 Fyffordd,IK. Welcome to the second meeting of 2022 of the Economy and Fair Work Committee. Colin Beaty has given his apologies for today's meeting, and we are joined by John Mason, who has healed us a substitute. I will just ask John, if he has any relevant interest, that he wishes to declare in relation to this meeting. Mr Mason, do you have any relevant interest that you wish to say? I am sorry, was that to me, convener? Sorry, I muster that. I don't know what happened. I have no relevant interest in the care. I welcome to joining us this morning. The first item of business is a decision to take items 4, 5 and 6 in private. Are members content to do so? I will now move on to the first item of business, which is an evidence session on the Scottish Government's 22-23 budget. The budget was published on 9 December 2021, together with a framework for a resource spending review and its medium-term financial strategy. The stage 1 debate on the budget is expected to take place next week. Today's evidence session will concentrate on the areas of the budget within the committee's remit. I welcome Kate Forbes, MSP, Cabinet Secretary for Finance and Economy. She is joined by Helena Gray, interim director of fair work, employability and skills, Richard Rawlison, director for international trade and investment and Kathleen Swift, who is head of economic directorate finance unit at the Scottish Government. As always, I ask members and witnesses to keep their questions and answers as concise as possible. I invite the cabinet secretary to make a short flow of publicity. Thank you very much, convener, and thanks to the committee for inviting me. In general terms, the finance and economy portfolio budget for next year provides £1.75 billion in total to strengthen Scotland's economic recovery, with a firm commitment to build a net zero while being an economy and to protect and create good quality jobs across Scotland. Obviously, overall, Scottish Government funding next year is significantly less compared to the current year, with Covid funding having been removed at a time when we undeniably need to invest in the economy and help public services to recover. I imagine that committee members will want to touch on the on-going Covid impact without necessarily having the Covid funding to cover it. We also have on-going challenges, which are presented by the EU exit to our labour market in particular. That means that there have been some really tough choices made in the budget, because the budget cannot deliver the resources that all of our partners need in full. The budget will invest £635 million across our enterprise agencies, the Scottish National Investment Bank, and Visit Scotland to support economic recovery and transformation. We are getting £124.6 million in total for employability support for those most impacted by Covid and contributing to our national mission to eradicate child poverty. That, hopefully, will help businesses to tackle the skills shortages that they are experiencing right now, particularly acutely. To accelerate the potential that digital tech has to make to the Scottish economy, we have allocated £192 million to improve connectivity and boost the digital economy. That is £48 million of an increase from this financial year, including targeted support for small and medium-sized businesses. Overall, those are just some of the headlines. The budget is progressive, but it is also transitional. As we are working towards finalising the 10-year national strategy for economic transformation, at the same time as doing all that we can to mitigate the immediate impact of Covid uncertainty to the economy. My last comment is that, alongside the budget, I have published a consultation on the resource spending review. It will publish a full resource spending review in May 2022. I would look forward to engaging with the committee in a way that suits the committee on that resource spending review, because it will be the first time in a number of years that we are able to embark on multi-year budgeting. I know that it has long been a request of this committee and others to provide certainty for our public bodies, as well as businesses and taxpayers. I thank the convener and I will hand back to you. I thank Ms Forbes for that statement. In your opening statement, you have mentioned the 10-year economic strategy and that you are working to finalise it. Obviously, we know that Scotland is lagging behind the overall UK in terms of economic growth. This morning, we saw increased figures around inflation and the pressures that it has put on the economy. Can you maybe outline why the 10-year strategy has been delayed and when we can expect to see the 10-year strategy? What are the challenges in responding? We are in quite a fluid situation. We have set out a long-term plan at this stage, where the ground is constantly shifting. I can appreciate how challenging that is. Can you indicate to us when we can expect to take it? Thanks, convener. I think that the way that you have phrased that question is particularly helpful, because you have instantly grasped some of the challenges that we face with having worked on a strategy for six months. I am quite pleased with what the strategy intends to achieve. It is clear in its objectives and evidence-based. It has been heavily informed by quite a remarkable council of advisers, as well as extensive consultation. Having said that, there are obviously quite acute risks of publishing a strategy at a time when businesses are quite rightly saying that there are challenges facing them just now, tomorrow, next week, without seeing Government investing significant time and attention in looking at what we should be doing in 10 years' time. That is one of the tensions. We have that tension in some of the other strategies that were due to be published before Christmas, including the retail strategy, because that is all focused on recovery. There is a particular tension there with publishing a strategy that is 10 years in length. Obviously, the strategy has to take into account not just the immediate impact of Covid, which we are well versed in, but also two other elements—some of the long-term structural challenges that were there pre-Covid and which will be there after Covid, perhaps in an exacerbated form, if we do not grapple with them, as well as trying to identify where Scotland can really grow over the next 10 years. This week alone, we have seen the pretty substantial and significant announcement on Scotland's wind. The opportunities for our supply chain are phenomenal, but I am of the view that economic success is never inevitable. It comes as a result of clear targets, clear approaches and working collaboratively with business. All that is to say that I would hope to be able to publish the strategy very soon. I would certainly be hoping to publish the strategy as soon as we are in a position of having emerged from the protections, which the First Minister announced the removal of many of them yesterday, so removing of the protections. When we are in a space, including the committee and the business community, we are in a space where we can contain that. I see that in a matter of weeks, not in a matter of months. That is helpful. The committee had hoped to see it before Christmas, but I appreciate the reason that it is outlined for delay, but we would hope to see it as soon as possible. I will move on to some questions about the tourism budget that comes under the committee's remit, which is also within your responsibilities. As you will know, the committee recommended that the Scottish Government looked to meet the ambition set out in the third proposals for the phase 2 of the tourism recovery programme. In the document for the tourism recovery programme, Ivan McKee is the minister who provides the forward. He says that the phase 2 recovery proposals have the potential to deliver greater green-out and fairer prosperity for Scotland. There is an endorsement in the two-year recovery recommendations document from the Government, but there has been no progress on funding. There has been no additional resource put in a toll at this stage for the phase 2 delivery of the recovery fund. You have given an explanation of consequentials, because that is what the 25 million that was originally came from, but other areas have recognised the importance of employability and some other areas where you have put in resource. Why has this area not received any additional funding? You are right in saying that the initial £25 million during this financial year was from Covid consequentials. That goes to the heart of comments that I made in my opening remarks about the difficult choices in the budget. There are some difficult choices that I am not shying away from in terms of where we prioritise funding. One of the areas across the board is areas where previously they were funded by Covid consequentials. We have had to determine whether or not those can be absorbed in our budget. I have engaged with representatives of the group and we have not withdrawn our support for the recommendations in the STERG report. We have previously accepted the recommendations. I would very much like to see us being able to progress those recommendations. I am working with VisitScotland and others to see how we might do it. The door is not closed on trying to progress it with financial support, but on the face of the budget, we have not identified a specific ring-fence pot of money to progress those recommendations. I have obviously been in conversation with the tourism industry quite intensively over the last month or so. I think that there is an opportunity, particularly once all protections are removed and tourism can, as it were, function fully in and trade normally. There is a real appetite to then focus back on recovery. I would like us to see if there is more that we can do around the finances to ensure that we can progress some of those early points. One last comment. Obviously, what the tourism industry is citing right now is the real need to invest in confidence. That comes from marketing internationally as well as locally. The reason that we have been perhaps holding off on our commitment to invest in a big marketing campaign is just the uncertainties of the time that we are living in, particularly when it comes to international visitors. There is still a commitment to do that when the time is right and certainly the door is not closed in terms of identifying additional support, but it probably will need to be in year rather than on the face of the budget. You mentioned marketing, and I see that VisitScotland's had a real-term reduction to its resource budget in the coming year, which is of concern as there they made marketing body. I know that a number of members would like to come in on that issue, so I will call Fiona Hyslop to be followed by Jamie Halcro Johnston. Good morning, Cabinet Secretary. I also want to focus in on tourism. I will follow up a bit on what you said about the tourism emergency recovery funds recommendations. Can you tell us how much you have calculated their ask for funding? Bear in mind that this is a budget for 2020-23, that any spend on phase 2 of the tourism recovery plan is not just for this summer in terms of attracting visitors and giving confidence, but for next summer