 Can I welcome everyone to the 14th meeting of the Education and Skills Committee, and can I please remind everyone present to turn on mobile phones and other devices on to silent for the duration of the meeting. The second item of business is a session on the Enterprise and Skills review, and I welcome to the meeting Keith Brown, Cabinet Secretary for the Economy, Jobs and Fair Work, Hugh McElwain, Head of Youth Employment and Paul Smart, Head of Colleges, Young Workforce and SFC sponsorship division in the Scottish Government. I understand the Cabinet Secretary wishes to make a short opening statement. Thank you, convener. I will be brief. First of all, I thank the committee for the invitation to come and speak here today on the Enterprise and Skills review, and in particular the impact of that review on the two agencies involved at SDS and the Scottish Funding Council. As you will know, the First Minister announced the review on the 25th of May, and that it would cover the work of the Scottish Government and four of its agencies, Scottish Enterprise, including SDI, Highlands and Islands Enterprise, SDS and SFC. The phase 1 decisions of the Enterprise and Skills review were published by me on the 25th of October. The aim was to take fresh action towards our long-term ambition encapsulated in Scotland's economic strategy that was to rank in the top quartile of OECD countries for productivity, equality, wellbeing and sustainability. That ambition was the foundation for the work of our four Enterprise and Skills agencies, both individually and together with each other and the Scottish Government. We recognise the vital contribution that the four agencies make to creating a more successful country with opportunities for all of Scotland to flourish through delivering inclusive and sustainable economic growth. Our agencies and their staff already carry out excellent work with a diverse range of partners around Scotland, and, as Audit Scotland noted, they have been successful in their respective roles with clear strategies and good governance. The Enterprise agencies, for example, collectively work with or assist around 11,200 businesses each year, and there are good examples of all of them working with partners to achieve a positive impact such as creating jobs. Although the review has been undertaken in the context of post-recession public sector expenditure, we have all been looking closely at opportunities for savings and investment, which will deliver the greatest return. The primary purpose of the review is about identifying ways in which we can strengthen the support on offer and the economic outcomes that it delivers. That is why we aim to establish an overarching single board that will allow us to strategically position our agencies and effectively align the services that they deliver. We are alert to the stakeholders' concerns about the process of closer alignment between the agencies and the creation of a single board, and in particular those concerns that are expressed by the university sector. A key focus of phase 2 of the review will be to work very closely with the public bodies and the stakeholders to ensure that the new structures enable a more integrated approach to enterprise and skills support, while maintaining distinctive approaches where appropriate. I would like to emphasise that the autonomy of universities will be protected and that I recognise the value of arm's-length bodies advising ministers about matters across both the F and HE sectors. We are alert to stakeholders' concerns about the process of closer alignment between the agencies and the creation of a single board, in particular those of the university sector. We will work closely with the bodies and they will be integral to the next stage of the review. I emphasise that the autonomy and the academic freedom of universities will be protected and that we recognise the integrity of that currently and that it will be protected as we go forward. With those comments, convener, I am happy to try and answer any questions that the committee may have. Thanks very much, cabinet secretary. You ran the formal call for evidence between 15 July and 15 August. How confident is the Scottish Government that the views heard during that relatively short consultation period are representative of the various people and organisations with an interest in or are served by Enterprise and Skills Agency? We had a substantial response over 300 responses during the course of that period, 329 responses. That was from a very broad spread of interested parties. Of course, the review itself is not finished yet. We have phase 2 of that review and the level of involvement is still very substantial across the sector and from stakeholders in the area. For example, what is different from phase 1 is that the bodies themselves, the four agencies, will have representation on the ministerial review group. We also have under active consideration the possibility of a transitional body, which will include the agencies themselves, for three different reasons. One, really, to provide the reassurance to the agencies about the central nature of their involvement in the process going forward and to reassure the staff that are there as well. Secondly, there will be decisions that are required to be taken, of course, over the course of the remainder of the review. Those decisions are properly addressed with the agencies, but they will want to co-ordinate those where they can to achieve that alignment that I have previously mentioned. Also, to provide support to the ministerial review group in terms of the work that they will be doing, there is a substantial number of work streams. I think that that level of stakeholder engagement is extensive and it involves those people with the greatest interest in relation to that. We also have, as I say, a serious, quite a large number of work streams going forward from the ministerial review group. It will be open to them to take on board other expertise as we go forward. I think that the engagement has been both widespread and substantial. In the consultation responses, there was talk of a cluttered landscape, difficult access support, tension between national and regional approaches and a lack of partnership working. Can you give us some details of the specific focus of activity and actions that has been pursued through the second phase of the review, which might help to deal with some of those issues? As I say, we have a large number of areas that we are looking at. Perhaps the first and most important of those is the issue of governance. I mentioned an opening statement about the concerns that have been expressed in relation to the university sector in particular. It also relates to HIE. A substantial piece of work has been done on governance as to how we make sure that we recognise the strengths and requirements of those sectors in terms of the new governance structure that is built around the new overarching board. That is one area. Another area that I am sure is the idea of regionalisation. COSLA has been involved in the ministerial review group at a high level from the start, and it has been very helpful in recent weeks in saying that, as we move forward into phase 2, they are willing to consider or allow to be considered the current functions that they carry out in relation to business gateway and economic development to be considered alongside our on-going work for, say, skills development, how that might be delivered on a regional basis around the country. That may well result in much closer collaboration right the way through the different economic development functions and skills functions of different bodies and, of course, may result in additional autonomy for bodies across Scotland and highlands and islands in the south of Scotland. We have the governance, regionalisation and separate streams in relation to what is called decluttering. We are aware that there are a substantial number of initiatives and different bodies, so we have asked for work to be undertaken that recognises that there are only so many people who can service all those initiatives and bodies, and if it is the case that we find that there are overlapping or any duplication, we should be looking to make sure that we can eradicate that to be more effective. Those are three that I can mention off the top of my head. I don't know if Paul or Hugh want to mention any of the other work streams that you have on going. Maybe not. There are several based on the decisions that came out of the first phase of the review. The cabinet secretary has already mentioned a strong governance at the top there with an overarching strategic board, but in addition to that, a proper look at national local enterprise skills delivery in a much more co-ordinated way. Facing up to the observation from a number of evidence givers, it was a cluttered landscape. It was as cluttered in terms of saying, well, how can they be better aligned to deliver their services? Looking at a better international co-ordination of activity to respond to the opportunities in international markets, simplifying the innovation support ecosystem and looking at the whole way in which innovation is promoted by the range of agencies that are already engaged in that. Looking at aligning the functions of learning and skills agencies, principally Scottish Funding Council and Skills Development Scotland, looking thoroughly at the learner journey, the 15 to 24-year-old journey through the education and skills development systems, and the fundamental review of the effectiveness of investment in learning and skills. I think that there is a number of evidence given during phase 1 that we needed to be much more effective at measuring the impact and outcomes of our interventions. It was also mentioned, convener, that digital is another workstream, but those workstreams were just in the process of having had the first ministerial review group since the end of phase 1, so the start of phase 2 of writing out to members of the ministerial review group to see which areas they want to see taken forward and which they individually want to be involved in. That is under active discussion, but digital is another area where we intend to see a very fundamental workstream as to how we move forward in that area as well. Thank you very much. Already, we have been able to see how substantial and significant this work is. Massive involves huge numbers of people in really important roles. I wonder what prompt to do to have a review that only lasted a month during the summer holidays? The review lasted substantially longer than that. I think that you are referring to the consultation period, but the review lasted longer than that. What prompted us to do that, I think, as I said in the opening statement, is that we have to recognise the ambition that we had. It was true of previous Governments as well to move Scotland from that third quartile in terms of economic performance. That relates to things such as competitiveness, productivity, internationalisation. We had not achieved what we had sought to achieve, and if you are not achieving that, it seems right and proper to me that we do, as the First Minister announced, review those agencies, which are most central to that. That was the prompt for it. It was also the case that, whether in the Parliament, in the chamber or in its committees, there has been concern expressed over previous years about whether there is duplication. I think that it is also