 If the Scottish Parliament, can I please remind everyone present to turn off any mobile phones, tablets or other electronic devices. Before we begin, my members may be aware that they will be 2 minutes silence at 11 am for the remembrance day. I therefore intend to suspend the meeting about 10.50 am to allow any member who wishes to make their way to Garden Lobby to join the Presiding Officer in remembrance, and the committee will then a chael y cyffredinadau aethau yn gweithio ar y trafodaeth. First item of business is to take evidence on the private housing tenancies bills financial memorandum from the Scottish Government's bill team. I would therefore like to welcome to the meeting Barry Stalker, Helen Duncan and Charles Brown. Members have copies of the financial memorandum and already have evidence received. I will go straight to questions from the committee. This is normally a case in the Finance Committee, I will start with a few opening per珉iwn i fonoenwys hwnnw dus du soortau oherwydd ni'n gallwn gweld rhyw oherwydd yn darparol maenthefyd rhai a weith어�iwch â fy lydych chi oedd ydохodi mater neu rhaid i ddechrau maen nhw.eleri a i ddlygu i fy extractor mai bywch, yn y ddechrau i ddechrau mai boffi ddryf. Felly mae'r pwld yn cytw i ddweud chi'n gofio? Mae hwnnw? Rhaid i dogo. Rydw i dweud i wneud ar gympeth nawr i Gwyllwyr Treybun gydym ni'n gweithio'r gwneud eich cyfle â hyn riderau m MS yn mynd i gyd. Erfyn y pagaf 49, mae'r FFT-T yn bwysig i'r cyflwg ffifol fragol i'r Cwrs ym 70 o Tirf.okriff yn mimfersio'r FFT-T yn cabwys. Mae'n ffifol i'r ffe i'r FFT-T. Felly yn di wrth am y wneud, yn gallu ni'n allu chi ysgrifenni'r gweld i'r gyrwyr ond sefydledd garlichow, and how it relates to the best estimates that you are supposed to have when you put together a financial memorandum. I will kick off and then I may also bring in my colleagues from analysis services as well. You are right in that when you refer to Par for 49, there has not been a decision made regarding the first to tribunal in terms of fees yet. That is a matter which is a collective decision for ministers and is going to be taken forward as part of the operational detail as the new tribunal is implemented. Of course, the new tribunal is being implemented from the 2014 tribunals act, and the first chamber in the new tribunal is going to be the housing property chamber. WAC is under way, and other colleagues are leading on that. Basically, what that will do is bring together the current private entity housing panel, home owners housing panel, into the new chamber for housing property, along with a new jurisdiction called the PRS tribunal, as well as a letting agency tribunal. Those two last ones for the PRS and for letting agencies come from the 2014 housing act. There are several things that are coming together. In terms of the costs that we have set out for this bill, what we have been able to do is to build on the work that was undertaken for the 2014 housing act, in particular the PRS tribunal that I just mentioned. That was work that was undertaken to estimate what the costs would be of transfer and tenant and landlord disputes from the courts to the new jurisdiction. In that, most of those cases would relate to the current tenancy. In the future, when the tribunal is up and running and we estimate probably a year after the new chamber is up and running, we are looking to implement, subject to the bill of Parliament, the new tenancy. We have been able to look at the costs that have been set out for the tenancy part of the new housing tribunal. That has given us something to work from. What we have done in the financial memorandum is that we have assumed that there is no fee to be charged, but we have said that there may be a fee and that is something that ministers will decide in the future. We have worked from the premise that there will not be, and that is reflected in, for example, the estimates that we have made for the number of cases that might come to the tribunal from the new tenancy. Likewise, in terms of the question about the glade, that is a matter for the broader tribunal, and what we would expect is that whatever the decision is taken there would be the case for the new tenancy that is set out in this bill. Again, we have assumed in the financial memorandum what we know, which is at present that we are assuming that it is not going to be legally, but that is not to say that there will not be any future. The assumptions that we have made are what we know, which is that we are assuming that there is no fee, although there could be a fee charged in the future, but we are assuming that there is not for the purposes of the financial memorandum and also for the purposes of legal aid. We are assuming that there will not be, because that is the case at present, subject to those decisions to be taken by ministers. That explanation, but you will appreciate that this is a really important aspect of the bill. I mean, for example, the Association of Rental Letting Agencies, and I quote, We remain concerned about the cost of implications for landlords when regaining possession of their property through the FTT. Were tenants lodged any case to the FTT, we believe they should pay. This would remove any temptation for tenants to continue stalling proceedings with no financial costs or penalties to themselves, but Shelter, say, you know exactly the opposite, which is that Shelter Scotland is strong with the view that financial provision must be made for legal assistance at the tribunal through a mixture of advice and representation. It is also the view of Shelter Scotland that there should be no fee for private tenants to access the tribunal. It seems to me that this kind of provocation, if you like, in terms of taking a decision on this, is not really pleasing anybody. The letting agents and landlords are a bit anxious that this could open the floodgates to a whole load of potential applications and delay adjudications, et cetera, et cetera, and decisions, and then you get Shelter, who are obviously concerned that tenants may have to pay. When will we likely have a decision? Stage 2 before stage 1? Okay, well, there's a couple aspects to that. The first one is that what was set out in this bill is obviously a bill to introduce a new tenancy, and the question that you're asking is about an important element, as you say, how the system will work with that new tenancy. It is a matter for other policy areas that are clearly very linked into. On fees, my understanding is that ministers intend to consult in the new year on the question of fees, whether or not there should be a fee and if so, what that fee should be. If there is to be fees, that would require secondary legislation, which, of course, would be scrutinised by Parliament. Let's move on to something else. In paragraph 25 of the financial memorandum, we say that only 14 per cent of tenants reported ever having left a tenancy due to a reasonably high rent that is ever put in italics, but, of course, the rent cap is a key aspect of the bill. In paragraph 77, we say that a possible negative impact of a rent increase cap is that it may deter investment in housing and reduce the supply of new rented housing or investment in improving the quality of existing housing due to the lower expected rental return. On the other hand, an invest will be able to recoup the costs by setting a higher initial rent since the rental increase cap will not apply to initial rents. It seems to me almost that you are giving with one hand and taking away with the other, so what is the thinking behind that? In a minute, I will ask one of my analytical colleagues to spin a little bit around the question that he asked about the ever-started question. However, there is quite a lot to unpack there, so I will try and view it as succinct as I can. The bill is about a new tenancy, because it is an open-ended tenancy, we need to address the question of what happens with rents. The reason for that is that the bill, in the bill's overall aim, is to improve security of tenants, balance with appropriate safeguards for landlords, lenders and investors. If you are going to improve security of tenure, what you do not want is the potential for some unscrupulous landlords to height the rent as a way of subverting the increased security that we are looking to provide for tenants. The reason why we have an adjudication process for tenants is to protect against that. We also provide for predictability on rents for tenants, which means that a landlord can only increase the rent once over 12 months with three months notice. That should help tenants to plan their finances. Both those measures were strongly supported in the two public consultations that we ran for the bill. I would put them under the category of things that we would apply to the tenancy in general. The third element on rents is the rent pressure zones or the caps that we would apply for sitting tenants in hotspot areas. That part of the bill is to say that, for a local authority where they are concerned that rents are increasing significantly in a local area and that that is having a detrimental effect on tenants and housing that they are able to apply to Scottish ministers and Scottish ministers to determine whether or not a rent pressure zone should apply. If they designate a zone, they would be able to set a cap for sitting tenants with a minimum of CPI plus 1%. In the main, in terms of what is in the bill, rents will be market led. If at all rents in terms of what is in the bill that is set initially at the start of a tenancy will be market led, but the rent pressure zones will have a cap for sitting tenants, which would be set by ministers. That is broadly what we have set out in rents. As an important question, convener, that you have raised there about investment, housing supply is important for the Scottish Government and that is one of our key policy aims, to attract more investment into the sector. We have been very mindful of that, in particular thinking through our proposals on rent pressure zones. What we did was having listened to stakeholders, in particular the investment community, what we wanted to do was to try and alleviate the uncertainty that they were telling us that they were finding with what we were proposing. We have done what we can in the legislation to try and set the parameters of what that would be. In particular, and this is based on the bill that has been published in the feedback that we have received since then, it seems to be fairly comfortable with knowing that initial rents will continue to be market led and that there is a minimum for the rent cap, because that enables investors to basically model what could be seen as, from their view, the worst-case scenario should there be a rent cap applied. That provides them with some degree of certainty. Overall, we would expect that the rent pressure zones to apply in limited circumstances, which would be dependent on local authorities, identifying there to be a need as a set-out earlier. In the main, rents would be market led, with the two policies around predictability and protection against unfair rent increases for all tenants. I wonder how it will work in this scenario. Say mortgage rates, which has an historic logo, 2 per cent and a landlord has a £200,000 flat in Aberdeen. That will immediately mean that the mortgage that he will be paying on that flat will be £4,000 a year extra, or £333 a month extra in mortgage. What would be the implication then? Would he be able to put the rent up? Would the cap be lifted? I am just wondering what the flexibility would be in the legislation for these kind of changes. Also, if, for example, mortgage rates did not fall, would that mean that the mortgage cap would be reduced, or what would be the impact? I am not really seeing the impact of that, because that is obviously a major decision in terms of people. If they are going to, particularly in those areas, as well as a chronic shortage of housing, invest and be presented with a cap, who knows what the mortgage rate is going to be like in three, five or ten years, so I am looking to see how you address that issue. We have thought of that, because it is a very good point. Section 34 basically gives ministers power to change the inflation index. What we are looking to do there is to be able to, to be able to, depending on what is happening with inflation, we could basically change the index which would be used for the setting of any cap. We are also able to, if it basically repeal rent pressures on if it was felt that, for example, the zone had been for up to five years, but midway through the conditions had changed to such an extent that it was no longer required. If that was required, there would be a facility in the legislation to basically repeal the zone if that was found to be necessary. What we have also done in the financial memorandum is that we have done a best attempt to try to model what the potential impact would be for landlords using the recent historical data for Aberdeen. If it suits the committee, my colleague Helen, who is an economist, would be able to explain a lot more about that, if that would be helpful. The figures that were presented in the financial memorandum are obviously based on historical figures to present our best estimate of what would have happened with those figures. They are collected for two-bedging properties. They are indexed to inflation to present the prices in 2014 prices. The annual change was calculated to establish whether or not a rent cap of CPI plus one would have come into play in those years. If the annual increase was above CPI plus one for that year, then the rent cap was applied. The rent was stated as what it would have been if the increase had been above CPI plus one. The impact that that would have had on the landlord's loss of profit has been