as well. If the clear indication is that they need confidence from the sector, not putting this on the face of the bill, it has an impact. How much do you think that phase 2 would cost? If you are committed to it but you cannot put it on the budget at this stage and you want to do it during any year between 2022-23, how much do you think that might be? In terms of phase 2 and the overall cost, it is challenging to put a specific figure on it at this point in time. In terms of each recommendation, there is a moveable feast, as it were, of what we could do. When it comes to some of the recommendations, I will see if any officials want to come in on fleshing this out further, but in terms of the recommendations, for example, embarking on a marketing campaign, I would like that to be as impactful as possible. In terms of the recommendation, the recommendation is to invest in that. We do not have a specific figure. The figures that we are using right now generally are about £25 million of resource and £24 million of capital, but I caveat that by saying that we will obviously identify funding for the recommendations as they are required in light of the particular pressures. If you take one other example, which I know Fiona Hyslop will know well in terms of the skills agenda, there is probably, again, an unlimited requirement for investing in reskilling and upskilling within tourism. Although funding will be identified for that, it needs to reflect the particular point in time. In terms of giving confidence, I take that point that, where there is not something on the face of the budget, it raises questions. That is why it is really important that that on-going engagement continues with Sterg, so that they are conscious of our commitment to continue to progress those commitments and that we are willing to work with them as and when those recommendations are required as part of recovery. That has started over the Christmas period, even though the tourism industry has been focused on the immediate challenges. Obviously, there is still financial support available in the budget for tourism more generally, so that is not about investing in tourism. That is specifically about the Sterg proposals. I will stop there. I think that there was a second part to your question, which I am afraid of temporarily not quite recalled. It is okay. I would like to move on, if that is okay. I would reflect that if you are thinking about £24 million for resource or £25 million for capital for a phase 2, that would always be the equivalent of the whole budget for the whole of tourism that you have in the face of the bill. It is not an insubstantial amount to be missing from the budget just now, but I think that people will take comfort from the comments that you have made, particularly in the tourism sector. On the actual budget that was before, the resource budget for Visit Scotland is flatlined. The capital has reduced, but we know that Visit Scotland's refurbishments have been taking place. Can you give assurance that the real tourism infrastructure fund, which you know that I have got keen interest in, is not going to be reduced as a result of the capital reduction? Therefore, that just leaves the tourism special project as being the major reduction in the tourism line. That is in relation to recovery, and you have explained that. Can you give reassurance on the capital for impact for communities that the real tourism infrastructure fund will be protected? Can you also comment on the fact that the phase 2, as you have indicated, may double the tourism budget that is currently on the face of the film, if and when you can get resources for it? Fiona Hyslop will know that the real tourism infrastructure fund is close to her heart and is extremely close to my heart, considering my constituency interests, which have significantly benefited from the fund that she announced. It was a very pioneering fund at the time and has just unlocked huge amounts of economic potential in some of the more remote and rural areas. It was a forward-looking initiative, which I still thank her. It is absolutely committed to art. Just on VisitScotland's overall budget, it has returned to pre-Covid levels. Obviously, during the comparison for all the public bodies, what I would encourage committee to do is look at the pre-Covid position where we have stripped out Covid consequentials. There was quite a significant amount of Covid consequentials in the VisitScotland budget. I do not for a minute argue that there is not an on-going Covid impact, but I do not have Covid consequentials in any part of my budget, because there is no Covid consequentials from the UK Government as it were sitting separately. That is the position for VisitScotland. We have done all that we can to protect the key enterprise bodies, including VisitScotland's budget. I pass back to the convener. Thank you very much, cabinet secretary. Thank you. I will bring in Jamie Halcro Johnston to be followed by a call. Thank you very much. I have a couple of more general questions. I will try to get through them very quickly. As has been mentioned, VisitScotland's budget has been highlighted by COSLA on local authority budgets. Given the importance of tourism to the region that I represent in your constituency, what concerns do you have over the impact of the cuts across the islands and islands? Well, I would argue that those are not cuts. I would argue quite strongly that we have protected particularly the enterprise agencies. For example, let me take Highlands and Islands Enterprise. We have protected Highlands and Islands Enterprise's budget. Its spending power has been maintained. I know that there was some dispute in the press about High's budget falling. That relates to non-cash allocation. That is about budget recovery for depreciation of assets and accounting standards. That is not about its spending power. That was based on what HIE identified it needed to cover that non-cash basis. In terms of High's budget, that budget has been protected. I have already talked about VisitScotland's budget being protected. He also referenced local authorities. I know that there is a debate later on tonight or this afternoon, which will allow us all to hear the issues that we have protected the local government budget. The point that I would concede is that protecting in flash-cash terms obviously does not take into account the very significant challenges around inflation. We saw this morning the announcement that last month inflation CPI rose to 5.4 per cent. That is significant and substantial. I cannot inflation proof any part of the budget, because my own budget is not inflation proof and these are challenging times. On top of that, I am not going to go into details right now, but I could cite the city growth deals for Murray, for Inverness, for the Highlands and for the islands, all of which are contributing to economic development in one of the best bits of Scotland. I certainly agree with you on that, although I might dispute the comments. Are you finished, Jamie Halcro Johnston? Yes, please, if you want to continue, your connection is a bit pure, but I think that we can continue. I think that we can hear you well enough. Okay, so I had another couple of questions, convener. I don't know if you want to keep those to the end or for me to deal with those now. If you want that to end, go ahead, if you can keep it brief, but go ahead. I will do, thanks very much. I just wanted to clarify a couple of points or ask for clarification from the cabinet secretary. On representing border, you suggested that you have allocated every penny of the budget and it is a fixed budget, and so you cannot create more money overnight. Around £100 million of funding was found from what you called existing budgets for business support. Can I ask which budget lines came out of that £100 million? I know that Jamie Halcro Johnston will know, but that question relates to this year's budget, rather than next year's budget, which is what we are taking evidence on right now. That budget—I think that the First Minister has been quite open about that—was largely identified from—there is an overall £3.7 million, £200 million that the Scottish Government has identified, but I take that £200 million largely from health consequentials. There is obviously a health implication of us keeping Covid transmission low, and to do that, we need to compensate businesses for being closed. There is a health element to that. On how we manage budgets, particularly in the run-up to the end of the year, we are obviously trying to ensure that every part of the Scottish Government's budget comes in on balance, on budget, and so there is an intensive piece of work going on right now with managing every budget line. Within that, we have identified funding just across the board, so I cannot go through a list with you right now beyond citing the health consequentials, where we are trying to manage that £100 million impact across the board. It will not impact its specific lines that I can reference right now beyond health, because it is just the nature of our budget management. I understand that I have been put on audio only, which is probably a blessed relief to the public and everybody else there. Can I just ask the last question? The bonnet consequential funding, which has come to help allay national insurance costs, has not been passed on to local authorities as it has been south of the border. Can you confirm that as a case and what the reasons are behind that? It is really important to understand that, within our budget that we receive, we do not get, for example, a ring-fenced fund for national insurance contributions from the UK Government. We get our overall budget, which has been well scrutinised. SFC talks about it being down 5.2 per cent in real terms versus this year's budget. We get an overall pot and, within that pot, we allocate the funding. We have therefore done that. We have identified funding for local authorities, funding for other parts of the public sector. There has not been a specific ring-fenced funding for any part of the public sector. I know that people are citing to me NHS getting additional money for national insurance contributions in Scotland. That is not true. I provide the health budget. Within the health budget, there is a responsibility for that funding to be divvied up. It is entirely up to the relevant cabinet secretary and the chief exec and so on to identify how they do that. They have identified funding within that overall pot for national insurance contributions, which any other part of the public sector could do. It is the same challenge for some of the public bodies that we have just been discussing, from high to Visit Scotland and so on and so forth. They, too, are willing to manage national insurance contributions, which is, essentially, an inflationary impact. I am sorry, but I will clarify. You are suggesting that it has been passed on, but it has been passed on in general budget terms rather than, as you say, ring-fenced or specifically? I am suggesting that, from within our overall budget that we receive from the UK Government, which does not have a specific line identifying national insurance contributions, I cannot tell you how much money has been or has not been given by the UK Government for