 Ond hyn yn ddiddordeb yn bnwysig ar y 17 fewn i ymgyrcholion rhesymlu i'r Sfaithbesigol i chi'n gwyfodol i wildwch ar gyfer y ddechrau ar y ddechrau rhagolion rhesymlu i dadfodwch effaith i chi yn ddigwydd mluoedd gigodafolion rhesymlu i chi'n gwyfodol i chi'n gweithio i chi diddych chi'n dod i chi amddangos unig o'r ddweud a bod hyn yn ei ddau'i ddau i chi amdanou i chi'n ddechrau i chi fyddwyd i chi i ei gwelliannau i chi'n mynd i y stage one scrutiny of the forestry and lamb bill agenda item, which is gender item 4 in public. Is this an approach paper? I'm sorry, an approach paper I should have said. Thank you. In private, which is gender item 4. Are members agreed to that? Yes. Good. All members are agreed. The gender item 2, Highlands and Islands. Yes, sorry. The picky. Yes. My agenda says it's agenda item 5. Indeed, it is agenda item 5 and I will speak to the clerks later about my convener's brief. Thank you, Mr Stevenson, for picking me up. So, agenda item 5, and just so that we're all agreed that we are going to take agenda item 5 in private, agreed. Thank you. Highlands and Islands Enterprise, which is the second item on the agenda. I'd like to welcome Charlotte Wright, the interim chief executive, Carol Buxton, the director of regional development and Douglas Cahn, the director of strengthening communities. I'd like to ask you, Charlotte, if you'd like to make an opening statement to the committee on Highlands and Islands Enterprise. Thanks very much. I'll be brief. Thank you very much for your invitation to come before this committee today. It's my first opportunity to speak to you all and it seems like a really good opportunity to update you on our wider activities. Now, I know many of you know Highlands and Islands Enterprise well, but I thought it might be helpful just to set out some context on what we do and how we do it. We have a long history of Highlands and Islands Enterprise going back 52 years to the formation of Highlands and Islands Development Board to solve the Highlands problem and arrest decline. It was an innovative solution to create a unique entity combining both business and community development and this approach continues to be central to how we operate today. So, whilst the overall picture of the Highlands and Islands has improved considerably since that time, we do recognise that there are still parts of our region where there are fragility. We have some complex issues to do with population decline in some of those areas which continues to be a challenge and some areas do have narrower opportunities. So, our commitment is to drive growth throughout all parts of the Highlands and Islands. Our overall guiding strategy is, of course, Scotland's economic strategy and we deliver significant activity under the four eyes of Scotland's economic strategy. So, that's about innovation. We have a number of programmes which support innovation, internationalisation, supporting businesses to export, inclusive growth, which is important to us, not only in terms of fair work but that geographic inclusion and investment in ensuring that we use our own investment powers to leverage growth. We operate through our four key priorities and that's the way our operating plan is set out and I'll just briefly explain them. There are growing businesses and social enterprises to deliver their growth aspirations. Primarily we do that through our account management approach but we do also have a number of programmes which are available to the wider business space as well. As I mentioned, strengthening communities in fragile areas which is a second of our priorities and very core to our activities. Thirdly, developing growth sectors and in doing that we make sure that that focuses on distinctive regional opportunities for the Highlands and Islands. Fourthly, creating the conditions for a competitive and low-carbon region. That's about our infrastructure investments, our digital work and supporting the development of higher and further education. To give you just briefly a flavour of what that means, for last year we supported the creation or retention of almost 1700 jobs. The businesses we supported anticipate turnover growth of 120 million, of which 80 million will come through international sales. We supported 12 inward investment projects and are currently account managing 415 businesses, 170 social and community enterprises and 50 whole communities through our community account management approach. I could say more but I get a sense that you want to move on so I'll stop there. Sorry, I didn't make it that obvious. I know that there's a lot of questions and it's a matter of great interest to the committee. The first question is going to come from the deputy convener, Gail Ross. We all know that in the Highlands and Islands there are a lot of fragile areas and you mentioned that in your introduction. Places in my constituency, especially very, very small communities like those in north-west Sutherland, for example, where one family leaves and immediately the local school is under threat of closure and various other situations. How does HIE identify and support fragile communities? Are there any areas that were previously considered fragile that are no longer considered fragile? If so, what was done to make them no longer fragile? I'll start off and I'm sure that colleagues might want to join in as well. I think that your question goes to the heart of a lot of what we do in the Highlands and Islands enterprise. In terms of the process of identifying and supporting fragile areas, we have a process where we look at a range of statistical measures that will identify some of those aspects of what we term fragility. There to do with distance from main service centres, sparsity of population. That in itself brings out mainly the periphery of the Highlands and Islands. As you rightly point out, north-west Sutherland, a lot of the western fringe of the mainland and the islands as well. That pretty much makes up the majority of the fragile areas. In supporting those communities, what we tend to do is either work with an existing organisation or community company to see what we can do with them, develop a plan and put in place support. Sometimes that might not be there, so working to develop the capacity within the community is a really important first step. That process in itself draws a lot from the community. There can be a big call on communities themselves. There are small communities, many holding down two or three different jobs, as well as wanting to support the way forward for their own local. It is a big ask of communities, so making sure that we invest in their capacity building and giving that support, perhaps through a community account manager or helping the employment of a local development officer can be really critical in those early planning stages. You asked whether there are any that are no longer fragile. I suppose that is a really difficult question for us, really, and that there are some areas where we have seen distinct improvement. I think we sort of shied away from saying, right, you are no longer fragile or having really hard boundaries about that and need to deal with the actual opportunities and challenges as they emerge. That is a really good point, because the fragility, a lot of it, is relative to performance in the rest of the region. Some of those aspects, for example, distance from a major service population, are not necessarily solvable. It is what we can do to mitigate those aspects. Things such as digital connectivity are very important. I suppose that there have been communities where things have significantly improved and I think that probably egg in terms of population, for example, the Isle of Egg, where the population has grown, albeit to still a relatively small number, but in percentage terms dramatically given some of the support and projects that have happened there. Dardas, do you want to come in for me from that? Maybe just to supplement that as well. I think that while we do focus a lot of our strengths and communities activity in our fragile areas, we also utilise the full HIE toolbox, so we do support businesses there. We do look for sectoral opportunities specifically that can impact on some of those areas, working on, for example, the North Coast 500 and how we leverage the opportunities that come out of that. Specific sectoral opportunities that apply across the region. Isle, for example, is also classed as a fragile area where it has a number of major multinational businesses. We work with the whisky industry to help them to support the growth of that island. There are a whole host of different interventions