Fall in enterprise agencies' spending, says Audit Scotland
Spending by two public enterprise agencies has fallen in the last six years, according to Audit Scotland.
The spending watchdog said the resources of Scottish Enterprise and Highlands and Islands Enterprise (HIE) were possibly being spread too thinly.
It also said that despite spending cuts since 2008-09 there had been "little change" in the agencies' work.
The Scottish government said it would consider recommendations made in the report.
Audit Scotland said that by failing to change the way they worked, Scotland's two enterprise bodies were at risk of spreading resources "over too broad a range of activities".
It added that "this might not be the most efficient use of their funding and expertise".
Scottish Enterprise and HIE spent £398m between them on their work to support economic growth in 2014-15.
But between 2008-09 and 2014-15, Scottish Enterprise's spending fell by 16%, Audit Scotland said.
While HIE spending rose by 3% over the period, the report said this was due to extra government cash for extending high-speed broadband in the Highlands and islands.
When this money is excluded, spending was down by 22% in real terms.
Audit Scotland said the two bodies had "performed well against their agreed performance measures", but the report added it was "not possible" to measure their combined performance.
It said: "Despite undertaking similar activities, there is little commonality between Scottish Enterprise's and HIE's publicly reported performance measures.
"For example, both have a performance measure related to 'internationalisation'.
"Scottish Enterprise measures the number of businesses achieving significant turnover growth from exporting, whereas HIE measures the increase in international sales by supported businesses."
It added: "Having different performance measures in place and different ways of calculating them means it is difficult to compare the performance of the two bodies.
"It also means that it is not possible for the Scottish government to assess the collective performance of its economic development agencies."
While Scottish Enterprise and HIE review performance targets annually, Audit Scotland said these had "mostly been exceeded" for the last five years.
But it added that the government had "not challenged the enterprise bodies to increase their annual targets", and said it was "important that the enterprise bodies test that they are setting the most challenging targets possible".
The spending watchdog also argued that there was scope to "simplify arrangements" for providing support to businesses, and "clarify roles and responsibilities".
It has recommended that the government should strengthen its approach to developing and monitoring economic policy, including setting clear targets and timescales for action, and making clear the different responsibilities of different public sector bodies.
Auditor General for Scotland Caroline Gardner said: "New powers, continuing pressure on public finances, and uncertainty following the recent EU referendum mean that the Scottish government needs to target public sector activity and funding where they will have the biggest impact on achieving its economic strategy.
"It also needs to be able to measure progress so its plans remain on track."
A Scottish government spokeswoman said: "We welcome this contribution to the debate on Scotland's economy and will consider the recommendations as part of our Enterprise and Skills Review which looks to build on the success of our agencies.
"Despite significant challenges Scotland's economic performance has improved since 2007 - the productivity gap with the UK has narrowed, and the labour market has remained resilient."
Scottish Conservative economy spokesman Dean Lockhart said: "This Audit Scotland report recognises that economic growth is complex but the gap between UK and Scottish unemployment rates continue to grow and small businesses need all the support they can get.
"The SNP have let the economy brief slip as they continue to obsess about independence and this report clearly highlights that more needs to be done on achieving sustainable economic growth in Scotland."