§ Mr. Stewart
To ask the Secretary of State for Scotland when the prior options study of Scottish Enterprise and Highlands and Islands Enterprise, which he announced on 7 February, will be completed; and if he will make a statement. 
§ Mr. Michael Forsyth
The prior options study, undertaken as the first stage of the five-yearly policy and financial management review of Scottish Enterprise and Highlands and Islands Enterprise, has now been completed.
I have accepted the overall conclusions of the study. Scottish Enterprise and Highlands and Islands Enterprise will continue as the two national agencies responsible for safeguarding employment, enhancing skills, promoting Scotland's industrial efficiency and competitiveness, and furthering improvement of the environment. A particular strength of the current arrangements is the ability to take 394W an integrated approach, combining economic development, training and environmental powers in pursuit of economic growth.
The review looked at the scope to privatise, contract out or transfer some or all of the functions of the two bodies. A key feature of the present arrangements is that Scottish Enterprise and Highlands and Islands Enterprise contract out the delivery of more than 80 per cent. of their programmes to the network of local enterprise companies. These are private companies led by local business people.
The review found that these arrangements have been successful in giving employers ownership of the system of training and enterprise creation, by decentralising decisions and resources to local level through a system of strong, employer-led bodies, leading to better and more focused decision taking. These arrangements will continue, and the review recommends that SE and HIE should continue to look for further opportunities to contract out more of their activities.
The review looked at the scope for rationalisation of the two bodies, but concluded that there would be nothing to be gained by a merger of Scottish Enterprise and Highlands and Islands Enterprise. I expect that the two bodies will continue to co-operate fully, as at present, to reduce unnecessary overlap and avoid duplication of effort.
I am grateful to all those organisations and individuals who responded to the invitation to comment which I issued at the start of this review. The second stage of the review, which will examine systems of financial management and control within the two bodies, will now get under way. Many of the comments submitted in the course of the prior options study will be relevant to the second stage.
Copies of the report of the prior options study will be placed in the Libraries of both Houses and may be obtained from the Scottish Office Education and Industry Department, Room 3-F53, Victoria quay, Edinburgh, EH6 6QQ.