that we adopt based on the opportunities and challenges on the specific community. You use different indicators than the Government and Council and the NHS, I believe, use the Scottish index of multiple deprivation, which is very difficult in rural areas, to pinpoint very, very small pockets of deprivation. Would you say that your indicators are better placed for rural areas and would you recommend maybe Highland Council or NHS Highland adopting those? We've had a number of conversations round about that, particularly through the various community planning partnerships that operate throughout the Highlands and Islands. I think that we would agree with your comment that the indicators of multiple deprivation are very helpful in the urban context, but don't bring out some of the characteristics that Carol was highlighting there in terms of spasitive population and the real challenges for rural areas. Our experience has been through community planning to bring those things together through the community planning process. For the Highlands and Islands, there are one or two areas that suffer from some of the more urban challenges. A certain area of Inverness, for example, would stand out that fits those characteristics. We would work with community planning partners to support that. However, as one of the statutory partners in community planning has made it quite clear that the rural context is really important, the locality planning process allows that to build up from the bottom up and take account of some of those rural challenges. Our experience at that level has been that partners are very willing to look at that process. I think that that's quite a full answer. I'm just conscious that there's a lot of questions in here. I think that Gail wants to do a follow-up and then another question, so maybe we could get that in. It's just about the community planning partnership. One of their main aims is to reduce inequality. How does HIE feed into that in a rural context? That's about a number of things in terms of access to work, access to education, services and facilities. Our part in community planning is clearly about the economic strand of activity, but in supporting the economic strand of activity and dealing with challenges to employment and particularly wage levels and opportunity within the employment base, particularly within some of those more rural communities, is about improving equality overall. We spoke about fragility at the start. The issue of Brexit is a hot topic at the moment. What conversations have you been having with businesses in the Highlands and Islands about Brexit? Possible impacts? How could you help them to prepare for them? Our account managers talk to businesses on a day-to-day basis. We also have a business panel, which has a thousand organisations across the Highlands and Islands, which we survey on a regular basis to get their feedback on specific issues. Recent surveys have been asking them about their feelings around Brexit and what impact that has. There is a mixed picture. There have been some positive aspects. For example, the tourism sector in the Highlands and Islands has had a bit of a boost with more visitors coming to the area. Food and drink, on the other hand, has been slightly less positive. We are worried about exports, particularly to the EU, which is a major market for them. At the moment, there is uncertainty. People do not really know what is going to happen. It may be being a little bit slower to make some of the investment decisions that they may be planned. There are concerns over access to labour market and the free movement of labour, particularly in some of the key sectors in rural areas such as tourism and food and drink, which have quite high proportion of workers from overseas. We have that day-to-day communication as an on-going part of our account management process, but we also have a regular surveying where we ask people to update us on what their plans are. In terms of what we can do to help them, we have run a number of seminars with colleagues about potential new export markets and how to deal with import substitution. For example, businesses are looking to market their goods and services more locally, as opposed to further a field. We can take practical measures like that. On the labour market side, it is working with colleagues to try to ensure that, in the medium term, we can make opportunities in these sectors more attractive to Indigenous labour forces and build up the skills locally to take on those jobs. The funding side of things is because the Highlands has traditionally benefited from quite a lot of European funding over the years. One of the things that I would obviously say is that that is an aspect that does concern people. We have been a transition region, so the volume of European funding coming into the area has been declining, albeit that it is still very important to specific projects. There are some areas that have more concern than others. For example, the higher education sector, which, in terms of students from overseas, has quite an impact there. What we have been doing on that basis is working on a number of transnational co-operation projects where you do not necessarily have to be a member of the EU but you can partner with other countries and benefit from some of those funding streams. We are looking at one other source of funding to replace EU funds and, secondly, how we can continue to tap into some of those in the future landscape. I suppose that it follows on a wee bit from the Brexit talks, but in your introduction you said that one of your high-level measures was to support exporters. How many more new exporters are there in the high area since last year and how does high support increased export activity? We have a number of programmes to support that international activity. We are using some EU funds as part of that as a programme to really focus on bringing in new exporters. We have devised a measurement system that we call the internationalisation ladder so that we can track progress of internationalising businesses from those very early stages of starting to think about exporting. You may start that by perhaps going first to an exhibition overseas just to see how that works. Start making contact to build right through to maybe having a presence overseas and being fully integrated into an internationalising agenda and relying quite considerably for your income and your turnover through internationalisation. We have found that that has made a significant difference, and I don't know if Carol's got a number handy. I'm trying to find an exact number. We can supply that, whether I'm going to manage to find it in the next two minutes, I'm not sure. We can certainly give you that, as we have been tracking that, because we absolutely agree that the key here is to get more value. The more value does tend to come out of a smaller number of businesses but also to grow the base of internationalising businesses by bringing in new entrants. That is a slow process and can take up to five years from starting to think about it to fully exporting. I mean, if you can find a figure in the meantime, that would be useful. Just to move on, food and drinks is obviously a very important part of your work. I see by the graph that it is the second most important area as far as accounts management is concerned after others. That doesn't surprise me, but, again, I have a fairly specific question. Can you provide detail of High's Food and Drink Collaboration initiative for small-scale food producers? Yes. The one that you are referring to is some work that we did jointly with SDI to bring together smaller operators within the food and drink sector, principally to tackle the issue of exporting. It is a real challenge for a small business and, of course, a lot of the business space in the Highlands and Islands is small and producers can be very small within that. We found that, by collaborating, working together and the additional support that we put in was somebody who really led that process on behalf of the collaborative group, went into market and made those contacts and really acted as the agent supporting that, made a big difference. Indeed, we are looking at how we can take that model and roll that out further, not only to other parts of the region but also in other activities. We have also found that there is a synergy across provenance products. People are interested not just in food and drink and its high provenance from the Highlands and Islands but in other products, be it textiles such as Harris Tweed or others, into a basket of products together. As far as food and drink