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Enterprise and Culture Committee, 25 Jan 2005

Meeting date: Tuesday, January 25, 2005

Official Report 197KB pdf

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Area Tourist Boards Review

I welcome John Brown, who is well known to the committee. He is head of tourism and architectural policy in the Scottish Executive Education Department. I also welcome David Noble, who is the head of network operations at VisitScotland.

Under this agenda item, we will deal with progress on the reorganisation of the area tourist boards. I invite the minister to say a few words by way of introduction.

Again, convener, I thank you for allowing us to come today to give evidence to the committee on a very important issue. You mentioned that the committee has seen a lot of John Brown lately; he has been here more often than I have. That may change in future, if the ATB review goes the way that we want it to.

The committee is well aware of the policy background to our decision to commission VisitScotland to set up the integrated tourism network. The policy rested on several foundations, one of which was the results of the Executive's consultation exercise, during which a large majority of respondents stressed the need for much better integration of national tourism policy with delivery at a local level. Another fact was that, taken together, the ATBs were in a fairly parlous financial state. As was often said at the time, the status quo was not an option. Since the Executive's decision was announced in March last year, a huge amount of progress on design and implementation of the integrated network has been made.

I am glad to be able to report that the project remains substantially on schedule, although some timing pressures have recently arisen. A lot of detailed work remains to be done by April, but we and VisitScotland are clear that the basic structure will be in place by then. That will be followed by further work that will be carried out by VisitScotland over the next year with the objective of having a fully functioning integrated network in operation by April 2006.

I know that concern was expressed at a previous meeting about the need for a business plan and a budget for the project. The first draft of a business plan and budget was produced by VisitScotland on schedule by the end of December. The draft plan was circulated to all ATB chief executives and, on 5 January, VisitScotland issued to all ATB and VisitScotland staff a proposed organisational structure for the network showing the number of posts in each area. The project team had hoped to make more detailed information available to staff about job descriptions and salaries for every post; that work has slipped a little, but only until the end of January. I appreciate that the slippage has given rise to some anxiety on the part of staff who had hoped, quite rightly, to see how their jobs fitted into the new structure and which jobs they might apply for. However, I know that David Noble and his colleagues are working hard to get the detail out to staff by the end of January, as Philip Riddle promised in a personal message to staff two weeks ago.

The business plan and the proposed organisational structure for the network were the subject of detailed VisitScotland presentations at a meeting attended by ATB chairs and chief executives in Edinburgh on 12 January. I understand that those present, including the chair of chairs, found the presentations very helpful in clarifying the structure of the network and the methods to be used in key areas such as business engagement.

I know that the VisitScotland budget for next year is of considerable interest to the committee—it is of some interest to me, too. There have been concerns that a budget deficit next year might affect the funding of the VisitScotland area offices. It is important to understand that the budgets for the VisitScotland area offices, which will replace the ATBs from April, will be an integral part of the overall VisitScotland budget. It is also worth noting that the current operating budget for all the present ATBs shows an expected overall deficit of just under £2 million in the current financial year.

Next year, funding for VisitScotland as a whole, including its area offices, will come from the Executive, local authorities, European funds and tourism businesses. Although businesses will no longer pay ATB membership fees, income is expected to be generated from the sale of a range of products and services available across the network.

We are discussing with VisitScotland its budget for the next three years. We are now clear that once efficiencies to be gained from network integration are achieved over the course of 2005-06, the new tourism network will be viable. The budget shows a deficit for next year and discussions with VisitScotland and within the Executive are on-going. However, my objective is to ensure that additional transitional funding for VisitScotland will be in place well before the beginning of the next financial year. I believe that that objective is achievable.

I repeat my assurance that cash balances remaining with certain ATBs at the end of this financial year will be passed across to the corresponding VisitScotland area office for use in that area. They will not be used to meet deficits elsewhere. I agree with the view expressed that areas served until now by financially prudent ATBs that have built up balances should not be penalised financially for transferring balances to the rest of the VisitScotland network.

