 I welcome everyone to the 24th meeting of the 2018 of the Environment, Climate Change and Land Reform Committee. We have apologies today from Alec Rowley. Before we move to the first item on the agenda, I would like to remind everyone present to switch off their mobile phones, please, as they may affect the broadcasting system. I would also like to take the opportunity to thank the departing members of the committee for their work over the past year, particularly Graham Day, our previous convener, Alec Neil and Donald Cameron. I welcome Gillian Martin to the committee today. The first item of business today on the committee's agenda this morning is to consider whether to take item 6 in private. We will take item 6 in private. The second item is the declaration of interests, which is to allow new committee members to declare any interests that they might have that are relevant to the work of the committee. Our new member is Gillian Martin. Gillian, is there any relevant interests that you would like to declare? No, I have got no interests to declare. Thank you very much. We move now to agenda item 3, which is the choice of convener. The Parliament has agreed that only members of the Scottish National Party are eligible for nomination as convener of the committee. I understand that Gillian Martin is the party's nominee for that post. We agree therefore to choose Gillian Martin as our convener. That is universal, so congratulations. Welcome to the chair, which I will now vacate, and we will have a brief suspension just to allow us to do that. The fourth item in our agenda this morning is to undertake pre-budget scrutiny of the Scottish Government's budget for 2019-2020. We will take evidence in two panels. In the first panel, we have been joined by Dr Sam Gardner, Acting Director for WWF Scotland, and Dr Mark Williams, Head of Environmental Science and Regulation for Scottish Water. Welcome. We have a number of questions for you, so I will go to our first question, and that comes from Richard Lyle. My question is directed in a line. On Scottish Water, I noticed from your briefing that you continue to support new housing, economic development across the length and breadth of Scotland. Period 2015-2018, over 65,000 new homes, businesses have been connected to your network, and you are forecasting that support for the capacity for those new connections will continue. How does climate change in any future developments play into your capital spending decisions, mainly to Scottish Water? From a Scottish Water perspective, climate change has two dimensions—the carbon implications of spend and the climate resilience of the services that we provide. In terms of the climate resilience of any flooding or development type implications that we are dealing with, we have undertaken a number of studies around the climate change implications for Scotland. We are also working to develop the implications for water resources and drainage planning, which have affected the long-term strategic investment planning that we undertake, so that the intent being that future services remain resilient to climate change. From a carbon perspective, we measure carbon in two ways. Operational carbon is the way in which we record and report externally Scottish Water's annual contributions to Scotland's carbon footprint. The way in which we would go through that is through a very consistent year-on-year approach for accounting for carbon in our business. I say that that gives us the overall implications of all our energy usage, chemicals, transport, administration, et cetera, within Scotland's Scottish Water's footprint. The longer-term carbon implications of investment are being picked up through a new approach that we are developing around capital carbon and infrastructure assessment. What we do there is look at the types of investment that we are doing, and we have created a tool that allows our engineers to look at the carbon implications of the concrete, all the assets and plant that they use non-site to undertake construction activities. What we are doing there is trying to adopt an approach that is consistent with the past 2080 carbon in infrastructure guidance that is available now from British Standards. What we are doing there is really effectively having the tool that will allow Scottish Water and its delivery partners to start to account for carbon within the business. We launched that last November time and have undertaken some training and development with teams to get the engagement with that tool. What we are effectively doing now is assessing the roll-out and the implications of that. Longer-term, what we are seeking to do now is to look at how we take carbon into account for longer-term planning. What that means is that we want to really start to understand much earlier in the cycle of planning what the carbon implications may be for investments, so that we can start to look at how we factor carbon into the choices that we make relatively early. Within that, what we need to really try and do is come to a very simple understanding of the relationship between the investment that we make and the carbon that is embodied or the construction carbon that that would entail. We are still working through that to close that piece of work off, but what we are doing is to try and look at the whole-life carbon implications of our investment through that approach. Mr Williams welcomes your realistic approach. I am very pleased to note that you are looking forward to the future. Do you also take water as a very important resource for houses, development and industrial areas? Are you pre-planning looking along with councils or mapping out developments as they take place to see how you can reduce your carbon? There certainly would be opportunities for looking more strategically with other partners around that. To date, we have largely looked internally at Scottish Water Zone investment planning. As we go forward, when we will start to think about more broad and urban drainage issues, the