is concerned, is it mainly fishing products or farming products? It would be a bit of both, I suspect, but I suspect that it is mostly fishing. Let me try and give you a flavour of that. Farmed salmon is the UK's biggest food exporter that is produced in the Highlands and Islands, so that is most significant overall. That does play a big part. As for shellfish, it is much smaller, particularly farmed salmon, but there are a range of other products. There are quite a lot around bakery products, so there are some big producers in the Highlands and Islands such as walkers, for example. A number of smaller companies such as Reeds of Caithness have been massively successful and award winning recently in their products. We find that there is a lot of traction with niche products in bringing those together. Salmon dominates in terms of both volume and value, but there is a lot of activity across smaller niche producers. I should also mention the growth in the distilling sector with niche whisky, a lot of them doing gin in the short term, and micro breweries have also been really successful. Jamie, you have a quick follow-up on that. Good morning, panel. You talked about your relationship regarding exports. Can you explain to me how you work specifically with SDI agencies and DIT, which have strong large overseas networks to help businesses across the country export to the wider world, not just to Europe? SDI operates as an entity that is jointly owned, if you like, through Scottish Government, Scottish Enterprise and Highlands and Islands Enterprise. It is very much part and parcel of the way that we operate in international trade. We have two or three members of staff who are based in the Highlands and Islands, who are part of SDI. They host a number of exhibitions and meet-the-buyer events and are very much part of our programme of supporting increasing international trade. We use the network of overseas officers, 22 overseas officers, in terms of our inward investment priorities and also to make contact with any of our businesses that are headquartered overseas as well. The wider relationship with DIT tends to go through SDI as a gateway into that. An example where that worked really well, I would say, was the development of what is now CS Wind and macrohannish in Argyll, in that we found that UKTI, as it was then, SDI and ourselves worked really well together to make sure that, what is now the case, the Korean investor came into Argyll to take over that facility. The next question is from Richard. Audit Scotland informs us that high spending has decreased by 22 per cent in real terms since 2008-2009. How does high respond to Audit Scotland's concern that budget reductions over the last seven years creates a risk that those enterprise bodies resources are being spread over too broad a range of activities, and that might not be the most efficient way of using their funding and expertise? The Audit Scotland report was a really important piece of work. It was good to see that on the whole it found that the work that both ourselves and Scottish Enterprise was doing was overall very successful. It is always a challenge, I guess, within the public sector to look at the issue of budgets and what we see in relation to both opportunity and challenge for how we can use our resource. Particularly to follow up on those points that were raised by Audit Scotland, we have sharpened the approach that we already have in terms of the resource prioritisation framework that we use. That is part of a tool that we use internally for our decision making process about where we allocate resources. We have an investment strategy tool for our account managers and those supporting businesses to use so that they can ensure that they are making the best decision on whether to use high resources or to use our influence to support other investment or as a package to make that an investment work overall. We are also looking at our own forward plans of our strategic investment at our own hand as we split what we do between our support direct to businesses and communities and things that we do at our own hand, which might be the more significant infrastructure project and use that to flex our use of budget across the piece. Of course, we now look forward to how things will operate along with our partners through the new strategic board and look at how that contributes to the priorities of Scotland overall. As I said in my introduction, our guiding document is Scotland's economic strategy in terms of that priority setting. I notice in your balance sheet, including business receipts. In 2008-09, you have 10.6 million. In 2015-16, you have 43 million. You have nearly quadrupled. What is that? I look at the actual detail for you to come back. That tends to come from a number of sources, but what can make the most significant difference is what property sales we have during a year so that we will always factor into our budget an amount of property sales. We have done a fair amount of that over recent years, and that is probably tailing off for us just now. It makes sense in terms of whether we have sold something, so it means that our portfolio is smaller than it has been previously. What proportion of high investment over the past few years has been in the Inverness area? Has that been to the expense of more rural areas such as Western Isles and Scotland? If you want precise figures, I might need to come back to you on that, Mr Isle. What I can point out is that we do ensure that we make investments across the whole of the Highlands and Islands. We have had a significant investment in the centre of Inverness through the development of the Inverness campus. However, our approach to that is that that is not just about serving the city of Inverness and by it being a location for both business and the University of the Highlands and Islands. To give some examples, I would set that against our investment in the Western Isles over recent years. In total, we have spent nearly £25 million in developments at Arnish near Stonaway. We contributed £5 million to the £10 million development of Lock Boysdale harbour as part of the community developments there. We contributed £1 million to the development of the fantastic facility, which is Lewis Castle in Stonaway. I think that our record stands for itself in terms of making sure that those investments are spread throughout the Highlands and Islands, and that is important to us. I think that I said in my introduction that it is important that we drive growth throughout the whole of the Highlands and Islands. That does not mean that every year that split looks the same, but it takes advantage of whatever the opportunities or challenges might be at any one time in other parts of the area. The benefit of that regional approach is the ability to switch that depending on what has happened or what those opportunities are. I would like to talk a little bit more about your finances. Looking at your 2016-17 spending budget, which I believe is around £80 million, could you advise me how much of that will be specifically spent on either loans to businesses grant funding or via taking an equitable stake in any businesses in the high area? Yes, I can, but I haven't got that split in front of me, I'm afraid, but I can certainly come back to you. Looking backwards, perhaps, could you advise me of any particular success stories or any major losses or investment write-offs that you think the committee should be aware of as part of those loan or grant schemes? Yes, so in terms of some of the recent successes, let's look at a few examples. We are working at the moment with an early stage life sciences company in Dingwall inside Biometrics Ltd. The principal was formerly working at LifeScan Scotland, Johnson & Johnson, Scotland's biggest life sciences company. He left the company when they made some downsizing but has set up this new company inside Biometrics in Dingwall, which we have made a number of investments in. We have recently given them an award of R&D funding and they have grown tremendously and are attacking a really important niche in relation to both diabetes and ketone monitoring. I have also found that what they are doing is useful for people who want to be able to track their metabolic rate when exercising so that they can determine what is best for them. Those types of investment in early stage companies carry a degree of risk. This one so far has been on a very successful course. We have had some in that space in the Iguile area, which have not been so successful. For us, that is the balance of risk that is important. Without making those judgments and decisions to