With 20% pay rises a thing of the past Scottish Enterprise stays in the black

Published on Thursday 14 August 2008 21:50

NEWLY slimmed-down economic development agency Scottish Enterprise has posted a £2.5 million surplus on its £535m budget in 2007.

It is the last year the under-pressure quango reports results under its old structure, comprising training and local enterprise support as well as its now core focus of economic development.

Since the SNP administration ordered its "decluttering" programme last September, the agency has transferred more than 1,000 jobs to other bodies, and next year has to make do with a budget of 327m.

Two years ago, SE bosses won a big round of inflation-busting pay rises, with packages rising as much as 21 per cent. According to this year's report, published yesterday, pay rises for the latest full year were more modest.

Chief financial officer Hugh Hall said: "All our executive board members got the basic pay increase of 2.5 per cent across the board. That is what we all received."

Chief executive Jack Perry received a total payout of 225,000, up from 219,000 the previous year. This included a 24,000 performance bonus.

Chief operating officer Lena Wilson, who between autumn 2007 and May this year was also interim head of Scottish Enterprise's international arm, Scottish Development International, took home 193,000, including a 17,000 performance bonus and 9,000 car allowance. This was up 7.8 per cent on the previous year, but SE said this reflected her dual roles. Hall made 159,000, including a 14,000 bonus and 4,000 car allowance.

A budget underspend is far preferable to a budget overspend. Two years ago, SE was embroiled in a massive row over a 33m black hole, requiring a bailout from the then Scottish Executive to the tune of 45m. The following year it made a surplus – an underspend – of just under 1m.

Hall, who was brought in to sort out the organisation's finances, said he had "steadied the ship". Job cuts of about 260 have saved the group about 10m.

Hall said: "For me the big issue going forward is how we can actually build up the resources we have got available, particularly in the investment side and the extent we can develop our sources of finance.

"Having steadied the ship it is a case of let's see what we can achieve in terms of additional resources."

Last year, SE put 40m into the Scottish Co-investment Fund, which invests in companies alongside private equity investors. The fund also attracted 32m funding from the European Union.

"We will use that over the course of the next seven or eight years to invest in growing companies," Hall said.

"With an economic downturn already kicking in, one of the areas that may well need our support is equity finance. Even in quarter one this year we are seeing increased demand for our investment fund. Tucking that money away means we are able to meet that demand."

A Scottish Government spokesman welcomed the report, saying: "It is very pleasing to see that Scottish Enterprise is operating effectively and within budget."