national insurance contributions. I can only tell you what the overall pot is, so I cannot tell you where there has been movement. Although it is a technical tangent, that is because this year is a spending review. In normal years, you would get all the identified lines of where there are rises and where there are falls in budgets. This year is a spending review budget, so we just get the overall pot. We do not get things divvied up. As part of that, I have sought to protect the local government budget in cash terms, the core budget, and that is significantly supplemented by funding for social care and funding for education to name just two areas of pressure that local government has cited. Colin Smyth, who will be followed by Gordon MacDonald. Thank you very much, convener, and good morning, cabinet secretary. Can I return to the issue of support for enterprise agency? Cabinet secretary, you said that you are protecting funding for enterprise agencies, but real-terms cuts are not really protecting. The revenue budget for Scottish enterprises is pretty much flatlining in real terms compared to last year. As you admit, as inflation rises, that becomes a cut. Highlands rise enterprise overall budget is being reduced in real terms, and that includes day-to-day revenue spending, not just capital spending. The budget for skills development in Scotland is being cut by £5 million in real terms alone, and we do not see any stimulus for our struggling high streets. Given the scale of the economic challenges that we face, surely that would have been a year not just to tread water when it comes to economic support, but to boost the budgets for our enterprise agencies and SDS. It sounds like Colin Smyth and I are on the same page, because it is entirely because of the huge economic challenges that we face that the total allocation across the three enterprise agencies—Scotland Enterprise, Highlands and Islands Enterprise and South Scotland Enterprise—is the highest that it has been since 2010. In terms of the overall budget, this year we have not just protected the enterprise agency's budgets, but I have ensured that there is funding to help them to respond to the economic challenges that we face. I have discussed the budget allocation with each agency's chair and chief executive, and they are planning their business activity right now. We are also, obviously, fully funding the FT requirements for the Scottish National Investment Bank. I do not think that you can get away from the fact that the enterprise agencies have not just been protected, but that there is funding in place to help them to respond. The two points that you talked about are cut to HIE and South Scotland Enterprise. The only change—there are two changes to their budgets. One is removing the ring-fenced Covid funding, which I have explained already, but the second is the not-in-cash element that seems to be dominating discussions. Non-cash funding is not spending power. It is just to cover depreciation and accounting standards, and it is determined by what the enterprise agency tells me that they need. That is where there is fluctuation, particularly for HIE and South Scotland. Incidentally, Scottish Enterprise's non-cash allocation has gone up significantly because of the need to cover some of the issues that are not about spending power. I want to clarify how, effectively, freezing the revenue budget when we have got inflation over 5 per cent is somehow protecting the budget of enterprise agencies. The Scottish Fiscal Commission recently warned that the Scottish economy is lagging behind the rest of the UK compared to pre-pandemic levels, GDP, employment and earnings, which are all recovering more slowly than the rest of the UK. CBI Scotland said that Scotland is lagging behind other parts of the UK. Nine of the 13 productivity indicators—surely it is not about a real-terms revenue reduction for enterprise agencies. Why are we not increasing that in real terms in the year ahead? Does that not impact at all? The fact that the Scottish economy is lagging behind the rest of the UK and the key indicators that your Fiscal Commission highlights? I will give the figures again. The investment of £370.5 million for next year is an increase of almost 7 per cent for the enterprise agencies from this year. What I find startling about this conversation is that, in a budget with lots and lots of difficult choices, the enterprise agencies have been protected. I understand the focus scrutiny on the enterprise agencies but we have already talked about some of the difficult choices that we have had to make. Those difficult choices are largely as a result of what I have prioritised funding. I have prioritised funding for the enterprise agencies for the bank in order to deal with and tackle some of the economic challenges. I understand the scrutiny but this is an area where the enterprise agencies have received what they need. My bottom line is that, if he thinks that enterprise agencies should receive more than what has been allocated, then tell me where in the portfolio to take it from because there are other areas that are probably facing greater challenges than the enterprise agency's budgets. Just to find out why Scotland's economy is on all the key indicators that the Fiscal Commission flag up lagging behind the rest of the UK if it is not funding for enterprise agencies? I can go into that in great detail but anybody who suggests the structural challenges in the Scottish economy are entirely the result of budget decisions for the enterprise agencies. It is missing the point in the SFC's evidence and many other commentators' evidence. There are a number of challenges. If I take productivity as one obvious example, productivity, although it has increased in Scotland over the past decade and a bit, it still lags behind. We need to look at more significant investment in business investment, private sector investment and public sector investment in businesses. We need to ensure that we are tackling the skills challenges and making sure that we are dealing with trying to reduce economic inactivity. There are a whole host of different areas around productivity and growth. Perhaps there is a dependency on particular sectors in the economy in which, when they take a hit, particularly oil and gas over the Covid period, there is a disproportionate impact on the Scottish economy compared with other parts of the UK. We could probably spend an entire evidence session on what some of the structural challenges are and what some of the opportunities are, but I suggest that the entirety of the structural challenges are purely linked with the enterprise agency's budgets, which is probably short-sighted. Okay, thank you. I will now bring in Gordon MacDonald to be followed by Michelle Thomas. Thanks very much, convener. Just to continue the conversation on enterprise agencies, cabinet secretary, you have talked about the highest budget in recent years, and it has increased by 7 per cent. Do you see anything about other revenue streams that are available to enterprise agencies? I am thinking about investment income and so on. How would the £370 million that is the baseline investment into the enterprise that is being used to support economic recovery, especially coming out of the pandemic? Yes, it is a really good point. Gordon MacDonald will know that the enterprise agencies, perhaps South of Scotland less so, because it is fairly new, have their own revenue streams. They have their own portfolios that they manage and that supplement their budget position. What we are discussing right now is what is allocated by the Scottish Government. The agencies are constantly on a journey of trying to improve the way that they operate, improve the way that they support businesses and create greater business and community resilience, protect and create jobs and deliver a fair and green economy. One thing that I am clear on is that when the economic strategy is published and it will be published soon, it galvanises and provides clarity to what the enterprise agencies should be doing. I am of the view that we cannot do everything as an economy. We need to identify what our strengths are, we need to back those strengths and ensure that we have competitive international advantages rather than trying to do everything moderately well. You will have seen that the enterprise agencies have developed their own performance management frameworks and are working together to make sure that they are better aligned. Their annual business plans, which are approved by Scottish Government ministers, set out their commitment to meeting agreed targets and milestones. Every penny that is spent has got to deliver benefit to the Scottish economy. Every penny that is spent on enterprise agencies has got to deliver that benefit to the Scottish economy. I want to see the enterprise agencies performing as well as possible and being clear in their ambitions and their approach. I do not know whether the member would like me to bring in Richard Rawlsson as an example to speak of some of the other things that he is doing, but otherwise I have probably covered it. That would be helpful just to further expand on how we are going to get out of this economic recovery. As Ms Forbes said, that is probably a whole committee to pick up on. Ms Forbes has a point about particularly the revenue generation of Scottish Enterprise and, to an extent, the other enterprise agencies. Scottish Enterprise, as the committee will know, has an investment portfolio that, over the years, delivers returns, which it then invests back into the economy, economic growth, business support, net zero and all those things. All of the enterprise agencies have a little bit of a property portfolio that delivers some revenue, so that income adds to the grant funding that the Government provides to help and support the economy. The detail of the income that she has set out in her annual accounts. I believe that it was in the region of £56 million last year, was that correct? I am not sure of the precise figure, Ms McDonald, but it was pretty significant from some historic investments. We can come back to you on that. How do we go about measuring the impact of the enterprise agencies' activities in particular in relation to that national performance framework? That is a hugely important question. In terms of that measurement, it is two-part. What they do now is what I would like them to do. What they do right now is obviously develop performance management frameworks. Those are published with annual business plans and are approved by ministers. We monitor the delivery through the agency's boards and also through regular discussions with me and Ivan McKee, and they formally report on progress in the annual report and account. That is some of their internal and external reporting on performance. What I would like us to do after the economic strategy is published is be crystal clear. Without pre-announcing the national strategy, there are five aims and objectives within that strategy. Those all relate to areas in which the Scottish economy either has big opportunities or needs to deal with some of the structural challenges. I have already referenced productivity. There is also a big opportunity in terms of some of the new markets and new growth