follow through on that, we will not get the kind of growth that ultimately led to a small company in Venice Medical turning into a corporate and impressive, significant employer in Venice, which is now LifeScan. I am trying to get a feel for the sense of the ROI that you are getting from those investments. It is not quite clear, either on paper or in your evidence, if it is heading in a more positive direction or there are more losses than gains. I wonder if, perhaps following that up, you could write to us of details of some of the financials behind what investments you have made, which ones have been successful or not successful and therefore the relevant returns. I am certainly happy to give you some detail on that so that you get the split of that. Overall, the impact overall of our investment is much more success than loss. I think that the message I just wanted to get across there is that a degree of loss is expected because we are taking risks and that is the business that we are in. A short question following on the budget along the last financial year. I noticed that your operating costs are just over 18 per cent of your spending plans last year. The budget has been reduced over the last few years. Can you tell me what proportion? Has it reduced your operating costs or are you still at the same level of about 18 per cent? What is the trend since your budget has gone down? What about your operating costs? Are they still operating about 18 per cent or have you reduced them? Some things have reduced, so a key one is our headquarters. We were in a building that we leased. We moved out of that to allow an inward investor to move in. We have now built our own building on land that we own, so that has made a significant saving in itself. We are rationalising our office space across the whole of the Highlands and Islands. However, it is really important to us that we retain local offices and we will always make sure that we do that. It is just a point also that I would like to make about the operating costs in terms of the staff resource. The comparison that you make is very valid in terms of the cost of operation and the amount of money that we disperse to businesses and others. A lot of what we provide is advice, and that comes from the people that we employ as well. While they are also part of the operating costs, they are delivering direct to business also. I was just trying to get a grip of whether they have stayed the same or as a proportion of whether they have increased or decreased. The budget for this current year that we are in, we have increased that slightly but that reflects the picture that I have just painted to you of moving more towards ensuring that advice and information through expertise in our staff space is a key part of our product. Looking at Highlands operating plan, what progress has been made in the last year towards achieving the goal set out? In relation to the year just ended March, I mentioned in my introduction that almost 1,700 jobs were created and retained. That is significantly higher than the measure range that we set of 700 to 900 jobs. There were some significant outliers in that in terms of big investments with some of our inward investors. We tend to sometimes look at those as outliers within that overall picture, but that was a very significant out turn in terms of the job numbers for that year. We measure the impact of what we do with business in terms of business turnover and the view that we take there is what their turnover will have increased by just attributed to our intervention by year 3 of their development plans. For that, it was £120 million of forecast of increased turnover of which almost £80 million would come from international sales, again showing that focus in terms of the push on international sales. I mentioned the 12 inward investment projects. 47 communities that were account managing and supporting. Turnover from the social economy, as you know that what we do with social enterprise and the social economy is really important to us. Turnover growth of £5.6 million. In terms of access to fibre broadband, that is 155 premises with access. Wave Energy Scotland, which is our subsidiary company dealing with technology development in wave energy, disbursed £6.5 million towards 16 projects. Our digital excellence centre, Hello Digital, saw over 2,000 people come to a variety of events to progress what we want to do in terms of digital. Getting the fibre in place is great, but it's also about the benefits realisation of that. 2,000 people were at a variety of events, including drones, virtual reality, 3D making and a whole range of things there. Those are the progress that are kind of against our harder measures. I think that there are a range of other things that are slightly less, more difficult to measure probably, but things like support to Hyal to attract more international flights into Inverness airport, which has a huge impact on the region with KLM just announced the other day a second daily flight from Inverness to Amsterdam. The feedback that we have had from the business community and potential investors on those has increased and improved connectivity has been really, really good. High undertook a piece of research recently with young people in the region about what they felt about the region and their attitudes and aspirations. Again, we are seeing a much more increased positivity among young people about their prospects within the region, about the fact that they want to live and work and study in the Highlands and Islands. They are saying that it is a much more attractive place to live now than it was five years ago. Looking five years forward, they think that it will be even more improved then. Some of the trends that we look at are becoming more positive now. It is not always easy to say how much of that is directly attributable to what I have done, but we are certainly contributing towards a lot of those improvements. If you can pause and let Gail come in after your follow-up. That sounds very positive. Do you foresee challenges in meeting your targets for this year? As Carol mentioned, our business panel was saying that, potentially, there is a slowdown in businesses making investment decisions. That will continue to be an area of focus for us and how we use our investment powers as a leverage there. We always mean that businesses feel that a little bit less confident about making some of those decisions to develop. We want to make sure that we can continue to find the right strategy and the right support for businesses to continue to grow. Gail, if I bring you in, then I will come back to you for a moment. You talked about 1700 jobs created and retained. I imagine that it is relatively straightforward to calculate the amount of new jobs that are being created. How do you calculate jobs being retained? What does that mean? If there is a threat to a business and we are investing to support that development, what we need to look at is what would happen if we did not make that investment and, in some cases, the business would retract. If that investment means that it maintains that workforce. Sometimes there is an element that they maintain and an additional number of new jobs that they would grow. We look carefully at that. In some cases, it is quite small numbers, but in some perhaps more high profile cases where there has been a total threat to a business and we have stepped in, then we may be able to say that the intervention through the public sector has supported maintaining the whole of that facility. Audit Scotland had said that Scottish Enterprise and the Scottish Government had to do more to make sure that your performance framework aligned with the national performance framework. What work has been carried out and do you think it aligns well now? There is quite a lot of work on going as part of the Enterprise and Skills review. Our staff have been working closely with, in particular, the Scottish Government and the Scottish Enterprise, but other public sector bodies as well to ensure that we are more aligned and that we are measuring the same things in the same way. It is work in progress, but we have done some work internally to see how our measures align to the national performance framework. On a broader basis, yes, we are working with them to improve that. A new measurement framework is in development. I think that moving forward with that, we do think that it is quite important that some of the things that we measure because of the activities that we undertake, we would continue to do so because we do have that additional remit with what we do with communities and the