 Good morning and welcome to the 22nd meeting of 2022 of the economy and fair work committee. Our first item of business is a decision to take items 8 and 9 in private. Are members content? The committee will now take evidence on the companies at 2006, Scottish public sector companies to be audited by the Auditor General for Scotland, number 2, order 2022. I welcome to the meeting Ivan McKee, Minister for Business, Trade, Tourism and Enterprise, who is joined by Ninian Christie, Solicitor and Rebecca Winterstein, Head of Capital Investment, Scottish Government. I invite the minister to make a short opening statement. Thank you, convener. I am grateful for the opportunity to speak to the Straft Order, which relates to the Audit of the Scottish Futures Trust, or SFT. SFT is a non-departmental public body that acts as a centre for expertise on infrastructure. It works across the public and private sectors in Scotland to improve the efficiency and effectiveness of infrastructure investment. SFT was originally established as a public corporation and company in 2008, and, as such, it was audited by commercial audit firms. In 2011, SFT was classified as an NDPB by the Office of National Statistics. The majority of NDPBs are audited by the Auditor General for Scotland and the Scottish Government, and SFT have agreed that SFT should follow suit. That order will give the Auditor General the power to appoint an auditor to SFT in future. That change is not a reflection on SFT's previous audit arrangements and has no bearing on the functions of SFT. SFT has always been audited by reputable commercial auditors. SFT's annual accounts today are available on its website and have been laid at the Scottish Parliament each year. That is an administrative change to bring SFT's audit arrangements in line with other NDPBs. In practical terms, we do not expect that to have a significant impact for SFT. Audit Scotland could undertake the audit itself or it could contract the audit to an external audit firm, such as the audit firms previously used by SFT. I am joined here by Rebecca Winterstein of the Infrastructure and Investment Division and, remotely, by Nene Christie from the Scottish Government Legal Directorate, who will be happy to join me in answering any questions that you may have. Thank you. Do I have questions from members? Jamie Halcro Johnston. Thank you so much. Good morning. This was set up in 2008 and became an NDPB in 2011. That is 11 years ago. Why is the change only being made now? Yeah, good question. We have been working through that process. There was a number of bodies that had to go through that process and we have been working our way through that. Of course, as a private company, it will have contractual arrangements with commercial auditors that, for a period of a number of years, it would have been worked through as part of that. That was not the whole period, but it was a latter period. It is an exercise to bring things into line. Obviously, it will now become under the opportunity for Audit Scotland to look. Do you know what their plans would be? Was that up to them in terms of deciding whether they will look retrospectively at previous accounts or how will that look? In terms of retrospective, I do not know all the ask officials to comment on the technicalities on that, but I think that there will be a discussion with Audit Scotland around the best arrangements. It is quite likely that they might look to use a commercial audit firm to continue doing that as has happened in the past, but that would be for them. I do not know if you want to comment on the retrospective part. The discussions that we have had with Audit Scotland have all been forward-looking, but they have not expressed any desire to look at accounts retrospectively. Those accounts will have been published, so they are available to be looked at anyway. Thank you. Do you have any other questions? I have a member who has remotely joined us this morning. Mr Beattie, would you wish to ask a question? Yes, morning, Minister. Just a couple of very small questions. First, it is not clear for the documents here whether Audit Scotland has formally agreed to take that on. I know that there have been lots of discussions about taking on additional audit functions, and I presume that that is part of it. Is there any impact on resources for Audit Scotland? Are they going to need additional people, money or whatever in order to carry out this audit? Is there a cost attached? In terms of the discussion—again, officials can comment, but my understanding is that Audit Scotland will take that on as part of their role because it is an NDPB, and in terms of additional resource, I think that that will be part of the overall discussion with them in terms of what resources they need to do their overall job. However, as I said, it is quite likely that they may choose to use a commercial audit firm in that regard, which would be far less resource intensive for them. I do not know what discussions we have had in that regard. We have kept Audit Scotland closely involved in this as we have been developing the order. They are perfectly content to take it on. We have had no discussions with them about the costs associated with it. If you consider SFT currently using a commercial audit firm, if Audit Scotland also chose to use a commercial audit firm, the cost of the public sector is balanced. Just to follow up on that. Obviously, if they use an external firm to do the audit, as they do in some cases, there would be no additional staffing costs necessarily to Audit Scotland, but there would still be an absolute cost, because there is a cost to carrying out the audit. Who absorbs that? Will it be absorbed by SFT? Will it be absorbed within the existing budget of Audit Scotland? Those are questions that will be useful to understand. At the moment, SFT would be paying for the commercial audit. In terms of which part of the public sector would pay for this going forward, I am assuming that it would still be SFT, but we can clarify that if it is helpful. Jamie Halcro Johnston Are there any other companies, any other NDPBs or organisations that are in the similar position that are going through the system or you are intending to bring in? That is a good question. Not that I am aware of within my portfolio, there has already been one company, and I am trying to look for the name. It is a real business, I think that it has gone through the same process. Scottish rail holding is limited to the same process. I do not know if there are any others across the piece. I am not going to be aware of it, but it is time. Thank you. Are there any other questions? No, if there are no other questions, we will move to agenda