, improved communications and networking events. The two key themes pursued in this investor support strategy are: assisting the performance of the investor's current facility in Scotland and encouraging the future development of that facility, particularly into higher value functions. In 1999-2000, almost 50% of investment decisions represented new projects or expansions by existing investors.

Update on Outward Investment

15.  Scottish Trade International recognises the increasing need for companies to establish overseas operations in order to successfully globalise their activities. STI currently operates an Outward Expansion Fund to support companies implement an overseas investment strategy. Scottish Enterprise has also established a Global Companies Development process and is currently working with 10 companies with global aspirations.

16.  At the time of the Committee's original report STI had established the Scottish Technology and Research Centres in California. A further 3 centres are now operating in Virginia, Florida and in Houston. These have the dual purpose of acting as STI in-market offices with adjoining incubator facilities for Scottish SMEs. The location of the offices has been determined in conjunction with industry and the Scottish Enterprise network and is reflective of market potential within key priority industries, i.e. software, optoelectronics, telecommunications, electronics, biotechnology and healthcare.

November 2000

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 3 April 2001