social enterprise sector, and we would still want to make sure that we were tracking and measuring that in terms of our investment and also the impact that that makes to our communities. Do you think that it would be helpful that the national performance framework would adopt some of those? I certainly hear from people in other areas that they are quite envious about some of the social remit that HI has, especially in areas of deprivation and issues about rurality. People are keen to have that social dimension. Do you see that being adopted? We are certainly discussing that as part of one of the work streams through the enterprise and skills review on data. We are supporting that and hopefully influencing where that might go. We recognise in that picture that we are a regional agency and there are a number of national indicators that we would contribute to. The next question is from John Finnie. Good morning, panel. I thank you for the good work that you do across the area. It is not always recognised, but it is appreciated that I show you. I would like to ask about social enterprises. Highlands and Islands is 9 per cent of the population, but I am told that 22 per cent of the social enterprises in 193 are your managed accounts. That is 30 per cent of all our accounts. Can you give some detail of the specific support that is provided, please? I will start with that one. I think that you are correct on your numbers. 22 per cent of Scotland's social enterprises in the Highlands and Islands according to 2015 census, which we were behind. Around 150 social enterprises per se, the other 47 or so are our community account management, which is a broader-based, more holistic support to primarily or more fragile communities. The support that we offer to our social enterprises is very similar to the types of support that we offer to our business base. It is a range of interventions from advice to financial support to access to our broad range of services from graduate placements to whatever. It covers the broad range, and it is really intense account management support that makes the difference, and it is what is appropriate for the plans and aspirations of that social enterprise. The portfolio covers quite a broad range from organisations that support those furthest away from the labour market. You might have seen in the media today our investment towards Cope Ltd in Shetland to diversify and expand its operation. Similarly, there is an organisation in Campbelltown at the opposite end of the region, Contire Recycling, which does similar work. There is a broad range geographically and also sectorally. We have a number of clients in the childcare sector, and we support them equally in a number of ways. It is a broad range of specific support to the organisations, and the ones that we work with are those that can deliver the greatest impact economically or socially. Can you ask about another two initiatives? That is the Scottish business pledge in the living wage. Are you able to say how many of your account managed companies are signed up for that? Do you have a target for the current or indeed future years at all? From memory, and I will have to confirm this figure, I think that it is around about 10 or 12 of our account managed businesses are signed up. Proportionately across the country, it is kind of even but a relatively low figure at the moment. The business pledge is being promoted very heavily by account managers to our client businesses, but signing up currently is relatively low. I suppose that the approach that we have taken with account managed businesses is that a high proportion of them are meeting all the elements of the Scottish business pledge. It is getting them to go through that final stage of signing up for it. The majority of them meet the criteria within the Scottish business pledge. Can I finally just ask a question on the term alignments being used? I was to understand your relationship with other bodies, particularly with the Scottish Government, with regard to two specific issues, one of which I have discussed personally with you. That is the issue of ethical investment and the other is a very specific issue. That is the concerns that are expressed about the GEO park in north-west Sutherland, an institution of world significance that requires a modest sum. Are you able to comment on your relationship with the Scottish Government and other bodies regarding those two issues, please? In terms of those specifics, we have had a conversation about the question of ethical investment. I have talked to the Scottish Government about that as we discussed it. It is not a straightforward one to answer in terms of what exactly we are meaning by ethical investments. The particular point that we discussed previously was about those involved in arms. We highlighted some of the activities of some of our engineering companies, which might feed in at some point into that supply chain, but we do not directly support any manufacturing weapons as such. Is there a conscious policy? We do not have a policy set per se, no. Perhaps that is something that you could look at. I understand your concerns about that and we will continue to have those conversations with our partners in the Scottish Government to see where that takes us in terms of a policy approach. In relation to the GEO park, I know that our local office in Thurso is looking at the challenges for that particular GEO park. We have other GEO park areas within Highlands and Islands as well, and hopefully we can find a resolution. I understand that they are doing a lot of good work and if there is a way that we can continue to support them and find a sustainable route for them for the future, that is the important thing. With any of those types of initiatives, finding the route to sustainability is important. OK, many thanks indeed. Well done on getting that constituency or regional question directly. John Mason, yours is the next question. Rhoda Grant has already mentioned the social dimension that you have, which is slightly different from Scottish Enterprise, so I wanted to explore that a little bit. The whole community support model that HIE has, if we are going to have a new body in the south of Scotland, would that be something that you think they would benefit from? In fact, part of me wonders should the whole of Scotland and Scottish Enterprise have that as well, or is there something unique about the Highlands and Islands, which I agree there is, that requires it there that does not require it elsewhere? On your last point, I think that I would always say that there is something unique about the Highlands and Islands. There are predominantly rural parts of Scotland who might share some of the same challenges and opportunities, but Highlands and Islands is half of the landmass of Scotland with significant challenges of our islands and spossity of population. In relation to the proposed vehicle for south of Scotland, we are engaged with the groups that are looking at that. We have hosted visits from the south of Scotland Alliance so that they can see more of what we have been doing in the Highlands and Islands and see what is transferable. We are keen to ensure that the experience, skills, knowledge and expertise of Highlands and Islands is put into the mixer to support the development of what is most appropriate to deal with the opportunities for south of Scotland. Do you see it as a significant difference from the way that Scottish Enterprise looks at communities and the way that you are dealing with them? Some of the things that Douglas described earlier about our approach to community account management, where we account manage whole communities, where we have worked to support those with income generating assets. We run the Scottish Land Fund across the whole of Scotland in partnership with the Big Lottery, which reflects the expertise, knowledge and the policy that has been part of Highlands and Islands, which is about where land sits for communities. Communities are a challenge all over Scotland. I accept that they are slightly different challenges, but I would suggest that some of the communities in the cities are also struggling with their identity and so on. Is there anything that Scottish Enterprise or we could roll out more widely in the urban areas from what you have learned? I think that there are always opportunities to share that knowledge. I suppose that the way that we have worked has been specifically about our communities in our more rural areas. The degree to which that might transfer might look slightly different in terms of some of those challenges. Our challenges are about access to