item 3, which is the formal consideration of the motion to approve the instrument. I invite the minister to speak to you and move the motion. As no member wishes to speak to anybody, we put the question on the motion. The question is that motion S6M-05863 be approved. Are we agreed? Thank you. The motion is agreed and therefore approved, and the committee will publish a short report of the decision that will be published soon. I thank the minister and his officials for joining us today, and I briefly suspend the meeting to allow for a change of witnesses. Our next item of business is agenda item 4, which is consideration of a legislative consent memorandum on the UK Parliament infrastructure bank bill. This is a UK Government bill introducing the House of Lords on 11 May 2022, which changes the law on devolved matters. I would like to again welcome Ivan McKee, Minister for Business, Trade, Tourism and Enterprise, who is joined by Jeff Oweson, senior policy officer with the Scottish Government. I invite the minister to make a brief statement on the Scottish Government's position, and then we will move to questions from members. Thanks for the opportunity to speak to you this morning about the legislative consent memorandum for the UK infrastructure bank bill. The UK infrastructure bank bill was lodged in Westminster on 11 May, and the legislative consent memorandum was lodged in the Scottish Parliament on 2 September. First, let me say that the Scottish Government fully supports the aims of the UK infrastructure bank and they are broadly aligned with our own investment, and infrastructure will be critical in meeting our commitment to a just transition to net zero and plays an important role in supporting regional and local economic growth. The purpose of the UK infrastructure bank bill is to put the bank on a statutory footing by placing its objectives into legislation. It is intended to create transparency, accountability and governance. Of course, the UK infrastructure bank has already made its first investments and has been operating on a non-statutory basis since it was established in July 2021. We welcome the £22 billion of financing capacity and the advisory services that have been made available to local authorities. While our aims are currently aligned, the policy and landscaping Scotland differs from that of the rest of the UK with our infrastructure investment plan, global capital investment plan and national strategy for economic transformation, providing the framework for our policy priorities. Additionally, Scotland's climate change plan sets a target date for net zero emissions of all greenhouse gases by 2045, five years before the UK Government target. The time frames and nature of Scotland's transition to net zero will therefore be different to that of other parts of the UK and therefore delivery will follow a different approach. We have therefore been seeking assurance that Scotland's interests will be suitably reflected in the design and delivery of UK infrastructure bank activity. The bill, as introduced, allows HM Treasury by regulations made by statutory instrument to amend the UK infrastructure bank's functions or the meaning of infrastructure. We, of course, appreciate that building and flexibility will allow the UK infrastructure bank to be responsive to changing priorities over the longer term without a requirement to update legislation, however it also creates a future risk of divergence with Scottish Government priorities. It is a clear overlap between the strategic objectives of the UK infrastructure bank and the Scottish national investment bank, particularly with regard to tackling climate change and supporting regional economic growth. In order to ensure that investments deliver maximum impact, we believe that it is imperative that both banks are able to work together to identify and support appropriate infrastructure projects in Scotland. It is also crucial that Scottish interests are appropriately represented and there is an awareness of our economic context. We are therefore seeking an administrative mechanism such as a memorandum of understanding between the UK infrastructure bank and the Scottish national investment bank to support continued alignment in the approach over the long term. We have also asked for confirmation that there will be no funding implications with respect to the Scottish budget. Convener, Scottish ministers are clear that the UK infrastructure bank bill has merit but some of the clauses continue to cause constitutional concern. The Cabinet Secretary for Finance and Economy wrote to the economic secretary to the Treasury John Glenn offering in principle support for legislative consent motion on 9 June, but that letter made clear that legislative consent was contingent on the insurances that have outlined being provided. We remain in discussions with the UK Government about the insurances that we have requested and I am hopeful that we may be able to secure those but we have still to receive a formal response for now. Therefore, I cannot recommend consent to the UK infrastructure bank bill as it stands. The committee has a few questions. The UK Government wrote to the UK Government on 9 June looking for some insurances and indicated that there are some on-going discussions. First, on the memorandum of understanding proposal for the UK infrastructure bank and the Scottish national investment bank, do you think that there is an understanding of the need for that? Is there any other solutions that are being looked at in relation to the relationship between the two banks? The memorandum of understanding to provide alignment between the Scottish national investment bank and the UK infrastructure bank would be helpful to ensure that policy line-up is in place. There have been official discussions on that, my understanding that those are progressing in a positive direction and there is an understanding or recognition on the UK side that that would be a helpful move. We remain hopeful that that will reach a positive conclusion but, as I said, it is still in discussion on the detail of that. I understand that there has also been a suggestion and request from the Scottish Government that an individual with relevant knowledge of Scotland's policy and project landscape should be included on the board or the investment panels just to give that level of knowledge and expertise at the centre of decision making. Is there been any positive response? That is something that we would like to, from our perspective, make sense. As I said, the reflection of Scottish interests and differences in the policy and economic landscape are important to reflect in the UK infrastructure bank. We have made that