Redundancies are another matter that has exercised ATBs and me. VisitScotland's proposed organisational structure included an analysis of the current number of posts in the ATBs and VisitScotland, which together employ around 1,060 people. It also identified a proposed number of 1,025 posts for the new network. The difference of about 35 posts includes some that are already vacant. The balance of the reduction that is needed, which is about 20 to 25 people, is expected to be achieved mainly by voluntary severance. The costs of that are included in the project transition costs, which the Executive is funding. I also confirm that VisitScotland will take on the pension liabilities of all ATB staff who transfer on 1 April.

Another matter that interests many of us is how VisitScotland will meet the commitment not to increase the number of its headquarters staff in Edinburgh. The management of the new organisation, which will employ well over 1,000 people, poses significantly different management challenges to the VisitScotland management team in comparison with the challenges posed by VisitScotland's current size. To address the challenges of managing a much larger network, the VisitScotland management team will be spread across the network. Of the six directors who will report to Philip Riddle, only two will be based in Edinburgh. Another two will be based in Inverness, one will be in Glasgow and one will be in Perth. Not all directorate staff will be co-located with their directors, but many will be, especially in Inverness. That arrangement will ensure that the VisitScotland Edinburgh HQ head count does not increase. I regard that as a satisfactory outcome in terms of our relocation policy.

Much discussion has taken place of how the project has been run and criticism has been made of poor communications and the resultant low staff morale. As chair of the project board, I have taken a close interest in such matters. In its latest written evidence to the committee, VisitScotland has acknowledged that aspects of the project management could have been better. It acknowledged that feedback to groups in the project team was occasionally not as good as it should have been.

The crucial role of good communications often crops up in such projects and I know that VisitScotland has taken the lessons on board. However, it is now time to look forward. The integrated network will be operational in less than 10 weeks' time. The fact that such a hugely complex and challenging project has remained on schedule is testimony to the commitment of all the people in the ATBs and in VisitScotland who have been involved in it.

The time has come to focus all our attention on how best to use the new network to support the growth in the tourism sector and I hope that we will continue to grow it. Tourism is not just one of the biggest and most important business sectors in the Scottish economy—it is now also one of its best performers. A recent Scottish Chambers of Commerce survey highlighted the fact that the tourism sector continues to perform very well. Optimism, total demand and—most important—turnover and profitability are up. That is a tremendously positive background against which to introduce the new network and the products and services that it will offer tourism businesses throughout the country to help them to perform even more strongly.

That was very helpful.

I remind committee members of the sensitivity of the third attachment from VisitScotland. The comments are non-attributed, but those who made them could be identified if they were quoted publicly. It is only fair to respect the fact that the comments were solicited on the basis of anonymity.

Without considering the benefits that will be realised in years to come, what is the bottom line on the total transitional cost of the project? How much of that cost falls into the current financial year and how much falls into the next financial year or subsequent financial years?

VisitScotland's budget for transition costs is £2 million this year and £2 million next year. From the numbers that we have seen, we expect VisitScotland to use that whole budget in the current year and to use a bit more than that next year. That transition cost deficit is part of the overall deficit to which the minister referred in her statement when she spoke about the deficit next year and the transition funding that we are looking for to meet that. As the minister said, we hope to have that in place well before the beginning of the next financial year.

How much is "a bit more"?

The figure is still changing, but at the moment it is around £500,000 to £1 million more.

Is the commitment from the Executive that that unforeseen and unplanned-for additional cost will be added to VisitScotland's budget and will not come out of the planned core budget for next year?

We are working on achieving that at the moment. That is the best way to describe the situation.

I would like to amplify my response. We had to make an estimate of what the transition costs would be away back in March of last year. It was quite difficult to do so with any accuracy then, because we had not started on the detail of the analysis that VisitScotland has done. The provision of £2 million for this year and £2 million for next year was our best estimate, as it were, at the time, but it was an admittedly very rough estimate. We now have much more information about what the costs will be next year, so we are where we are.

What is the payback period for the £5 million transitional costs? In which future financial year can we say, "We've got our £5 million-worth; we're in profit for eternity now"?

The figures that we are looking at from VisitScotland indicate that the costs and income of the network as a whole will be in balance in 2006-07 and in surplus from 2007-08 onwards. I would hesitate to give you a specific answer to your question because, as I emphasised, the forward projections of costs and income are still being clarified with VisitScotland. However, on the basis of the information that I have at the moment, I would say that the initial outlay for transitional costs will be recovered in a few years—somewhere between three and four years. I say that just for the guidance of the committee. We are not talking about a 10-year payback period, for instance. It will be much shorter than that.