true to say that we felt very strongly that the agencies themselves could very much justify the work that they were doing, and they could point to the successes that they had had, sometimes very substantial successes. However, it was not the case that we saw that alignment of the agencies across each other, so that we had, for example, in terms of international activity, that level of focus. In previous years, I remember a minister going to China to promote both Scotland and the university sector with a Scottish university. I think that two, maybe three other universities turned up on the day because they were worried about missing out. Whether it is that or whether it is in relation to some of the work that we do through SDI, we have some very substantial presences around the world with universities. I think that we want to be selling Scotland as a whole and we have to co-ordinate our activities more substantially. That was the prompt for doing that. Of course, it is not the case that the reviews lasted for a month. The reviews are still on-going. We are still in the review with some months to go before it is concluded. The consultation lasted a month over the summer holidays. I think that you said that the review lasted for a month over the summer holidays. Are there any other examples in your time in government where you have consulted over a month in the summer over something as substantial as this? Given that, most of my time in government, I have had a particular focus. I can only talk about the areas that I have been involved in, so I could not answer the question about other consultations. You would find out if there are any examples of Scottish Government consultations that lasted a month over the summer. In any of the responses in the consultation, did anybody suggest the need for an overarching board? I am not saying that people did not say that there was a cluttered landscape. They did not say that there were problems. Which of the people who responded identified that as a solution? I could mention a number of individuals in the ministerial review group who represent bodies that responded to it who also voiced support for that idea. I asked. There is one thing to say that you voiced support for a proposal that comes before you. Did anybody come to the consultation and say, you know what we think the solution to this is to have an overarching board? It may not be what you asked, but that is what I am answering. I am telling you that there are people in the ministerial review group who never had a proposal in front of them but came forward saying that they supported the idea of a single overarching board. They represented bodies that were consulted and that is what their view was. The Government makes a proposal and people in some cases agree with it. Of the four boards, the four agencies that were represented, they will be part of it as this goes forward. Do they have the freedom to speak out against Government policy if they think that it is going to be damaging? I can just say that, again, your first statement was incorrect. I did not say that there was a proposal from the Government that people then agreed with. I am saying that people came back from the consultation as part of the consultation and made that point. It is an important distinction to make. I am sorry, I am not clear what the distinction is. You have said twice now that you made a proposal that people could choose to agree with. I am saying that that is not what happened. There was no proposal during the course of the ministerial review group. People came forward voluntarily and said that they thought that a single overarching board was a good idea. Who said that? That is what I was asking. Which organisations came forward independently and said that they believed not that they agreed with the Government's proposal but that they independently believed that they brought the proposal on to the table that there should be an overarching board? It is probably invidious to mention people who are involved in the ministerial review group, but Collegy Scotland was one example. Others can be seen from a perusal of the consultation responses that are all publicly available. That was a second part to your question, if you just remind me of what that was. I am interested in that. You have said that the agencies that are involved have gone to be part of the group and they are going to have the freedom to contribute to what happens next. Do they have the freedom to speak publicly about the implications of the proposals for an overarching board? I think that that would give people some comfort. You know that you will be aware that we had a conversation with the Scottish Funding Council about the fact that they give advice privately to ministers but would not make that public. Are they able to speak publicly about the proposals and implications that they believe for the economy and for skills? We know in order that people cannot speak publicly. In fact, one of the members of the review group would be University of Scotland, who has spoken very public, have voiced their concerns. That is the purpose of the ministerial review group. The idea was to have people most involved in the sector that can give advice straightforwardly to Government. Of course, some of them have chosen to make that public, and that is their right to do so. I am interested to know to what extent the Scottish Government itself is an open mind in this. Is it possible, given what Mr Swinney has said about this and it would appear to have said that things have already been decided, is it possible that, at the end of this process, the Scottish Government decides that, in fact, an overarching board would be overly bureaucratic, would not be able to deal with regional differences and so on, and would not pursue that proposal? Or is that something that has been decided that should happen through the second stage? It has been decided and we would not have decided it if we thought it was going to be overly bureaucratic. That was not the idea behind it. In fact, it is one way of helping to achieve the alignment that I mentioned and decluttering the system. Yes, we have decided and what I have said is now being looked at by not just the original members of the ministerial review group but now involving all the members of those bodies is the governing structure around that, so we have a very open mind to that. Of course, that is the area in which, for example, the University of Scotland funding council I am sure will be very involved in the governance process to make sure that the concerns that they have expressed are dealt with in terms of the governing structure. You have started with your own proposal and this stage 2 is the responsibility for people to make it work. It is how that process is carried out, rather than the principle of the overarching board. No, we did not, for the third time. We did not start with the proposal. We started with the review. We had a ministerial review group. We had a consultation that led us to the proposal for the single overarching board. We are now going into the second phase of the process, where the governing structure of that board is what will be examined. We have an open mind that I have assured the members of that board that that is the case. They will lead in relation to how we take forward the governing structure. It is an open process. They have the chance to influence it and to make sure that the concerns that they have are expressed by what we eventually agree. For the absence of doubt, there will be an overarching board. Can I follow up on the questions that Johann Lamont has asked? Can I refer you to the comments that have been made by the Royal Society of Edinburgh, who have no problem about the need for a better industrial research and innovation strategy none at all, but they raise two very specific issues, one of which is exactly akin to what Johann Lamont was asking, where they say that the phase 1 report indicates that phase 2 of the review will be about the implementation of the conclusions with their having been very little parliamentary scrutiny to date as to whether those conclusions are well founded. The second point that they make is that the Royal Society notes that the publication report is in phase 1, but it is concerned that it does not present a strong evidence space for the approach that the Scottish Government proposes to take in establishing the new statutory board. Could you tell us, in your view, where you think the evidence is, where is the clear evidence that what you are proposing, when you have just indicated that it is firm proposals that will go ahead, where is the evidence to support this plan? I think both in terms of what we did produce and actually reported on to Parliament. We had a debate on it in Parliament, so the conclusions that we have reached as part of phase 1 are backed up by the evidence that was published at that time. I have given you the rationale for us undertaking the review in the first place in terms of what we have not achieved, which you now want to achieve. We have had the involvement of all the different stakeholders and a very active consideration by the people in the ministerial review group who represent, for example, University of Scotland, they represent the college sector, they represent businesses. Business is also very seized of the view that we should, going back to the previous point, have undertaken this as quickly as possible. I should add that perhaps the pace at which this has been carried out is also underlined by the new environment in which we find ourselves in terms of Brexit. There was expressed by a number of people the need for urgency to do this because of a very rapidly changing situation in terms of Brexit, which would obviously impact on international activity. As you say, all society has mentioned those things. I have been quite supportive in terms of some of the proposals, but the other point to make is that we have not finished this review yet. We have come to some conclusions, but as to how those are fleshed out over the course of the whole review, which will result, by most estimations, in a further parliamentary process and, indeed, a legislative process. Again, there is a further opportunity for parliamentary scrutiny then. Whether individual members want to look at the evidence base for what we are doing at that time, it is up to them to see what we have produced so far. They will see further evidence of that when we come to the conclusion of phase 2 and they can take their own view on that. It will be interesting to see from the Royal Society and others who have commented their view once we have reached the conclusions after phase 2 of the report. I do not know whether Paul wants to add to that point. At the same time, it is called for evidence that we commissioned a number of academics to look at international comparisons to see how they shaped up against their own perspective. We had Professor Alan McGregor look at operations in places like Denmark, Norway, Northern Ireland and New Zealand, where there was clear evidence of a more joined-up and co-ordinated approach that seems to ensure that we provide a care and approach to the development of skills and learning. That was coupled with a report from Dr David Skilling as well looking at international business support. That fed into the consideration of the decisions and recommendations that came out of phase 1. One of the key pieces of evidence was in the