The Scottish Government has ditched plans to scrap the boards of specialised enterprise and skills agencies including Highlands and Islands Enterprise (HIE) and the Scottish Funding Council (SFC), Economy Secretary Keith Brown has confirmed.
He said a strategic board would co-ordinate the work of Scottish Enterprise, HIE, Skills Development Scotland and the SFC but the individual boards would remain unchanged.
The climbdown follows two parliamentary defeats on the issue of the government's controversial enterprise and skills review which contained initial proposals for a single centralised board and then for the current agencies to be retained as "delivery boards".
In a statement to Parliament, Mr Brown said: "In particular I have listened to this Parliament and so I confirm today that the boards of HIE, the SFC and the other agencies will remain but there's an absolute expectation that the agencies will work to align their delivery to maximise their positive impact on the economy.
"As I have previously promised, HIE will continue to be locally based, managed and directed and the new arrangements will protect and enhance their unique service.".
He added: "I do not intend to bring forward legislation to change the name, the functions or structures of the agency boards."
He said the strategic board would deliver "greater collaboration" across the agencies and would be chaired independently with seats given to the chairman or woman of each agency.
Mr Brown said the governance reforms were a "means to an end", adding: "The core purpose of this review is to drive a step-change in the performance of our economy and to deliver strong, vibrant and inclusive growth."
The first phase of the review recommended last year that a new single board should be set up to co-ordinate the work of the enterprise, education and skills agencies.
The proposals were met with heavy criticism by the opposition parties, who were particularly concerned over the impact on the effectiveness of HIE.
Phase two of the review recommended the current agency boards should be retained as ''delivery boards'', but this prompted fears their powers would be reduced.
Opposition MSPs gave a caution welcome to the Government's U-turn on the organisations' boards.
Labour's Jackie Baillie said: "It's been a bad week for Keith Brown, on Tuesday he announced the delays to the Queensferry Crossing, on Wednesday he had to apologise for being conned by a Chinese investor and today he appears to performed a series of spectacular u-turns."
She said Parliament had "made clear" it wanted Highlands and Islands Enterprise and the Scottish Funding Council to be retained in their current form, and said for that reason she welcomed the "apparent change of mind to abandon legislating for a new board".
She also told Mr Brown: "I warn him trying to exert control in another way doesn't respect the will of Parliament."
Liberal Democrat Tavish Scott, MSP for Shetland, said: "I too welcome the U-turn but I'm struggling to square that u-turn with the sentence in his statement that he very carefully delivered, which says the boards will collaborate effectively to deliver the strategic boards purpose and achieve our overall vision."
Tory Douglas Ross asked for assurance "that decisions taken locally and across the Highlands and Islands by the board of HIE won't be overruled" by the strategic body.
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