stated and then averaged. The Scottish Property Federation has talked about the frequent reference to modest and negligible costs of the legislation, but it has talked about not being set out in the summary table or elsewhere in the memorandum. It has said that those cumulative costs are small and that a medium-sized company can become overwhelming. The point that is made in the financial memorandum is that most of the landlords actually only have one or two properties. Is that not—it was at 95 per cent—of them only have one or two properties? Yes, they are about that. Do you not accept that the additional costs would have a detrimental effect on people deciding whether to put up a place up for rent? I am against that. That is a good question. It is something that we have thought about. What is important from the Government's position here is clearly what we want private landlords to continue to play the really important role that they play in providing housing supply. We also need to make the changes that were set out because the period has basically changed from where it was when the current tendency was developed in the late 1980s. In fact, it has changed quite a lot even since the late 1990s. What we have said in the financial memorandum is that because we are looking to provide the balance with the grounds for repositioning, a landlord will be able to still recover the position of the property in all reasonable circumstances so that that should not impact on the ability to invest in property. For example, if you are a private landlord and you are looking at it as an investment, clearly it is important to be able to receive a rent and appreciate the capital value of your investment through the sale of it. Both of those things can be done in the grounds, for selling, which is a mandatory ground. There are also grounds to deal with, for example, should there be any event areas. We feel that through the grounds that we have set in the bill, we have been able to provide cover for landlords so that they are still able to use or to let out their property and to be able to recover the investment in that property in the same way to what they can do at present. The last point that I want to make before we open up is the issue of students. There has been some concern raised about the 12-month tenancy and how it will impact on students who are currently often in places such as Edinburgh. I have nine and 10-month tenancies that suit them, because they do not have to pay for a full year when they are only here for nine or 10 months and it suits the landlords because they can then rent them out to tourists etc in the summer. What is your thinking on that and are there any proposals to potentially change that? The minister's position on that is that what the new tenancy is doing is it is basically replacing the assured tenancy regime. All those tenants who are currently covered by the assured tenancy regime will be transferred across into the new regime. What that means is that, for students, if they are on the assured tenancy currently, they will be transferred into the new tenancy regime. Ministers are keen that the new rights that we are providing through the new tenancy will be applied to all tenants that they will be transferred across. On a specific point of students, that basically means that students should have the same rights under the new tenancy as all other tenants. We are also looking to have a more simplified, clearer tenancy than the one that exists at present. Having something that is simple and straightforward and works across all tenants in the sector is therefore attractive. On the point about students in the financial memorandum, we recognise that that will have some potential impact on Llanosuit, who let out in that market. We recognise that, for example, it will mean that the things that they could do, such as engage well with tenants already, but they continue to engage with tenants to ask them when they might be looking to leave. There is nothing in the legislation that deliberately ties in tenants to year tenancies. At the moment, a few of the students that you can let and the Llanosuit will probably have under a assured tenancy a set date with a tenancy should end. In most cases, the tenant will leave on that date, although not always. Under the new tenancy system, it will be for the tenant to provide notice to the landlord that they were intending on leaving. In most cases, in the student market, those tenancies tend to be backed up by a guarantor. If a student is looking to stay on, they will continue to pay the rent. If they are looking to leave at the end of term, as she said, because they might want to stay for nine months, they will still be able to hand in their notice. If they stay on for another year, they can still do that. The key difference is that it is in the tenant's hands to decide when they are going to leave, unless, of course, the landlord uses one of the grounds, but there is not a ground at the moment, and we do not intend to have a ground specifically to bring a tenancy to an end because a tenant is a student. Seeing we are on students, that was one of the areas that I was interested in, so we will carry on with that just now. I do wonder if students should be treated the same way as other people. There are policy issues in there that the committee is not looking at, but I think that I would be concerned about the knock-on costs. Not to be derogatory towards younger people, but a lot of students are not going to be thinking too much about, oh, I better give in my notice by a certain time. From what I understand with landlords around about Easter, they would be heading towards the end of a student year, they would be looking at people staying in a flat over the summer, they would also be looking at students for the following year booking up. I get the impression that that system works fairly well in some areas, and I just wonder if that is disrupted, then there are going to be costs for the landlords, and those costs are going to be handed on to the students, because if they do not give in their notice, the landlord cannot advertise for the following year, he cannot bring somebody in over the summer, and the assumption then would be that the costs would actually go up for the likes of students. Okay, we will start at the end of the question, and I will walk back if I may. If a student does not hand in their notice, they will still be paying the rent, they will still be in the tenancy. As I said earlier, the overall aim that ministers have set for the new tenancy is to increase security of tenure, providing what is balanced with appropriate safeguards for landlords, lenders and investors. The key to that is not including what is commonly known as no fault grounds under the new tenancy, which is where a landlord can bring a tenancy to an end on a specified date. Instead, landlords would need to have a reason. The national union students and other student representative groups seem fairly supportive of the principle that students should have the same rights under the new tenancy as other tenants. If you come to the question about costs, if you look at what a landlord can do, the legislation says that a tenant needs to give eight months notice if the tenancies come beyond six months. It needs to give eight weeks notice. A landlord would have eight weeks notice before the tenancy ended, but they probably would have more. If you are a student, you probably have an idea fairly early on what you expect them to do. For example, if you are a first-year student, perhaps you are staying in a private residence, private halls, not with a landlord as a university, as a university is a landlord, but you will probably be thinking about moving somewhere else in the second year. That is what tends to happen. I think that students probably have a fair idea about what they are looking to do. Students may have an idea. My suggestion was that they do not bother telling the landlord and that they get to the end of the June, if they are forgotten to hand in their notice and they just walk away. First of all, we are talking in the financial memorandum about landlords having good engagement with their tenants. If a student was forgetting, then a landlord could always ask what is your intentions. There is nothing to stop landlords from doing that. If a student walks away, I mentioned that most students have a guarantor so that landlords already protect themselves against the potential risk of direct not being paid. Also, in the bill, we have grounds for a landlord to recover if rent is not paid, if they need to recover rent, they can also go to the court. We are not expecting there to be a significant change in how tenants tend to work with the tenants that they are in. The wider problem is that that is part of the fact that on the table in the financial memorandum on page 22, and the points that have been made by a number of people who submitted evidence, is that the words negligible and modest appear several times, especially towards the bottom of the page. The final column costs on other bodies, individuals and businesses, which I assume include both the tenants and landlords, who are major players in all this. When we get to total costs, all that says is modest in both cases. We, as a committee, have been unhappy with a whole range of bills that have come here without putting a figure on it. In most cases, we would rather have some kind of figure rather than modest and negligible. Can you tell us, couldn't you have put some kind of figure in there? I am going to ask my colleague Charles to go through how we got to there. I completely appreciate your point about not being able to put a figure. The simple answer to that is that we have done extensive consultation with stakeholders who have developed a barrier, two public consultations, talked to stakeholders and engaged them on a regular basis. Not really anybody has been able to put firm figures on the potential impact to the sector, so we can only work with what is available on figures. We felt that the best that we could do was to highlight in the financial memorandum the areas that have been brought to our attention, where there might be potential costs. We have done that, but we have not always been able to provide that cost, because often there is not a cost available. In terms of modest, we do not expect that to be that much, but we appreciate what you are saying. We are not able to put a firm figure on it, but I do not think that anybody has been able to do that. Charles, is there anything you would like to add to that? With the figures that we have set out on the table, we have tried, in all cases, to be evidence-based. We have based the costs on existing tribunals, which we know the costs of, and we have also tried to use information provided by stakeholders to us to give us some indication. In those two senses, we have tried to be evidence-based and not just to pick figures out of the air. Therefore, where we cannot do that, in that case, we have expressed the cost as a narrative, as a text, rather than to fix a figure to it, which we could not be confident in the robustness of. I am afraid that I just find the whole concept quite strange here, because we have legislation. Presumably we have legislation because there is a problem. I thought that one of the problems was that landlords were making excessive profits in some cases by raising the rent, and that is why we have this possibility of rents being restricted. Even if we looked at that point on its own, the super-profits—or whatever we call them—that the landlords were making, they are not going to make any more, so presumably they lose out, and the tenants who were paying the super-profits are going to gain. At the very least, I would have expected those two groups to be affected, or are we saying that there is no evidence that there are super-profits? We have done the financial memorandum, for example, and we would not necessarily say super-profits, but what we have done is that we have looked at, as an example in the recent past, Aberdeen and Shire, and the table that my colleague Helen was talking to earlier on is one example of where we have looked to say that we know what the rents have been in that area, we know that they have been rising quite high, and we have been able to model what potential caps for certain tenants would be in those areas. That is an area where we have been able to provide some costs on what would be from the potential for rent pressure zones in an area. As Charles has said, we have taken an evidence-based approach to where there has been evidence that we have used it and that we have done the best that we can with explanation and narrative. I am sorry, but I am still struggling to understand all this. Can we assume that the landlord in the end of the day is going to get the same amount of rent and the tenants are going to pay the same amount of rent? The initial rent will be increased in order that they are knowing that there will not be serious increases during the rental period. Also, the suggestion is that, if there are restrictions on rent, first of all, it will drive some investors out of the market and will then push up the rents in the medium term, although I assume that that would bring in more landlords in the longer term. If we are really saying that the total costs for other organisations are modest, it seems to me that we are saying that, in the long run, there is no financial impact on anyone in this. In terms of the question about rents, rents will be market-led and outlined a little earlier what we have put in the bill. Even when a tenant believes that the rent increase will be excessive and they can seek adjudication on that, the test will be if that rent for the property that the tenant is in is comparable to another similar property