Skilling report in relation to HE, so we topped the league in terms of people going through HE. Given what I said earlier on about economic performance and productivity, we have not had the dividends that you might have expected from that level of investment. One of the conclusions in one of those reports was that it might be the case that investment in more essential basic skills and those delivered at HE could provide a bigger economic impact. Both of those reports were things that the Home and the Zero Review Group considered in the process of the first part of the review. Cabinet Secretary, I do not think that there is any disagreement about the need for a strategy. I think that that is very clear, in fact, of all the submissions that I have read. Indeed, the parliamentary debate that took place was very much about some of the issues that you have set out here and what can be done about that. The real concern, however, is what evidence do you have to ensure that the new board, the overarching board, which will abolish as I understand it, the existing boards and have a new board, which, if your answer to Johann Lamont is accurate, you are suggesting will happen? What is the evidence on which you are basing that decision that it will work better when we have a lot of the institutions involved who are raising pretty serious concerns about the abolition of some of these boards? I know some of my colleagues will come back to this a bit later on. What is the evidence that it is going to work better? The evidence, as I have said, we have produced a substantial amount of that at the time of the part 1 conclusions. The other evidence that we took, for example, was from people who are currently being, if you like, provided with services from either Highlands and Islands Enterprise or either account managed companies. We took evidence from those who are using the services of Skills Development Scotland just now. I was very keen at the start of the process that we actually had the evidence from people receiving those services. Those led us to the picture that there were elements of duplication and that there was not the level of joint working that we wanted to see happen. I have mentioned that in relation to international activities. I have to say that, to some extent, that was reinforced by some of the contributions from people from the agencies themselves. Whether, for example, HIE currently gets the level of service that they require in terms of international activity through SDI, whether there is a level of collaboration that should be between universities when they are acting overseas and SDI and other elements of government, as well. We took a substantial amount of evidence. We have produced that evidence so far, and we will produce further evidence as we go through phase 2 for the conclusions then. Could you clarify something, cabinet secretary? My understanding is that the Scottish Funding Council Board, as it exists just now, would no longer be in existence and there would be a new overarching board. If you abolish the current funding council board, do you effectively abolish the Scottish Funding Council because there is one and the same thing? Is that what you intend to do? We have said what we have said in terms of the existing boards, but you are right to suggest that there is still an open question as to what function, what should be the form of the governance structure that applies in relation to the funding council, in particular to the university. As I have said, what we have is a piece of work being undertaken in terms of the governance structure that will look at those issues. We will come back to how that is best service and you have heard some of the concerns in relation to ensuring that academic freedom is preserved, ensuring that ministers are not able to take certain decisions and should be at one remove from ministers. Those things are actively being considered and they will involve the funding council and the University of Scotland being involved in those considerations, but we have not reached the stage of reaching our conclusion on that yet. There are obviously some conclusions, but there are other conclusions that do not exist. In other words, you are categorically saying this morning that you have not made a decision about the governance structure of this new board. Is that correct? Absolutely, yes. We have made that clear in the debate. I just want to ask one question under the steam and come back to HIE if that is okay in a short while when we turn to that issue. As someone who has been in Parliament since 1999, I have had a pound for every time politicians across all the parties call for a bonfire of the quangels or for the public sector landscape. To be streamlined, I would be a very rich man, so I very much understand where the Government is coming from and what the Government is trying to achieve in support much of that agenda. I would like to comment on where regional policy sits in terms of where we are going with this review, because there are a number of initiatives happening across Scotland and I just want to understand better how regional policy has been delivered. You have this review, you have city region deals and a number of other initiatives. The city region deals tend to be focused on the cities. I would like to explain what the difference is between a city's policy and a regional policy in Scotland, because my fear is that we may have a national approach in some respects and a city approach in other respects and all the areas in between fall through the net. I just wonder if you can expand on how the Government is trying to deliver regional policy in Scotland. I would say that you are quite correct in relation to the unique nature of the city deal framework that is emerging. Of course, that was an initiative that began in the Glasgow region with the UK Government and the relevant local authorities proposing that. The one thing that I would say in relation to city deals is that you are right to say that they do not fit readily into the current structures that we have, and I think that for that reason it is quite right to look at those structures again. It is also true to say that a feature of city deals that do involve much more than the cities because of the nature of the deal, so Aberdeen involves Aberdeenshire, the number of authorities that are not cities involved in the Glasgow deal, Stirling involves Clutman and Sheer, obviously not a city. The Tay cities deal, despite its title, will involve more than cities as well, so they do involve more than cities, but I understand your point about how does that fit currently with regional policy. I think that the one thing that I would say, I am keen that we, in phase 2, which is when we will examine this in more detail, is to preserve that, because I think that the benefit of those is that they have been, if you like, organically grown through local authorities. Each of the deals that we have, the projects and initiatives that are in the UK government are funding are ones that local authorities themselves have said that they want, and I think that there is something vitally important about that. We want to maintain those, and of course our stated aim is to further look with them, encouragingly, on those deals that are still to emerge, so Tay cities has been mentioned, Edinburgh has been mentioned and the Stirling and Clutman and Sheer deals, which I think, if I am right, will take all of the cities in Scotland, but much more than that. Beyond that, I think that we are looking at terms of regionalisation, and one of the conclusions of the first phase of the review was to establish a new south of Scotland agency to look in particular at that area, because of some of the views that we had expressed, some of the evidence that had been led to us, in terms of concerns people had felt there. Perhaps the most frequently expressed anecdote was, if you look at the respective trajectories of Inverness and Dumfries over a number of years has done very well. Dumfries, those people said less so, and how can we have that focus in terms of south of Scotland? As I say, the issue of regionalisation is one of the work streams that is being developed just now. For my part, I do not think that we should be too rigid in how that develops. As I have mentioned, city deal, there is something very important about the fact that it is developed from local authorities themselves. Whether it is in nature of the geographical areas that are covered by different initiatives, or whether it is in the nature of what services are provided, we have a relatively open mind as we go through phase 2. I am not suggesting that this is what is going to happen, but if a proposal comes forward that we should look at skills and some of the functions of local authorities being delivered in a different way from one area to another, that is something that we should look at. It is not tidy and clean. I am happy to concede that, but I do think that not least in relation to city deals is something organic and vital about the way that we are providing those services. My only comment is that I urge the ministers to look at this a bit more closely, because we have this review and various other initiatives as well. I am sure that Parliament wants to be confident that that is delivering a proper regional policy, which is not just the skills and enterprise review, but looking at the cities as a way of addressing some of the other issues. However, the rest of Scotland falls through the net, and I think that there is a real danger of that happening if we do not think through what regional policy in Scotland looks like, in particular learning from other countries. I would say that it is worth bearing in mind that, if you were to look at the seven cities of Scotland and the likely deals that will emerge in relation to them, the areas that are not cities will vastly exceed the areas that are covered by the cities, given the way that the city deals are configured. Aberdeenshire and Aberdeen. Inverness is the only one that stands alone for fairly obvious reasons, but, again, in Glasgow, with the seven or eight other authorities involved in that, which are not cities. The area that is covered by the city deals is very substantially greater than the cities themselves, but I take the point that you make. I will come back in each item. On the review, as I said before, I understand what the Government is trying to get to in terms of addressing public sector landscape. Jim Hunter, the Highlands Historian and former chairman of Highlands and Islands Enterprise, showed a scathing article about the decision to disband the Highlands and Islands Enterprise board. Therefore, it would be good to hear what comfort you can give Jim Hunter and other people in Highlands and Islands who would express concern over that decision, because, clearly, people want to know how the interests of Highlands and Islands are going to be represented in the overarching framework. I think that what I have said, both going back to the debate that we held in Parliament on that, is that Highlands and Islands Enterprise itself will remain as a legal entity. It will remain with a chief executive based in Inverness, with the headquarters based in Inverness. The same people who are currently providing the services to individuals and to companies in the Highlands and Islands will be providing those same services to those same companies and, hopefully, many more. That was something that