We aim to keep it as short as we can.

I was struck by the remarks that you made at the end of your statement, minister. I apologise for paraphrasing loosely, but you put great emphasis on the need to look forward—I think that you said that we need to channel all our efforts into looking to the future and the benefits that the new arrangements could deliver. That is a sentiment with which I have a deal of sympathy. Moving on from the details of how the change process has been taken forward, but going back to the objectives as to why that whole process was embarked upon, can you tell us what are the main improvements that you expect to see as a consequence of the changes? How will you, your department and the rest of us recognise that those improvements have been achieved, and when would you expect us to be able to see the resulting improvements?

As you say, we have to go back to the idea—or rather, the necessity—that drove us to make the changes. We were in a situation in which the financial position was poor and bad. We were also conscious that some of the output was not of the standard that we expect nowadays. At core, tourism is an incredibly valuable part of our economy. It employs a great deal of people and is something that we all want to see grow. The imperative is to get a product that will integrate tourism around Scotland, that will be professionally run and organised and that will provide the best possible showcase for Scotland as a destination. I hope that a great deal of quality will be built into the product—I do not like using the word "product" when I talk about tourism, but I think that you know what I mean when I do. It encapsulates the whole thing, but I want it to be high quality too.

I hope that there will continue to be increases in the number of visitors who want to come to our country, the number of people from other parts of the UK who want to go on holiday or take a short-break in Scotland and the number of Scots who take breaks in Scotland. I want to be confident that what we are marketing abroad, in the rest of the UK and in Scotland is of the best quality. If the number of tourists is up and if what we are marketing is a good product and we are marketing it in an integrated way, those are good, measurable outputs.

Will you clarify for us what feedback you get from customers, both at home and abroad, who use the product? In other words, I am interested in knowing what data exist—although I am loth to use the word "data", because much of what we are talking about is qualitative information. A year from now, how might we get a sense of whether potential visitors from elsewhere in the UK or abroad are getting improved information and a more seamless service than they get at present?

To be honest, the bottom line is the number of people who come to this country—and perhaps the number of people who come back here as a result of the experience that they had on their first visit. There has already been a big increase in the number of people who come to Scotland. It is possible for us to market the country more effectively; improvement is always possible. That is already beginning to happen and things can only get better as we develop our integrated approach.

I hope that people who come to this country report their experiences. VisitScotland does work on the reactions that people have to what we do. We could come back to the committee on a future occasion to explain that in more detail. If the convener does not mind my making a suggestion, the committee might want to consider inviting along someone such as Malcolm Roughead, who is head of marketing at VisitScotland, to find out how Scotland is marketed abroad. An amazing package of material is used; in my view, it is excellent. I know that when it has been shown abroad, the response has been good. John Noble might want to add to that.

On that point, the European and External Relations Committee is in the process of writing its inquiry report on how Scotland is promoted abroad and I think that its inquiry included consideration of tourism, as well as trade and technology. Once we have read that report, we can decide whether we need to do further work.

I do not have much to add to what the minister said. The bottom line was and, in a sense, still is financial. There was a situation that had to be addressed and we have done that. I sketched out the results, although we do not yet know with any precision what they will be. In my view, the integration of the network will give it a power that it did not have before, but I am not well qualified to tell you about that. Before his present appointment, David Noble was chief executive of the Highlands of Scotland Tourist Board. If the minister does not mind, I will bring in a fellow official, as I suspect that he might have something to say in answer to the question that was asked.

The big change that we will see in year one of the transition is that there will be a much more positive approach to how we work with the industry. I know that Susan Deacon's question was about how consumers would be able to tell the difference, but the first customer group for which we must improve our services is the industry, because it is the industry that delivers services to tourists.

A few years ago, VisitScotland commissioned external research into industry attitudes to the organisation. It pointed to significant problems in the extent to which VisitScotland was engaging and to confusion in the industry about the different levels of organisation that were available in Scotland—especially the area tourist boards and, to some extent, the enterprise networks. The integrated organisation will give us the opportunity to have a one-door approach and will make it easier for businesses to engage with a tourism organisation that is both national and local.