request. In that regard, we are less hopeful that there will be agreement from the UK side but we continue to press the case because we think that that would be a clear mechanism to ensure that Scottish interests were represented. Is there other organisations that use that type of model that could use an example of why it is important? It is not a suggestion that the person does not have to be based in Scotland or be Scottish. It is somebody who has knowledge of the Scottish circumstances. We have had similar discussions with the UK Government in other areas but not always with success. I think that it is a mechanism that we think makes sense if they have something explicitly or has that technique. Has there been discussions with the devolved nations? Will the UK infrastructure bank follow and cover Wales and Northern Ireland? Is there similar concerns from them around? There are some Wales as well. I am pretty sure that Wales is also not concerned. The Welsh Government has not recommended concern either on that basis. You mentioned concerns about Barnett consequentials. Can you expand a bit more on those concerns and what assurances you are looking from? Clearly, if there is money coming north as a consequence of things that the UK bank does, and they have already invested £200 million in broadband as part of their initial investment in Scotland, we would not want that to be caught up in issues around the Barnett formula. My understanding again is that there have been official-level discussions on that and some progress has been made and there is recognition that that needs to be addressed. Again, we are hopeful that that will be resolved, but there has been nothing clarified definitively yet. Is there a common concern that other areas of the UK Government are making direct investments or payments into Scotland that have concerns around Barnett consequentials? The level of money on green ports or any other projects that are happening? On living up, it is an issue in terms of the route that those funds follow. I have not been as close to that, but with regard to green ports, there has been quite a bit of discussion around how that impacts Barnett or not. I think that it is very much on a case-by-case basis. That is why we feel that it is important to get some clarification and assurances on that. Can you tell us about the timescales involved in that? There are three areas that you can highlight. There are on-going discussions with UK Government officials, but what are the timescales or when we really need to know what the outcomes of those discussions are? I think that through the rest of this year, they would be taking the bill through, so it is something that we would obviously want to get resolved sooner rather than later. Are there any other questions from members on Graham Simpson? Hello, minister. I just want to ask a bit about your request for an individual who has knowledge of Scotland. You are not necessarily asking for a Scottish Government representative. It just needs to be someone who knows about Scotland, so that could be a UK Government person with knowledge of Scotland. I need to be somebody who has understood the Scottish Government policy and the context in which we operate, so that I understand the national strategy of economic transformation, our net zero activity, our global capital investment plan, our focus on infrastructure and the strategic transport plan and so on, so somebody who understood that and was able to represent or make the case as to why or how the infrastructure banks' investments were aligned with those priorities. You are not asking, or maybe you are asking, for you to have a proof who that person is, because that person could change, couldn't you? Yes. So you are asking? No, we are not asking to see if the person could change. So I know just a recognition that there was somebody on the board or the investment panel that had an understanding of those issues? Yes, and similarly for Wales. I am not quite sure if Wales has made the same case exactly, but I am not sure. We are here to talk about Scotland of course. The memorandum of understanding is that your understanding that that will get that? It seems to have been positive moves around that as a recognition that it makes sense, and obviously the details need to be worked through, but I think we are hopeful that that will reach a positive conclusion. And back to what the convener asked about timescale, so in terms of timescales for this parliament, we wouldn't be asked to take a view until later in the year or early next year? If we get these issues resolved to satisfaction, then we would be returning with another recommendation at some point, which could be later this year or early next year. Okay, thanks. Do you have any other questions on this? It's just off the back of the other areas. In terms of the fact that there's moneys being spent—and I mean, this may actually be a question really that lives with the Audit Committee—but are there any discussions about how moneys spent by the UK infrastructure bank, how that will be actively scrutinised, audited and aligned to the national performance framework, given that the Scottish Government is responsible for outcomes? Well, it reinforces the point that I've made about the UK investment infrastructure bank having an understanding of the Scottish context, because the impact of decisions that they make on the national performance framework is clearly very central to the Scottish Government's priorities and the way of work in Scotland. In terms of audit of the impact of that, again, officials might want to comment, but it will depend, I suppose, very much on what the investment is. We'll take the one at the moment on broadband and clearly that, if it goes as planned, we'll have an impact on our broadband roll-out aspirations and contribute to our metrics around about delivery of those, so it will have an impact there. We obviously monitor that as a separate piece of work that I don't know in terms of audit. We can check and come back to on the specifics. I suppose that I'm highlighting, because obviously the suggestion of an MOU and having somebody representative will consider the kind of proactive upfront aspirations and whatever areas, but I'm also thinking about the reactive scrutiny element in terms of value for public money, so that's the two sides of the coin. You can come back to us on that, Jim. I'll ask the final question. The memorandum of understanding to create alignment between the Infrastructure Bank and the Scottish National Investment Bank. At the moment, the objectives for those two banks and institutions are quite similar. It's around net zero ambitions. I suppose that that's what memorandum