came back to us in the evidence. People said that they valued those services. In relation to the board, I think that it is important that we await the outcome of the governance initiatives that I have mentioned previously. For phase two of the report, to see how those things, which some people like Jim Hunter have been talked about, are further preserved and ensured in terms of the continuation after that governance review, and to mention that Highlands and Islands Enterprise will be intrinsically involved in that governance review. The other thing to say is that the initiative here, going back to a previous question, was the extent to which bodies can get the support and work actively with other public bodies to achieve more. If you look at, for example, many of the initiatives in the Highlands in recent years, I mentioned the local one, but the A9, with the First Government to commit to dualling the A9, the First Government to commit to dualling the A96, we have struck a city deal for Inverness. The recent work done by my colleague, Fergus Ewing, on the real Tinto further development in Fort William, whereby 130-plus jobs have been safeguarded with the prospect of many more. Those things have often been achieved either not through HIE or through HIE working with other bodies, and we want to try and maximise our ability to do that in future. In relation specifically to HIE, I think that the ability to work on an international basis is very important. SE and SDI have a particular relationship, obviously, but I do not think that we have had sufficiently the ability to prosecute those interests of HIE on the international stage in the way that I like to see happen. So, whether it is through universities or whether it is through SDI, I think that we want to maximise the international opportunities that are there as well. I think that we will have something greater than what we have just now as a result of those changes. In terms of the governance, people should take a view on that once they see exactly what is proposed in relation to Highlands and Islands. I will just close. I think that it is important that ministers keep an open mind in terms of listening closely to the concerns that are being expressed in the Highlands and Islands in terms of how we address those concerns. I can ask if the chairman of Highlands and Islands Enterprise is allowed to say publicly what his views are on the abolition of his board. Tavish Scott will know, as well as I, the code of conduct for people appointed to government bodies, but there has been no injunction online clearer not to speak out. In fact, I think that he has spoken out on a number of occasions in relation to that. What he told Highlands and Islands MSPs last night, he wasn't going to speak out publicly. He can't really comment on third-party conversations, convener. Could you give me a practical example of what you just said to Richard Lochhead, which is where SDI have not been servicing high properly? If you look at the evidence, it was said that there was an arrow base. I think that it came up during the course of the ministerial review group that that level of support from SDI could be greater. We have had that expressed to us, but you can't give an example of an investment that didn't happen. You said that there was evidence from companies that you have been discussing this with, which I thought was a very fair point, so you must have some evidence. I am just asking if you could lay it in front of the committee. As I have said, convener, I don't think that you can give an example of an investment that hasn't happened, but we did get that evidence led to us in terms of the ministerial review group and submission from others. Do you feel that there could be a higher level of international support? If there are submissions that they could be sent to the committee, then I would be happy to do that. Similarly, could you furnish the committee, I don't expect today, but in writing, with a specific list of the organisations or individuals who said that a central board was the right solution for the structure that you have described? We already have published all the submissions, convener. No, but could you send to the committee a specific letter with the specific organisations or bodies who said that, as Johann Lamont was asking you earlier on? I have mentioned—what I will do is examine whether the minutes of the ministerial review group where this issue was raised can be published, and if we are able to do that, I am happy to do that and publish those, but that will be in addition to the 329 submissions that we received in our call for evidence. I am really sorry. I am trying not to be awkward here. I am just asking for a specific list that Johann Lamont asked for as well of the organisations or individuals who specifically said that, as part of your consultation, there should be a single board. That is all I am asking for. I am not asking for minutes. I am asking for the evidence that helps us to understand the case that you are making, minister. I have heard the question now twice from Tavish Scott. I have given my answer, convener. Thank you very much. Why are we not going to get it? Well, the cabinet secretary has answered, so. Will the suspect not answer if he says that he is not going to answer the question? Well, he gave an answer. So, we are not going to get that evidence. Right. There is no evidence then. Will the minister chair this new single board? Sorry. Will the minister chair this new single board? As I have said, we have a stream of work being undertaken in terms of the governance of that strategic board, so that will be one of the outcomes. We will decide who is chairing in the membership of that board as a result of the work that we take forward in terms of the governance structure. So, it could be a minister. Well, we will not know that until we have had the word stream. Okay. Well, let me ask it the other way. You have not ruled out a minister chairing the single board. Well, what we have said in the first instance is that the people most involved in this, so the agencies themselves and those on the ministerial review group, should look at this governance structure. They will then report back to the ministerial review group, and we will look at that at that time. I think that that means that you have not ruled out a minister chairing, potentially chairing this board. Do you take the view that the UHI, Regional Governance Outcome, has been positive for the future of the UHI and therefore for skills in the Highlands and Islands? Well, I think that I have mentioned in relation to skills that are kind of outwith my area in terms of UHI. Obviously, they work into Scottish funding council. But I have mentioned already where I think there has been some duplication, that has been said by a number of members of different parties in this Parliament. And whether the right balance is there between universities, colleges, local authorities and Skills Development Scotland is one of the things that we are actively considering in relation to the regionalisation and workstream, which I mentioned earlier on. Could you give me an example of that duplication that you have just described? Well, again, it is sometimes when we have apprenticeships, when we have colleges sometimes cutting across those activities that SDS is involved in. Some of the evidence that we had in terms of the people who came to the ministerial review group said that there was uncertainty in terms of which body was responsible for them. So if that feeling is out there, whether or not it is the case, then it is something that we have to address. So you will have seen not the usual cliche of a one-door approach, but the mention of any-door approach, where people looking to access services for skills, whether it is through local authorities, SDS or those services funded by the funding council, that the people that are trying to access those find it as easy as possible to do so. And we had that representation made to us both in the ministerial review group and it is in the submissions that were made as a result of the call for evidence. Would it be possible to give the committee some specific examples of that that were presented to the ministerial review group? I am happy to do that. Thank you. Do you believe that the challenge that we have around engineering, maths and science, specifically after yesterday's PISA report, is helped by the narrowing of choice at the senior curriculum levels of our secondary schools? I have to say, convener, that was not part of the review that we are carrying out in terms of the skills and enterprise companies. Will it be part of the Scottish funding council's consideration of the work that they do at the moment? The Scottish funding council's work obviously covers areas that it is substantially out with as well as included in the scope of the review, but that area was not part of the review. So how would a single board therefore address that issue? I have mentioned what I believe would be the strengths of a single board, which I think in relation to the alignment across different agencies to make sure that we can drive out duplication and more effectively focus effort those things would apply across the activities of the different agencies. But you said that issue has not been addressed as part of the schools review and I take that point. Would it be addressed by a single board? As I have said, I think that the strengths of a single board are both from those that made representations in favour of it, those that spoke for it as well, and the basis of our conclusion are those strengths that will bring a greater focus and will help to drive out duplication. In terms of curriculum, as I have said, we intend, as part of the governance review, that flows from phase 1, that the protections that should be in place so that ministers do not get involved in directing curriculum activities or also have one removed from research and other aspects of university funding, that will be something that will feature in the governance review. And that particular point, as I have said, lay out with the scope of the review that we carried out. So an issue that currently is dealt with by the funding council board, I think that you are accepting that it is dealt with by the funding council board, we do not know where that issue would then be dealt with because we do not know what it is going to be, it is supposed to be considered as part of the school's review. No, I think that education ministers will tell you exactly how they are dealing with that. I am just saying that it is out with the scope of the review that we carried out. But it is currently dealt with by a board that you are proposing to abolish? Yes. Perhaps Paul would want to answer that point. Sorry, there was a decision in the first phase of the review to incorporate a look at the learner journey from 15 to 24, specifically looking at the pathways and the availability of information to young people in terms of how they navigate their way through education and training, so that will be an integral part of phase 2 of the review, the undertaking of that learner journey. So will it be considered by this single board that you want to propose? I mean, the learner journey is part of phase 2, but whatever conclusions it comes up with have obviously been referred through to the transition or interim setup that will accompany the… You would at least concede that if Alice Brown and John Kent