The other change, which will have more impact on consumers and visitors, is that the total effort in promoting Scotland will be built around a national strategy, with area initiatives aligned to support the overall national feature. That already happens to an extent, but it is not as joined up as it should be. That does not mean to say that area marketing will disappear because there will be a single national organisation; it has been described well as a national dish with local flavour. Scotland, of course, is made up of a multitude of different localities, which all have their strong selling points for the potential visitor. The trick is to get those things lined up behind a simple message to overseas and UK visitors and add the detail as we get them enthused about coming to Scotland.

Thank you for your comprehensive statement, minister, which I very much welcomed. I have two questions on unrelated subjects. I will start with your concluding remarks. I appreciate that it is not entirely productive of the committee to look back at what has happened. However, you will be aware of the evidence that the VisitScotland board and representatives of the ATBs gave to the committee. Putting it politely, I think that there were discrepancies in the different parties' evidence and representation of events. You were gracious enough to acknowledge that there had been failures in communication between both parts of the organisation. What assurances have you had from the VisitScotland board that it has learned the lessons of what happened in the past and can now move forward and bring the whole organisation and the people in it with the board?

To be fair to VisitScotland, it was gracious enough to admit in its written evidence to the committee that there had been failures in communication. Certainly, the scrutiny that it has been required to undergo as a result of the committee's inquiry has been helpful in taking matters forward. VisitScotland has recognised that in concentrating on achieving the completion of the project, it perhaps missed along the way important nuances about how communication should be done. I have indicated to VisitScotland that I expect things to be done differently in the future. The fact that communications are now going directly from VisitScotland's chief officer to ATB staff is probably a good indication that the lesson has been taken on board. I hope that VisitScotland will progress in that way in the future—I am sure that it will.

Thank you—that was helpful.

Looking forward, my second question is to do with industry involvement in the new structure. Clearly, the industry will no longer be involved through the means of membership. The Scottish Tourism Forum expressed its wish for an improved level of communication with industry groups. I invite you to say a little bit about that. How do you envisage that developing? Will groups such as the Scottish Tourism Forum have specific input into the new structure?

David Noble can probably talk about that in more detail than I can, so I will pass the question to him.

Thank you, minister. The key element here is to build a whole new approach by setting up an industry engagement with Parliament. The director of the relevant department is now in place. He has a private-public sector background and can bring new thinking to how we do this. A team of 32 business relationship managers will support him. In designing their job role, we drew heavily on the experiences of other organisations, including Scottish Enterprise, in building up a customer relations management approach. We also drew on how the private sector works. We looked in particular at the banking sector's good and perhaps not-so-good practice in managing business-to-business relationships. That is how we have replaced membership.

The essence of how we ask businesses to make a contribution is that we offer them the choice of either a packaged approach, involving simple access to advertising and promotion services, which would look very much like membership to many of them; or, at the other end of the spectrum, use of our business relationship team to devise tailored solutions for businesses that need a bespoke approach. That is something that helps them to take full advantage of the channels to the market that VisitScotland can offer. It also helps more businesses to take full advantage of our quality assurance systems and use them to present themselves in the best light to potential consumers.

Is there industry involvement at a more strategic level?

At a strategic level, the chairman of VisitScotland is in the process of establishing two committees that will advise the board. One will be drawn from industry representatives and will give an industry view to supplement that of people already on the VisitScotland board who come from the industry. A parallel committee will involve local authorities in the same way to advise the board on issues arising from the public sector side.

I thank the minister for her uplifting statement, which dealt with a number of the concerns that I and others had. I have described Scottish tourism as being Cinderella 10 years ago, but a glittering princess now. It is in all our interests to ensure that it remains the princess and keeps shining.

The Scottish Chambers of Commerce survey stated that last year 35 per cent of tourism was business trade and that business tourism was worth £800-odd million to the Scottish economy. My questions are on building not just domestic and overseas leisure tourism but business tourism, with local authority and local enterprise company involvement, particularly in devising forward strategies. I note David Noble's comment that there will be two parallel committees: one for industry and one for the public sector. Will you talk a bit about how and where they will come together? If we keep discussing things in parallel, we might find that the parallel lines diverge somewhat.