opportunities to work with councils and other partners around finding more sustainable approaches is certainly an area that we are keen to explore. This is something that Scottish Water launched earlier this year with its surface water strategy, which is about how we work with partners to ensure that we can take a more realistic and holistic approach to urban drainage. I was going to ask you why you developed your carbon accounting tool, but I think that you have explained why. How does the capital carbon accounting tool work in practice? Is there anything more that you would like to see about how it works? The key to all of this is that the industry has, over a number of years, been engaged in understanding how we need to do this. Operational carbon is relatively straightforward, relatively easy, and we developed the tools around that quite early on. We have been able to develop that consistent record. The issue with capital carbon is much more difficult. It goes to the heart of how we think about plan, engage contractors and deliver investment. It requires a broader church of people to be involved in understanding that. The key thing that we are finding is that we need that continual push on engagement to get it into the process. Going forward, we are keen to see how we build this into decision making in the future rather than bolt it on. I will pass on to the next person. I want to explore that in a bit more detail. You have had the carbon accounting tool. Has that made any practical difference to the existing programmes that you had around capital infrastructure? How does it drive innovation? I am aware that, for example, when sterling, you are trying out some wastewater heat recovery. Clearly not a commercial technology can be applied across every development at this point. How does the tool drive that kind of innovatory work, which can then feed into capital programmes at a later date? One of the key things we are looking for is to understand where it can drive different thinking. By and large, if you spend a pound, you will limit carbon. Historically, going for the lowest overall cost solutions will deliver a lower carbon outcome, generally speaking. What we are interested to understand about this tool is the extent to which it will drive further and different thinking around what we do. It is difficult for me to say that there has been a direct outcome in terms of innovative difference or a carbon difference that we have made because of carbon appraisal, because we are largely at the stage of understanding what we have done, assessing and accounting for the carbon in the capital investments. That allows us to start to demonstrate where savings have been made, but I will not pretend that carbon was the driver for that. What we are looking for is how we understand what benefits it gives so that we can then look at how we can take that forward in decision making. For example, some of the schemes that we have delivered around, there was a scheme at Cowdenbeath where we ended up putting in a more sustainable wetland type solution. Overall, we saved about 5,000 tonnes of carbon out of doing that, although I will not say that carbon was a factor when we understood the totality, but it was not the driver for that innovation in the first place. What we can look at here is understanding where, if you just looked at cost, you might end up with one outcome. If you factor carbon in, is there anything differently either in the supply chains around me, or should you actually also do differently around this? Relatively only in the journey on this, but that is certainly something that we are looking for. Stuart Steeveson had a supplementary question. I just want to explore a little bit, with Scottish Water, how carbon accounting is actually done. Specifically, what I am interested in—I just use this in an example—is that you will be, in your capital projects, a consumer of cement. Cement is a very high carbon. There is a lot of carbon invested in energy to produce cement, grinding stones down etc. Overall, the question is, to whom should that carbon cost be attributed? Is it to the manufacturer of the cement, which I think it probably should be, rather than to you? I want to understand that, but I also want to understand to what extent you consider the carbon costs that others have incurred the manufacture of the cement in the example that I am using in coming to the decisions that you have. Of course, we are very early in the days of dealing with carbon accounting, and I always get a bit worried that we have got a danger of double counting or missed counting if we do not have a consistent inputs and outputs approach that we would have in financial terms. I just wonder if you could talk us through that a little bit. That is very fundamental. When we report our operational carbon, we do not report the capital carbon, because the capital carbon very much would draw from the carbon that is emitted by other industries within Scotland and, indeed, if we have imported materials elsewhere. What we are trying to do is look at this from the Scottish Water perspective and say where have we had an influence. We are talking about the capital carbon as being a part of our broader footprint, but it is not the footprint that we would report as our contribution to Scotland's emissions. Otherwise, that would be double counting in my view. What we do is look at the tool that has the drop-down data sets for carbon in concrete, carbon in the different materials and pipe work and whatever that we use. We try to capture the majority or the main items within that drop-down, but we certainly would not claim that that is Scottish Water's truest carbon footprint, because those would have been effectively accounted for elsewhere within the Scottish economy. What we are trying to do is look at how we use it for understanding the carbon implications of our choices of investment and where we might have an influence in the future. Well, let me just on the capital—and that is what I hoped I