were here today, they would answer all those questions, because they know the detail of this. They are on the policy, it is their responsibility of the policy, and what I am putting to you today is that there is no evidence that those issues will be considered by your new board. I have had a number of discussions with both Alice and John, and of course Alice is on the ministerial review group and is perfectly able to put forward those issues to the extent that she thinks she should form part of what we are doing. We mentioned the governance structure, but also one of the work streams that Paul has just mentioned, the learner journey, which is just exactly what we have been describing, trying to make it as clear as possible for people trying to navigate their way through skills and learning support as they go through the system. We have people both from University Scotland and from the funding council on the ministerial review group, and of course those things can be taken to account to the extent that they want to mention them. If there is no Scottish funding council board, where do things like the capital allocations for colleges get sorted out? Exactly as I have said before, the governance structure is what will lay out how those things are dealt with. We have agreed that there will be the overarching board. What we have not agreed and what is open for discussion and review through the ministerial review group and others is exactly how those things will be allocated. We have reached that inclusion in favour of an overarching board. We know that there are quite a number of subsidiary discussions and structural solutions to be found in relation to that, and that will flow from phase 2. We are at phase 1 of the review. We are entering phase 2 just now. It is not a complete review. Those things are being looked at currently. You would accept that there is a huge amount of detail that the Scottish funding council board already deals with, which will have to be replicated by the new super board, which you are appointing, multiplied by four, because there are four different agencies. Actually, five, because we are creating a new agency south of Scotland agency, but yes, all that data, and that is why the funding council, university Scotland and many others are involved in the ministerial review group to make sure that those things are taken into account. Thank you very much, Daniel. I would like to focus my questions on Scottish funding council. Can you just point to me on which page of the phase 1 report does it recommend that the board of the Scottish funding council should be dissolved and subsumed by the new super board? I do not have it in front of me, but it was mentioned. I made it clear in the phase 1 discussion that took place in Parliament and made it clear a number of times since, so it is quite public knowledge. Is it in the document? You have the advantage on me with the document in front of you. On page 5, point number 1, it talks about a Scotland-wide statutory board to co-ordinate the activities of HIE, SE, including SDS and SFC. Do you not think that the word co-ordinates a little bit different to what has now been proposed, which is, as I said, direct governance of those bodies by the overarching board? I do not think that direct governance is currently being proposed. The issue of governance is still being discussed as part of phase 2. We have already had a number of suggestions from members of the ministerial review group, from members of the agencies themselves, making points about the governance review that they like to see replicated. The governance of those agencies is something that is now—we are only halfway through the review—the second part of the review is still being undertaken. That will look most crucially, as I have said, at the issues of governance. I am a bit confused. In response to a question from Ian Gray, the Deputy First Minister said that the boards of the Scottish Funding Council and SDS would go and that those functions would be subsumed by the new overarching board. Was he not correct in that statement? As I have said, I am absolutely right. The boards are going to go. The governance structure that will be brought in instead of that will be decided as part of phase 2 of the review. Are the boards going or not? I am getting very confused by your answers. I do not know how I can say more clearly, convener, that the boards, for the benefit of Daniel Johnson, are going. I have said that three times now. I do not know what the ambiguity is, to be honest. The document is not clear. I am telling you now, so I have said it three times. Can you just explain to me which experts recommended abolishing the Scottish Funding Council board? Was that a particular point discussed and agreed upon by the ministerial review group? No, it was not. The ministerial review group was there to make sure that all the stakeholders involved in the sector were able to provide their views. The decisions were taken by ministers. The decision was taken collectively by ministers and that is our decision. Can you not understand that the concern there is that we had a phase 1 document that did not make this point explicit? In response to a question, it was made explicit by the Deputy First Minister well in advance of the phase 2 document, which is going to be published, I believe, in March. Do you not understand the concerns that people do not really understand what bits are up for consultation and what bits are predetermined? No, I have made it publicly known for a substantial number of weeks now. For example, in the convention of the Highlands and Islands, I again asked that specific question, made it very clear. I think that all the boards, well, certainly Highlands and Islands, Schools Development Scotland and Universities Scotland, the Funding Council were all in attendance at that meeting. It has been made plain a number of times in public fora. In recent weeks, the committee has heard essentially the results of a wide number of educational reforms that we have heard about from Education Scotland who could not explain the fallen literacy or very poor explanations of the issues that teachers face in terms of curriculum for excellence. We have heard directly from Ruth Brown who said that the issues around the reformed qualifications were in their design, implementation and the way they work. When it comes to reforming the way our universities work, why should we trust the Government, given the issues with the fundamental reforms that we have had in previous education reforms? Given the controversy, will you commit today to putting those proposals forward in primary legislation so that they can have proper parliamentary scrutiny? On the first part of Daniel Johnson's question, that is not the subject of this review. We are not looking to reform the universities in this review. That is not part of what we are doing. Also, the issues in relation to educational standards will be for education ministers to take up. On your last point about committing to legislation, I will go back to the point that I made before, that the governance structures are being looked at just now in terms of phase 2 of the report. The necessity and the nature of any legislative outcome from that will be driven by what those governance decisions are. You can see a situation of course where if there is a need for primary legislation, either for the establishment of the new board or for other subsidiary organisations, then of course it will have to come back to Parliament to legislate for that. However, the nature of that legislation will be driven by the nature of the outcomes of the governance review. I do not think that that is puzzling at all. I tell you what I am puzzled by is the claim that you can somehow reform the way that our universities are governed and claim that that does not constitute a reform of our universities. Clearly, governance and the way that universities operate are absolutely and intimately linked. Further to that, could you point to me what is broken with our university system that needs this level of reform? My understanding is that our universities produce more spin-out companies and receive more competitively awarded research funding than any other part of the United Kingdom. What is broken? Why do they need this reform? Just to repeat if I could that we are not seeking to reform universities as part of this review, which is what you have said, reform of universities, that is not what we are seeking to do. However, you have raised the issue of spin-out companies from universities. One of the submissions that we heard was about the nature of those spin-outs. There has been tremendous success if you think about Edinburgh, Stirling, many at the Strathclyde, Aberdeen, many universities have had huge success. There are people in the private sector that sometimes feel that the universities will often take too high an equity stake in those companies, which negates their further growth. There are questions about whether the spin-outs result in scale-ups, whether those companies become more substantial. Those are live questions, which, of course, are within the domain of economic development, and so we have considered those. What we are not considering is the reform of universities themselves. That was never part of the review. Can you just clarify that point? How on earth can you claim that reforming governance, which is as fundamental as how it is funded, especially around teaching, is not a reform of our universities? All I can say is that we are not reforming the universities. The Scottish Funding Council is part of the review of universities and the way that they are structured is not part of the review. The governance of the four agencies, in fact, to become five agencies, is what has been looked at in terms of this governance, not the reform of the universities themselves. My original point on that, as I understand it, the Scottish Funding Council board is going, you have confirmed that. The Scottish Funding Council board is, effectively, the Scottish Funding Council, therefore that is going. To take up Daniel Johnson's point, that will inevitably mean a reform of the funding and governance structures of our universities. There is no other way to answer that. Do you agree that that is a fundamental change? It is a fundamental change. The review will result in fundamental changes, and I have said what I have said a number of times now about the funding council itself. What is still open, what is to be decided, is the nature of the governance. You will have heard, as I have heard, concerns expressed—we have had it at the ministerial review group as well—where the University of Scotland and the Funding Council have said that they have particular concerns that certain things are preserved within that governance structure. They are going to be intrinsically involved in how we develop the new structure, the governance structure, and it will be designed to protect those things that are very important to that sector. Cabinet Secretary, that is a massive change of policy, if you do not mind me saying. When we had the governance review of universities in the last Parliament, which created a great deal of controversy, I may say, if there is a proposal for something new, surely that should have parliamentary scrutiny and the Government should be able to set out not only what it wants to achieve but the evidence-based to support what it wants to achieve. I cannot see that