Is your question on business tourism?

It is about all tourism, but particularly business tourism, to which flights and transport infrastructure and links are extremely important.

Absolutely. As you know, those involved with my portfolio have a great deal of interest in the route development fund. The successes that we have had with that have been good for tourism and business. Business tourism is incredibly important. Yesterday, when I spoke to the Glasgow Chamber of Commerce about tourism, one of the issues that arose was the use of places such as Glasgow, Edinburgh and Aberdeen for business and convention tourism. I am conscious of the extremely large respiratory medicine conference that was held in Glasgow during the summer and of the changes that have been made since I used to organise conferences in Glasgow, when we bussed in people from Loch Lomond and further afield because we did not have the necessary bed capacity.

Business and convention tourism is an area of huge potential growth, because Scotland is a good product. People might want to come to a convention that lasts a week and will travel quite a distance. They will not want to come to sit in a convention hall for an entire week; they will want to see a diverse range of attractions and to undertake activities while they are here. Some of that will involve retail and some will involve having a look at Scotland's scenery or enjoying our sport. People are doing a huge number of things. The idea is being developed of not just saying, "On day 2 of this convention, you will be able to go and do X, Y and Z." Instead, people are saying, "We understand that you are interested in golf. Would you like to come and experience what we have to offer in golf?" The market is becoming sophisticated and it is important that we respond, as we have a reputation for business tourism, which we want to develop. The special purpose vehicles that are being developed in Edinburgh, Glasgow and Aberdeen, about which we are still in negotiations, will be vastly important in encouraging that development.

I am also conscious that other locations in Scotland want to develop that market. I hope that they can not only work in partnership with the convention bureaux, but build their own industry in such a way that, in future, we regard them as hubs for such activity, too. That is an important element of what we are doing. David Noble might want to comment further on how the two aspects dovetail.

The special purpose vehicles for the three main cities reflect the current position that 80 per cent of discretionary business tourism into Scotland goes to those cities. The minister's predecessor, the local authorities and VisitScotland agreed on the importance of maintaining the strong partnership between the local authorities and the national agency and, in all three cases, of involving the key players in the private sector in promoting those destinations for business tourism. That will be backed up by a Scottish business tourism unit with the role of promoting Scotland as a place to come to for conferences; the unit will work through a seamless handover arrangement to promote the most appropriate destinations for major events.

There will also be a regional element, to provide business tourism specialist support to every part of the country. That follows on to some extent from the predecessor area tourist board convention bureaux, but instead of covering only around 60 per cent of Scotland, the new arrangement will open up access to business tourism support and advice to every part of Scotland, which will help to spread the benefits.

The right balance must be struck. We have enormous strength with the city destinations, which can compare with the major conference destinations worldwide. They need a specialised, city-specific approach, married with a national approach that raises the profile of the country as a whole as a place to come to and in which to carry out discretionary business as a conference visitor.

How do you intend to marry the views of the public and industry sectors, not just on business tourism, but on tourism as a whole?

We mentioned the chair's committee, but probably more significant at local level is the proposal to establish area tourism partnerships in each network office area. That is not prescriptive, because there is room for flexibility. Where our local offices cover a large area, we could have a greater number of partnerships.

The partnerships will be between VisitScotland, local authorities, enterprise networks, other public agencies and, most important, the industry. Their purpose will be to develop area tourism partnership plans, which will set agreed priorities for how the industry will grow in their areas. The partnerships can contribute to the ambition to grow tourism by 50 per cent over the decade and to ensure that we have allocated tasks, so that partners commit to playing their part in delivering the priorities. That will be an important part of steering how VisitScotland operates at local level and nationally, but it is also aimed at being a way of involving our partners, because tourism does not stop at VisitScotland—it is a multisector, multi-agency industry.

That is the way forward. The proposals are not a complete innovation, because they build on successful partnership working throughout the country through area tourism strategies and some of the tourism action groups, about which you have heard in evidence. We are starting from a strong foundation. The aim is to build on good practice and to ensure that it applies throughout the country.

