Scottish Enterprise shrinks support for business investment

Published on Monday 14 March 2011 13:54

Business leaders have criticised cash cuts to private sector companies as an "unwelcome trend" in the current economic climate.

But the national economic development agency Scottish Enterprise yesterday said firms would have to contribute a greater share to development projects.

The agency is facing a 10 per cent reduction in its own budget from 201 million to 194m as part of the raft of cuts across the public sector. Support for commercialising new ideas is being cut by a third from 24m and the urban regeneration budget is being halved from 25m.

CBI Scotland assistant director David Lonsdale said there is a need to tackle the "hefty deficit" in the public finances and that the growing national debt must be addressed.

"The devolved public sector cannot be immune from this," he added.

"However we have argued that the Scottish Government could have made greater savings elsewhere in its budget in order to better protect important GDP-enhancing investments in business support and capital investment in order to help the prospects for growth."

Garry Clark of the Scottish Chambers of Commerce said that there is a need in the current climate to ensure that the private sector is "picking the economy up."

"The financial sector needs to grow pretty rapidly, particularly given what we're expecting to happen in the public sector over the next few years," he said. The SCC voiced concerns at the proposals to hit the enterprise budget when they first emerged in the Scottish Government draft Budget last year.

"It would be unfortunate if the public sector was to decrease engagement with business and support for business," Mr Clark added.

Reducing the support for commercialisation of new ideas is "disappointing", he said.

"That's the sort of area where we would hope Scottish businesses would be able to cut a competitive advantage," he said.

"If they have less support for doing that and insuring against the risks of doing that, that's not a welcome trend."

Scottish Enterprise's total budget next year will go up by 43m, as it takes in the government's budget for supporting inward investment by foreign firms.

A spokesman for Scottish Enterprise said yesterday: "Like all other public sector organisations, we've had to look very carefully at the budget we've been given by the Scottish Government and there have been some difficult decisions that we've had to take.

"However, we've identified five key priorities which we believe will have the biggest impact and make a significant and lasting difference to the Scottish economy."