just now. As I have said, we have not just mentioned the governance structure. We have not finalised that yet. In fact, we are really in the middle of the consideration of those issues in terms of the governance structure. Of course, when we come to the conclusion of that, then of course Parliament will have the chance to debate that. It is not for me anyway. Other parties may want to ensure that, but I am sure that they will. I think, as I have said before, that the nature of the single board and some of the other issues are very likely to require legislation, but the exact nature of that will not be obvious until we have concluded in terms of the governance structures. Even in addition to that, phase 1 of the report was the subject of a statement and a debate in the Parliament. Phase 2, I would imagine, would also be a statement and also a debate in the Parliament, but that would only be a precursor to what is likely to be the full legislative process, as we have for other new legislative initiatives. First, I wanted to pick up on a question raised by Richard Lochhead, which was run out of the comments of the former chairman of HIE, Professor Jim Hunter. In that article that Richard Lochhead referred to in the press and journal, he was quoted as saying that, rather than building on the success of HIE that the Scottish Government have instead, and I will quote, cut HIE's budget, abolished its 10 local enterprise companies and turned the organisation into a Scottish Government delivery agency with centralisation, and again I quote, run riot. What is his cabinet secretary's response to those particular criticisms? I'd be interested just to hear your view and those particular points. Also you'll be aware that the press and journal itself is running a long-term campaign, which is to keep HIE local. I was wondering if the cabinet secretary would consider supporting it. On the first serious point that was raised by Ross Thomson, if you start from the position of saying that there have been budget cuts, I think that we all know—I think that you, especially as a Conservative member, will know all about budget cuts, given that the Government's support has been responsible for the vast majority of them and the cuts of this Parliament. You'll know about the budget cuts. If your position is, as has been expressed there, that there have been budget cuts and what you said about local enterprise boards, and it's a vehicle for centralisation, if that's where you start off, then how can you then go on to say that this represents centralisation? We have said that we are guaranteeing the continued existence of Highlands and Islands agency, that the chief executive will still be there. We have not concluded in terms of the governance of that agency. There will still be the same level of control and discretion in decision making that they currently enjoy. What we are trying to achieve through this—this is my response to the point that you make—is that we think that we can achieve more. In fact, we have had demands for more to be done in all sorts of areas, as you will be aware as well, whether it is increasing job opportunities, the value of those job opportunities, job stability and increased economic activity. We believe that we can achieve more by the work that we are undertaking in the nature of this review. We think that this is a very positive thing for the Highlands and Islands. We think that it is building on the best of what is there already and will serve the greater interests of the Highlands and Islands. Thank you very much. We are all due respect. We are talking about the political choices of the Scottish Government and the areas of holy responsibility that you have. I am sure that the public will see through the blaming of anybody else. Last week, a public audit committee, Alistair Sim of University of Scotland, during questioning, said in relation to the single proposed superboard, and again I will quote him, that a limited number of people sitting around a table will not have the competence to deal with the huge remit that the board could be given. Therefore, minister, is there a danger that a new single board could be set up to be too big to function and will we be setting up to fail? I do not think that it is going to be set up to fail. Whether it is set up is too big to function. That issue has to be and is being considered as part of the governance review. The extent to which there is a requirement for additional expertise and additional capacity in relation to that is something that has been looked at just now. University of Scotland, who, Alistair Sim, represents, is intrinsically involved in that process. Just to come back to the point that you started with, political choices or spending choices are not taken in a vacuum. The choices that we make in this Parliament are intrinsically influenced and directed by the resources that we are provided with. That is why I mentioned the cuts that we have had from successive Conservative Governments. I am sure that you will be using the new powers of the Scottish Parliament to rectify anything that you believe is wrong, but thank you, convener, on the topic at hand. In the same session, cabinet secretary, Mr Sim stated that the role of such a single board again should take on an expert view that challenges government tells it what it has to achieve, has to do to achieve the results at once, and that it has to have the ability to challenge universities as well. He says that that intermediary role of being able to challenge both ways is incredibly important. In evidence sessions that we have had from other agencies, particularly Education Scotland, a lot of the submission feedback was concerned about an increasing politicisation of the agency and the inability sometimes of challenge to be brought to government. What safeguards you think can be put in place to ensure that we do not see that type of politicisation creeping to any new board? The thing to say is that the performance of those agencies in any event always comes back to political accountability. Ministers are heard responsible for the performance of agencies. The first two points that you quoted from Alasher Sim are very good points. The challenge both ways is extremely important. That is partly why we have had the ministerial review group, so we can be challenged in our thinking. It is partly why, in the first phase of the review, we did not include the agencies. We wanted it not to be the system representing itself. We wanted to have others who were accessing the system telling us how they found their experience to be. There were some challenging evidence sessions in relation to that, both for HIE, Scottish Enterprise and for others. I think that, in terms of how we develop the governance structures, we want to do, just as Alasher Sim has said, to build on that challenge. The actual review itself is responding to a challenge, which is that we have not achieved as much as we have, bearing on mind, as I have mentioned many times in the chamber. There are two Governments involved in the economy of Scotland. The UK Government is intrinsically involved as well. You would not think that, of course, from the Conservative response to many economic data that are produced, but they are. I think that having that kind of level of challenge is very important, and that can be reflected in what comes forward as part of the governance review that has been undertaken. In relation to theme 2, convener, I had a couple of questions under that particular theme. In the submissions to the review, I noticed that the Scottish Cities Alliance had given some feedback. Part of their comment was that I need to align the Scottish Funding Council funding of further education with regional needs of employers. As the cabinet secretary will be aware, there are particular regional needs, particularly in my own area in the north-east, where there are skills shortages. The phase 1 commentary from the Government in response to that was that it did not share the view and did not support a regional or local approach. Could the cabinet secretary expand on that a bit further? If what is being talked about is in relation to skills that you mentioned, I think that there is scope. As I have said, we are looking at regionalisation for things to be considered, so I suppose that we will be considering the view of the best dispensation of skills. One area, for example, Ayrshire, is possible to point to. I would have to see the context of the quote that you have provided there. It is possible to see that there are specific skills requirements in different parts of the country. If that is what flows from phase 2—as I say, it is not for me to preempt it—we will wait to see what comes back from the workstreams that have been commissioned. If that is what flows back from that, we have an open mind. We have discussed it both with COSLA, who have an interest in that. They have, including the authorities involved in the SIT—not all of them, but the city's alliance that you have mentioned—a view that they would like additional discretion to be involved in those things. I think that we have to keep an open mind in relation to that. As an example of that open mind, I think that the announcement that we have made to establish a new south of Scotland agency in terms of economic development shows that we are serious about that. Thank you very much for that, cabinet secretary, because following on from that, within the same submission, the SCA proposed decentralisation on the principle of subsidiarity. It talked about more fiscal and non-fiscal powers, and it put in some suggestions, feeling that local authorities were better placed to incentivise investment and meet local need again if they had that. The phase 1 report responses seem to suggest strengthening co-ordination and control through a national board. Looking at the responses and the specific ask around about fiscal and non-fiscal freedoms, there was no comment from the Scottish Government. I was just wondering in the same way, would you be as open to those asks as you are to others? That ask has been made a number of times by the Scottish City's Alliance and sometimes from individual members of the Scottish—and it is important to understand where that ask comes from, because it is the Scottish City's Alliance. I have said to them each time that they have made that ask. Tell me what powers it is that you do not think that you have just now, which is required. I am an ex-local authority leader myself. I know the powers that local government has have substantial powers, and it is not clear to me genuinely what powers cities do not currently have that prevent them from doing some of those things. I have asked them to provide that kind of evidence and, more than that, to tell me what is intrinsic to cities, because that is not a demand from all local authorities. It may be shared by other local authorities, but it has been made by cities and they say that it is on behalf or in recognition of their particular requirements. I have asked them to demonstrate to me to provide the evidence, and, of course, it will be for Kevin Stewart and other ministers to look at that as well. What is specific and intrinsic to cities that require additional powers? There is one, for example, Edinburgh. I think that, possibly, other authorities have talked about a tourist tax, but even that is not necessarily restricted if it was to be applied to cities. It is possible that other local