in that area. Basically, it is at the market rent. The general principle that we have set out in the bill is that landlords will be able to charge market rents. They do now and they will be under this new tenancy. As I said earlier, the one exception would be where there may be a rent pressure zone designated. I must set that out in the table at the end of the financial memorandum. On the point of investment, there are probably two areas of investment in the PRS. As the convener mentioned earlier, the smaller scale is more individual landlords or landlords that have a smaller portfolio. There are many different types, those that are actively invested and those that have inherited the property, those that could not sell, etc. However, they all tend to have a relatively small portfolio of size. It tends to be an existing stock that they buy, sometimes with a bital little mortgage, sometimes not. The other side of investment is what we are looking to do, which is to encourage more institutional investment into the sector. That is part of the Government's broader drive to increase overall housing supply. In terms of that second area, it is still early days, but there have been some investments announced in the lead-up to the bill. In particular, Edinburgh has about 700 units in the Fountainbridge area from two separate developments, which will be institutionally investment-led PRS stock. Lesal has recently bought dandarra bill development in Dyson, Aberdeen, for around 300 units. That is full-market PRS. There has been, as I am sure the committee will have seen in the press recently around the bill, commentary on the potential impact or not of what was sitting out may be. To provide a balanced view, the Scottish Public Federation chair John Houghton, who would not support a lot of what we are proposing in the bill, says that the SPA firmly believes that the introduction of rent controls will not help the nascent and new source of forms to develop in Scotland. In fact, it may well stop it from going beyond a handful of schemes. However, alternatively, Mark Donnelly, associate director of crawlers international, who are providing global real estate services, has said that there is nothing in the bill that ought to stop institutional investors considering Scotland for PRS investment. On the point about investors, it is a matter of perspective. On the one hand, some stakeholders say that investors are looking at the bill, and perhaps putting investors into the hole to see the way the wind blows, what the final outcome of the bill will be. On the other hand, we have stakeholders say that this is not a problem, and that nobody is telling us that it is a problem. Again, we have done what we can in the financial memorandum to reflect that. On the other point, if I may, on a separate issue altogether, Glasgow City Council raised the point that, when we talk about rent pressure zones, there could be a variety of housing in an area. Some might be more pressurised than others, so there might be lots of student accommodation but not so much in the way of family homes. How would that be taken account of? Would there be a cost to the council in digging into all of that? The answer to the first point would be for local authorities. What we have in the legislation is basically discretionary powers for local authorities to apply to ministers. In terms of the detail around that, that would need to be taken forward in the second legislation. The answer to that question would be for local authorities to identify where rent pressure zone is required, sub to the test that was set out in the legislation around being a detrimental impact on tenants and housing rents rising too much. That would be something for local authorities, but, of course, such as the Bill of Parliament, the bill implementation would be working with local authorities who may be considering whether or not they may be looking to make an application for rent pressures. They will move with them to ensure that there is a process in place that works. For local authorities to do that in study? In terms of the cost to local authorities, we have worked closely with local authorities both at a strategic level and through the bill. For example, we have worked with a lateral and causal or on the joint housing policy delivery group and we are on the review group that considered the current tenants in the regime and made the recommendation to ministers that there should be a new tenancy, which is where what was set in the bill started from. They both replied to the two public consultations and we have discussed that with them. Basically, up to the point of the financial memorandum, which, of course, sets out the best estimates on the cost on the bill in introduction, there was not really an issue raised around cost to them. What we have in the financial memorandum is what we think the cost to local authorities would be, which are mainly around rent pressure zones, but I am aware from reading the evidence that has been submitted to the committee that having now had a chance to look at the bill in detail, there may be a couple of areas that they think there might be more costs that may accrue to them. On the point about Glasgow, I am meeting with Glasgow later on this month to talk about the bill and I am sure that we will be picking up with Glasgow then some of the issues or matters that they have raised in their evidence to the committee, which have been more than happy to discuss with them. I will take you back briefly to the question and answer from John on investment. He quoted two individuals, one of whom said that the bill would have no impact on whether they would decide to invest in Scotland and the other one who said it would. Is there anyone who has actually said to you that they are going to invest because of this bill? We are only going to invest in Scotland, but we are going to invest as a result of it. That is a good question. Clearly, what the bill is looking to do is to support a broader work on the PRS to make it a more professional sector when it is attractive to investors. I was in a meeting recently with Llywyddor Homes, who are the private rent sector arm of the Wheatley group. They are very supportive of the bill and what it looks to achieve. The current investors in the PRS have invested significantly recently and are looking to invest even more in the long-term. You are saying that the stability caused by the bill could encourage more people to come in and invest. We believe so, yes. The University of Edinburgh says in its submission that it is vital that accommodation provided by universities or colleges remains exempt from the proposed legislation. Are they exempt from the legislation? Is there any university or college that provides accommodation? Yes. In the bill and in the schedule, we set out the exemptions. We have carried across what happens under the assured regime. Where a university or college is a landlord, they will be exempt from the new tenancy, as they are for the assured tenancy. Staying with students just now, the convener has a number of interesting questions. You have consulted a bit, but I wonder from the sense of the evidence that we have. Do you not think that there is a slight concern that what could happen is that instead of landlords offering nine-month lets, which seems to suit both parties, the market changed you so that you can basically only get a 12-month let? Students who do not want to be in Edinburgh, for example, for the summer, are then tied into a 12-month let? Is that not one potential consequence? As the bill stands at present, it is possible that the initial period that we have set out could be offered by a landlord as 12 months. If tenants accept that initial period, that would in effect tie a tenant in for 12 months and also restrict the grounds that a landlord can use to evict for that period. In the financial environment, we recognise that certain parts of the period would need to adapt, although that would happen in reality. It is possible, but I do not think that it is necessarily certain. That comes down to what we have in the bill at present around the initial period that we have set out in the legislation. On the ground, what are landlords who let students say to you—are they saying to you that they will find a way around this and will still try to keep similar arrangements and will communicate better with their tenants—or are they saying to you that in order to minimise the risk from our point of view, we think that we are going to move to 12-month lets? If that is what happens as a whole, the students will not be able to find a nine-month let. What are landlords saying to you as you consult? I have not said to me the 12-month lets, so that the evidence to this committee is the first I have seen of that. It is fair to say that, from a landlord's perspective, including the Scottish Association of Landlords, they are not in favour of there being no no fault ground in the new tenancy, so they would prefer that there was. In those terms, landlords are saying that what we have set out in the bill is something that they would be less supportive of. Other stakeholders—not necessarily landlords such as the National University of New Students, Sheldon and so on—support what we have set out. I mentioned Louver earlier on, they are a private landlord and they do support what we have set out, but it is fair to say that, in the main representative groups of landlords, we would be less supportive of what we have set out in terms of not having a no fault ground. However, our assessment is that we recognise that we need to get the balance right, and that is why it is important to have the grounds that we have said that will cover all the reasonable circumstances that a landlord would need. It is important to get that right, and what we have set out in the financial memorandum is that we believe that landlords would be able to work. Where they have to adapt, they would be able to adapt and still be able to work with it, because, fundamentally, they would still be able to sell the property, and they would still be able to manage the properties effectively, and they would still be able to take action, if, for example, there was an issue with rent-a-views. Moving on to another issue, first-year tribunals—just for clarity, because you gave a couple of different answers, and I am just trying to work at which one is the official Government position. In terms of fees being charged, you said that you are working from the premise that fees will not be charged. Is that the premise that ministers have asked you to work from, or is that just a bill team decision? Well, as a bill team, what we are required to do is to provide a financial memorandum that estimates the costs on the bill introduction. That is what we have done, and we have done it on the basis of what we know now. There has been no decision-made. In terms of the analysis, I have assumed that there will not be a fee, but we have also said in the financial memorandum that ministers have yet to decide on that, and there could be a fee. If there is a fee charge, that is not something that we have accounted for in the financial memorandum at present. The reason is that we do not know at the moment if there will or will not be a fee charge, so we can only go with what we know. I am just trying to figure out which is a default position. Have ministers said to you work from the premise that fees will not be charged, or have they simply been silent on the matter in their discussions with you? In terms of the analysis, they have been silent with us yet. But they are saying that they are going to consult in the new year. They are going to consult in the new year, as I said in the other one. In terms of the same answer to legal aid, have ministers been silent to you on that issue? Will that form part of a consultation alongside the fees issue? I can answer that point. Clearly, it is not my policy area, but the position is that legal assistance is a broader policy matter for the implementation of the FTT. It is not including the cost for that, as it is a policy matter that is still under consideration. Divinial procedures are designed to be accessible and understandable, and do not generally require legal representation. That will be the case in the new tribunal. We recognise that cases that will be handled by the tribunal, including those involving reposition, can be of a serious nature and are considered in the requirements for support for parties, bringing in a case as part of the detail of the operation of the tribunal. It could be through funding support for legal representation and some form of representation. Funding support for legal representation and other tribunal jurisdictions is generally provided through assistance by way of representation, such as ABWAR, which is the Minister for the Scottish Legal Aid Board, if selected, that would be set in place by secondary legislation, which would be scrutinised by Parliament. That is all that I can say on that. In terms of fees, the position is clear that there will be a consultation and ministers will take a decision. In terms of legal aid, you do not have any further particulars on whether there is a consultation. I have said all that I can say on that. No fair enough. The convener asked what happens if there are changes to mortgage rates, because most of us have now become accustomed to interest rates. We think that interest rates of half per cent are normal, and clearly that will not always be the case. In terms of section 34, ministers will be able to make changes under regulations. Is there anything in the legislation that forces ministers to act? A rate increase that is announced by the NPC happens immediately, and banks and mortgage providers within days or weeks change those mortgage rates. Is there anything in the legislation