opportunities, including the energy transition. There are also areas in which we have the skills challenges and ensuring that we have a skilled population for the jobs that are available and then dealing with some of the structural inequalities. That is a quick overrun. I think that the enterprise agencies and other public bodies that have an interest in Scottish economic growth should all be held responsible, as I will be held responsible for delivering against those objectives. The national strategy will also include a real hard look at the delivery mechanisms or having a ruthless focus on delivering a stick change against those five objectives. I have told you how they are published right now, how they monitor progress right now, ultimately. That is where perhaps I will go back to Colin Smith and agree in part with him that the enterprise agencies need to deliver, as I do, and other public bodies need to deliver when it comes to economic activity and economic prosperity. That is where accountability should be. I move on to Michelle Thomson to be followed by Maggie Chapman. Good morning, cabinet secretary. Thank you for joining us today. There are only a couple of areas that I want to explore. I will try to be quick so that all the members can get in. The first one is about women in business. The committee has discussed this a number of times. The first time that it came up was when I asked what I thought was quite a simple question to one of the business development agencies, which was to what extent did they routinely disaggregate their data for all business services by gender. After some humming and hollowing, the answer came back. Well, no, they did not really. I noticed in your response to the committee that you talked that pret work is being undertaken now to establish the actions that are needed to overcome and ultimately remove barriers to participation for women business. One, can you give me a bit more flavour of that? Two, what consideration has been given to putting conditionality in grant funding at some point in the future? And three, around how this data collection and perhaps conditionality might work in public procurement. I appreciate its very early days for the work that you are doing at the moment, so it is just a flavour that I am looking for. Thanks, there is a lot in there. I did note the committee's recommendation in terms of some of the points that the member has raised. From a Scottish Government perspective, we absolutely want to see more data published on a disaggregated basis. We cannot deliver change unless we understand what the problem is and the problems can only be understood if you have the data. We absolutely need to understand the data. I think that there has been some good work that has gone in in terms of what the Scottish Government has paid for or invested in in studies and information that is provided on gender disaggregation, but we need to do more. We are planning right now on how we can capture and publish more information, particularly on gender, for future published analysis on businesses and their employees. It is perhaps an area where I would like to come back to the committee and perhaps take your views on how we can do that as effectively as possible. We are also working right now on how we can capture data on women-owned businesses in their participation in public procurement going forward. There is just an example of one specific issue. I will let you come back in. Sorry about that. There is also a role for the private sector in getting them to change their behaviour, given that we know that only 1 per cent of private equity funding goes to female led businesses and 99 per cent to male led businesses. I also want to talk about the Scottish National Investment Bank, which I am very interested in. Given that the Scottish Government—some people are not clear about it—has no control over most regulations around property and labour markets, the international migration regime and overall macro-monitory policy, one of the key areas where the Scottish Government can really make a difference is—I am glad to see that happening—the protection of funding for SNP after the withdrawal of FTs. Despite that, the chair said in November that she would still like to be able to raise third-party funds. I am wondering whether you have given any consideration for this, because the impact of the CPI at 5.4 per cent today—and probably only going to get higher—will make a difference to the difference that it can make. I suppose that my question to be clear is, have you given any further thought as to whether SNP can raise money, private sources of funds as well, or are you constrained in any way by allowing that to happen? No, it absolutely needs to happen. I think that I would like to see and I would like to work with the Scottish National Investment Bank to enable them to raise third-party funds. You will know that there is a process there, which they are currently undergoing as part of becoming FCA regulated. That is quite a key stepping stone on the road to being able to raise third-party funds and manage third-party funds. There is a journey there. The chair said a few months ago, and I think that it was somewhat taken out of context, but he said that £2 billion of overall capitalisation was never enough to meet huge opportunities. I actually agree, and it was never ever intended that the bank would only manage £2 billion. The point was that it would be able to leverage and crowd in additional funding, and that is where we need to end up. Okay, thank you for that clarification. That is me, convener. Thank you. Maggie Chapman, followed by John Mason. Thank you very much, Claire. Good morning, Cabinet Secretary. Thank you for what you have said so far and the information that you have provided. I want to ask a little bit about some of the employability and skills issues. Could you give us an update on how the youth guarantee is going and how successful it has been, particularly in reaching young people that have been affected and quite dramatically impacted by the pandemic, and how we can ensure that we continue to see the support for young people not only through the pandemic but beyond that as well? Yes, absolutely. I will perhaps focus on the young person's guarantee specifically. Helena on the call will probably be able to provide a bit more information, but we have allocated funding to the young person's guarantee. I think that it is progressing well, to be honest. We are working well with partners. We are working well with the private sector and, indeed, public sector employers to ensure that there are opportunities for young people. We were quite concerned that, in the early parts of the pandemic, there would be a significant impact on young people's employability. Substantial funding has been made available. The ambitions have not changed and it is progressing well. I am not going to over speak right now, because I wonder if Helena Gray could come in and perhaps flash that out? Yes, of course. I am delighted to address specifically the point around monitoring and evaluation. We are developing a measurement and evaluation framework to support our understanding of the young person's guarantee. We have developed a three-year evaluation plan in collaboration with our partners. That evaluation plan covers three key themes around employability services, employer engagement and education initiatives. An annual participation statistics published at the end of August highlight that the proportion of 16 to 19-year-olds participating in education training or employment in 2021 is 92.2 per cent, which is a slight increase. Of course, we continue to develop our evaluation plans and we are continuing to monitor those areas really closely. I will give a couple of the headline stats there. Helena, that is helpful. As a linked issue, you have given us the very clear context of the pandemic and the other issues that we are dealing with. You have spoken about the support needed for businesses and the need for excellence in what we do, not having mediocrity across the board. You also said that you are making sure that our citizens and people in our communities are ready for the labour market. Of course, the labour market is not an end in itself. It is there to tackle some of the challenges, the structural inequalities that you mentioned will be included in the economic strategy. However, I was wondering whether you could give us a little bit more information about the pace of change and how we deliver on the pace of change that we need to see around fair work and conditionality. Not only in areas of fair work but in areas of wellbeing, because, if the economy does not create happy, healthy communities, one measure of the economy could be argued to be failing. A question about fair work and conditionality and the pace of change, are we getting that balance right? We could always move faster, particularly on fair work. I am very conscious of not just the moral imperatives but the economic imperatives. A healthy, thriving economy with an ample supply of skills requires fair work to be embedded in everything that we do. If somebody in work is still in poverty, we have a problem. We are not tackling child poverty, we are not meeting our objectives on child poverty and, at the same time, I do not think that skills interventions are meeting the mark. We could always move faster. On the fair work side, we are making significant progress on conditionality and ensuring that it is embedded in everything that we do. Public sector grants, for example, are the requirement to pay at least the real living wage. You will know that we have real limits when it comes to employability and law, so we are using things such as conditionality instead of that. There is another side to this, which you talked about even once people get into the labour market—that is not enough. The other side of this is how we help people to get into the labour market. There is a budget point here, which is—I need to say this carefully—very budget intensive to help to prepare somebody for the labour market, who has perhaps not been participating in the labour market for not just years but sometimes decades. You will know about our scheme, no one left behind the long-term unemployed scheme, where there is substantial investment there, but £20 million helps probably 2,000 fair work opportunities and there are more than 2,000 people who need those opportunities. That is financially intensive for good reason. I think that there is a question for all of us about how we prioritise substantial sums of money in trying to tackle economic inactivity, while at the same time recognising that we cannot just leave people once we have done a scheme for a year. I will ask a brief supplementary. The committee's recommendations to the Government talk about the need to encourage employers to invest and the employees to develop the skills base. While you have talked about employability programmes, the committee has evidenced that, while businesses are experiencing labour shortages, the skills gap is pressing an issue. Is there a budget line that is looking to address the skills gap, which would help our productivity levels and our sluggish economic growth? In terms of responsibility, overall falls within my own budget, but I would say that the