authorities would have that, so I think that what is important to get from both cities and local authorities is a coherent set of requirements that they have that would apply across local authorities unless it is the case that cities can specify what is intrinsic to being a city that means that they have to have additional powers, and what is it that they need those additional powers for? What specifically do they want to do that they cannot currently do? You are saying that you are open to that. If they can provide evidence and suggestions, the Government is open to that. I take your point about the powers of councils. I think that a lot of them feel still constrained given that there has been an agenda centralisation. I think that they feel that, given that they contribute the seven cities together, about £65 billion to £120 billion that Scotland generates in economic output, that is a significant proportion and that they could, if given, more fiscal levers could potentially meet local needs. However, if I take it from the Cabinet Secretary, you are open to that if they were to submit evidence. I think that we have said as much to the cities, but I will just say in terms of the, as you called it, the agenda centralisation. I know my time to local authority councillor goes back substantially before years, but I remember when a huge chunk up to 40 per cent of our budget was determined by ring-fence funding directed by central government. That no longer applies. There has been a substantial amount of decentralisation that has happened over a number of years, which I am very pleased about. Beyond that, as I have said, and I am sure that you will know this from your own experience, local authorities have very substantial powers to act if they choose to do so. Specific provisions in law to take action if they want to do that. I appreciate that. I think that those who live in the northeast in relation to centralisation are not keen on the idea of all the council tax that we raise going to the central belt. That is not very local. Let's move on and try to concentrate on the skills of you. Fulton, what do you want to come in? I thank the cabinet secretary for attending today and much of the questions that I was going to ask you about have actually been answered. Indeed, I have heard you clarify things sometimes two or three times for members' benefits. I will come at a slightly different angle in terms of the new board that is to be set up. I know that we have a phase two, but has any preference been given to you, any sort of idea of who would be likely to chair it? No. You have seen, I am sure, and I think that Travis Scott, if I am right, mentioned that there has been public commentary on it, but I cannot think, and I would have to check again in all the submissions or the deliberations of the ministerial review group that people have made a specific recommendation. I do not think that there has been, though. In forgiving me if you have already covered that, but has the possibility or do you think that there is a possibility? I know that we have a phase two, as you have said a few times, but do you think that the possibility of some sort of system with the various organisations could chair it on a sort of rolling basis? One or two suggestions already made, not necessarily about the chairing, but about the membership and governing structure. I have been happy to receive those and have discussions about them. I do think that the driver for this has to be those within the ministerial review group that has specifically been tasked to look at the governing structure. There have been a very small number, not proposals, but suggestions that are made, but it is more proper for the people involved in that, which will not be me directly, the people involved in that review. In all likelihood, I would imagine that Highlands and Islands Enterprise, Scottish Funding Council and others. What we have said in terms of the ministerial review group and its work streams that have been established is that nobody should be precluded. If somebody is not within that membership of taking forward that work stream forward, they should be able to say that they want to be involved in that, so it is an open process to that extent. However, it is best that the suggestions flow from that work. Specific on the HIE, I am interested. You said that, if you looked at Inverness in Dumfries, there was a comparison with Inverness Retriving and perhaps Dumfries said that it was struggling and you had recognised that by establishing a board. I understand that that has been a popular decision that there would be a development board for that area. What do you think has contributed to Inverness thriving in a way that you suggest that Dumfries hadn't? I didn't suggest it. I said that people had said that to us. It was actually more than one person has said that, so I was saying to other people—I think that if you checked the record—that other people had said that to us. However, I think that there has been a substantial benefit to Inverness over a number of years. One would be, of course, establishment as a city itself, the ones that I have more recently been involved in. I think that the work that has been done previously by John Swinney in relation to the college that is there, by a number of people going back many years in terms of the building up of the life sciences sector within Inverness in the surrounding area, I think that it has had a substantial boost from the perspective of, for the first time, going to be connected by either dual carriageway or motorway to the other cities of Scotland, which was not the case just now, but it is in prospect of being the case by, first of all, 2025 and 2030. I think that there has been quite a number of things that have added to its success over recent years. You would obviously accept that the role of HIE has been significant as well. If I can give us an example, I am the child of a generation of people from the islands who felt they had to come to Glasgow for work. My classroom was full of people from Islay, Lewis, Harris, wherever, because the islands, particularly in more rural areas, were becoming depopulated. My nephew's generation can contemplate the possibility of staying on their island of Lewis to work. I think that many people would recognise the role of the old Highlands and Islands Development Board, and now HIE has created that change. There are still very fragile communities in Highlands and Islands. Would you accept that the autonomy and authority of HIE, which was described by Jim Hunter, was part of that change? I think that there is no question that HIE has contributed hugely to that. The point that I tried to make earlier on is that many other things have done as well. RET to the western islands was a huge boon to the western islands. The introduction of road equivalent tariff and the substantial reduction in fare has been a huge boost. Strategically, has it been significant? You can think of individual policies, but I am asking you, do you accept that that change that I described from the 60s to now was a strategic role in giving authority at a local level to not just to be committed to economic development but community regeneration and supporting the skills and development of communities within the islands and islands? I have acknowledged a number of times now the work of HIE, which evolved, of course, as we are asking it to evolve now, previously from HIDB as well. It is also the case that, if you go to the western islands—I am sure that Johann Lamont knows this as much as I do—there has been pretty trenching criticism from the western islands about the extent to which HIE had been felt to the central islands as well and in Venice. During the referendum campaign, when I was involved in TV programmes, you have had that criticism there in the past. It is probably as well to say that some of the developments that have contributed to the success of the islands have come from other sources. Of course, there has been a huge role played by HIE, having acknowledged that three or four times now. I cannot think that anybody in the western islands who is concerned about concentration of power in Venice is going to be happy about it being further concentrated in Edinburgh. I accept what you have said earlier about that there will still be a role for HIE. Can you clarify for me what the difference is? If we are still going to have the chief executive in Venice, we are still going to have a board, what will be the difference? What will they not be allowed to do? Where would the overarching board, which is definitely going to happen, happen if there is a view within HIE that something should happen? In what circumstances would the overarching board say that it cannot do that? If it is only about partnership working, why do you need to create that authority over it in order for that partnership working to take place? That last point is the key. To be perfectly honest, we do not feel that that has happened to the extent that it should have happened up to now, that joint working between different agencies. We think whether it is in relation to internationalisation or skills. The evidence that we cite for that is the fact that we have not achieved our ambition to move from the third quartile to the OECD rankings to the first quartile. We have not achieved that, whether it is in relation to internationalisation or productivity or competitiveness. We have had an increase in productivity in Scotland of around 4 to 5 per cent over the past 10 years, which is not nearly enough. The UK has stood still during that time, no increase at all, yet it still has a higher productivity rate than we do. Most of our competitor countries have a higher productivity rate than us. We believe whether it is internationalising, whether it is scaling up companies, whether it is getting more investment in, we can do better. We think that the way to achieve that is to have a greater alignment between the agencies that are working, and that is what the strategic board is intended to do. Aligning is not the same as overruling, which is clearly where the power that the centralised board would have. We will move on. We have just been discussing the five actions that set out in the phase 1 report. One of them is an open and international economy. You mentioned very briefly at the start of the session about the Brexit decision. How much has the Brexit decision impacted on the changing creation of this new overarching board? How important and urgent is that now, given the challenges of the Brexit situation, not just for businesses in the economy but for our universities? I think that it is extremely urgent. It is explained not just by our approach to this review and the conclusion of an overarching board. It is also by other decisions taken, for example, to double the number of SDI staff working across the EU and to substantially increase its activity, so the establishment of a board of trade. It comes down to making sure that, when we make representations, we are not in a position where we are allowed to strike trade deals, but we can do a great deal in terms of trade promotion. If you are going to do that, the point that I would make, which I sought to make earlier, is that we are best to do that in as organised a way as possible. For example, in the past week, the First Minister has announced substantial support for the chambers of commerce. That is about their international activities and about