of understanding is for, because you see a position where they could start to diverse. There might be different priorities, but is that one of the purposes of having the memorandum of understanding? Why is it important to have that there? In terms of diversions of priorities, that's an issue, and that's one of the reasons why we want to have better processes for alignment just to guard against that in the future, but the memorandum of understanding is also to help to ensure that the two institutions are working together where it makes sense to do so, and understanding that they're not bumping into each other for a better word than it comes to supporting specific projects, because clearly if a project is looking for funding, it can be talking to a number of institutions or investors, and if the two banks understand how each other are operating in that space, then clearly it makes the process a bit more extreme, lined and efficient. That brings our evidence session on this LCM to a close, and I briefly suspend the meeting for a change of our witnesses. Our next item of business is agenda item 5, which is consideration of the Legislative Consent memorandum on the UK Parliament procurement bill. This is a UK Government bill introduced in the House of Lords in the elements of May 2022, which changes the law on devolved matters. I'd like to welcome, again, Ivan McKee, Minister for Business, Trade, Tourism and Enterprise, who is joined by Julie Bain, a lawyer with the Scottish Government, and Alasdair Hamilton, a procurement policy portfolio manager with the Scottish Government. I invite the minister to make a brief statement before questions from members. Thank you, convener. The procurement bill is intended to reform the regulation of public procurement primarily in the rest of the UK. The UK Government is keen to present it as a brexit opportunity, but it ignores the fact that, in Scotland, we were able to reform public procurement whilst being members of the EU. The Procurement Reform Scotland Act 2014 placed a sustainable procurement duty on authorities to consider the economic, social and environmental wellbeing impact of a procurement exercise in their area. It increased transparency by requiring contracts to be advertised on one single portal and that authorities publish a pipeline of expected contracts. The act also contained measures on community benefits, reporting and contracts for health and social care, all of which is compliant with EU rules. Where the UK bill is most noticeably doing something different is in introducing new flexibility for buyers to design procurement procedures. It says that that will allow for a more responsive procurement system, but it will also mean that companies will potentially come across a new way of doing things every single time they bid, which will be different again from how contracts are awarded in the EU. We do not share the UK Government's enthusiasm for dumping EU rules for the sake of being seen to be doing something. For the most part, therefore, this bill will have no practical effect in Scotland. There are three specific ways, however, in which it does engage with the LCM process. First, it seeks to regulate the procurement activities of reserved and cross-border bodies operating in Scotland. That mirrors the approach to scope and extent in the Procurement Reform Scotland Act 2014, which excludes bodies' exercise and reserve functions, meaning that they are not covered by the sustainable procurement duty. To that end, it is not unreasonable for them to be subject to this bill, but at present I cannot recommend that Parliament consents to that, given the concerns that we have with other parts of the bill. The second area in which the bill touches on devolved competence is in relation to cross-border procurement. Frameworks are similar agreements awarded under the new UK rules but will not be compliant with the Scottish rules, so devolved authorities in Scotland would not be able to use those arrangements. Similarly, UK bodies would not be able to use arrangements put in place under the Scottish rules. That is a practical issue that needs to be addressed because bars from both sides of the border cooperate with each other when it makes sense to do so. The way in which it is addressed in the bill is unacceptable, however. The bill creates powers to address the issue through secondary legislation. Some of those are in devolved areas and it confers on UK ministers without any requirement to secure the consent of Scottish ministers before exercise. They are drafted very broadly, including a provision that would allow UK ministers to modify an act of the Scottish Parliament. Finally, the third area in which the procurement bill touches on devolved competence is in relation to powers to implement international agreements relating to procurement. We agree that such a power is necessary, but the power that is presented is too broad and is conferred concurrently on UK and Scottish ministers with no requirement on UK ministers to secure the consent of Scottish ministers before exercise in relation to devolved matters. There is no justification for that and I cannot recommend consenting to it. Convenience is a matter of regret that the UK Government did not engage with us more fully before drafting of the elements of the procurement bill to work with us to arrive at a proposition that was acceptable. Had it done so, we could potentially have recommended consent. We remain in discussions with the UK Government about its plans and I am hopeful that we may be able to secure some improvements, particularly in relation to the practical issue around cross-border procurement, but we are not there yet. Therefore, for now, I cannot recommend consent to the bill as it stands. Okay, thank you. Minister, I will take questions from members. I just wonder if you could update us on those discussions with the UK Government what has been happening when the next plan meeting and also what level the meeting is at, official level or ministerial level? At the moment, a meeting is at official level and it is on-going. Officials can perhaps give you some dates if you require that. There has not been engagement at ministerial level. Of course, you could just change the other ministers, so we are just establishing contact with them as we speak. I do not have any specifics on that. Engagement has been going on for a number of months with the UK Government at official level. As the minister said, particularly in cross-border procurement, it has been a constructive engagement, but we are not yet at the point where we have a proposal on the table. Okay. There are a number of LCMs that we are looking at today. Would the intention be