that compels ministers to review the situation quickly, or is it something that could just lay dormant potentially for months or years before any changes are made? In terms of the policy position, ministers should be able to vary the cap in the rent pressure zone, for example because of the scenario that you mentioned. When making a determination on the rent pressure zone, they are placed under a duty to consult tenants and landlords before making a decision, so part of that is to provide a kind of safeguard, to basically feed in the potential for that happening. However, there is nothing in the bill at present that would basically make ministers have to change the cap because of a change in the interest rates. We are going to have a break in a couple of seconds, just to let Mark and Jackie come in after the break. I find this student thing a bit confusing. At the moment, you get nine or 10 months, and then two or three months, the landlord will let his or her property out over the summer. Everything under the new legislation goes well, and they communicate brilliantly, and they should not agree to leave after nine or 10 months, but then if the landlord decides to let the property out for two or three months in the summer, will they have to then have a 12-month lease, even though they might only want to have two or three months letting the summer before they start the student letting again in the autumn? What would happen over that kind of intervening summer period? In the scenario that you are outlining, normally what landlords would do would be to have a holiday lep, which would not be subject to this legislation because it is not someone's principal home, etc. If a landlord has a student lep to let it out over the summer, they will still be able to do that, subject to the tenant moving out. If they want to let the student again for the next time, they will be able to do that, but it would be on the new tenants. I understand the time now that he is about to go any second. Here we are. I will now call a halt to proceedings, and we will recommend shortly after 11 o'clock, but I will now reconvene the session. I just wanted to touch on a couple of issues. The first was a note, obviously, as an Aberdeen member. I was interested by the fact that you had selected the north-east council areas as comparators. In terms of the use of CPI versus RPI, what dictated that approach? I know that, for example, at a local authority level, when the local authorities are setting their rent, in Aberdeen, we used RPI as the inflationary indicator. I just wondered why you opted for CPI. There are a couple of reasons, and I might ask my colleague Helen to come in as well in a minute. One of them is that, in other countries where they tend to have some form of rent cap, it tends to be something equivalent to CPI. In terms of stakeholders, I think that there were stakeholders, including she or the who, as part of the consultation, who had said that CPI would be an appropriate inflationary measure. As far as I understand it, it is also the measure that some housing associations use. It is something that, as an infrillational index, tends to get used in the housing context, as I understand it, in the housing association. Helen, is there anything that you wanted to chip in on? Not in particular, those are the main reasons. As you said, it is the standard measure that we would use in the Scottish Government when we were talking about housing, so that would be why it was used in that case. In terms of the impacts, I note the submission that we have had from the Association of Residential Letting Agents, or ARLA, where they speak of the difficulties that that could pose to independent agencies, also your individual letting agent, as opposed to your larger organisations and agencies, which could lead to some being either forced out of business or selling up their interests because of the costs that may be incurred. What would your response be to those concerns? Obviously, we noted the concerns and the written evidence of keen interest. Clearly, we do not want to be in the business of putting any business out of business. If you look at some of the other evidence that was provided to the committee, for example, the council letting agents, I think that they did not raise similar concerns to ARLA and, indeed, CLA, the Scottish Association of Landlords and Shelter, they would probably be the three main tenant letting agent and representative bodies in Scotland. They seem to suggest that the methods that we use to calculate the figures in the FFMs appear to be fairly sound. I was interested in ARLA's figures. They seemed fairly high. We mentioned compliance costs for large firms of hundreds of thousands of pounds. We know that the larger letting agents turnover in Scotland would probably be somewhere in the region of £3 million to £4 million. The figures seem to be a bit high, certainly higher than what we have estimated in the financial memorandum, but we take the point that clearly what we are looking to do in the bill is implement a change in the tenancy regime, and that will have some impact on letting agents. It is a balance, because what the new tenancy will be is easier to use, including a simpler tenancy than the current one. We will also provide a model tenancy agreement, so that should make it easier in terms of having standard agreements to use, which, for letting agents, might be cost-benefits. That might be beneficial to them. In terms of what we have raised, we have noted it, but it is not something that came to the same conclusion in our assessment in the financial memorandum. I note the awareness-raising and training. You anticipate costs to local authorities to be nil. Some of the evidence received at Glasgow in particular said that demand for information is more likely to be sourced at a local level. We would suggest that a proportion of the campaign funds be targeted to would-be PRS customers in partnership with locally-based or council-wide organisations. Do you feel that nil on local authorities is a true reflection of the likely impact there? There may be that letting agents or landlords would go to the local authority for information rather than perhaps looking at a national level, and therefore there might be a cost impact. I mentioned earlier about the extensive consultation that we have done and how closely we work with local authorities in particular on costs. I will not go over that again, but I need to say that we have done in the development of the bill on the financial memorandum that supports it. There are not many local authorities that have brought that attention, but Glasgow is one. In terms of our assumptions in the financial memorandum, we have allocated the Scottish Government market and budget for, in effect, spreading the model of landlords and tenants, as well as for helping advice bodies and representative bodies with training, so that they are prepared to help tenants and landlords when the changes set out in the bill occur, subject to the bill of Parliament. We were assuming that we would do most of that legwork, but clearly it is now something that a local authority has brought to our attention. Now that they have seen the bill and considered the detail, I mentioned earlier that I am actually meeting with Glasgow in a couple of weeks' time, so that will be one of the things that I will be discussing with them. Ultimately, what is important here is that there is a facility to be able to ensure that, subject to the bill of Parliament, when the new tendency comes into effect, landlords, tenants and everyone else involved understand it and are able to use it. I just wanted to come to the evidence from Alachro, which I think ties into this. They talk about the practical experience from the last time significant changes were made to the law, where they say that many landlords, estate agents, solicitors and property managers were very slow to properly understand the changes and reflect them in their day-to-day practices. They say that this remains a sector characterised by its atomisation with many landlords in particular, operating without any regular professional assistance or support. Obviously, that may then lead to a burden on private sector housing officers within local authorities who may be the go-to people for those landlords who are not operating within a wider organisation and have that support readily to hand. What input have you had from those areas around likely impact in terms of workload and, obviously, subsequent cost? It has not been something that has been raised by Alachro until now, but, again, that is because we have seen the bill in the policy detail. First of all, Alachro responded very positively to both consultations, and they seem to welcome the broad thrust of the proposals that are set out in the bill. I think that they are very supportive of what we are looking to do, although they have raised a couple of areas to discuss further. I think that I am right when they refer to the last time that they referred to the last time that there was a change in the tendency regime, which would be in the late 80s. It is a different world that we are in now, but, nonetheless, it is important to be able to look back and to learn of any lessons that we can from the last time that there was such a change. The first is the potential impact on local authorities. Having looked at the evidence provided to the committee, I think that, clearly, something will discuss further, as the bill is implemented. However, if you think about the policy that the bill is providing, it is about improving security for tenants with the appropriate safeguards for landlords, lenders and investors. The potential impact in some areas, such as homelessness, is likely to be that there will be less pressure on homelessness from the PRS, because tenants will have more security of tenure. There may be issues around, from a local authority's perspective, demand coming to them. There might be other areas where there is less demand because of what the policy is seeking to achieve. There is another point about the discussion with local authorities about what we would normally expect them to do as business as usual, and what they may see themselves as being more than business as usual. Taking a point about training, clearly local authorities will need to know what the new tendency is and to understand what changes in legislation might move from something that, for example, a lawyer might use as part of their continued professional development into something that is beyond that and something that, for example, the Government might want to contribute towards training. We are very open to discussing those matters further with both Alachlan and COSLA. As I said, we have outlined a budget in the financial memorandum that looks to provide for the market and the training and so on. On the training side, we were thinking principally around representative bodies and advice agencies, but it might be that there is something that we can work with in that for local authorities, if they make a good case to us that that something that would benefit them. I want to touch finally on the issue around student accommodation, which has been well aired, but there is an area of that that I am interested in, which perhaps goes slightly wider. Many students who are in private lets are also in houses of multiple occupation, and many individuals who are in houses of multiple occupation students are otherwise. They do not always begin their tenancies at exactly the same time as one another, and therefore that will give not just varying start dates to those tenancies but also varying end dates if they are on a 12-month tenancy. You have spoken about landlord engagement and landlord monitoring of tenancies, but if a landlord is operating a number of HMOs, where there are a number of variations in terms of start and end dates, that obviously creates a burden on that landlord from an administrative perspective, which might not have previously been the case. Have you looked into that at all? In the HMO sector, the tenancies that are currently used tend to be joint tenancies, and so, in effect, everybody joins and starts at tenancies at the same time under the regime and then leaves. That is something that under the new tenancy will still be provided for. Jackie, do you want to be followed by Jeane? I just have one brief question, and I want to return to the question of fees and legal aid for tribunals, because there is no mechanism for a financial memorandum with secondary legislation. Therefore, your intention is to deliver that through secondary legislation, and I am assuming to tell us the cost then. It is not my intention, because it is not my policy area. On behalf of the minister? I know that. I can only say as much as it is worth. I have indicated that ministers intend to consult on fees and what the position is on legal aid. What is important for what we have set out in the bill is that when those decisions are taken, they will apply to the bill when we are looking to commence later in 2017. It is quite a substantial part of the bill, and I would have thought that it would have been helpful to provide estimates. I accept fees as a matter that you wish to consult on, and that is fair enough. However, the question of legal aid touches on the public purse. It is a hard-pressed budget. Are you saying to me that there have been no estimates at all to inform the minister's decision about whether to afford legal aid or not? I am going to answer that question with reference to the bill. That is not something that is considered for this bill. In terms of the broader policy, I am not able to provide an answer on other than what I have said to the committee already. I think that it would be helpful for the committee convener if we knew whether there was, if it