facilities and resources. I think that the challenges in relation to urban centres, of which we have few, really tend to be more about the indicators of deprivation that we spoke about earlier in terms of higher unemployment or lack of access to employment. Where does Inverness have been mentioned already, but where does it fit into all this? It is now a city, which it did not use to be. It seems to be doing quite well. Does it not need that kind of level of input, as more rural areas would need? Inverness is a tremendous success story, and I think that the parallel has often been used. You have probably heard it here as well between the story of Inverness and the story of Dumfries as a comparator of different parts of the country. We see what has happened in Inverness to have an effect across other parts of the Highlands and Islands. It is a driver of the economy. We do not claim that it drives the whole of the Highlands and Islands economy. There are a number of small economies throughout such a diverse area. What we need to do and are doing in Inverness is focus on the key opportunities, so investing in the business base and really creating a very dynamic city environment there. We are working with Highland Council on the delivery of the Inverness city region deal. Importantly, it is a city region deal. It is not just about the centre of Inverness, but again, how we use that to push out to the other parts, particularly of Highland area. We often hear much said about the demographic and population challenges that face the Highlands and Islands. I was therefore quite surprised to see that it performs quite well in terms of population growth. The population growth has doubled the Scottish average, with the exception of our garland but where the population has shrunk. Do you have any views on those potential challenges over the next, say, 5, 10, 15 years, both demographic and population specific? I think you're absolutely right. The population story overall has been positive and growing apart from in our guile where I think there are some specific challenges. I think we see the demographic issue as a bigger one and that's about that missing gap in the middle of the younger element of the population. We do have an ageing population in most areas and that's where we see attracting young people back to the region or encouraging them to stay in the region as being key to the growth of the region. It does vary across the patch and, as I was saying to you earlier, the research that we've done recently into attitudes and aspirations of young people has helped to inform some of our work. I don't think any of the outcomes of that have been a particular surprise. Young people want access to employment opportunities, they want access to really good education opportunities and our work with the UHI has really helped to ensure that young people can stay and learn and study in their own home areas rather than necessarily move away. The tackling the demographic issue is a key one for high across the region and it is going to continue to be a challenge as we move forward. If I may move on, I think that one of the challenges in encouraging people to come back to that has been the issue of digital connectivity, so I wonder if we might reflect quickly on that. Could you advise me if you will be participating in the remainder of the R100 project? Absolutely. As you are obviously aware, high have led on the phase 1 of the NGB rollout in the Highlands and Islands, which has been a really challenging project, but I think that high have been involved in connectivity telecoms projects for a long time now, going back a number of years. We've got a really good story to tell and I know it's not good enough and it's not fast enough for those people that it hasn't touched yet, but we are an integral part of our 100. We're working very closely with Scottish Government colleagues in terms of the shape of that and how it rolls out. I think we've learned a huge amount from the phase 1 rollout. We always knew it was going to be very challenging in the Highlands and Islands and quite different from the rest of Scotland. I think that the thing that we all have to remember is that although by the end of the current contract, the phase 1, we will have touched 86 per cent of premises across the region, which is slightly in excess of where we had hoped to be when we first started out, which was 84 per cent. We have achieved a better result than that, but that remaining 14 per cent is absolutely the most challenging bit. It's not a case of being complacent or think that the job is nearly done. There still is a difficult job to do and it's absolutely vital that we feel that high are part of that going forward. Certainly, our colleagues within the Scottish Government have indicated that they are very keen for us to be an integral part of that. You mentioned getting to this last 14 per cent, which we all accept is the most challenging part of the country to get to in the furthest away parts of Scotland. We've previously had evidence that suggests that it may cost as much to get high-speed connectivity to those areas of wood for the rest of Scotland in its entirety. Do you have any views on that? I think that there are probably better informed people who have given evidence to you in the past, but I certainly would agree that the bits that we've got left to do are going to cost a significant amount of money. Until we do detailed modelling, we won't be absolutely sure, but I think that the ballpark figures that you have been given, I wouldn't disagree with them. Can I clarify? I can understand that we've been given three different sets of ballpark figures that vary between, as far as I can understand, 100 million and 600 million. Which ballpark figures would you not disagree with without taking you too far from being your very diplomatic self that you are? I think that my colleague Stuart Robertson gave evidence at a previous committee where he said that it was in the region of maybe about 300. 300? OK. So somewhere in the middle. Very diplomatic. Sorry, Jamie, did you want to? Sorry, could I just be very cheeky and take the opportunity to correct my question that I gave to Mr Finnie? I can update the figures on the business pledge. We had 12 account managed companies. That's now risen to 17. Across the Highlands and Islands there are 25, so that's including companies that high don't support specifically. That's very positive. Thank you. Jamie, did you have a follow-up question before we move on to Rhaedda? I'm pleased to hear that there's a sort of creative or tech hubs developing in the high area. I think that's very exciting. With technology, obviously, there are other risks such as automation industry or even technological advances in rural agriculture industries. Do you see any challenges or risks specifically around digital economy technology, posing any risks to the progress of higher? Do you see it more as opportunities? I think that we're all aware of the productivity challenge that there is for Scotland. As ever with these types of numbers, that productivity gap looks bigger for the Highlands and Islands, which reflects the business base in itself. Opportunities for automation or use of technology are absolutely what we are doing with companies. A great example will be what we can do with Liberty, who are the new owners of the aluminium smelter in Fort William, who are not only protecting the actual production of the primary product but are planning some downstream manufacturing. This is a significant step in terms of industrial manufacturing for the Highlands and Islands and an opportunity to get that state of the art from day one. That's an easy example when you're looking at a big manufacturing process. On a smaller scale, we look at that in relation to our food and drink industry, because that's all about production and how that can be improved and speeded up. There are some great examples out there of how innovation has made a difference to some of the smaller scale businesses, too. Before we move on, Carol, can I take you back to a comment that you just made? You said that when further detailed modelling was undertaken in relation to the final 14 per cent that we haven't managed to get to, when are you planning that detailed modelling and when will the results be known? The procurement process for R100 will be kicking off this year with contract awards sometime next year. Some of the modelling will start at that stage, but a lot will be done once the engineers are on the ground delivering. That's what we found during the course of the contract. You can estimate to a certain degree during