07 April 2006
A top firm of accountants is being called in to examine the finances of Scottish Enterprise after the disclosure that the economic development agency has overspent by £30m.
The appointment of the KPMG group to examine the budget process of the organisation, which spends about £500m a year, was announced by Enterprise Minister Nicol Stephen.
He also gave Scottish Enterprise permission to take cash from its budget for the next financial year to help plug the £30m black hole in its budget for 2005/06. It will be allowed to make interim payments to its business units and network of 12 local enterprise companies to allow them to operate.
Stephen said there would be 'tough choices' before ministers finalised the agency's budget for 2006/07 at the end of April.
He told MSPs that the financial difficulties arose partly as a result of a 'deliberate strategy' to encourage new project proposals and from the identification of a growing number of projects of national significance.
The minister confirmed that the agency would drop responsibility for the careers planning organisation Careers Scotland from 2007/08. This was, he said, because the arrangement had not allowed the organisation to achieve its full potential.
Stephen also accepted Scottish Enterprise's decision to restructure its operations and focus more on cities and big business. He gave his support to chief executive Jack Perry and chair Sir John Ward.
Perry said the minister's announcement meant that the agency would start the financial year with a balanced budget. He added that Scottish Enterprise intended to focus on the activities that provided the best return for the economy and the taxpayer.
PFapr2006