is not your policy area, somebody else's, that those costings have been done, and albeit there may be broad estimates to inform the minister, I think that it would be useful information for this committee. Agreed. I really just wanted to ask you about market rents. What that means is that I accept the premise of the bill is to have a much more simplified and clearer and fairer system of tenancy and private rents, but if I go back in my own history, I do remember sharing a flat with five other girls in Edinburgh and the landlord put the rent up by 50 per cent and we called somebody, I think, who was known as the rent adjuster at that time, who came along with the property owner and agreed a 20 per cent increase in the rent, which we accepted and he accepted and everybody went away, and that was the end of it. How will we see fairer rents in this bill? In terms of it, it would affect the financial memorandum in terms of outcomes of appeals and tribunals and so on in the same situation. In other words, is the market rent whatever anybody can get for it, whatever the property owner, whatever rent he or she can attract for that property, is okay by everybody? I think that the way we have described it in the financial memorandum is that it rents a market led, so a willing landlord, a willing tenant agreeing what the price would be, because if that happens, numerous times that creates averages, which will give market information on what the market rent is. In terms of what we have provided for in the bill, tenants will be able to seek education. For example, in the scenario that you said, 50 per cent seems to be quite a large increase, so they would be able to go to rent service Scotland who would then determine whether or not that increase was fair or reasonable and what they would have in reference to when determining what other people are paying for similar or comparable properties. The rent service Scotland has a lot of experience in doing that sort of thing, so that is the position on market rents. The other thing, Scotland has changed dramatically in as much as we—I think that I am right in saying that at one point we were over 70 per cent of people who lived in social housing in Scotland. That has changed because that housing sector, although it is coming back into play, has not been there, and therefore there has been a dramatic growth in the last 30 or 40 years of the rented sector. Have we looked at countries that have always had a private rented sector and seem to work very well? Germany comes to mind, Holland or the Netherlands, where that has been the norm and the relationship is there because people have lived in the same house all their lives through the rented sector, which is not something that we are used to in Scotland. That is a good and interesting question. There is a short answer as we have. This is a strategy that the Scottish Government produced and published in 2013. It was developed in consultation with stakeholders through the private rented sector strategy group. We consulted on that and informed the Scottish Government's final strategy. That basically sets out what we are looking to achieve in the PRS and how we are going to do that. One of the actions in there, by the way, is to review the tense regime that follows on to where we are today. Other countries do have private rented sectors. You mentioned Germany, where they often cited the example of a country with a large private rented sector, where people tend to look at it as a more attractive option and stay in it in the longer term. It is interesting to look at the evidence around that, because there are reasons for that, some of which are cultural, some of which are due with the broader fiscal framework and incentives that the Germans provide to landlords. Ultimately, what we are looking to achieve in the PRS is to have a sector that is attractive to everybody who wants to live in it or invest in it or who walks associated with it. For it to be a positive choice for those who want to stay, which it is for many but not always for everyone at present, that is why we are looking to make the changes that we are making, including the new tenancy that will improve security of tenants with proper safeguards for the landlords, lenders and investors. I want to turn to the issue of students and their tenancies in the future, because I think that some important issues have been touched on here in previous questions. I appreciate the intention is to keep rents down, including for students, which is welcome, but I worry about unintended consequences. Can you not visit a scenario where, if a student—obviously, you hope that there will be good liaison dialogue between the landlord and the student—and then, as you said, a tenancy comes to an end mutually agreed, which benefits both parties and it can work as it does normally? However, if it does not, that can happen. If somebody moves on to that rolling contract, that indefinite agreement and they walk away, for whatever reason, in September, October rather than in an organised fashion in June, July, that landlord is left high and dry because they have missed out on that student market. That can make a big difference to what rent they can let that property out. If landlords go through that experience on a number of occasions and they decide that this is just not for us, we cannot live with this model any more and they walk away, is not it a danger that you get reduced supply and new people come in but come in at a higher level? They start off immediately charging higher rents and, potentially, as the university touched on, there could be a situation where, because of such a situation, in fact, students might be paying higher rents. How far have you worked through that scenario and to what extent have you consulted on the potential for that to happen? What we have set in the financial memorandum is that we accept sub-markets of the PRS. We will need to adapt based on what we intend to do in terms of the new tendency. However, we do not see that as being a fundamental adaptation. Things can change, and landlords will still be able to do what is ultimately most important to them, which is to effectively manage their properties and, if they are looking at their properties and investment, to realise that investment in one way or the other. Really, what that comes down to is that, at the moment, landlords can say that, if they have issued a shot, they should say that the tenant has to leave at a certain point, and more often than not, they do. However, sometimes they don't, and it can take months for a legal eviction to take place. That is one of the reasons why we are looking to move to the more accessible specialist tribunal system, which is something that landlords have broadly supported. Under the new system, landlords will have crowns. We do not expect the pattern to really change much, so most students—this is backed by, for example, the representative body of national union students—if they are looking to stay for nine months, they do not want to be paying rent on some of where they are not staying. If they are not going to be staying there, they will look to give notice and move, and landlords will be able to rent out that property for the following year, as I mentioned earlier. The worst case now for landlords is that they have eight weeks, but we have good engagement that they could have more than eight weeks, because once the tenant has confirmed what they are intended to do, then the landlord will have that certainty that they currently have. If you look at what the actual change is, it seems that it is rebalancing the relationship between tenants and landlords to some extent. It is not quite as favorable from a landlord's perspective in terms of how they can currently manage their property. However, it is not something that fundamentally changes their ability to do what they want to do in terms of letting out property. I think that one of the final things that is really quite important is that the short-short tenancy does not work that well. One of the reasons why—and it is actually one of the reasons why there is broad consensus with stakeholders—the short-short tenancy does not work too well. It is complex. It is very hard to really know if you have done it right. The sector works in a way now that most tenants—we have said that in the financial memorandum—will leave the tenancy about 90 per cent or so. In most cases, a landlord really would not know whether they have done it right or not. However, there are instances in which landlords think that they have a short-short tenancy, and therefore a no-falt ground. However, they realise that the paperwork is not being done properly, and they do not. I think that there are benefits to having a clearer, simpler system in which we will support a more professionally managed, high-quality, private sector that inspires consumer consciousness and is attractive to attracting investment. In the United States, and quite rightly, they have raised this on a number of occasions, because the amount of rent that students are paying is clearly far too high. However, in terms of the nine-month contracts, that arrangement seems to work broadly quite well. Why did you not give any consideration to a separate arrangement for students in consultation with the United States and other bodies? Or did you not give any consideration to a separate arrangement? No, but we have discussed this with stakeholders. The stakeholders have made the various positions that they have done to us. Ultimately, as I said earlier, we are going to have a more simple, clearer system—one tenancy, which is clear and simple to use in the current arrangements. Everyone who is on the current-assured system will transfer across to the new system. Ministers have said that their position is that they want all tenants who are transferring across to have the same rights under the new system that they currently have under them. I think that what I am saying is that they will not want to differentiate and students from other tenants in a way that would potentially provide them with less rights than other tenants in the PRS. I think that it is a point that does not want students to pay higher rents. My concern, Mr Stalker, is that you have said that you have engaged in consultation on this, but the University of Edinburgh clearly is not reassured that it is not disrupt on the rental market. I simply therefore convene to say that it is worthwhile to ask why they still feel a bit of disruption. From my point of view as a committee member, I would like to be reassured that these changes are clearly well-intentioned. Clearly students want to have good rights as tenants, but, fundamentally, they do not want to pay higher rents. I do not think that I have received assurance that I do not want to have that unintended consequence. Okay. We have consulted with two full public consultations. I and the bill team have engaged with the broad spectrum of stakeholders, including those that provide university accommodation. In answer to the question that was asked earlier about the specific question that the University of Edinburgh had asked about, would they still be exempt if they provided an answer to that? I think that a lot of landlords might just say that they are just going to give them a 12-1 tenancy and the students are going to have to pay for 12 months, and that is going to be it, rather than all this engagement with the students and all this kind of stuff. Frankly, for a lot of them, I think that it is going to be too much more trouble than it is worth. At the end of the day, the students are the ones that I think I could lose out here, but I want to just touch on just one thing that has not been really covered, but you did settling questions, but you did touch on it a wee bit yourself in your last answer. First of all, I would say that you said that some sub-markets will need to adapt, and our concern is that they may adapt in terms of providing less supply. That is the thing that I want to just touch on. The Scottish Association of Landlords said that, in terms of the loss of the no fault ground, the element of discretion may prolong the time that it takes to evict the tenant, the new legislation. Ultimately, if the tribunal does not award possession, it may result in the landlord being forced to continue the tenancy, despite the fact that the tenant is breaching the terms of the tenancy. They then go on to say that, with a tenant that has stopped paying the rent, currently repossession can often be achieved in two to three months. Under proposals that we estimate, it may take a landlord at least five months to take off possession from an on-paying tenant. Clearly, that will have big financial implications for landlords in terms of lost revenue. Again, the issue there is obviously supply and will people want to enter such a market, given that there are 146,000 landlords and they all have an average of 2.5 flats. I don't know if some have got dozens, but a lot only have one, so it's a small people I'm thinking about here. You said in the reply to Richard that you seem to be of the view that this legislation would make quicker to process an eviction in such a case. Did a pick-up write on that, because that's not what the landlord seemed to think? The landlord's perspective on the tribunal is that they are supportive of the tribunal because it's more accessible and specials form of redress compared to the courts. This comes back to the 2014 House and Act, in which both the Scottish Association of Landowners in the Scottish Land and the States have given evidence to the committee that they were supportive of that. One of the reasons for that is that it doesn't happen that often, or less often than you think, but where a landlord does have to go to court through the court system, it can take some time, particularly