that there is ministerial level engagement on these LCMs and, perhaps, in a more general term, fairly soon? With regards to procurement? With regards to the LCMs that we have got here, plus the general meeting, as they were. I was keen to engage with UK Government ministers. As often as required, I wrote to my UK Government counterparts when they took office in the last few days. We have in the diary a base quad already and the way other meetings that are happening across all my portfolio on a four nations basis, which will allow us to discuss these issues on trade and on tourism in a manner of things. Unresponsible for digital, et cetera. That is an on-going process. As those meetings start up again, then, obviously, that will be discussed as part of that process. I suppose that I have the same general observation as I relayed in the earlier session about how scrutiny will be undertaken and alignment with our priorities, whether it is in terms of fair work or conditionality or gender fairness, both proactive up-front and reactive in terms of value for spend and alignment to the national performance framework. That is my first question, but my second question will be helpful for me in terms of the sense that the need for powers is too broad. If you could outline some practical examples of where that would be a concern in terms of procurement processes just to make your concern live. On the first point, as I said, the current situation is that Scottish law places requirements on bodies in devolved areas and bodies that are reserved or cross body are not included in that, and the bill would cover them. There is a different scope in that regard, if you like. In terms of the practical effects, I suppose that the problem that we have is that it confers those powers, which, as I said, could allow UK Government ministers to make changes to acts of the Scottish Parliament. In that regard, it is pretty broad and could cover a wide range of areas. The concern, therefore, is that we do not know what it could impact in terms of opening a door, and then what they choose to do with that would be a concern. We see issues with that because of the way that it has been drafted, because it confers those powers, and from our perspective, that is not an acceptable position to be anywhere in the UK, UK ministers have the power to make changes to acts of the Scottish Parliament in that regard. Just picking up to be clear, have you had any discussions in both of those taking place about the broadness of powers and specific examples in that? Is there any more colour that you can give to that? Well, there have been discussions on going at official level, and I am ready to engage with UK Government ministers when they are in place and able to talk on that. Obviously, when they are taking a bill through Westminster, there are a whole range of aspects that are considered from different quarters. As it goes through amendments and so on and so forth, we need to consider across a whole range of things. We are part of that process of engaging with them to make them aware of our concerns, which I say that we have done, and to address what they have made to be able to do about it. If you look back at similar situations that have been involved in previously, when sometimes we are able to resolve those through ministerial discussion and sometimes we are not, but as we get to that next stage, then we will obviously be talking about the implications of it directly with UK Government ministers, and hopefully they will recognise that they are able to make changes to the bill as currently drafted that take account of those. Going back to my first point, we had an earlier session, but it will be along in a different record. Will the discussions include any consideration of how procurement and the inaction of the bill will align directly with the national performance framework? I call your attention to the fact that the finance committee has asked that the UK Government have cognisance of this because there are specific, measurable outcomes that the Scottish Government will be measured against, even if it is not directly linear. We appreciate the complexity of the budget and so on, but has any consideration been given to that, or would that in fact be an additional area of concern for you? As I said before, the procurement scope within Scotland covers the devolved aspects and presently reserved and cross-border are not part of that mechanism or are covered by that legislation, so that it reflects the situation as it stands at the moment. Obviously, having a responsibility for procurement, I will work very closely with officials and others to ensure that the actions that we take on procurement support policy objectives be that on community wealth building and sustainable procurement, more work going to Scottish businesses, more work going to SMEs, et cetera, et cetera. That is a relentless and on-going process and we look for every opportunity to take that forward, but the UK Government procurement has been outside that scope up to now, but that effectively would not change. The importance of procurement post EU exit has been recognised by everybody that had to be legislation put in place. In January 2022, the UK and devolved Governments published the common framework on procurement, which this committee, and I think everyone will recognise, was a very practical common sense way forward. However, the Scottish Government noted in their LCM that they have not been able to fully address their concerns with the procurement bill. How has the common framework been operating in practice? Everybody was looking to that as being the practical by means by which there could be that sensible common sense co-operation? Yes. That cross-border co-operation on procurement is with exploring it. In effect, at the moment, on either side of the border, organisations will put in place framework agreements with suppliers to enable them to make use of more advantageous procurement conditions and organisations on either side of the border will leverage those agreements with supply base to best effect. That situation already happens. There are agreements that will be created by Scottish bodies with the supply base that organisations south of the border will leverage and likewise in the opposite direction. Part of the concern that we have is that the bill is introduced and that one effect would be to close off that co-operation because of the way that the bill is drafted. It is a concern that makes that process harder than it is at the moment. I want to comment on that, Alistair. Just to add to that, in terms of the operation of the common framework, the common framework has been operating on it. At an official