Mr Noble, you correctly anticipated that my question would be about local things. You might be aware, minister, that we had a conference in Inverness recently. The guest speaker outlined to us the threat that we face from destinations such as Belgrade and Prague. Clearly, there is a currency issue there, in that the pound is strong against the local currencies, but the gentleman was clear that we had to look to our laurels in terms of the quality of service that we provide. Could you say anything about that? Perhaps the speaker was exaggerating, but he painted a fairly stark picture of a future in which we might be struggling to attain that 50 per cent growth. I would be interested in your thoughts on that matter because, although we have a Cinderella or a princess, other princesses might be coming up.

The speaker was right to talk about competition, as tourism is probably the most competitive market in the world. In effect, we are competing against around 193 countries in everything that we do. It is therefore vital that what we are offering is of a high standard and that quality is built into everything that we do. That is why we have put great emphasis on the issue of quality throughout the industry and why VisitScotland is concentrating much of its efforts on that.

When we talk about quality, we mean quality across the board: in the bed-and-breakfast establishment, in the major hotel, in the convention bureau and in the tourist information centre. It is vital that we ensure that that quality is provided and that everything that we do is of the best. I have used this expression before, but you will forgive me for using it again, because it is relevant: we will succeed in encouraging people to come back to Scotland—which is what we want to do—only if we exceed their expectations on their first visit. We have to aim extremely high, remember our ambitions for the country and work towards achieving them.

The convener asked about the £5 million transitional cost. Can you reassure me that that is the total cost? Does it include the cost of the consultants PricewaterhouseCoopers, Hay and Co, the new database, the new senior director post and the anticipated shortfall caused by the loss of tourism revenues?

It is fair to say that that is the total cost that we are anticipating at the moment, as John Brown said. We have not finally bottomed out the costs absolutely, but those are the figures to which we are working at the moment. We are working hard to ensure that those costs do not increase and that we can, ultimately, bring them down.

Does the total cost include all the items that I mentioned? Do they come under a different heading, for example?

I honestly do not think that they come under a different heading.

It might be helpful if I emphasise that I used the term "transition costs". All the items that you mentioned, except the salaries of the directors, are inside the transition costs budget. The salary costs of the directors are in the VisitScotland operating budget. The overall deficit that the minister indicated that she is in discussions about just now is a combination of the transition costs for next year and a temporary operating deficit, which relates to the deficit situation that the area tourist boards were in. As I have indicated, that operating deficit is expected to be sustained only for next year before the budget comes into balance.

Minister, you also made a helpful comment about the position of the various staff after the merger. That will be welcome, but I invite you to go a little further. At the moment, with only nine weeks to go, the majority of staff do not know what their job descriptions or grades will be after 1 April, at the start of the tourism season. Can you confirm that those members of staff will have full details of their job descriptions, grades and so on within the period of a couple of weeks that you mentioned?

Yes, that is certainly the aim. VisitScotland has been clear that that needs to be the position and I put great emphasis on ensuring that staff have as much information as possible throughout the process from now on. I think that VisitScotland agrees with me about that.

That is very much to be wished for, as it is obvious that such uncertainty is not helpful at the beginning of the tourism season.

Absolutely. I entirely agree.

Finally, you said that the route development fund has helped tourism. What figures do you base that assertion on? I have been told by the Enterprise, Transport and Lifelong Learning Department that it does not keep an analysis of the number of tourists who have been brought in by the RDF.

We can see that the route development fund has helped by the number of routes that have been established through the fund and are being sustained. Since two new routes were established from Sweden two years ago, for example, the number of tourists coming to Scotland from Sweden has increased by 200 per cent. There is a lot of similar evidence that indicates to us that the route development fund is having an effect. We also know that the new route to Dubai has been enormously helpful in opening up tourism to Scotland from the southern hemisphere.

It is inevitable and understandable that, once new routes are established, most traffic will be outward during perhaps the first year or two. However, over a period of time, things have tended to become more balanced and the number of people coming into Scotland has increased. That is why we are concentrating much of our marketing effort on the other end, if you like—the destination at the end of those routes. We want to ensure that we capitalise on the important opportunity that the routes provide.