for one of the main reasons that landlords tend to go to courts, which is for rent arrears. I think that they have said then, and I think that they will continue to support the first year tribunal as an effective place of redress for both tenants and landlords. We don't know whether there's going to be fees, whether there's going to be legal aid, we don't know how many people are going to try and access the system because those will make a huge impact on the number of people. If there's not going to be any costs to tenants, you're going to have a lot more people going to tribunal than if they have to pay a cost and if they don't get legal aid. How can you then be confident that the time to process applications when you don't know how many there's going to be and what circumstances there'll be under will be less than the current situation? I'm going to ask my colleague Charles if I may just outline what was set out in the financial environment on the potential demand from the change in policy on the first year tribunal. From what I've said earlier, then obviously that is an assessment based on currently the position of there not being a decision on fees there for no fees and also what I said earlier about legal aid, but Charles, would you mind outlining the numbers that we expect? I think that we do have a fairly good idea of the number of cases that we expect in the financial memorandum. It's just over 1,100, and we based that figure on the operation of the private residential tenancies board in Ireland. The figures that we have questioned in the financial memorandum are based upon a tribunal system that's up and running currently. Therefore, I suppose, an evidence-based point of view, there's no reason to expect a particular surge around those if that's what's happening in another country with a similarised PRS system. Ireland, do they get legal aid and other fees? I'm not sure on the question of legal aid, but I know that they do charge a fee in Ireland. So, if there's no fee here, then that 1,100 number would be significantly increased plus the population in Scotland is bigger. I don't know if the rental market's larger, turning about 368,000 properties here, 146,000 landlords in Scotland. Are the figures comparable with the Republic of Ireland? Well, the PRS in Scotland is slightly bigger than in Ireland, and we did uplift our estimate to reflect the larger size of the PRS in Scotland, so we have done that. Just one last question. If there's no fee, what impact do you think that that would have on the number of people applying for tribunals? I can answer that question. If there's no fee, we'll sit out in the financial memorandum. That's the figures that we've assessed and provided for that. Based on what? I mean, based on getting legal aid, I'm not getting legal aid. Okay, so just for clarity. Sorry, there's too many ponderables here, I think. Right, so just to be clear, the assessment that we've set in the financial memorandum is assuming no fees and we've not assumed legal aid either, but that's not the set that might not happen. It's just that's the model that we've put into the model when we've basically produced the numbers. Thank you very much. Okay, that's concluded our questions. Are there any further points that you want to make to committee before we wind up? No. Okay, well, thank you very much for your time and for answering our questions in such detail. I'm now going to call a brief natural break until 11.50 to enable a change over of witnesses. Our next piece of business is to take evidence from Anne McTaggart MSP in relation to the financial memorandum accompanying her member's bill. Ms McTaggart is joined today by Diane Barre of the non-government bills unit. I welcome our witnesses to the meeting and I invite Ms McTaggart to make a short opening statement. Thank you, convener, and thank you, committee members. Good morning, as she'll still say, it's still morning, nearly there. I'd like to thank you all and the committee for the opportunity to provide evidence today on the transplantation, authorisation of removal of organs etc. Scotland bill, and for allowing me to submit supplementary evidence just as recently as over the last few weeks. I know that the committee's focus is on financial aspects of the bill, however. I just wanted to take a few moments to explain why this bill is necessary and why I have introduced it. There are currently 571 people in Scotland waiting for a transplant. Demand for organs far outweighs the number of organs being donated. As a result of three people die each day in the UK, who are in need of an organ transplant, this is far too many. Many more face years of ill health, often with no guarantee of there being a suitable donor. That needs to change. I believe that a soft opt-out system of organ donation is the solution. Calls for an opt-out system are not new. Members of this Parliament and indeed members of this very committee have considered this issue many times over the years. I want to commend the work done by all the MSPs from all parties to highlight this important issue. Work that has helped to inform this bill and, more importantly, give those awaiting a transplant under families hope. This is not a party political issue. This is about saving lives. The bill introduces a soft opt-out system of organ donation in Scotland. According to international evidence, a soft opt-out system can lead to an increase in organ donations of between 25 and 30 per cent. The financial memorandum focuses on the costs of implementing the bill, and much of that evidence that the committee has received also focuses on those costs. However, we should not lose sight of the potential gains. Needing an organ does not have any boundaries. It can happen to anyone. If you have ever spoken to anyone who has received an organ donation, you will know how transformational it can be. It is not too strong to say that it can be a matter of life and death. The Scottish Government and I share the same ambition more donors, more transport, more transplants and more lives saved. That ambition will not be realised without investment and change. The financial memorandum provides a best estimate of the expected costs. In my letter to you, I have provided a revised estimate of £6.8 million, with details of each area of spend. I believe that that is a realistic and accurate assessment of the costs of implementing the bill. The written evidence received by the committee suggests that most agree with me also. Some of the best-performing countries in the world for donation and transplant rates have a soft opt-out system. Support is growing. With the recent introduction of soft opt-out system in Wales and the Northern Ireland Assembly has recently agreed stage 1 of an opt-out bill, Scotland has led the way on so many other health issues that we should be leading and on organ donation to. Let's not limit our ambition for Scotland. Let's lead the charge and not wait and wait and wait. Don't put and hold the lives of those waiting for an organ donation. Thank you for listening and I welcome now to answer your questions to help us to make this bill possible. Thank you very much for that. I know that it's your first time in the finance committee, so what will happen, as I'm sure you're probably aware, is that I'll ask some opening questions and then colleagues around the tables will then come in. The first question is really from the submission from the Scottish Government. The number of questions you'll understand will be from that, because it was obviously the most detailed submission, and you're right. A lot of the people who submitted evidence more or less said that there was no real impact as they saw it, so we'll focus on the organisation that said it would, which is the Scottish Government. You said in your opening statement that what you want and I think what we all want to see with this legislation appears through is more donors, more transplantations and to reduce the number of people who are actually waiting, particularly those whose lives are threatened. In paragraph 4, the Scottish Government said that the bill does not provide an estimate for the number of additional donors nor transplants that legislation would lead to, so what's your response to that? Has any work been done to see what impact do you think it would actually have on that? Thank you, convener. The estimate that we have provided is what we would thank the Scottish Government for, because they were able to give some of that detailed information and costings that we weren't able to provide up until they did. Given the fact that we're unable to put a cost on people's lives, the Scottish Government has given up its best estimate, and we have looked at that as part of myself and Diana in the bill committee, we have looked at that as the best estimate. The actual costs that FAR have provided to the actual costs incurred by the Welsh Government for the soft-opt legislation, and we have taken a lot from their information and used it towards our bill. Obviously, we have adapted that because we have a greater population. The costs of additional transplant operations arising from the bill are far more difficult to quantify. Indeed, in its submission to the committee, the Scottish Government acknowledges that, despite the NHS national service division having undertaken a great deal of work to forecast the potential costs of additional transplant arising from the Government's own donation and transplant plan for Scotland over the period of 2020, it was, and I quote, not in a position to provide any robust estimate of financial cost savings to the NHS and to Scotland. As a result of the possible 25 to 30 per cent increase in organ donation for implementing a soft-opt system, although, in its written evidence, the national service division says that it would expect to manage any increased activity within the existing portfolio. Thanks for that. The issue of costs—obviously, you have answered my next question almost about when the Government said that it is impossible to accurately assess the cost of the proposed measures from the limited information container within the financial memorandum. I have to say here on the record that I think that individual members who bring forward bills with the best intentions do not have access to perhaps all the information that they should in putting together bills, and that is an issue that, as a Parliament, we should be looking to. On what we have got in front of us, I will go back to the question asked. One of the things that I was wanting to know about the number of additional donors in transplants that legislation would lead to—in other words, from the evidence in Wales and elsewhere, how many more people are likely to come forward—not come forward—sorry. How many more people are likely—more organs are likely to be available for transplants as a result of that? I apologise for not covering that initially. We have the figures, and it is expected that there will be, as I said, a 25 to 30 per cent increase. That could actually mean—I think that is the figure that you were looking for—additional 24 to 29 donors per year and additional 75 to 90 operations per year. Obviously, depending on how many organs will be removed from each person, we will equate to how many operations that will take. That is very helpful. One of the issues that has come up is the role of the authorised investigating officer. The question that I have been submitted here is that that role does not really exist. It is about how much would that really cost, what training would it require, what kind of people would it apply? I am just wondering if you can give us a summary of what you think that this job would entail and how much it would cost. Obviously, it is a new position. At the authorised investigator person, you will see from the Scottish Government's estimate and from their financial memorandum that they have created a whole new tier. We have not done that because, quite simply, we do not see that there is a need to create a whole new mass of people. There are people currently working in that role just now. They are called senior nurse of organ donation, we call them SNOTS. Those people have the skills and are working within that job, and it is just about enhancing that role and extending that role that they are currently doing. We do not see that figure that the Scottish Government has placed. We have chosen to select that option, and I see that as the most preferred option and the most expensive option. We would normally say in our trade that that is the Kenny Rolls Royce model that they have chosen. Creating a new role is not a requirement of that bill. Therefore, the financial memorandum is not missing the costs from it because we do not reckon that it should be. I will ask one further question, and then I will open out to colleagues around the table. It is just that we are only focusing on what the Scottish Government has to say. One of our submissions that we have is from the local Lothian NHS. They have said that, as a service provider, they will be disproportionately impacted by the bill, and there is a certainty over the impact of lives of transplantation activity when they are taken. I think that you have really touched on that latter point, but I am just wondering how, if you have done any work to look at how individual health boards might be affected, as opposed to the national picture a wee bit, specifically in terms of Lothian. The costs made from the NHS boards budget in paragraph 25 of the financial memorandum confirms that most of the additional costs are expected to fall on the Scottish Government's health budget and that its contribution to the NHSBT should not change. That is similar to the Welsh Government's approach. I refer the committee to the confirmation and the Scottish Government's submission that the NHS national service division has undertaken detailed consultation with NHS boards to ensure that those resources will be made available to support the additional costs related to meeting the Scottish Government's targets. There was just the evidence from the NHS national services division that they confirmed that additional costs related to the implementation of the bill would be met. They said that, if there were to be an increase in transplantation activity as a result of this bill, the national services division would expect to manage this within its existing financial portfolio, so there does not look like there would be additional costs that could not be met. Thank you very much for that. Thanks, convener. I mean, probably best continuing on that theme just now, because we had Lothian—I might come back to him—but the Western Isles, in particular NHS Western Isles in their submission, seem to feel that they would be disadvantaged, because, obviously, they are one of the smaller ones. They are not carrying out any actual transplants themselves and seem to get recharged, as I understand it, from other health boards who do the work. If we just think of them for a minute, how would they be affected? It is about trying to offset some of the savings, and you are right, not only with the Western Isles, and I am not sure if they would not benefit in a sense. We are signed up to a UK-wide organ transplantation delivery, so those costs would be made throughout. It is not always that some of the organs—in fact, some of the organs that are transplanted in some of the people, perhaps from Western Isles or within Scotland—do not necessarily come from a deceased person in Scotland. They are UK-wide. I understand that dialysis would be one of the main savings, but in other cases there are not such obvious savings if somebody gets a transplant. That is right. The dialysis—you are right to touch on that. There are currently 571 people awaiting a transplant in Scotland. 