would hear. Therefore, on the capital front, since you do not employ many brickies, you do not grind many stones down to produce cement, I am actually struggling to work out any capital cost that you incur rather than buy-in. Can you give me an example or two just to help me to understand? I suppose that it would be primarily around the on-site activities themselves, where we have threw a contractor, have not done the land works and the diesel used on-site, all the various other materials that are direct emissions from the activity on-site. Effectively, we would bring in material that would have been produced elsewhere in the economy. We have a factor for understanding what that carbon implication of that investment has been, but the emissions that are more directly associated with any capital investment would be our actual on-site activities to either ourselves or our contractors. Do you have another question that you would like to ask? Yes. I will move on to something that I have been asked to ask, which I think I should ask. That is what you have developed a tool for. To what extent is that tool likely to be useful for other parts of the public sector and, indeed, beyond, you referred earlier to John Scott that you work with partners and councils and house builders and so on. Clearly, there is a collaborative model in the way that you think about things. To what extent is the model itself that you have developed—the accounting tool that you have developed—that is going to become part of that collaboration and help others? I think that there are two ways to look at this. One is in terms of the principles of the accounting itself. Those are what we developed through a project that we did with the UK water industry research. This established the overall kind of cradle-to-grave type approach to capital investment and embodied carbon emissions. Taking those principles, which are published and available, we have then looked at how we build that into a tool for use within Scottish water. One of the key things that we do—again, it is fairly straightforward, Excel-based tool. It is not an earthshatter in that regard. It is about having the right boundary settings and having it reported in a way that is useful to our engineers. The key thing that we find as we go through this is that whatever organisation is undertaking investment, the tool would have to fit with its own systems. The principle is absolutely fine. There is nothing that is not transferable within it and the approach that we have taken. We have taken the carbon factors from the broadly available and published data on carbon metrics. I am certainly very happy to talk to anybody and to take people through that approach. I think that the tool is basically an industry tool that has dropped down for the types of investments that we make. It will not be directly transferable as a tool in its own right, but it is certainly happy to engage further on sharing the learning. What is transferable? Is your approach to developing the tool rather than the detail of the tool that is very specific to your industry and your company? The key thing in any organisation or company that is doing this is that they have to have something that is aligned with what they do. One of the things that we found as an industry ourselves is that we were able to develop a carbon emissions workbook for operational emissions that every company uses. It is a one-stop shop that you go in there and you do the entire inventory of your emissions. For capital investment, we could only produce the guidance because each water company had different ways of doing things, so you have to recognise the diversity of how organisations invest. Could I ask you, in relation to Scottish Water's business stream, how that works in terms of carbon accounting and whether that is something that members of the public can see? Is there a website where they can see how that process works? With regard to our operational footprint, one of the areas we do not cover is business stream because what I report is our core and our regulated business emissions, which would also include all the PFI companies that operate some of our assets. It is the core regulated business as part of our footprint. I am afraid that I do not have direct access or input to the business stream side of things, but I can go and find out where that could be found. Helpful, because I think that it sends a clear message to businesses that are working with yourselves that this is an important issue. One of the things that we do to try to help customers as part of our carbon footprint report annually is that we let customers know the carbon intensity of each of their water and wastewater services, so any customer could effectively get that information from our website. I would like to take in some questions for Sam Gardner now. I would possibly like to have your view on some of the things that Mark Williams has discussed, with a view to information sharing to other sectors. What can they learn from what you have heard today? I suspect that there is an awful lot that they can learn. It sounds like Scottish water are being particularly progressive and demonstrating some best practice, and I think that is commendable. Transparency and sharing of that is to be encouraged. One of the things that became apparent in Mark's answers in the discussion is that issues around double counting and such and the need for bespoke approaches to particular industries only serves to highlight the need for a cross-economy approach that gives confidence that the sum total of all of these bits of investment adds up to something that can be confidently prescribed as being consistent with tackling climate change. That is where I think WWF has certainly had a concern over a number of years. We have not been alone in that respect. This committee has previously highlighted the challenge in being able to scrutinise the budget effectively and having confidence about how that capital investment delivers for climate change as