level, we meet monthly with our counterparts and there is a six-month liaison group meeting. We have expressed in that forum our concerns that the UK's approach to the bill is not necessarily compliant with the common framework's principles in terms of respect for devolved competence. That has been noted at that level. Working our way through this process will be the test for how the framework operates in practice. My next question is about what amendments you really want to see for the LCM to be able to be consented to. In terms of the impact on cross-border contracts, what changes would you need to see to the bill for you to be able to bring forward an LCM for consent, particularly in relation to that cross-border arrangement? There are two clauses that we can highlight, certainly clause 83, which gives UK Government ministers powers, which is concerning in devolved areas. I am with regard to implementation of international agreements in clause 103, which gives powers to UK Government ministers in regard to cross-border arrangements. Those are clauses that we think would need to be amended. Is there any other aspects to that? Those of the two ministers, in terms of making sure that there is a requirement there to seek or secure the consent of Scottish ministers before their operation, or perhaps in relation to clause 103, which is the cross-border procurement, putting the measures necessary to give effect to cross-border co-operation on the face of the bill, rather than delegating them might be an alternative way forward? Do you think that this is more accidental mission creep, as opposed to deliberate paragraph? Obviously, there are degrees of disagreement with the LCM, and I think that the infrastructure bill looks a bit more straightforward, but because it is so important that it is procurement, we need to get it right. Is it something that you think that you can try to resolve at ministerial level to try to get us back on track with the common framework agreement? To be honest, it is sometimes hard to tell the difference, and the UK Government is obviously getting many people working within it, and a lot of things will come forward that could be written for different reasons and not fully appreciate the implications of them. That is sometimes a situation, and sometimes that is not the situation. As I said, I am hopeful that officials will work their way through and be able to address that, but if not, as I said, minister-to-minister engagement would allow us the opportunity to be more direct about the issues that we have with us and how it could be potentially resolved at that point, then it perhaps becomes clearer as to what the intentions are. Just more for clarification about how the procurement is working. You talked about the sustainable procurement bill and how in Scotland there is a desire. The committee has also looked at its supply chain inquiry about how procurement can be used in a positive way, whether it is net zero, living wage, gender and different areas. For reserved bodies, and I was thinking about the DWP and Bascuit, for example, my constituency, if it was conducting its own procurement. Obviously, a lot of that is centralised and will be part of UK-wide common frameworks, but if they were doing things more on a more local basis, would we be expecting them to be subject to the conditionalities that we would have, or is that going to be part of what should be happening in terms of those UK-wide common frameworks? It is because the procuring agency is reserved, but what we do not want is for that to be the freedom that has been given to the reserved agencies on their procurement. We do not want that to compromise what is done in devolved areas. Just a practical clarification. My understanding is that that is the situation as it is at the moment, so in devolved areas we can legislate for that and require procurement for all certain processes, but for bodies that are reserved areas or cross-border at the moment outside the scope of devolved procurement legislation, that would continue. We have that difference at the moment and nothing would change in this regard anyway. Do we know what the volume of UK reserve bodies' procurement is in Scotland? That is a good question. I know that the Scottish procurement is around about £14 billion, in that case local authorities, NHS, other public bodies, Scottish Government and so on and so forth. I do not have a figure for UK government procurement in Scotland, but it depends how you would look at that, either as UK bodies that are operating in Scotland and placing their purchase orders from an entity in Scotland, or you could be looking at UK government bodies as a whole across the whole UK that may be buying from Scottish suppliers. There are a number of different ways to look at that, but I do not have anything to add. That would be interesting to know if you had that information to share with the committee, but I am aware that it is not specific to what it is. I would suspect that it will probably be a broadly similar number, but I do not know for sure. That is probably a simple question that I am just not understanding what is before us, but the current situation is that if a reserved organisation or a cross-border that will not change the way in which it is, so what does it change? What it does do is, because of the rates drafted, it gives powers to UK government ministers to be able to change things that are devolved. So what would be a practical example of that? That is the issue. As it is writing, it basically says that UK government ministers can make changes to things that they cannot currently make changes to in a Scottish context. That is pretty broad, but I do not know if you want to comment on any specifics. If you look at the power in clause 83 to implement international agreements, the equivalent power for the UK ministers in relation to the UK act, as it will be, is to amend the schedule to that act, so that international agreements are listed in that. We need a similar power in relation to the Scottish regulations to update the schedule to the Public Contract Scotland regulations 2015, but the power that is drafted is a much broader power for a concurrently exerciseable, which allows either UK or Scottish ministers to make provision to ensure equal treatment. There are many different ways of ensuring equal treatment, so that will be taken away from the Scottish Parliament, potentially putting it in the hands of UK ministers. Also, there is the Henry VIII provision in that as well, which would allow amendments to future acts of the Scottish Parliament. Although it is suggesting that we could have the Henry VIII powers, or that the Scottish ministers should