Fears advice service will become easy cuts target

FEARS are mounting that Scotland's only national business advice service will prove a "soft target" for council leaders as they come under pressure to slash their budgets.

The Scottish Parliament's probe into the structure of the country's enterprise network will this week put the spotlight on the future of Business Gateway, the business support network that has been provided through local authorities since the end of 2007.

With hefty public spending cuts on the horizon there are concerns that the service will be eroded.

"That is a potential risk, certainly," said Iain Smith, convener of the parliament's Economy, Energy and Tourism Committee.

"There is an issue of what level of priority the government has put onto economic development, in particular as we are in a period of economic constraint."

Some of those involved note privately that the budget for Business Gateway has already effectively been cut. Almost 18 million annually was transferred out of the budgets of Scottish Enterprise and Highlands & Islands Enterprise when local authorities took over the Business Gateway contracts - a sum which some say is less than what was invested when it was part of the now-abolished local enterprise company network.

"Scottish Enterprise negotiated a really sharp deal on that," said one source who preferred not to be named. "They were certainly a lot sharper about it than the local authorities."

Nonetheless, supporters note that Business Gateway clients remain generally happy with the service they have received since 2008: "It has not had a negative impact on customer satisfaction," notes Jim Galloway, business growth spokesman for the Scottish Local Authorities Economic Development (SLAED) group.

Galloway, who will give evidence this week, noted that economic development is not one of the services local authorities are required by law to provide.

"While it remains a non-statutory service, we are vulnerable in a way because of increasing economic pressures," he said.

The Business Gateway contracts taken over by local authorities run until September 2012, essentially keeping the existing system intact until that time. One of the many questions being examined by the committee is what might happen thereafter.

"One simple message I will be trying to get over on Wednesday morning is that economic development is not an optional extra," said Ronnie Smith, executive director of Business Enterprise Scotland. "It is a fundamental part of what government needs to provide."

Colin Borland of the Federation of Small Businesses said it was "absolutely right" that concerns were being raised over the funding situation at Business Gateway.

However Borland, who testified before the economy committee in the opening week, added: "A more pressing concern is the economic development departments of local authorities, whose budgets are re-negotiated every year.

"They could be facing some very grim cuts."