have other committees for some time. My answer could get quite long at this point is my point. There is a very welcome endeavour that was captured in the very first climate change bill that has been pursued with considerable effort on the part of the Scottish Government to provide a carbon assessment of the budget. I think it's become apparent that over the course of the last nine years that that approach hasn't afforded committees with the means of understanding whether or not the finance budget will deliver for the climate change gender. There is a welcome opportunity that we and the Scottish Parliament, the committee has in front of it through a combination of both the budget review process, the forthcoming climate change bill and the climate change monitoring plan that is coming forward in October and is required under the proposed climate change bill to be an annual report to bring these processes together in such a way that affords much greater understanding to the committee and to stakeholders as to whether or not capital investment is aligned with the climate change agenda. WWF was instrumentally in establishing something called the Low Carbon Infrastructure Commission Task Force, which was made up of a broad range of different institutions from the Scottish Investment Bank as it was then to SCDI and Ramble, Pints and Masons, Edinburgh University and Oxfam and others that looked at how we could have low carbon investment into our capital spend. One of their conclusions, which I think is pertain to this point about how do we take that oversight as whether or not some total of our capital investment is fit for purpose, was the need for a low carbon infrastructure commission in Scotland, something that would not be dissimilar from the National Infrastructure Commission at the UK level, that provides the means of, one, providing independent scrutiny as to whether or not the long-term investment plans of the Scottish Government are fit for a low carbon, zero carbon future, and two, providing advice as to where that infrastructure need is, most pressing, where is the gaps, where is the infrastructure investment most required and how can that be aligned with delivering a zero carbon future. I think that idea has an awful lot of merit when we're talking about investment that happens today that we'll be living with in 2050 and trying to ensure that we have that long-term perspective applied to our capital investment decisions. Thank you. Now we have some questions from Finlay Carson. Sam, you've touched on the role of the low carbon infrastructure task force. Can you tell us specifically what your role was at and what did WWF contribute to it? Sure. The idea came from WWF, born out of an understanding that our capital investment will determine whether or not we meet our future long-term climate change targets. We spend money today that will lock in behaviours and technologies that will shape whether or not we have emissions in 2050 or not. We sought to build an alliance of representatives from across the infrastructure cycle, whether that be from the legal space, from industry, from the finance sector, from the development side. The endeavour was in the first instance to try and take stock of what the current state of play was. We commissioned green alliance at the time to do a piece of work that concluded by looking at what proportion of the capital investment from the Scottish Government could be attributed to high, medium or low carbon. It's been welcomed that the Scottish Government took up that approach and the finance secretary has continued to try and apply that in describing what the capital investment is at the moment. I think in doing so it's become quite apparent that the figures given by the Scottish Government are that 29% of current capital investment could be described as low carbon and the rest is a combination of neutral or high carbon. I think in the post-Paris agreement world those distinctions become a little bit defunct in that we are moving towards a place for 2050 where it's low carbon or it's no carbon. We cannot have an investment cycle which 70% of which is contributing to climate change. We can see what the current balance of effort is and where it's going. The low carbon infrastructure task force then set about trying to identify what were the most pressing infrastructure needs that delivered multiple benefits for the Scottish economy, for the people of Scotland. We peer-reviewed those, we employed Jacobs to do a fairly extensive piece of research interviewing lots of different sectors including Scottish Water. We then did a public poll so we engaged the public to see get a sense of where there was a public sense of need. Key areas of investment that concluded from that project were energy efficiency which is a topic that this committee and others have given some focus to, transforming our city centres into more livable spaces which encourage and enable active travel and district heating support for and district heating networks in particular connecting what we have at the moment isolated district heating networks and using the investment spend of the Scottish Government to enable those networks to be built and connections to be made because at the moment they happen increasingly in isolated one-off developments rather than being built strategically through some kind of long-term investment planning. The whole project concluded with some recommendations about the need for, as I've already alluded to, the value in a Scottish Infrastructure Commission and that oversight that it could provide. It described some key areas of low carbon investment that would go a long way to stimulating innovation and provide multiple wins for Scotland. It shone a light on the importance of making sure that the investment spend that we have, the long-term investment spend, delivers for the climate. That was a very comprehensive answer and you've answered my next question. What role did you play in the process of developing that? Can you highlight