primary ministers responsible would be Jamie Hepburn, who is responsible for skills, as well as Richard Lochhead, who is looking at fair work elements and who has worked together closely. In terms of budget lines, I wonder whether I could go through a list of the national transition training fund and no one left behind. I could tell you about all the different things that the public sector is doing. I am spending money, but what you are asking is where are employers spending money, and I think that we need to make it as easy as possible. Or what government could do to incentivise employers to make that kind of investment? One way of doing that is applying fair work conditionality. For example, if you cannot access a grant unless you are investing in your employees, there is an incentive to invest in your employees. If you cannot get a public contract unless you are investing in your employees, there is an incentive. I would say that the primary way of incentives are through conditionality, and we are trying to embed conditionality in all forms of business support. Thank you so much, convener. As the cabinet secretary probably knows, I am a substitute member today, so I am not quite so familiar with all the work that the committee has been doing. To follow in the subject of conditionality—presumably that a lot of that is Scottish Enterprise, HIE and South of Scotland—in who they invest in, and Maggie Chapman talks about wellbeing and fair work, does that apply to net zero, too, that grants and conditionality will be linked to recipients of businesses being committed to net zero? At the moment, the straightforward answer is that we are embedding the programme for Government commitment, which is that, by the summer of 2022, we will introduce a requirement on public sector grants to pay at least the real living wage. The focus is on fair work right now. I am sure that many people would like to see us expand on that conditionality. There is a tension there, because if you have too many requirements, too many conditions attached, then that is quite a lot of hoops for businesses to jump through at a time when we are keen that businesses have access to support to grow and develop. It is less clear-cut in terms of the definition of net zero, which is not in any way to underplay it. We have had those discussions with businesses that need support, but at the moment, the requirement is on the real living wage. I take the point that we do not want to have too many hoops for everybody to have to jump through. I was previously on the economy committee, and at that time we felt that Scottish Enterprise and HIE, because it was just the two of them, were solely focused on the number of jobs that they could attract. Michelle Thomson was talking about attracting women and things that were almost on their radar. Do you think that there is an attitude change? Do you think that now Scottish Enterprise and HIE can get it? I think that they do. I think that they increasingly get it. My sincere hope is that, again, if we take the approach that one strategy is published, that becomes a defining mission. There is a lot in there about dealing with structural inequalities around participation, as well as the benefits of a thriving economy. Enterprise agencies are getting there. It is a more nuanced approach. Quite clearly, Enterprise agencies are leading the charge on things like net zero, just to go back to the previous question. They have expanded their approach. The third and final point that I wanted to raise was that I saw in the committee letter to the Government in the Government response a question about ownership and co-operatives and so on. Obviously, the committee would feel and I would agree that co-operatives can be a very good model. It keeps decision making in the local communities, less likely to be taken over all that kind of thing. Is the Government investing in co-operatives and how does it see that mixed model of ownership? Absolutely. The primary way that we do that is working through Cooperative Development Scotland and the Enterprise agencies to support the growth of co-operatives and other alternative business models. It is very much on our radar and we have the mechanisms to work with and invest in alternative business models. We do not seem to have quite as many co-operatives and things as some other countries. We tend to look at the Nordic countries, Denmark and so on. Do you think that we can make progress in that area? I think that we can. It does go hand in hand with some of the other work that we are doing around things such as community wealth building. Just thinking about the economic opportunities that sit outside your traditional company house-registered business of the last few years, I think that there are alternatives there. We certainly want to continue working with Cooperative Development Scotland and the Enterprise agencies to support those. I think that we have the target that will be 300 employee-owned businesses by 2030, I think. We are making slow progress towards that, but are there interim targets to try to drive that change? Is the work of Cooperative Development Scotland, which is delivered by Enterprise, a mainstreamed across Scottish Enterprise? Is it always an option that is considered when they are looking to support a business that you could change into employee ownership or Cooperative Model? I am not conscious of an interim target. I can pause there to see if officials want to correct me on that, but I am not conscious of an interim target. We can get back to you on that. In terms of mainstreaming, I think that we are actively—I think that I may have responded to the committee's recommendation in this regard, so forgive me if I am repeating myself—we do promote the Cooperative Model. It is not just about supporting those who proactively seek support, but how do we promote the model? How do we provide advice and information to those that are considering it and providing training when it comes to cooperative business skills? Again, if the committee has ideas of alternative models to mainstream this activity further, I would be open to that. It is probably more that we can do in order to ensure that we meet that target. That is helpful. Thank you. Alexander Burnett. Thank you, convener. Good morning, cabinet secretary. A question on broadband. A number of constituents and private installers have been contacting me over the voucher scheme, but it is not working properly and they are not getting any indication from the self of when this is going to be resolved. It is also clear that the value of the voucher scheme is not going to address installation costs particularly in rural areas. I know that your constituency will fall into that. I would be grateful if you could provide an up-comment on those points and provide an update on the timelines of the completion of the R100. On the voucher scheme specifically, we have extended the deadline for the voucher scheme, understanding some of the challenges for businesses. In terms of the overall value of it, the value is determined by whether or not a household or a business property is likely to get access to commercial builds or R100 builds. The voucher is less for those who are in scope, so that might come into it, but the deadline has been delivered. In terms of overall contract delivery dates, the member is probably more interested in the R100 north contract, and that is expected to be built by the year 2026-27. Obviously, the years for the central lot and for the south lot are earlier, for obvious reasons being that it is the more remote and rural areas that will require more investment and will take longer. Will you review the value of the voucher scheme or the value of the voucher that is available? Probably not, unless there is substantial evidence that either the member can provide me with or others can provide me with, in terms of the disconnect between the overall cost and the voucher scheme. Obviously, the voucher scheme is also supplemented by UK Government vouchers, so that takes the overall pot available to more, but it is determined by whether or not a business is in scope for R100 or not. If the member is referring to those who are in scope, it is much harder to justify because they will ultimately get broadband by appreciating the one that is earlier, which is absolutely understandable. Those who are not in scope, that would be where I would have bigger concerns. If those who are not in scope and are not getting, as it were, the overall cost covered, that is where I would have perhaps a bigger concern. Thank you. I will certainly forward examples of the disconnect between the scheme and the cost of insulation. I have a second question to a slightly different one. On the register to Scotland, the budget is down 25 per cent for the 21-22 year. I wonder if you could give some reasoning behind this when it appears that the registration process is behind target, but particularly for local authorities, which I do not think have really started the process. I would like my register of interest around the property. Two points on that. One is that the register of Scotland had received quite significant Covid consequential funding this year. As part of the £639 million of Covid consequential of the register of Scotland, if I remember correctly, it has got £14 million, and if I am incorrect on that, I will come back to you. That is probably one area. The second area is that the reason why it has got substantial financial support is because it raised income. The way in which the register of Scotland budget operates has raised income, and I have been assured that it can still deliver the services in the budget that has been allocated. I will ask one final question, which is more for clarity. Cabinet Secretary, does she expect the medium-term financial strategy to divert to its normal publication date of May in 2022? In terms of future timetables, my intention would be to publish as following the UK spring statement at least four weeks prior to summer recess. If we are unable to meet that deadline for reasons outwith my control, the normal process is to consult with the finance and public administration committee, and we would certainly make sure that the committee was cited on that, but that is certainly my intended timetable for May. That is helpful. That brings us to the end of the evidence session. I thank the cabinet secretary and the officials for answering our questions this morning. I will now move to the next item of business. I will suspend briefly to allow for a change of witnesses. The next item of business this morning is a further evidence session on the subsidy control bill, which is a piece of UK Parliament legislation. The provisions in this bill cover the whole of the UK and the impact on areas that are devolved to the Scottish Parliament and on the executive competence of the Scottish ministers. The bill continues its passage through Westminster, and I understand that it started second reading in the Lord's day. The bill establishes a domestic subsidy control regime for the UK following exit from the EU and provides a legal framework for public authorities to make subsidy decisions. The committee is required to consider and report on the Scottish Government's legislative consent memorandum, and the Scottish