ensuring that, whether it is ministers, whether it is universities or whether it is SDI, we do that in as co-ordinated a way as possible so that we are having the maximum possible impact. That is important to do in any event, but I think that everybody can see how much more important and how immediate it is in terms of the Brexit background to what we are doing. With regard to the economic impact that universities could potentially suffer by not being able to access EU funding, how much more important is the links with businesses and enterprise agencies that maybe have not been as strong as it could be? I know that it has been very strong, Highlands and Islands Enterprise and Highlands and Islands University have got very, very strong links, but that has not really been quite across the board of old Scotland, has it? The committee will have had the chance, as it has been mentioned, to ask the agencies themselves. I think that the agencies themselves have conceded the point that you have made, that there should be greater collaboration to do. There is no question that the university sector sees itself as, by some way, the most vulnerable in terms of the Brexit discussions. Within a week, in fact, of the results, I had a meeting with all the chambers of commerce in Scotland and was told by one of the representatives from the northeast that they had already lost a contract. Within one week, it was an Erasmus-related contract, and you will know the vulnerability that universities feel in relation to being able to draw in people from elsewhere is extremely important. Given that context and given the pressure of Brexit, especially in relation to the higher education sector, then that level of collaborative working—I am admitting here that I am conceding the point that it has not been what it should be in the past—the agencies would concede that point. That is a large part of what the review is about. To realise the success of Highlands and Islands Enterprise in that regard, there is an opportunity here, with this overarching board, to share that knowledge and that success so that we can take what has been very successful in that area and duplicate it across the whole of Scotland. I think that that is a very fair point. One of the proposals that was made, I am trying to think whether it was just made publicly or whether it was in the response, was that Highlands and Islands should take responsibility for the south of Scotland. That was the proposal that was made by a number of people. We did not think that that was right, which is why we did not decide on that. However, you are right to say that, as Johann Lamont has already mentioned, there is a huge amount within what HIE has done, which has been seen by other areas to be something that is not universal across the board, but much of what they have done has been seen to be very positive, and other areas do believe that they can learn from it. Of course, if you are going to have greater alignment between those different agencies, now to be five agencies, everybody can learn more effectively if they are in a situation where they are working together in a closer way than they have been in the past. I do not think that anybody should—I cannot see what the nature of the opposition would be to that idea that they should work more effectively together. They should be more aware of what is going on in different agencies so that they are not cutting across each other. There is also good practice that can be shared across those different agencies. I think that that is very important, and it has not happened. From the Government's point of view, it has not happened to the extent that we would like to have seen it happen, and I think that the agency is by and large would bear that out as well. Back to the funding council cabinet secretary. What implications does the Government expect there to be from the abolition of the funding councils board on external funding, from charter organisations, from Europe, etc.? I might be asked Paul Smart to come on this as well, but I think that that will come down to what is determined in terms of the Government's structure. I think that it is one of the issues that is raised by Universities Scotland, and I think that there is no interest in the Scottish Government in seeing a reduction in that funding beyond the threat that we already have from Brexit, so I think that we are very keen to make sure that that does not happen. There is also a related issue, which is the one of classification, in which we have the situation in which the O&S seems to take pretty much at its word whatever Eurostat says in terms of classification on these matters. We have to have regard to that as well. Another issue that has been raised by Universities Scotland is the way in which those issues will be dealt with, and the way in which Universities Scotland and the funding council, both the chair and chief executive, are being involved is to make sure that those concerns are reflected in how the governance arrangements are produced, and that will happen as a part of phase 2. Taking that on board—I am sorry, Mr Smart, where are you? Will you come on? Just to add that already the Scottish Funding Council with Universities Scotland and the Scottish Government have a strategic funding group, which is having to consider all the funding implications that you have referred to in terms of looking forward, in terms of future funding packages for the universities. That will continue to be the case going forward, as well under the offices of the Scottish Funding Council and the Scottish Government and Universities Scotland. Taking on board what you have said, one of the simplest things to do right now in terms of governance that has already been covered, could we not rule out now that the board would be chaired by a minister? That would have pretty significant implications for research funding for at least the perceived independence of the institutions. I have already picked up on concern that funding agreements coming up in the next few months are in jeopardy because of the perception that those institutions will end up not being separate enough from the Government. To the extent that that is true, that is a requirement to get on and do this. I understand that point, but it is perfectly possible to see that, given the experience in public sector reform—I remember hearing her, I said this to recently lecturing on this in Brussels a number of years ago and I went along to the lecture—we have some substantial expertise among the people who are looking at the issue just now. I think that it is right that we let them do their work rather than announcing ad hoc and different parts of this governance review. I understand the point that you make about the need to get on and do this, but I think that it is right that we should let those people take this forward in the meantime. Your point on classification was an important one if you look at particularly funding from charitable foundations that are based in England. The Welcome Trust, for example, when this issue came up in Ireland, they were giving universities in Ireland around half of the funding that they otherwise usually would because of the classification as public bodies. That makes me question the entire process and the purpose of it, going back to the questions that have been asked previously about why we have even got this far identifying what the need is in the first place. Are we not simply jeopardising the ability of our universities to get this funding to solve a problem that no one really seems to have identified? I think that we have, for our part, identified a problem. We have to improve our economic performance. I think that the evidence shows that we have not achieved what we have set out to achieve. That is not just this Government. It has been true of previous Governments as well, so I think that we do have a need to do that in any event. I think that there is a need, as I have said, for that increased alignment and collaboration to take place. However, we are seized of the issue that you raise, as are the universities that are intrinsically involved in the process. It is not our intention to see a reduction for the reasons that you mentioned in terms of research or support for universities. Thank you. Thank you very much. And the last question is from Colin Beattie. Thank you, convener. Cabinet Secretary, you have been talking about dangers of ONS reclassification. Clearly, it is not something that is desirable. I was looking at the joint submission by the NUS, UCU and University of Scotland, and they say that reclassification is under review at present, which is a little bit alarming. Is it under review at this point? I think that what they may be referring to is that the major classification that happened in recent years was something called ESA 10, which, as its title suggests from 2010, even though it was four or five years after it had been developed, the implications of it became clear. So, because of Eurostat guidance, the ONS started to look at ESA 10. I think that what they may be referring to is now further iterations of that classification process. So, without seeing it in front of me just now, I think that that is what they are talking to. I do understand that, not least because of the response that there has been to ESA 10 being issued. Bear in mind that ESA 10, if it is developed in 2010 and we get told about it that we have to comply with it in 2015, when we are in the middle of doing, for example, the Aberdeen-Western peripheral route, that we have to change its classification, public authorities around Europe cannot cope with that kind of uncertainty. I think that there has been a substantial backlash to Eurostat, not least from in Belgium, some of the regional governments here who have had projects which have been cancelled because of that. There has been a substantial backlash. I understand that Eurostat perhaps is now acting in a way that is more cognisant of the need of public authorities to be able to plan those things, which might mean that the process of further classification is not as drastic or as ad hoc as it has been just now. However, I think that what is being referred to in that submission is the further iterations of that reclassification. Just a couple of random items, because a great deal of what I have been asking has already been covered by my colleagues here. I understand that HIE has some sort of social element in terms of their remit. How will that be impacted? As I have said, we intend that HIE, and you are right that that was going back to its formation many years ago, a vital part of what it has done. If I rule something out or in just now, then it undermines the work of those who are taking forward the governance and remit structures for the new board and how it relates to the agencies. However, that has been, without question, a very valuable part of what it has done. It has been our intention to make sure that HIE, notwithstanding what we have said in relation to the boards, has the same structure that it has just now. It has a contingent, its own chief executive, and it has a legal status. I think that those things are going to be protected in relation to how we go forward from here. In that case, that is the finished questioning, cabinet secretary. Thank you very much for your time. Thank you, Mr Macleon and Mr Smart. I look forward to hearing you with the information that we requested. That closes the public session.