What you say might well be true, but you will realise that, until the Executive starts to collate figures, some of us will maintain that the existence of a route does not necessarily mean that more tourists are coming to Scotland than are going out.

Perhaps the Swedish figures that I gave are one reassurance, although I am not sure that you appreciate it.

I apologise, minister, for the discourtesy of not being at the meeting for your opening statement and hope that I do not ask a question on a matter that was covered in it.

You have talked about employment in the sector, which is a hot issue. I do not want to rake over what seem to be still relatively warm coals in respect of differing interpretations by VisitScotland, the Scottish area tourist board network and some others who are prominently involved, but one issue that has concerned me is the future of the tourist information centres, in which many tourism jobs are to be found. There still seem to be differences of view. The committee has seen—and I am sure that you have seen—the response from Philip Riddle and Peter Lederer to the points that have been raised. Philip Riddle has made it perfectly clear that the decision on tourist information centres is not the fait accompli that the area tourist board chairs have said that it is. Given the number of jobs that are involved, will you say what the position is? Philip Riddle has said:

"No decision has been made on the re-engineering of TICs and the most likely way forward is that the current proposals will form the basis of a major exercise in year two of the project."

That means no short-term decisions. Will you say something about the information centres, please?

I think that information centres will continue to exist in some form, but we must recognise that, as technology moves on and as there is access to information through many other channels nowadays, the centres might have a changing role. They might be located differently, for example, or integrated with other information services at a particular location. There might be such changes. However, you are probably aware that VisitScotland is committed to reviewing the role of TICs in the next year, once the initial part of the project is established, and that review will be on-going.

This may be an unfair question, given what you have just said. Is it reasonable to expect that some, if not all, of those who are employed in tourist information centres will be redeployed within the structure in some way? Is there not a role for what are, effectively, front-line staff? Everyone in this room will have used tourist information centres when we have gone out and about in Scotland. It seems to me that the skills that those people have are valuable and that the sector would not want to lose them.

You are right about that. However, that is not something that I would want to second-guess at this point, as a lot will depend on what the review throws up. You missed my opening statement, in which I made the point that, in this initial part of the project, a great deal of care has been taken to try to minimise the number of jobs that might be additional to requirements. At the moment, some 20 to 25 jobs are in that category, the vast majority of which we hope will be dealt with through voluntary severance from the new organisation. I never like jobs to be lost anywhere but, if they have to be lost, I would prefer them to go in that direction rather than in any other. I encourage VisitScotland to take that attitude in the future, if it is necessary to go down that route. However, it would be wrong of me to second-guess what might come out of the review.

I accept that. Thank you.

When the committee considered the issue last month and Mr Brown was here, one of the issues that was raised was the relationship between tourist boards and local authorities and the question of local authority funding for tourism. There was some discussion of the prospect of local authorities continuing their funding at the current levels for another year. Is that agreement going ahead? Does it apply for the financial year 2005-06, which begins in April? If so, are discussions on-going about what will happen for the year immediately following that, given the importance of the funding that local authorities provide?

The vast majority of local authorities have committed themselves to funding for 2005-06. Some have increased the amount of funding that they want to give to the new structure and discussions are on-going about what happens thereafter.

You are talking about the vast majority of local authorities. Are there areas where there are—or could be—difficulties in relation to funding from April?

I will pass that question to John Brown, as I am not aware of any specific areas.

No. I am aware only of the local authorities that are offering increases in funding. I defer to David Noble, as the director of network operations. It is part of his job to oversee that matter and he had a further round of meetings with local authorities recently. Our general view is that, for 2005-06, as the minister has said, local authority funding is being sustained and, in some cases, increased.

I will just put the figures to that. We have had detailed discussions with 24 of the 32 local authorities in the run-up to that budget period, following our discussions with all 32 local authorities earlier in the year. Those authorities represent 80 per cent of the current funding and, so far, no local authority has indicated a cut. The budgets for local authorities are due to be set in mid-February; the matter will not be over until local authorities take their democratic decisions on how they will allocate their funding. Nevertheless, the prospects look good.