adopt Henry VIII powers in certain circumstances? I think the only issue that Alice has commented on is the regard to updating, so if there was a new treaty that was signed with someone else, we would add that to the list of treaties that need to be taken into account when you are taking for procurement legislation, which covers it in that regard. Okay, thank you. I would also like to thank the Delegated Powers Committee for the work that they have done on this that supported our questions this morning. Okay, it brings us to the end of the evidence session on this LCM to a close, and I briefly suspend the meeting to allow for changeover of witnesses. So our next item of business agenda item 6, which is consideration of a legislative consent memorandum on the UK Parliament Trade, Australia and New Zealand bill. This is a UK Government bill, which was introduced to the House of Commons on 11 May and changes the law in devolved areas. So I would like to welcome back Ivan McKee, Minister for Business, Trade, Tourism and Enterprise, Julie Bain, lawyer of the Scottish Government, Alasdair Hamilton, procurement policy portfolio manager, and we have been joined this time by Leslie Henderson, team leader, food and drink regulation and trade with the Scottish Government. I invite the minister to make a brief statement on the Scottish Government's position and then we'll move to questions from members. Thanks very much, convener. The Trade, Australia and New Zealand bill is a very narrowly focused bill, and whilst we have some wider and significant concerns about aspects of the free trade agreements with Australia and New Zealand, particularly in relation to agriculture, the bill is focused only on the implementation of the Government procurement chapters of those deals. Amendments are needed to procure to procurement legislation to extend duties of equal treatment to bidders from Australia and New Zealand and to make some minor amendments to procedural rules. The UK Government has opted to confer a power on ministers to make those amendments, like the power in the procurement bill that we've just talked about. This power is drafted too broadly and conferred concurrently on UK ministers, as well as Scottish ministers, with no requirement on UK ministers to secure the consent of Scottish ministers before exercising it in devolved areas. That is clearly unacceptable. However, although the bill is relatively narrow and it is focused on the procurement chapters of those two agreements, it would be remiss of me not to say a few words about the agreements more broadly. The Scottish Government has had no direct role in negotiations and we are very concerned by the impact of both of those agreements. Those concerns are particularly acute in relation to agrifood. The potential for imports to increase is huge. Australia currently exports 5,000 tonnes of beef to the UK each year, but the agreement will allow 35,000 tonnes in the first year, increasing each year after that. Of course, Australian producers do not have to adhere to the same animal welfare and environmental standards as Scottish farmers. There is a similar story in relation to the agreement with New Zealand, where access to the UK beef market will rise to 60,000 tonnes per year 15 of the agreement. There are almost no benefits in this deal to Scotland's food and drink sector. All that this deal achieves is to expose Scottish agricultural market to the most export-oriented food producers in the world. To what end? UK Government analysis shows that the deal with New Zealand will deliver a 0.03 per cent benefit to UK GDP over 15 years, with the Australia deal contributing 0.08. At the same time, the UK's EU trade and co-operation agreement will lead to a contraction of UK GDP by 4.9 per cent over that time period. Of course, economic self-harm of leaving the EU should come as no surprise and it is noticeable and worth highlighting and convening that the EU has secured the same market access into New Zealand for its exporters as is the UK, but at a much lower cost to its domestic producers. Convener, being outside of the EU and tied to a UK Government hell-bent on reaching trade agreements at almost any price so that it can pretend that Brexit is working is an invidious position to be in, but it is a position that we find ourselves in. We must try to predict Scottish interests as best we can. The impact of those agreements will be felt throughout Scotland. The committee is focused this morning on scrutinising the LCM. I do appreciate the broader issues that you wish to highlight, but I think that the committee is fairly familiar with the political discussion around that. Absolutely, and it is hugely important, convener. I will now take questions from ministers. Good morning, minister. Thank you for being here this morning. Similar question to the starting off for the others that we have discussed this morning what discussions have you had since 13 June, since the Scottish Government published its LCM with the UK Government? Do you see any progress being made on the areas of concern that you have highlighted? The areas of concern on this are broadly the same as we have highlighted on the procurement bill, and it is the power that it confirms on UK Government ministers in devolved areas. There has been official-level discussion on that, but not any discussion at ministerial level, specifically on that point. Is your hope the same that you will be able to work something out on this, or do you get the sense that your officials are meeting an intransigent UK official group? I will let officials comment on that specifically, but, as I said earlier, my experience on this has been sometimes when we engage at ministerial level, it resolves it and sometimes it doesn't, but until you have the conversation, it is difficult to know where the UK Government's position is on that. Very similar issue to the equivalent power on the procurement bill, so we are meeting with Cabinet Office and DIT officials on that. They understand our concerns, they are thinking about ways in which they could be resolved, but we don't yet have an agreement, so it may arise, it may not. So there is an interplay between this LCM and the one that we have just been considering on procurement. Although my colleagues might not want to dwell on the politics of this, there is an issue of not much gain but potential vulnerability to Scottish suppliers from this agreement, so the issue then is on procurement. To try and get that in a practical sense, clearly the UK Government is responsible for the trade agreements, but the broad powers that have been set out in the procurement bill may undermine Scottish suppliers potentially compared to, for