once more the pros and cons of the way that the Scottish Government went about calculating the low, neutral and high carbon spend? To be fair, the Scottish Government took the approach that at the time we presented as the low carbon infrastructure task force. It's a very high-level division. It seeks to attribute the carbon associated with the capital investment to one of these three categories. What's really important now is that particularly as we approach the scrutiny of a new climate change bill, which seeks to raise our carbon targets, our climate change targets, that we recognise that we cannot be locking in any carbon investment for the future. What we can't be creating for ourselves is the need to return to infrastructure ten years down the line and expensively retrofit it with new technologies in order to enable us to meet future carbon targets. We have to be locking in that transition to a zero carbon future and that requires a substantial shift in the proportion of investment that's spent on infrastructure that is not making a contribution to climate change. At the moment, well over half of the investment is contributing to climate change and roughly a third could be categorised as low. That's definitely got to change if we'd have any confidence that we're not making the job an awful lot harder for us down the line and creating expensive challenges as we have to go back and retrofit. It's typically an awful lot more expensive to go back and retrofit a building than it is to kind of build in from the first place. Thank you. I want to ask you some of the things that you're saying about the low carbon infrastructure projects that obviously have a fantastic impact on our emissions and all our climate change targets, but they also have a big economic benefit as well. Do you think the narrative around that has to be spoken about more? You talk about things like active travel, energy efficiency, there's actually a big saving to be had. Absolutely and it's, you know, I think your question illustrates the fact that we still have a job to do to kind of articulate that broader set of benefits. WF is a member of the existing homes alliance, which has gone to great lengths to illustrate the job creation figures associated with energy efficiency. So somewhere in the region of 9,000 jobs could be created by taking all of our homes to an EPC rating of C by 2025. They've also looked at what the savings would be to the NHS. So similarly, others in the sustainable transport space have kind of invested in a lot of time in articulating what the benefits would be to the NHS of improving our air quality, what it would be to increasing the level of active travel. So absolutely, there's a really compelling need to kind of broaden the narrative beyond purely about delivering emissions reductions. These investments typically have multiple, multiple benefits associated with them and we need to confidently prescribe them to those investments. Thank you. Richard. Thank you. Can you, and further to your question, befinlay, you say that Scotland's way ahead project recommended a creation of an independent Scottish infrastructure commission. Most organisations have a regulator. How important do you believe that an independent Scottish infrastructure commission would be as a sure ask in any future bill? So I think an awful lot would depend on how it was constituted, what its mandate was, what its resources are and so on, but I think given if it was to fulfil its greatest potential, I think it could have huge significance in complimenting the parliamentary scrutiny process and affording the Scottish government with independent advice as to where the infrastructure needs are for Scotland going forward and doing so in a way that meant that there could be confidence that those infrastructure commitments were compatible with delivering on the climate change agenda. At the moment we don't have that, we have an infrastructure programme that's built up of the sum of its parts that come from across the Scottish government that come from the outside world that people kind of put their hand up and make a case for. The sum total of which it's hard to kind of be confident or ascribe any confidence to is consistent with tackling climate change. Until we allow ourselves to take that independent long-term perspective as to how we are building our future, I think there remains a risk that we will be making decisions that will contribute to climate change and potentially lock us in. So it's not about trying to replace a regulator or anything like that, it's trying to provide independent objective analysis of what the infrastructure spend of the Scottish government is, how it allies to climate change and where the most pressing needs are that need to be addressed and how could that be done in such a way that maximises the impact of public spend, creates innovation, creates jobs but at the same time ensures that we tackle climate change. So we have a new budget process and there's an opportunity perhaps to consider climate change in more detail. Do you have particular views on how the Scottish government could improve the way it monitors and reports on the climate impact of the capital programme? Yes, indeed. So WWF worked with Strascoids International Public Policy Institute to look at just this challenge. The first thing I want to say is that we have had an attempt on the part of the Scottish government year on year to present an understanding of a kind of picture of what the climate impacts are of the budget. I think it's become accepted that that goes as far as it does but it doesn't provide us with, certainly doesn't provide, I would suggest, the committee with the means of understanding whether that spend will contribute to tackling climate change or locks us in to kind of high carbon behaviour. So the forthcoming climate change bill, along with the climate change monitoring framework, provides us with an opportunity to to align these two processes that to date have been entirely separate