425 of those people are waiting on a kidney transplant, and that is 74 per cent. There is a potential for savings from the majority of the transplant operations. The Western Isles will be part of that. The kidney can talk about most, if you want more information about how much it would save. It is the greatest amount—74 per cent—of the people awaiting. That is where a lot of the money is perhaps not made but offset from kidney dialysis, the costing of how much it would cost if a person did not get a kidney transplant about their own current costs. I agree with your opening comments, and I am sympathetic towards the bill, but the committee has to look carefully at costs and potential savings. I think that it is annex B of the Government's response that was quite blunt at one point, where it said that we are required to make the point that, with the exception of kidney transplants, patients who do not receive a transplant will die, and therefore they would not have on-going costs. Would you accept, in principle, without getting into all the detail that for some patients, if they do get a transplant, that will mean that there will be a cost of a quality of life that they would not have had before, but there will be on-going costs that they would not have had before? The on-going costs would offset how much that would cost. The cost benefit of a kidney transplantation compared to dialysis is £24,100 per year, and will that, over a 10-year period, be a user in the finance committee and good at the maths? It is £241,000 over a 10-year period. An example of that is that 153 transplants were performed in Scotland in 2014-2015, representing a cost saving of approximately £3.7 million or £37 million over the 10-year period. That's for kidney. It's the exception. For the others, if somebody gets a transplant, if we just look at the NHS and leave a side quality of life and all the rest of it, it would mean a higher cost for the NHS on-going. That's where they would aim to offset that with the kidney savings costs. We are only talking about 26 per cent, aren't we? Going back to Lothian, it gave us quite a full range of comments. One of their points was that the bill does not explicitly highlight the additional cost of organ retrieval and transportation. Would you consider that a major point, or is that quite minor? Sorry, Mr Mason. It was towards the end of the Lothian submission that they said that the bill does not explicitly highlight the additional costs of organ retrieval and transportation. Do you accept that? Or is it minor? If additional investment in retrieval services is required, that is a matter for the Scottish Government for them to decide. How the savings are redistributed within the NHS would be for the Scottish Government and for the NHS to determine. I do not think that within the realms of the bill that I would be able to answer that. Is your argument, because there is Lothian stuff here, that although we are getting individual feedback from the individual boards, they are unable to look at the whole picture, whereas you and the bill are looking at the whole picture? Is that the logic? Yes. I would not foresee many of the health boards writing to tell you that they will be able to gladly be able to splash cash on and have a wash of cash around. I do not think that many health boards would be writing any kind of evidence that that would be the case. I think that they have given what they reckon, but you are exactly right that I have looked at the overall picture for Scotland to buy it. I think that my final point is that NHS Lothian, as a service provider of both transplantation and organ retrieval, because I think that it does some of the stuff nationally, NHS Lothian will be disproportionately impacted by the bill. Is that the same answer that although it might be disproportionately impacted, the overall picture will be more neutral? Again, I think that we are going over the same question. I see it as an overall broader picture and it is about—it would not boil down to me if the person in the Western Isles or the person in Lothian was needing that transplant and the cost that I look at as an overall picture, as Scotland-wide, as opposed to each individual health board. Quite a lot of stakeholders seem to agree with your financial memorandum, but obviously, as has been touched on, there are a bit more differences between the Scottish Government, which is the first impression that looks like a massive difference, but when you realise that it is over a 10-year period, there is quite a big difference in percentage terms, but not so big in absolute terms, year on year. You are saying that it is going to be £680,000 a year, and they are saying that it is going to be £2.2 million a year over a 10-year period. Nonetheless, there is a difference. They cite two differences. One has been touched on as this authorised investigating person. The Scottish Government put an estimate for that of £10.9 million over a 10-year period. You have described that as the Rolls Royce, and you think that there are other options that would do that. You referred to something called snods. I guess that you have assumed that the cost will be nil for that, but what is your assumption of cost? If you go for the snod option instead of the AIP option, what is the cost implications? I have said that that would be the Rolls Royce model for bringing in an additional whole set of a different team. The people who are doing it just now are the snods, but with enhanced training. We have put that training bill down at £0.5 million. The Scottish Government is basically saying that they reckon that they would need 18 AIPs. You could use existing staff. They would have to be trained and there would be a cost implication for that, but you do not think that there would be any new staff required. You think that it could be done from existing people, as it were. Not only do I not think that there would be new staff required, but it would be a different system then if we did bring in an extra layer of staff. That would be a different system from what has been operated elsewhere. I am not really sure why you would bring in that additional team in a sense. The Welsh Government does not have that in that they are ready to roll out as of December. That is not the case there. I am not really sure how that would work out, given that we are UK-wide service. How that would work out would a snod then be up—you know, the snod would be able to do it down there, but we would be calling them something different up here and a different role. I am not really sure how that would work out and I do not think that it would work out. That is why we have not looked at that option. You mentioned Wales, so Wales has not gone live yet. It will go live next month. In terms of what they are planning to do, are they following the model that you have in the bills at Wales? They are not having AIPs, as the Scottish Government said yesterday. They are doing effectively what you have outlined. Yes, most certainly. I have spoken with some of the drafters from the Welsh Government and also from the Northern Ireland. We regularly meet up to try to put this together as much as we can to make it as best a bill as we possibly can. The Welsh Government has not included AIPs separately and neither have I. Northern Ireland is behind Wales but ahead of us. As far as you understand, their approach is similar to what you are suggesting. That takes the biggest financial difference between you and the Scottish Government. There is a second one that they describe as on-going publicity. You have set funds aside in the financial memo, something to the tune of £2.8 million, for the publicity that would be required for this. The Scottish Government seems to accept, or broadly similar to you, in terms of the initial publicity. However, they estimate a total of £4.9 million over and above you for on-going publicity for the eight years following the initial two. Their argument being that, particularly people reaching the age of 16 would need a specific communication to anyone new coming to the country and so on, I guess, with a general refresher. You have not got that figure in there. Can you explain the difference between your thinking and the Scottish Government's thinking? The Scottish Government has an obligation under section 1b of the Human Tissue Scotland Act 2006 to promote information and awareness about the donation for transplantation of parts of a human body. To meet that obligation, the Scottish Government has an annual organ donation advertising budget. It is reasonable to assume that any recurring campaign cost related to the organ donation would be included in that annual budget and that no separate advertising budget would be required, so that is simply why we have not put it within the financial memorandum. Therefore, any recurring organ donation advertising campaigning costs are not additional expenditure attributable to the bill and are not included in the financial memorandum. The financial memorandum includes the most up-to-date organ donation advertising spend information that was available, which was £527,000 for the year 2012-2013. So your view is that the bill does lead to an increase in advertising spend for year 1 and year 2, but in years 3 to 10 the bill does not have an impact on advertising spend. I have two questions. One is a follow-up about the authorised investigating person, because NHS blood and transplant in their submission suggested that it would cost around £1.1 million per year to ensure 24-hour availability of such nurses 365 days a year, so they seem to accept your premise that you do not need a whole new bunch of people, there are existing people, they have not commented, I do not think, adversely on the amount allowed for training, but they seem to be suggesting that these people need to be 24 hours a day and I wonder whether you would comment on that. One point one million is the NHS BT's estimate of employing that additional 18 staff as authorised investigating persons. I will say it again that it is not a requirement of the bill, as you are probably well aware by now. That was not the NHS BT's approach to the implementation of the Welsh Bill soft-opt out legislation, in which it updated the policies and processes of the senior nurses, which are SNOTs, and the clinical leads, which they are called clods, to reflect the changes to their roles. As the NHS BT provides a UK-wide service, I would expect it to provide a similar approach in Scotland. So they have done it in Wales, they can do it in Scotland. That is very helpful to know. Finally, let me turn to Wales for a minute, because the Scottish Government not unreasonably wants us to wait, wants us to evaluate, because the opt-out legislation in Wales is fairly recent. It is not unreasonable. Why should we wait? The Welsh Government will be monitoring and they have said that they have not actually started, so they will be monitoring the process. They have started to monitor, sorry, but they have not started the process, so they will be monitoring and evaluate the impact of the soft-opt out legislation over a five-year period and publish its final report in 2017, which is a long way away. The Scottish Government decision to wait for at least two more years will have a financial impact on the NHS. Paragraph 31 of the financial memorandum makes clear that kidney transplants do offset the cost of the transplant procedures due to the cost associated with the dialysis and the length of time a patient is expected to survive on the dialysis. Again, with 74 per cent of the people awaiting kidney transplant organ donation, sorry, they are waiting for kidneys, there will be a financial cost to the NHS in continuing the dialysis treatment for the 425 people waiting. Financial terms, that means 30,800 per patient per year. In terms of the potential financial