Government is not recommending that the Scottish Parliament gives its consent to the bill in its current form. The committee took evidence last week and had a number of issues to follow up on and asked the minister about this morning. I welcome Ivan McKee, MSP, Minister for Business, Trade, Tourism and Enterprise. He is joined by Hilary Pierce, who is head of European structural funds and the subsidy control division, as well as Jen Willoughby, who is head of the national and international regulatory alignment unit. As always, I ask witnesses and members to keep questions and answers as concise as possible, and I invite the minister to make a short opening statement. Thank you, convener, and good morning to you and the committee. Thank you for the opportunity to set the views of the Scottish ministers on the proposed legislation. I look forward to taking questions before I just like to make a few brief remarks to outline my key concerns. First, the case-specific sweeping powers of the sector of state ignoring the devolution settlement and the risk of UK ministers intervening without proper consultation or knowledge of local circumstances in devolved areas is a concern. Secondly, the absence of formal regulatory and enforcement arrangements that can undermine the confidence in the process and grant awarding bodies and potential recipients and hinder their ability to make awards, as they had done previously. Thirdly, the inclusion of agriculture in the provision. We believe that it should not be included for many good reasons. Fourthly, as we are talking about the time periods involved, particularly the fact that interested parties only have a one-month appeal to any decisions. Lastly, and much of the provision remains unclear even at this stage due to the absence of draft. Ordinal legislation and detailed guidance in the absence of such detail makes it difficult to take a considered view and notwithstanding concerns of principle makes it difficult to give consent in that regard as well. Those are my brief outline of my concerns, convener, and I look forward to taking questions from the committee. First of all, if you are still in discussions with the UK Government, I know that we are at the lighter stages of the bill making its way through Westminster, but are there any possible amendments that you could see coming forward before the bill's conclusion? We are still in discussions. I met Paul Scully at the end of last week, along with Marnie Gougeon, the Cabinet Secretary for Rural Affairs, and we went through the issues that I have just outlined. We did not reach any agreement. We shared our concerns again, as we have done in many occasions previously, and the officials continued to discuss them on a regular basis, but, unfortunately, without reaching a conclusion on those important issues. I appreciate the tensions and frustration that has been built up around the legislation. The evidence that we took last week—I asked the panel about that—suggests that some of the areas that the Government has called for in Scotland, such as the ability to veto, would be unworkable and unrealistic. The UK Government would argue that it will make interest in the best issues of the UK and that it would take Scottish interest in decrysidiation. Is your consent around that through a lack of clarity in the bill? Is there a sense that there is a distrust of the UK Government on those statements that they have made? Do you seek assurances that they will behave in the way that they have outlined when it comes to decrysidiation for devolved parliaments and nations? There are two different issues there. I think that, in terms of the lack of guidance, that talks to a lack of detail, which makes it difficult to take a perspective on some of the issues and the inclusion of agriculture, which I have mentioned, is clearly a concern. With regard to the specific powers, our concern is round about the equivalence of powers in regard to devolved areas of competence. On a position in which the UK sector of state has powers across the whole of the UK and that there is a whole list of powers that have got to the operation of the scheme when it is up and running, where there is no equivalent power for Scottish ministers with regard to devolved areas in Scotland, that is clearly an imbalance that runs against the devolved settlement and that is an area that we are concerned about. At the level of a principle, we are also at the level of the operational aspects of that, because the knowledge, understanding or the specific impact on Scotland, how events are unfolding in Scotland and the impact that that could have on the nuances of any decisions and relative importance of different decisions or subsidies that are made is clearly something where the knowledge of that is in Scotland at a detailed level. There is an issue about the principle of powers and eroding the devolved settlement, but it has also been about the practicalities of us being much closer to those issues obviously that are now in some day in Whitehall. The other issue that was raised last week was about you talked about uncertainty in terms of the guidance. While it was recognised that the bill could present opportunities for different types of subsidies within the UK, there was a concern that the lack of uncertainty would lead to risk aversion, particularly in public bodies, about deciding to make any kind of investments. Are those concerns that you recognise? Absolutely. I have already seen that. Even now, there are examples that I am not going to go into for commercial confidentiality reasons, but we have had to have a good look and legal teams have had a good look to understand whether they feel we are able to move forward and taking, as they often do, a very safe perspective on what is and is not allowable. Because we do not have the pre-authorisation process that existed previously, in the absence of that, there is an inclination to operate on the side of safety, which means that things that we may have done in the past have to take a different perspective on them, which is, obviously, concerning. I will bring in Michelle Thompson to be followed by Fiona Hyslop. Thank you, convener, and good morning, minister. I wanted to focus on a specific example, which is the Scottish National Investment Bank, in terms of the rules that are certainly not yet clear as to what determines market failure. Snib was set up with a clear set of rules around that when we were in the EU. It has now passed its third reading through the House of Commons, and we have no certainty over the rules whatsoever for market failure. We heard in evidence last week that that could impact and limit our ambitions for net zero. First of all, do you have any specific concerns about Snib, given its importance in economic development terms for Scotland? I have the echo of what you just said. Under line point, there is a lack of clarity from the guidance to the lack of guidance that is available, and my understanding is that the bank has raised those points themselves. Clearly, much of what the bank would do would be lending at commercial rates in a commercial environment, but in situations where, as you said, we are looking at a market failure scenario or a similar scenario in which the bank felt that there was a need within its scope for emissions to be lending money. Clearly, it would require that there was clarity on what was allowed and what was not in the lack of clarity in the guidance, which raises a concern about what may or may not be possible. Given that it has been through its third reading, the suggestion is that it will be left to officials at Bays to further divine the rules. Obviously, we have our own constitutional consideration in the Scottish Parliament, but I would note that, regardless of where you sit, having an unelected official in Bays making the decisions about this without either reference to the House of Commons or to the Scottish Parliament and use ministers is not entirely desirable from a democratic imperative. What is your view on that? I think that that is right across a range of issues. It goes back to the points that I made earlier. If the guidance is not clear and there are decisions that are having to be made on whether things that the bank may do or may not be within the control regime, there is an issue that it may stop the bank from doing things that they might otherwise have done because they would be concerned about that. However, if it moves forward, it would be, as you said, decisions being made at a UK level on something that is a devolved issue with a devolved institution making decisions based on the specific economic environment in Scotland and on all those levels, clearly making that decision. In Scotland, having the ability that the Scottish ministers have an equivalent power to the Secretary of State would be much preferable and desirable from a democratic point of view but also from an economic and a practical point of view as well. My last week question before I give way to other people is, have you had any discussions about the potential cooling effect on much needed investment in the light of post-Covid recovery? That surprises me. Surely, any Government would want to encourage investment. When I say cooling effect, if the rules are not clear, we have been told that that could lead to legal battles, which are expensive and the likes of local councils will probably then not want to take the risk. Have you had any discussions about that? Have you made that point clear? Is it understood? Yes, we have. I have made that point repeatedly at every opportunity, as I said earlier. We have already had situations where we are looking at support for investment that we would have had more clarity on previously and we are in a position where the perspective of lawyers on that is obviously to be safer rather than taking and moving things forward. We have had to have those discussions in that context, which is concerning because it puts a delay into processes. As you said, it does have that chilling effect and slows up or perhaps it could, in some cases, prevent things happening, otherwise it would have happened because we do not have that clarity in advance of what is and is not permissible in taking that safety first approach. It could lead to advice that said that we should not go ahead, which is obviously a concern. As I said, many other issues, including the issue around the bank, have been raised repeatedly at official level and ministerial level with the UK Government. To be followed by Maggie Chapman. Good morning, minister. I want to cover agriculture. NFU Scotland, in its submission on the subject control bill, has said that it is critical that devolved Governments can continue to develop agricultural policies that suit the unique domestic needs and policy ambitions that are essential for rural businesses and the communities and economies in the underpin and the inclusion of agriculture in the subject control bill to really constrain this. Safeguards are already in place to secure the integrity of the UK internal market through existing international commitments to WTO and the UK controls. Finally, agricultural policy is devolved and must not be renationalised by the back door by UK-wide subsidy control measures. Even with the agricultural leadership