HIGHLANDS AND ISLANDS ENTERPRISE VALUE
FOR MONEY REVIEW OF PERFORMANCE MEASUREMENT
HOW WELL
HIGHLANDS AND
ISLANDS ENTERPRISE
HAVE BEEN
PERFORMING
44. Since 1991- 92 Highlands and Islands
Enterprise have reported that they have consistently achieved
more than 70 per cent of their targets. Targets have been met
for their Training, Environmental Renewal and Community Action
Grant programmes and for Administration. The Finance for Business
programme targets have been met for job creation and cost per
job, though, apart from 1996- 97, not for private sector leverage.
[39],
[40]
45. The Department and Highlands and Islands
Enterprise supplement annual performance measurement with, and
seek to assess impact through, a rolling programme of programme
evaluations. Since 1991, Highlands and Islands Enterprise have
completed evaluations of three programmes: Environmental Renewal;
Finance for Business; and Training Development. The National Audit
Office supplemented these with evaluations of the programmes for
Property and Projects and Marketing. [41]
46. Taken together, these performance measures
and evaluations provide an overall picture of the value for money
achieved by Highlands and Islands Enterprise. [42]
47. We asked Highlands and Islands Enterprise
why on their Finance for Business programme they had been less
successful in attracting private sector funds. [43]
They told us that private sector leverage was a difficult measure
and a tough target. The less help a project needed the higher
leverage would be, but they prided themselves on assisting projects
which needed most assistance and therefore leverage was a target
they frequently had not managed to achieve.
48. Highlands and Islands Enterprise's Training
Development activities, the discretionary element of the Training
programme, aim to improve the quality, availability and volume
of training and learning opportunities in the Highlands and Islands.
The evaluation of these activities con- cluded that they had relatively
modest targets and little hard output but that the broad range
of benefits achieved from the assistance compared favourably with
other Government initiatives and provided favourable value for
money. There was a need for clearer appraisal priorities, more
active dissemination of best practice and improved monitoring.
[44]
49. Highlands and Islands Enterprise told
us that their Training Development activities had become increasingly
effective and that since the evaluation they had issued new guidelines
and now made greater use of benchmarking and the dissemination
of best practice. [45]
50. We asked Highlands and Islands Enterprise
whether they were satisfied with their performance on Property.
They told us they were. They pointed out that they ran property
in a difficult area of the world where there was little or no
private sector which made it hard to get developments going. They
were just beginning to see private sector involvement coming to
the Inverness area, and had got their first involvement in the
Aviemore area. [46]
51. The National Audit Office assessed the
cost per job created in the Property sector at between £5,000
and £7,800, compared with £2,900 cost per job on Finance
for Business projects. We asked Highlands and Islands Enterprise
whether this meant that their investment in Property was not being
spent effectively. [47]
They told us that they assessed their performance on Property
against their financial duty set by the Department, 5.8 per cent
in the current year. They thought that their investment in the
property sector represented a good use of taxpayers' money because
of the difficulties of the areas involved. They pointed out that
estimating the cost per job for property was not wholly comparable
with the Finance for Business programme because it was difficult
to assess the number of jobs for a property when tenants changed
frequently over time.
52. Highlands and Islands Enterprise's Projects
and Marketing activities aim to research and promote development
opportunities and to enhance the marketing of products from the
Highlands and Islands. [48]
53. There is a wide range of activity brigaded
under the programme. We asked Highlands and Islands Enterprise
about the split of expenditure between them and Local Enterprise
Companies, and how much of the money was being spent on people
who were generating activity in the region. [49]
They told us that they had spent some 65 per cent of the £70
million since 1991- 92 while Local Enterprise Companies had spent
35 per cent. [50]
They assured us that the money had been predominantly used on
projects to build up or have the potential to build up industry.
One example was support to salmon farming, which employed some
2,000 people in periphery areas on the west coast of Scotland.
54. Highlands and Islands assured us that
they would continue to evaluate the success of individual projects
because the very essence of the projects and marketing programme
was business by business, project by project, effort by effort.
As an illustration, they let us have the executive summary of
the evaluation carried out on a group of projects on Bute costing
over £8 million. This evaluation demonstrated the benefits
arising from these projects, in terms of jobs created or safeguarded,
and wider impacts such as attracting additional economic activity
and strengthening local communities. [51]
Conclusions
55. Attracting private sector funds to the
Finance for Business programme is challenging in many locations
and Highlands and Islands Enterprise achieved a significant improvement
in leverage in 1996- 97. Nevertheless, we question Highlands and
Islands Enterprise's argument that the most deserving cases might
be those which are unattractive to the private sector, and encourage
them to bring forward projects which attract the maximum private
sector involvement and thereby maximise the return on public funds.
56. Highlands and Islands Enterprise have
taken positive steps to improve the effectiveness of their Training
Development activities, including the use of benchmarking and
the dissemination of good practice.
57. Attracting private sector investment
in property is challenging, and those assessing Highlands and
Island Enterprise's performance in this area need to take into
account wider factors than straightforward financial returns.
We look to Highlands and Islands Enterprise to develop further
the way they assess the cost benefit of providing property and
the impact achieved.
58. Highlands and Islands Enterprise's expenditure
on Projects and Marketing activities covers a diverse range of
projects which cannot be aggregated to provide a single measure
of performance. We therefore support Highlands and Islands Enterprise's
plans to continue to assess the impact of their expenditure project
by project, and to benchmark the results of similar projects.
59. One can only get a full picture of the
impact and success of Highlands and Islands Enterprise by looking
at performance measures and the outcome of their evaluations.
Highlands and Islands Enterprise already report their performance
achievements in their Annual Report; but it would be useful if
they would also report the outcome of their evaluations more widely
to help assure Parliament and the taxpayers that the £80
million being spent each year has been used wisely and that any
improvements necessary are implemented promptly.
39 C&AG's Report para 2.9 Back
40 Evidence,
pp. 1- 2. Back
41 C&AG's
Report, para 3.3 and Figure 10 Back
42 C&AG's
Report, para 10 Back
43 Q 6,
7 Back
44 C&AG's
Report, paras 3.7, 3.8 Back
45 Qs
158- 169 and Evidence, Appendix 3, pp. 21- 24 Back
46 Q 88 Back
47 Q 89-
93 Back
48 C&AG's
Report, paras 3.16- 3.18 Back
49 Qs
139- 147 Back
50 Evidence,
Appendix 3, pp. 21- 24 Back
51 Qs
31- 38 and Evidence, Appendix 3, pp. 21- 24 Back
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