savings, there would be 609 kidney transplants took place of which it saved the NHS £145 million in dialysis costs, waiting at least another two years because it could be longer than that, does not only incur a financial cost, the cost to the people, that is the real cost, I am afraid, the longer the way, the greater the number of people who are either taking off the waiting list because they are so poorly, or like I am sure the convener mentioned earlier, or they pass away for being so ill. I am too sensitive to mention that. Thank you very much. That appears to be exhausted the questions from the committee, there are any further points that you want to make before we wind up this session? Oh, no more questions, I was just getting in the hang of it. I can't even force them, you know. And I am in between now and lunch, aren't I? I hope that I have given the committee what has been required, and if there is any further information that you do require, convener, as the committee, please do not hesitate whereby I will get back to you in writing with the figures that we have and the information that we have. Thank you very much, and that is very helpful offer. If we need to, we will take that up. I am just going to call a one minute recess to allow witnesses to depart, and then we will move on to agenda item 3 straight away. Folks, our final item of business is to report back on the recent fact-finding visit to the Basque country by Richard, myself, along with, of course, Jim and Ross. Members have received copies of a short written report summarising our findings. I am not going to go through it all, but I want to highlight some points. Richard will come in and, if there is anything that he wants to add, he can feel free to do so. The report summarises the key findings from our visit to the Basque country. A fascinating part of Spain is less than a tenth the size of Scotland. It is 2.2 million people. It comprises three very prosperous provinces. The level of productivity per person is 34.5 per cent above the Spanish average. Its human development index is higher than Iceland, Norway or Sweden. Less than 5 per cent of Spain's population, but more than 6 per cent of its GDP. What is interesting is that the contribution that the Basque country makes to the Spanish state, which is fixed at 6.24 per cent, known as a quarter, pays 6.24 per cent of Spanish state expenditure in areas that are not devolved to the Basque country. The way that everything is being set up is through something called the economic agreement, which regulates the financial and tax relations between Spain, the Spanish state and the Basque country. It derives from historical power held in the Basque territories to regulate, manage and collect taxes, and it was certainly drummed into as we were there that this goes back well into the midst of time and is part of their historic rights, which they feel very strongly. As such, the Basque country has a history of a specific Basque tax system with its own treasury and collection infrastructure. Because the economic agreement is bilateral, the intergovernment machinery provides equal weighting to the Basque and Spanish representatives, and this bilateral relationship was considered key to the economic agreement. Nearly all politicians and officials that we met were strongly supportive of the economic agreement. It was seen as an effective mechanism for governing, which has allowed the Basque country to develop a successful and distinctive economic and industrial policy. There was agreement around the strong causal link between the economic agreement and the positive economic and social indicators evident in the Basque country. For example, on GDP per capita, productivity, employment, research and development spend inequality and higher education participation, the Basque country outperforms Spain and the European Union average. A key message was that Scotland's tax powers must be for purpose and usable. What is interesting is that it showed that it was a common team-bask approach to be successful. In terms of what we discussed last week, in terms of behavioural patterns and how taxation impacts on that, we asked some questions of that. Despite the fact that the Basque country has higher personal income taxes than the rest of Spain, it was not perceived to be an issue because of the quality of workforce, infrastructure and research and development investments that we are seeing as far more critical. Richard, do you have any more questions? I think that that sums up the key points. It is important to play some record the fact that the Basque Government and the Parliament are so helpful to the committee in terms of our inquiries and in providing us a huge amount of information, which was all very informative indeed. I think that the key issue that I took from it was the importance of that bilateral approach agreements between the Basque Government and the Spanish Government and the fact that, while there are certainly consensus in the Basque country about the financial arrangements, about the economic agreement, it is disputed on the parts of Spain, but it is survived clearly because they have that bilateral approach to agreeing their tax regime, any disputes around that and in terms of the broader economic policy. For me, what came out of that was that we are discussing in terms of the current Scotland Bill what will happen in terms of any disputes between the UK and Scottish Government through our new tax powers, and we have been debating whether we have some independent arbiter. In fact, the experience of the Basque country is rather having these joint committees where there is equal representation between the Basque Government and the Spanish Government. That was a helpful model to examine and convene it, and it is certainly something that we should take into account as we move forward in our considerations over the new fiscal framework. The final point that you made particularly in terms of their approach to personal taxation and those issues is that there was very little experience or very little of an issue for them in terms of people moving from or to the Basque country in terms of that regime and that other factors were far more important in terms of people coming to the Basque country. Certainly, it is very clear that they have had an economic success story there, and I think that more broadly there are things that we can learn from that. The economic agreement has lasted 34 years with different Governments in Madrid and the Basque country shows how robust it is. Of course, while Madrid, like the UK Government, constitutionally holds the upper hand of the Basques, has significant bargaining power, in my way, I said what happens on this agreement, what does Spain do, and they laughed and basically said, we collect the taxes, we've got the money in our pocket, so they have to work with us. I think that equality of partnership is very significant. I should have also said that it was a bit remiss of me not to do so that the level of assistance that we were given was such that the finance minister, the day before he was to present the budget to Parliament spent an hour and 45 minutes with us going through in great detail the way in which they work in terms of their fiscal framework and, indeed, historically how they reached what they have actually done. All of the Basques are extremely hospitable in terms of working with us and trying to help us in their quite keen on developing our relationship with Scotland and, indeed, other countries. Anyone get anything they wish to ask, or? I mean, I'm interested that they haven't touched the quota since 1981. That's equivalent, I guess, of the block grant adjustment, although it's going the other way, but it's the balancing amount. Presumably that is quite a sensitive issue for them as the block grant is for us. I think that it is. I think that they have, well, 4.6 per cent of the population, 6.07 per cent of GDP, but they're expected to contribute 6.24 per cent. But I think that the view that they have is that, given the difference between GDP and the quota, to go to all the trouble of noising up the Spanish Government and creating all sorts of political battles over that fairly small amount in relative terms, when they are doing much better than the rest of Spain, they feel it's not really a reason to quibble. Of course, if the Basque economy continues to develop and grow and it goes above 6.24 per cent, GDP will still be held to that 6.24 per cent, and they'll be able to say to Spain, well, when it was below, we didn't quibble about reducing the quota, we're not going to quibble about it now, so I think it's about taking that judgment. I mean, it has to be said that the left nationalists who represent 21 of the 75 MPs in the Basque Parliament, as opposed to what you might call it, the mainstream nationalists that PNV get 27, they do want to renegotiate it because they said that it shouldn't be spent on things they don't agree with, like the Morrke, it's much Morrke defence, etc. But the rest of the parties basically take the view that it's really up to Spain to decide how it spends its money, just as it's up to the Basque country to decide how it spends its money, so it has a non-interference policy. Is there anything else that anybody wants to ask about it? Sorry, Jim's just pointed out here that because it has to be agreed unanimously as well, it makes it difficult to change, but there is no real urge to change it at this point broadly across the Basque country. I can ask me perhaps from a slightly different angle, but one of the issues that obviously we've been looking at both with this committee and also with the devolution and further powers committee is around the scrutiny that can be applied to intergovernmental relations, intergovernmental agreements, particularly around the fiscal framework. I note here that there is an arbitration process as mentioned, but I wondered what scrutiny, if any, is applied to the discussions and negotiations that take place between the Basque Government and the Spanish Government, particularly in relation to financial operations and the economic agreement. My understanding is that scrutiny is quite in depth, because it is not only an arbitration board. When they have discussions, the two sides are represented by six individuals each, and the Basque country is represented by three representatives from the Basque Parliament and also one from each of the regional provinces. Each of them wants to look at how it is impacting on themselves, so I think that there is quite extensive scrutiny because it is a key aspect of their entire financial structure, so I think that they do scrutinise it quite effectively. Richard? I think that the key point that Mark brings up is that whatever structure we come up with needs to be very open to parliamentary scrutiny. I think that Kenny is right that there is great representation in terms of the municipalities and as well as the Basque Government. I didn't get a strong sense of what the parliamentary scrutiny was, so I think that certainly for us learning processes are structured there, but we have a different parliamentary structure here, so we would have to attach that. Obviously, we want to establish best practice in that in terms of the scrutiny of the other way that the process works, but I think that the learning process for me is, in fact, our bilateral approach to having that for me, the joint committee, and the fact that it is there is a big thing to take from it. I think that we will have to develop our own processes of scrutiny, to be honest. I would like to be fair. We were looking a lot at what the relationship between the Spanish state and the Basque country was, in terms of the transparency between how those two institutions operate, and how the Basques feed it back to their own provincial governments and Parliament. We didn't really pay much attention to that, but one imagines that they do scrutinise that. I would have thought that the Basque Parliament would want to know exactly what its representatives are doing in terms of representing it in Madrid in terms of this agreement and making sure that everybody was playing by the rules, but there certainly seems to be the broad consensus that has been beneficial for both sides. We have seen in Scotland—obviously, we are in the third Scotland bill in less than two decades—whereas there seems to have been a level of stability in the Basque country, which has allowed those areas to develop significantly over the years. That is only related in thoughts. The committee has made some efforts to go and look both in Stockholm and the Basque country and at a visit to Ireland. Has there been any interest from the Westminster Government in looking at, before they declared this the most devolved region in the world, that they have spent any time looking at how the Basque region works in Spain or any other devolved region in order to draw that conclusion? I would speak for the Westminster Government, and I do not think that it is necessarily either. It is the most devolved place on earth. I do not think that that is the case at all. There seems to be greater devolution here. You have seen in the report a whole list of taxes, which are administered in the Spanish state, but they are all collected as well in the Basque country. We are talking about everything from VAT, excise duties, income taxes and corporation taxes. Corporation taxes are different instantly in the Basque country. They also have a wealth tax. There are a lot of taxes that are different, so there seems to be more devolution in what it has been seen to be able to operate with a high-level stability over a long period of time. Is there anything else? Well, thank you very much for that. We will put that into the record. Thank you very much, everyone, for your contributions today.