of NFU Scotland saying that, in terms of your discussions, why are the UK Government including agriculture when it is not normally put together with other subsidies in the subsidy control measures? Why is that happening? That is a good question, and it is something that we have raised. As I said, current Secretary of State, Mary Gougeon, had extensive discussions with Paul Scully on this just last week. The position's outline that is correct, agriculture, is normally excluded from many of the subject control regimes that are in separate treatment under WTO and obviously under the EU as well. It was through a separate process. The second point, of course, is that agriculture is fully devolved. It is a prime example of an area in which we are seeing the encroachment of UK Government powers in two devolved areas. Thirdly, there are specific circumstances in Scotland, and this goes back to the point that I made earlier. The characteristics of the sector in Scotland are different to much of the rest of the UK, which means that the ability to have different regimes for subsidy to agriculture in Scotland is something that, in practical terms, may evolve well over time. Clearly, we would want to have given to the devolved area the ability for Scottish ministers and the Scottish Parliament to be able to make decisions on what is the most appropriate subsidy. The control regimes in wider WTO and trade agreement limitations would not be running the risk of falling foul of concerns that would be raised south of the border, as to what we are doing. The position of the Welsh Government, I believe, is aligned with us in this regard. I have a second question before I hand back to the convener. Can you make clear that the Scottish Government is in support of subsidy control measures, but they have to be the right ones and the right ones for Scotland? The subsidy control bill is a consequence of Brexit, but even those in favour of Brexit wanted to see economic growth. As we have heard, there is a risk aversion implicit in the practical measures of the legislation. If the UK Government could deal with the constitutional aspects and the asymmetry of that, everybody could focus on trying to get the bill right in terms of its measures. Particularly in relation to net zero, if we are going to forge ahead on net zero, with a combination that we have heard from private and public sector, there is a real danger in that one of the biggest areas for economic growth, not just for Scotland but for the rest of the UK, those practical measures, if they are not addressed, will end up having, for whatever your views on Brexit, a negative drag on what should be an economic growth opportunity. What are your comments on that? I am absolutely correct. You are right to raise the importance of net zero, Scotland. As we have seen from Scotland this week, there are many examples of Scotland's globally leading position in many of the technologies and opportunities of the transition, the just transition to net zero. We need to be in a position where we have the ability to provide support as we see fit within a set of rules that are transparent, clear and predictable. All of that is absolutely important. Is there a risk that there are things that we would otherwise do that we find ourselves being more difficult to do or taking longer to do or perhaps not being able to do or feeling that we were able to do as a consequence of where we are at the moment with this building? That is absolutely the case. I have already said that there have been examples where support has been delayed and had to be through a more complicated process internally as a consequence of lack of clarity on the guidance on where that takes us. In answer to your earlier point, of course, we agree that there should be subsidy control of the state aid regimes in place. It is potential for my good governance point of view, for my global trade point of view, to have those rules at a global level, bilateral level and EU level. We absolutely recognise the need for that because it works in both directions. It gives certainty to Scottish exporters as well as gives certainty to what state government and others take within Scotland. However, the key point is that there needs to be clarity, there needs to be a process that allows those decisions to be cleared in advance and allows for the guidance to be detailed and clear as the pot to what specifically can and can't be done. I want to explore a bit more about the impact on economic development. We know that the economic development landscape in Scotland is different to that in the rest of the UK. We have heard in the evidence that we have already gathered that the new regime has the potential to create greater uncertainty, higher costs, more risk aversion, as others have mentioned, and particularly at this incentive for smaller community-based support and community-focused schemes. Can you outline some of the impacts that you have identified in that area? Obviously, if we can mitigate them through discussions with the UK Government today, then fine, but if we can't, what are the options open for us to ensure that we don't suffer those negative consequences? I think that's a concern and I know that you've taken evidence. It's covered some of those issues already from COSLA and others, which will be closer to some of the practicalities of that. From a Government or a Government agency point of view, we are clearly in a position where we can access legal advice, we can take a view on things, what we're typically talking about, larger sums of money and bigger investments and so on. It makes the process more complicated, more difficult, more challenging, more uncertain. However, if you're in a smaller organisation that is dealing with those issues and trying to support economic development locally, then absolutely those challenges are multiplied. It's too early to see examples of that yet, but I absolutely would have concerns that that may well be the case. In terms of the second part of your question, what do we do about it? Clearly, we continue to challenge the UK Government on those issues, but I think that we are open to having conversations about specific organisations that may find themselves in that situation and how we could work with them to be able to help them to navigate the uncertainties that exist as part of the process. Thanks. One of our concerns is, as Fiona Hyslop has already mentioned, the asymmetry of power. However, as it applies to the balance between communities at a very local, if not regional level, I appreciate what you say. It's too early to identify examples of issues that are rising just yet, but is there a specific area of work that you or your officials are looking at to ensure that we don't lose very specific community-focused development opportunities that might not apply or relate to some of the broader principles and examples that would be done at a bigger geographical level? Yes, we are very conscious of that. You said earlier that you were talking about the guidance and so on, but those issues are very much to the fore in terms of how we support local economic development as a priority for the Government. The issue will be that the chilling effect of the risk aversion is part of the issue. I think that we need to be open and clear with those who are in Scotland who may find themselves in that position. They may look at it and think that it is too difficult. We don't want to take those risks. In terms of understanding examples of that, it is important that they are brought to our attention and we are very open to having those conversations and to go out and look, for example, with local authorities and others as to whether that may be a risk so that we are aware of it and be able to work with those potential effects to help them to navigate the process as necessary. Thank you very much for that minister. I hand back to you, convener. Thank you. John Mason will be followed by Colin Smyth. Thank you very much, convener. As the minister may know, I am a sub-state, so I am not quite as up to speed as some of my colleagues on the subject. I noted your fifth point in your introductory comments, which was about lack of detail, so that is why I really wanted to focus on that. I saw in last week's evidence that Professor Stephen Fothergill talked about the lack of detail, so it is very worrying. I just wanted to explore that a little bit more. There was also the argument that, with the EU legislation in the past and state aid, it was all very much tick-boxed and very black and white, whereas that is meant to be more principles-based. What would your view be on that? I looked at some of the evidence from last week, and that is the base in terms of what has been a shift from what has been a rules-based process. Something that is much more open in those principles are laid down, but the interpretation of them is obviously the most important part in how different people's organisations interpret them and differ, and the risk of organisations not taking steps that they should properly in terms of economic development and other opportunities is something that is a concern. I can hand over to Hilary Pearce in a minute to give a bit more detail on the conversations that she has had with the UK Government about guidelines and some of the specific gaps that are there, but it suffices to say that we have been—well, there has been a lot of conversations with the UK Government and Ministerial and the official level. The reality is that they have been very slow to come forward with the details of what those guidelines look like underneath the very broad brush principles, and that, of course, is what matters, because organisations need to look at that and understand where the lines are and what is allowed and what is not allowed in various scenarios that may not be obvious from the broad brush principles. Helryd, is there anything that you can add to that observation? Thank you, minister. Scottish Government officials, both in my team and in agriculture, have had fairly regular engagement with BASE and DEFRA officials on the details of the bill and the guidance and subordinate legislation around it, but that has tended to be in the form of briefings by UK departments to us, and there has been little joint working that we would have wanted or expected. We have a meeting set up next week now to talk about the definitions of subsidies of particular interest and points that the devolved administration wants to make around that, but this is very late in the day in the course of the bill to be looking at that level of detail, so it is fairly concerning. That is all from me. Thank you. Thanks for those responses, that was very helpful. There was a specific phrase mentioned by Scottish Enterprise and others called streamlined subsidy schemes. Again, that seemed to be an area that they were looking for a lot more guidance on. I take the point that there has not been an awful lot of discussion up till now. Are we expecting the UK Government to consult on all of those guidelines and secondary legislation, or do we not know? I am not aware—I mean, they have had consultations at a general level. I am not aware if they are going to do consultation on the guidelines. Helryd, I might know that, but you are right that we are waiting to