the procurement process and on information that's currently available. Sometimes when you get out there on the ground, things aren't always necessarily as you thought they were. No, I'm just asking because one of the questions that I think we all probably get asked is when people are going to get their broadband and especially in relation to HIE projects and businesses across the highlands. It becomes fairly critical. The bill in our area, although the phase 1 contract is coming to an end and the main part of the contract concluded back in December time, the extended bill and the spend on base funded by the innovation fund and the gain share payment, which is what BT put back in because of the take up, will extend out to December. Probably into next year in 2018. The bill will continue in our area over the next 18 months and then the R100 bill will kick off after that. We will be able to update communities through the normal process, the exchanges on the website of when they will be coming into the programme. The next question. As anilins region has enjoyed quite high employment rates compared to the rest of Scotland, we all know that some of that is made up by multiple jobs, low paid, seasonal working. How much of that is actually the case and what would you see as being ways of tackling that because obviously tourism is a big part of the highland economy? In terms of employment rates, you are absolutely right. The highlands and islands have historically higher levels of employment than the rest of Scotland. Similarly with unemployment, it is lower levels although that can vary quite a bit across the region. We have low paid sectors and some of the major sectors are historically reasonably low paid. Part of our remit and part of the work that we do with businesses through our account management is to drive up wage levels in businesses that we support. When we look at, for example, last year, the profile of salary levels in businesses that we supported, I think that there is a good story to tell and a good picture to show. I think that is really how we do it by supporting businesses to grow and helping them to increase wage levels individually. I think that the point about people with a number of jobs is absolutely a picture that we recognise, but it is actually really difficult to be able to get the true data on it. I can think of numerous examples, real examples, where we do know that that is happening. I guess that says something about the employment opportunities and particularly where that is affected by seasonality or, as Carol says, the issue of the predominance of some low pay sectors. So trying to get to the bottom of that is quite challenging, but I think that we have enough anecdotal evidence from our own knowledge of the communities that we live and work in to know that there is something that is happening there. In some ways, it is a good thing because it is about the resilience in communities and that they ensure that, in a community, all of the key things are getting done and services are getting picked up, but that is a challenge for an individual to actually manage that kind of juggling of two or three jobs. I absolutely recognise that. I am just moving on to a different question and one that has come up today to an extent about Inverness and its growth and whether that is at the detriment of the rest of the region. I wonder if you have looked at that. How much does Inverness attract businesses from the rest of the region, people from the rest of the region? It becomes almost a magnet pulling some of the things that you need in communities into the centre rather than encouraging spread out into the periphery. I guess generally that there is always going to be an attractiveness about what the biggest town of the city in the highlands and islands can offer, whether it is about business or indeed social and immunity, so a lot of people use Inverness for that service base. What we and our partners have recognised is that we have a distributed way of operating. There is nothing like the University of the Highlands and Islands anywhere else in the way that the colleges operate across FE and HE sectors so that we have blended learning opportunities and not only have the colleges but a network of learning centres throughout the region. I think in the last 10 years that has made a substantial difference to access to both further and higher education. That in itself is really going to drive up the opportunities but people can be using Luzcastle or they can use North Atlantic Fisheries College to access a full range of academic provision through the UHI. I think that in itself has the ability to be a game changer and is why we have supported UHI as you know for the last 20 odd years. Our own approach is really similar that our area offices are absolutely integral to the way we deliver and making sure that our resource distribution reflects need and opportunity is critical to us. Inverness is important and having a regional centre is important to the growth of the region. Is that a balancing act to get that right? Just a supplementary on that. Have you done any work to see whether or not Inverness is a block to people leaving the region altogether to have those facilities in Inverness? Maybe people would have left and gone to Glasgow, Edinburgh, Aberdeen as being historically the case in the Highlands. Having those facilities in that focus in Inverness has maybe kept people closer to home and made it more possible for them to move back home if opportunities arise. We see some of that evidenced by the youth survey that Carol mentioned. We have done that twice now with a five-year interval in between. In that time period there has been a difference in the attitudes of young people. Several years back, the attitude in some parts of our region would be the brightest investor on the first ferry or train or boat or whatever it is out of there. That attitude has changed considerably. People have a commitment to the area but the ability to have the university access and the job access has started to make a difference. People are starting to see those employment opportunities. We have also seen that a student accommodation in Inverness in Fort William and elsewhere is making a difference. Students are moving into those areas so that people are coming from elsewhere to follow the adventure tourism degrees in Fort William and staying there and adding to the community. Those things actually make a really big difference but they are slowly building. There is probably, to answer your key point, some information and research. There is perhaps more that we can do to really understand how those dynamics work and how we can leverage that to the best for the region overall. Last August, it was announced by the Scottish Government that a new island strategic group would be set up and included local authority leaders, chief executives from all the councils that had islands. Is HIE involved in that or not? We are not involved with that group particularly but we have been working through our area teams who are based in the island areas on the island steel and particularly on the economic strand of that. I know that the Government is going to come forward with an islands bill and could you tell me what you think will be the important elements in it as far as you are concerned and what would you like to have in it from your perspective? We have made a submission to the consultation on the islands bill. I think that we are illustrating the importance of the flexible approach of Government policy to ensure that islands and other parts of fragile mainland areas, such as remote peninsulas in the islands and islands, are equally challenged. Are those totally surrounded by water? Plenty of them are surrounded by three sides and by water and have many of the same challenges indeed. In some ways we see that as a wider issue for those fragile areas to make sure that we have proper access and that policy supports that overall. We have made some comments along those lines in relation to the islands bill. Do you think that you have not been involved in the group? Do you think that you should have been? We are certainly happy to support that. I think that that decision has really been led by the views of the local authorities that have been involved. The penultimate question is to Richard, and then I've got a question. I just take curiosity. I've seen your budget line in your budget, which has never been in before. A million pound support for Scottish Government initiative, what is that? One million pound this year, never been in your budget before. Support for Scottish Government