example, their New Zealand counterparts in order to try and make sure that that kind of trade agreement is carried through. For example, if there are procurement powers given to the UK Government from the last bill, the procurement bill, on schools accessing lamb for their school meals, if there is a broad power for the UK Government in the procurement legislation, that could undermine what we might want to do in Scotland in ensuring that local authorities can access and be able to procure locally to help sustainability. I am trying to make this more real in terms of what the implications are. Nobody is disputing that the UK Government has the right to do the trade agreements and they may want to add subsequent ones into the legislation. The issue is the interplay with the broad powers of the procurement legislation, which is primarily at hand. Am I correct to my understanding, and if I am incorrect about procurement of Scottish produce for Scottish schools being undermined by the procurement legislation, please correct me? You are right in the sense that the trade deal, as agreed by the UK Government, enables much more produce to come in from New Zealand assure than currently, is the case on to the UK market. The concerns that we have on the procurement bill and on this bill is the broad range in powers that it gives to UK Government ministers within devolved areas, whether it is having to seek the consent of Scottish Government and Scottish ministers. That is the area of concern. What it does with that is an open question, but it opens that door and gives it the powers to operate in devolved areas. Just to answer that, the power in this bill is also a power to implement the Australian and New Zealand agreements as they may change in the future, which clearly we do not know what that might be. I am a generous—I do not expect the UK Government to undermine the Scottish supply chain, but the problem is that without our consent or monitoring of it and squishing of it, things could happen by accident or rather than design. We are the duty by in Parliament that should be scrutinising those things. Obviously, if they can do it for future legislation without it coming to us even just to check, that is the problem of the door being opened for unintended consequences. Is that a fairer representation of the situation? That is part of it. If you look back through the process for negotiation of trade deals, the paper that we published back in 2016, I think that it was how it highlighted, or shortly thereafter, how it highlighted how we saw Scottish Government-devolved administrations being involved in the definition, negotiation and implementation of those trade deals. The UK Government has been very unhelpful in working with us on those aspects. The opportunities for scrutiny of those deals are very limited. What that means is, as you said, that the deal could evolve and change and the implementation of it would be something that would therefore have to be taken forward. UK Government ministers, through this process, give themselves powers in that area that impinges on devolved aspects. A question is to be linked to Ms Hislops. The delegated powers and law reform committee have written to the UK Government. One of the questions is around clause 1, which is expected to be repealed once the procurement bill comes into force. Can you just say more about how those two interact? If we are spending all the time trying to get the changes in the Australia trade bill, what bits will be repealed? The procurement is the one that will remain, and it is likely to be aspects of that. Will that be repealed? Yes. The procurement bill, to some extent, will supersede this. Officials can talk to that in a minute, but it is the same concerns on both of them. It is the same concerns on both of them at this stage. It is so clear that we are not comfortable with either of them. Do you know when the timescale, if one is going to be repealed, what the timescales are attached to that, when the procurement bill will be the one that supersedes? The procurement bill is in the lords at the moment. I would expect that the Australia New Zealand bill will proceed on a faster timescale. There is a slight difference in the two powers. In relation to Australia and New Zealand, it allows for implementation of those agreements, which comes in two parts. It is the implementation of equal treatment obligations, and it is some minor amendments to the procedural rules for procurement. The plan that the UK Government has is that the procurement bill, when it is enacted, will repeal that power because it will no longer be needed. The alternative power in clause 83 of the procurement bill is a narrower power, and it only allows for the equal treatment obligations that does not allow for procedural rule changes. If there were rule changes required as a result of other international agreements, it would need primary legislation again. That underlines the point that is why we were not particularly clear why the power in this bill needed to cater for future changes to the Australia New Zealand bill when the plan is that it will be repealed possibly within a year. I suspect that it has already been covered, but it is part of your concern about precedent by getting that on the record. Even if it has subsequently changed a year down the road, it establishes a precedent and that precedent could be used for other potential disbenefits in similar trade deals, such as the GDP figures that you outlined at the start of your statement, minister? Yes. That has come before us to make a decision on legislative consent, and as it stands, we would not agree to it. If it gets up superseded by something else in the future, that is as it may be, but that does not mean that we would give consent just because it is not going to be around for very long, potentially. What are the devolved areas that you are concerned about? In procurement, because it allows UK Government ministers to have scope to make changes, as I have said, to the decisions that the Scottish Parliament, the Scottish Government acts or the Scottish Parliament regard to procurement. So it is just procurement? Are there broader implications as well, potentially? That bill was just procurement. Okay, any other questions? Nope, thank you. That brings us to the end of the evidence session on the LCM. I thank the minister and his officials for joining us this morning, and for coincidation of this LCM and the other LCMs that we have discussed. I will now propose that we make a slight change to the agenda. If members agree, we will move into private session for agenda item 8 before we open up again for our final panel of witnesses, if members are happy to do that.