see what they are going to come forward with. The streamlined is one example. That is also an example of where the sector of state has powers that Scottish and devolved ministers do not have. It is one example of those powers that is concerning, because you would end up in a position where there was any debate about what the streamlined powers allowed or did not allow Helryd, when they would operate, then that would be up to the sector of state and not if it was a devolved matter happening in Scotland. We would not have any ability to act in the same way. Helryd, is there an intention to consult on the guidelines? On the streamlined areas, we have just started to consult our thoughts on that by assigning devolved Administrations, but that has only just started happening. It is very late in the day. The difficulty is that we cannot be clear about the impact of the bill as a whole in all sorts of areas, because we are so far behind in knowing what the guidance is going to look like. It is very difficult to judge what the impact will be. Just to tidy up, if I can ask a final point, would the Scottish Government want to have the decision making in the streamlined subsidy schemes or would they just want to have input into the wider scheme? I am not asking whether the devolved ministers would have the public policy sector state in that regard. Colin Smyth, you are followed by Jamie Harper-Johnson. Thank you very much, convener, and good morning, minister. During the passage of the bill, in the UK Parliament, in particular at committee stage, one of the key issues that were highlighted by Labour was the lack of a preferential system for support to disadvantaged regions. How do you think that targeting areas of economic deprivation should be reflected in the bill itself? There is the possibility to identify more disadvantaged areas and to outline what those are of different scope to deploy support in a different way in that regard. That is something obviously that has been in place in EU processes previously with the different categorisations of different regions. That is something that, as I said before, from a regional economic development point of view, we are very focused on supporting all regions and communities across all to maximise their potential and where that requires them to be support to encourage investment or other activity that would want to be able to take those steps in a way that may be differential depending on the specific needs of different parts of the country. Having the ability to do that and having clarity about the ability to do that, we think, is important, but there is no provision in the bill for that. How that plays against the UK Government's stated aims of levelling up is interesting. That is another area where there is lack of clarity as to exactly how that will operate. On the issue of levelling up, when we took evidence from Professor Fotherland, he highlighted that very point and questioned how you could have a levelling up strategy without an assisted areas map. That is clearly not specified in the bill itself. Is it a view that the Government's provision for assisted areas map should be specified in the bill itself? I have suggested a new clause 7 in the bill to define what is an assisted area. Obviously, as you said, that was a concept that existed in EU state aid. Does the Government agree with that proposal from COSLA that that should be specified in the bill? I think that we are absolutely open to having—we will first point out more clarity on that, because I think that the issue will be, as has been said, that there are questions there about exactly how it is going to operate and the concern, I suppose, and the lack of guidance is that those decisions would fall back in some regard to the powers that the Secretary of State has, and those who would be taken at UK level without regard for what was happening in Scotland or other of administration. I can say that in terms of whether there should be more detail within the bill or certainly within the guidelines that there could be different scope within different parts of the country. I think that that is something that we would be supportive of. Okay, thank you. I will bring in Jamie Halcro Johnston. Thank you. Good morning to the cabinet secretary and his team. I asked last week Professor Bell and George Parrots about transparency, and I highlighted some of the cases, including the Presswick Airport, GFG Alliance and Ferguson Marine, where large amounts of taxpayer money has been used to support those businesses. There have been concerns, certainly in some cases, about transparency of those deals and the lack of ability to scrutinise those deals for a number of reasons. Can I ask where you feel that the bill might or whether you feel that the bill might improve transparency on the use of public money and any concerns that you might have about that? In terms of the bill, we have made representations that said that there should be a review of the timelines that are in there. I mentioned in the opening remarks that interested parties do not have long enough to appeal. There is only one-month provision in there, and we think that that could be extended, which allows them to raise issues that they want to raise. In terms of transparency, that has been our commentary on the bill as it stands. As I said, do you think that that will improve transparency and the ability to scrutinise or not have an impact, particularly perhaps relating to cases such as that at GFG Alliance? The issue of transparency depends on how the data race is. Obviously, awards would get logged on to the data race and they would be available for people to access and look at the information that was on there. Depending on how effective the data base is in terms of how it operates, there have been some teathing problems with the database that has been used for the subsidy control regime, but provided that is working as it should, that information is also available for people to interrogate. There also seems to be concern or confusion over what might be considered a subsidy and what might be considered or what might fall under just a straightforward loan. Obviously, Government loans and guarantees have been used, but there is also a straightforward subsidy. Are you confident that that definition is clear enough, either within the bill or just generally at the moment? Within the bill, it is one of the areas where guidelines are important. Clearly, we talked about the bank case, which was an investment bank earlier, and much of what they would do would be in that space. I think that there is more detailed clarity within the guidelines as to how that would be looked upon in the regime would be helpful. Gordon MacDonald will be followed by Alexander Burnett. Thank you very much, convener. Minister, I want to ask you about the power to refer to the CMA. We had last week in evidence one witness saying that it must be possible for the devolved administrations to have recourse if they feel that activities in England are undermining their competitiveness or their own markets. We had from another witness who said that amendments to that effect were tabled in the House of Commons, but the amendments were voted down. Given that the Scottish Government has responsibility for economic development, will having to go to the Secretary of State undermine the devolution settlement? Yes, I agree with that. It is one of the list of powers that the Secretary of State will have under the bill that he will be able to operate, if he would operate within devolved areas in devolved matters. We rightly believe that, as do the other devolved administrations, that equivalent power should be available to devolved administrations to be able to do exactly as you have said, to be able to address issues where we see there is, if we saw a situation, where there was a potential distortion to be able to refer and to go through the process in the same way as the Secretary of State can. Given that you have tried to amend the bill, where does that leave us in terms of how we move forward on this issue? We will continue to push for amendments to the bill in the later stages, but at the end of the day, of course, it is a UK bill, and it will take it through Westminster as they see fit. We will continue to make the case, we will continue to argue for those amendments and we will continue to work with others who are of a similar view to be able to make changes wherever we can. However, as I said, the bill will progress through Westminster based on what the UK Government decides that it wants to include or not. It is obviously a concern that those provisions have been taken on board, and it is one of the reasons why we are not recommending that consent be given to the bill. On another similar issue, the CMA has a subsidy advice unit, and we heard from the Institute for Government that it said that the unit should have a membership and input reflecting the four nation role in the UK, and it is appropriate that there could be better devolved representation. Given where we are in the bill, is there any scope for this bill to happen? To be honest, I am not fully up to speed on where we are up to with the membership of that unit. Hilary may have more up to the information, but certainly from a principal point of view, then, of course, from our point of view, we would be calling for it to be proper regard to the specific concerns and issues in the devolved administrations with regard to the membership of that unit. Even just from the point of view of understanding the various ways that things are done differently in the devolved parts of the UK, it would be helpful and essential for them to be able to do their job properly. Hilary, are you aware of the situation with regard to membership of that unit? We have raised it with Bayes. The competition market authority subsidy advice unit is staffed by the CMA as an independent body, and we have asked if a devolved administration representation can be considered, but we have not had a response on that as yet. I will now move to Alexander Burnett. Thank you for that. I would like to thank the minister for the evidence this morning. Is there anything additional that the minister would like to add that he feels has not been covered? No, thank you very much for the questions. I have covered all the issues that we wanted to raise in the committee's perspective on those issues. I just want to have any comments from what you have expressed, the desire to try and get amendments to the bill before it is concluded. If we do get to the stage where the bill is concluded in its current form, even notwithstanding if we accept not to approve a legislative consent memorandum, if we get to that stage, what is the Government starting to plan out on how it will try to work with us as a legislation? Of course. It is already the case in the interim regulations that are in place that we are having to work with in that. As I said earlier, there have been examples already where we have had to make decisions on whether we feel support is within or without the rules vague as they are. We will do our best to work with it, but it will be challenging and more complex and difficult when it needs to be. Thank you, Minister. I will now close the meeting and move on to the private session.