initiative, what is it? Is that 2015-16? There was one million pound set aside. Oh, I'm sorry, I haven't brought anything on 15-16 with me. Maybe you'd like this one. Just do it quickly, Austin. There's no further questions. I have one, which is, if I may, directed to you, Charlotte. Charlotte, you'll be aware in the recent vote in the Parliament regarding the HIE board and the decision that was made by the Parliament. Can you inform the committee how that decision is being implemented by the Scottish Government in HIE, please? The Scottish Government has confirmed that Highlands and Islands Enterprise Board, as we know it, and as it currently operates, will continue to do so. There will be no change to the HIE board. They intend to progress the new strategic board. That is still under way, so that hasn't met yet or been informed. The chair of each of the agencies, including the chair of HIE, will be a member of that new strategic board. In terms of the key point, and I know that there was a lot of local and other interest in that, is that the HIE board absolutely continues with its membership as it currently is and to operate as it currently does. That's in terms of all of its decision-making powers and autonomy. Sorry, I'll just push you a little bit. I see interim before your name on the briefing paper. Does that mean that you are staying or that hasn't been sorted yet? We are currently recruiting for their permanent chief executive. That process should be concluded in early June. Thank you very much for enlightening us on that. Are there any other questions at the committee? Charlotte, was there anything that you think that we have missed very briefly that you'd like to bring to our attention? I think that that's been a really wide-ranging conversation. I apologise that we didn't have some of the specific details that some of you have asked for. We will make sure that we follow up on that. I would just like to invite any members of the committee if there are things that they would like to follow up with us directly. We're delighted to come and talk to you or indeed invite any of you to see some of the projects that we've talked about in the Highlands and Islands. I'm really keen to do that and to get to know you all better. I know that the clerks will be in contact with you about the additional information that we've requested and you've offered that we can have and will circulate that to members. Thank you very much for attending the committee this morning and for giving evidence to us. I'm now briefly going to suspend the meeting to allow the panel to leave. I'd like to reconvene the meeting and move on to agenda item 3, which is subordinate legislation. We would need to consider four negative instruments as detailed in the agenda. If anyone wishes to raise any matters on reporting these to the Parliament, members should note that no motions to annul have been received in relation to these instruments and there have been no representations to the committee on them either. Does anyone member of the committee wish to make any comments? No. Is the committee therefore agreed that it does not wish to make any recommendation in relation to these instruments? Agreed. It is agreed. We will now move on to agenda item 4, which is consideration of the draft annual report. The report covers the work of the committee during the parliamentary year between 12 May 2016 and 11 May 2017. I'd like to consider the report on a page-by-page basis and see if there are any comments to May. Page 1. Yes. Just a general comment, I passed the clerk some very minor typographical, which I will not raise in detail. In paragraph 2. Page 1. Page 1. Page 2. We are now one-all in the scoring rate. It seems that I am not keeping a score. At paragraph 2. I just wonder if it might be useful to add in before all meetings are held in Edinburgh. The agenda for all meetings, including details of private business, is published on the Parliament's website. The purpose of doing that is to make clear that, while we do meet in private from time to time, we are making public the matters that we discuss in private, so that therefore we can be held to account for the matters that we discuss in private. Okay. Fine. Yep. I'll pass my note. Okay. Anything else on page 2? Page 3. He's got a few on the typographical. Page 2. They will all be picked up in the proofreading. Page 4. Page 5. Page 5. Paragraph 12. At the end of the paragraph, it says, due to opening of May 2016, six months later than originally planned, I'd like to propose, in line with what the Cabinet Secretary said on 8 June 2016, that we consider whether we should say, it was due to opening May 2016 in line with the contractual date, but six months later than previously anticipated. Does anyone on the committee... I think that that is a factual representation of the situation. Yes. Okay. Thank you. Anything else on page 5? Page 6. Page 7. Very nice picture. Yeah. That was funny. I have to say that through you convener... It's a good picture and we'll move straight on. Through you convener, I have to say that it was very enjoyable. Walk through the tunnel, Mr Mason and I, done and gone, on the Queen Street tunnel was a very exciting project and it was very exciting to actually see it and walk through that tunnel. Page 8. Sorry. Page 8. Say something that's later in it, but I'm pretty sure I've doubled, triple checked. There's a lot in here that's very specific around certain transport issues, but it's just a general comment that I get the impression that it doesn't give a flavour that we do cover a broad range of transport issues such as ferries, electronic vehicles and so on. I just feel that it's very much specifically focused on the bridge and rail services and very little else. Okay. We could certainly add into the report to make sure that it covers or shows the flavour of all the areas of transport that we're involved with. I wonder then if it might be helpful to print the committees the areas of responsibility maybe at the outset and that would show that although not specifically be able to do it on this page. I think that that would be a useful suggestion. Thank you. I couldn't see a section, maybe I'm wrong on the petitions that we've dealt with. Is it? Which page is it? Page 11. Oh yes. Yes, there is a very short section on petitions, yes. It's on page 11. But there's nothing in there to say what we've done with them. We can expand that. We can expand that out to... I just think it's helpful for the public to know rather than just a list of petitions. Okay. We'll expand that out to say what we've done with those petitions, yeah. Can we go back to page 8 committee? Page 9, page 10. Page 11. Page 12. Yes. In relation to that, I wonder... I think that the ports are very well put together and I appreciate that it's just a very small summary. But with regard to qualities, could we mention perhaps two issues in that as the committees looking at the public transport aspects of Queensferry crossing because we know that public transport addresses a number of the areas covered by equalities. And also specifically, with regard to the crofting, the entry of young people or the retention of young people. I mean, well, certainly, I think the point on public transport is an interesting one. I think it would probably fit neater in the Queensferry crossing bit, but we can certainly make reference to that. And certainly on crofting we could make reference to the fact that we were looking at new entrants in the crofting bit as well. I'm advised by the clerks, Mr Philly, that both of those fall outside technical definition of equalities. We can fit them in there. We'll fit them in the report in the appropriate places where I'll work with the clerks and suggest them. Yes, no, I'll bow to the clerks on that, but simply to say that the purpose of public transport is not everyone has a motor car and a lot of the elements of the qualities age poverty aspects and mobility aspects are better addressed by public transport. Maybe I can follow that up with the clerks. Yes, indeed. Thank you very much. Page 13. There have been one or two suggestions then made. If the committee are happy that I take those up with the clerks and make sure that they're included in the report and then publish the report subject to those points being taken, I think they're non-contentious and it doesn't need to come back to the committee if you're happy for me to do that. Is that agreed? Thank you very much. That concludes the items of the agenda that will be taken in public session. Therefore, we're going to move into private session and therefore would like to close the meeting. Thank you.