We expect to complete our round of meetings with local authorities by the first week in February. So far, year 1 looks good. In year 2, the essential ingredient will be to have much more clarity about the priorities for tourism in each area. That is why we refer to the idea of partnerships and partnership plans, which we see as informing our thinking and that of the local authorities on where in the network investment should go from 2006 onwards.

Efficient as ever, one of the clerks has been able to specify the quotation to which I alluded earlier. John Brown said:

"Although one or two authorities have decided to trim their tourism budgets next year, one or two are making large increases".—[Official Report, Enterprise and Culture Committee, 7 December 2004; c 1393.]

Although I realise that one element might offset the other, my earlier question was designed simply to find out which areas were being trimmed. Mr Noble's comments suggest that no final decisions have been made and that you still hope to meet any such problems in the intervening period.

I am not aware that any of the local authorities with which I have been in contact are trimming their tourism budgets. Although all local authorities face some fairly tough budgeting decisions over the coming year, they have all indicated that they are bidding for the same level of budget, at least at the operating department level. In some cases, they are looking to increase the budget, although they have not committed to handing that money over to the network. Instead, they are looking to invest some of that money in other activities. We are continuing to discuss that matter with them.

That comment clearly reinforces the position that was detailed in December. Things have moved on since the Convention of Scottish Local Authorities gave evidence to the committee in May and obviously we are pleased by all the evidence of partnership working.

I apologise to Mr Brown, but I want to quote something that he told the committee on 7 December. He said that he had been

"leading a senior management team from the enterprise networks and VisitScotland since the summer".—[Official Report, Enterprise and Culture Committee, 7 December 2004; c 1394.]

He also said that he wanted to put together arrangements to ensure that the enterprise network and the tourism network were pulling in the same direction, complementing each other and avoiding overlaps. Can we have an update on that?

That work is going well. Indeed, we have pretty well reached the final draft of what we are calling a co-operation agreement between VisitScotland, Scottish Enterprise and Highlands and Islands Enterprise. We hope to give it another shot in Inverness on 8 February, when we will meet for a whole day to work through the detail of the draft. We might need to tidy up some details after that, but I assure the committee that both enterprise networks acknowledge the importance of the matter. I am regularly meeting officials from both networks and VisitScotland and am as confident as I can be at the moment that a co-operation agreement will be in place for April. Such an approach will help the staff of all three networks to signpost businesses efficiently from one network to the other and to deal with any query that raises questions about which network is best placed to address it efficiently.

I have a quick supplementary to Mike Watson's question on local authority involvement. In its evidence, COSLA stressed the importance of the business plan in securing local authority buy-in. Presumably, the figures that you have outlined, which show increasing expenditure as a result of local authority and tourism spending, indicate a positive response to the draft business plan that was issued in December.

That is one of the reasons for those figures and you are right to emphasise the point. However, to be fair, I think that the figures are also a result of local authorities' increasing awareness of the importance of tourism to their areas. Indeed, I have encountered that attitude in a number of meetings that I have had around the country—not all of which, I might add, have centred on tourism. The fact that people have come back to the theme time and again leads me to suggest that the figures are a result of the two elements in tandem.

I want to finish by drawing the minister's attention to the report that the Enterprise and Lifelong Learning Committee produced in 2002 on a model used by the Californian Travel and Tourism Commission for involving the private sector. I am glad to say that Gordon Jackson and I visited the commission and saw these things at first hand. Indeed, I am quite happy to do so again if we need an update. Seriously, I feel that a lot of lessons can be learned from that example. Obviously, California has special advantages over Scotland in relation to tourism, just as we have advantages over California. The model for involving the industry was interesting and commends itself.

Finally, since you are here, minister, can you tell us whether Eric Milligan has completed his world tour and when he will present his report on first impressions?

Speaking of world tours, I thought that the convener was about to invite me to accompany him to California to find out more about its tourism strategies. That said, I will be genuinely pleased to study the committee's report.

I do not know whether Mr Milligan has completed his report—I certainly have not seen it—but we are looking forward to it with great interest. I believe that we can learn some important lessons from hearing about people's first impressions of Scotland.

The committee would be interested in receiving a copy of that report when it is completed.

That completes our consideration of tourist board reorganisation. I thank the minister, David Noble and John Brown for their extremely informative and helpful evidence.

Meeting continued in private until 16:39.