but have then been sought to bring together in a rather artificial way and I think rather unsatisfactorily despite everyone's best efforts. So the carbon assessment as we currently get it is a snapshot in time of the carbon emissions associated with that spend. It doesn't provide us with a kind of cumulative sense of what the consequences are of that spend. Perhaps most importantly of all, it doesn't obviously interact with the budget process. It's after the fact description of what the consequences are of those budget decisions rather than a tool that's used to inform and reflect and integrate with the budget development process. I think the opportunity that the new budget scrutiny process affords is for the Scottish government to present the Scottish Parliament with material in October through the new climate change monitoring plan that will support the climate change plan that should set out, as this committee has asked for in previous sessions, a description of what the high-level expenditure is associated with the policies that gives you the raw material to understand whether or not when the budget comes in front of you is do these two things match up. What's always been the case up until now is that the committee has been provided with level four figures sometime after the budget has been produced that has really challenged your and the outside world's ability to understand whether or not the budget will deliver against the climate change plan. Previous climate change plans, as they were known, reports and proposals and policies provided a description of what the total kind of cost was associated with a policy stream. The current climate change plan doesn't do that, which I think makes it all the more important that the climate change monitoring plan provides a greater level of transparency to afford the committee members and others. Sufficient understanding to know what's required in order to make a policy of success. I think behind every policy in the climate change monitoring plan is a theory of change and sometimes that theory of change is as simple as Scottish government invests X and gets Y. But if you don't know what X needs to be and Y is not described very clearly or is some many steps removed, it's going to be increasingly hard for the committee to take a view as to whether or not the spend that's attributed in the budget that you get in the new year matches with that policy. We have the opportunity through the monitoring plan and what comes forward to the committee in October to really get a level of information that hasn't previously been afforded to reflect on that and in that in turn can inform the committee's submissions back to the Scottish government as to how the budget should take account of climate change. Can I just follow up on that? You talked about the budget and the assessments of budgets about very much being a snapshot. Is there a difficulty here for governments in that in many ways capital programmes are multi-year, they can be quite lumpy, so you might have a large degree of high carbon capital spend one year and then it could go down again next year once we've built the bridge or whatever. So how do we assess the kind of trajectory that governments are without sort of plucking a 12 month figure and saying well that was a great year or that was a bad year? So I think that's what we currently do. I think we have the year that the carbon assessment comes out and that describes the consequences of that year. I think what the work that the International Institute for Public Policy from Strath Clyde described is an attempt to how would we provide a forecast so rather than how would we describe the instantaneous impact of a budget spend how do we provide a longer term forecast and they set out and we kind of attach it in our evidence two approaches. One would be a more top-down approach which would seek to attribute to a kind of carbon consequence to revenue spend and built over research and analysis is what's what's the projected saving associated with this and yes it would be refined over time and it wouldn't be incredibly accurate but it would give you confidence about the direction of travel but then for the more substantive high carbon or capital investment projects of which there's huge amounts of data associated with them particularly transport projects it's much more possible to a bottom-up analysis for those specific projects and says yes over the lifetime of this project this is this is what the carbon implications will be. So I think whilst it's no doubt challenging I think we all recognise that the approach that the bill the 2009 climate change act of Forzers has had its limitations the forthcoming bill that comes to this committee provides an opportunity to strengthen that and in doing so require futurist carbon assessments to provide that forecast and I think these briefings outline two kind of approaches that would help do that. Questions from other members of the committee first Stuart Stevenson. Thank you convener. Would it be fair to say that if the government's carbon expenditure rose that would be a good thing if in consequence it's displacing expenditure elsewhere in the system in other words just to go back to my cement example if we found a way of using a new material that had a a lower carbon footprint but not zero and the government themselves went and dug out the mud which we're using instead of cement I'm stretching the bounds of probability here we're no longer incurring the cement cost in the overall system but we're increasing the carbon cost in the government system and isn't that one of the sort of the generality of what I'm saying isn't that one of the difficulties in understanding what are quote good outcomes because the outcomes are not simply outcomes for the government but for the whole system. So your point is a good one and it illustrates the challenge of where you draw the boundary around the the implications of expenditure and I think what I would be encouraging in any future carbon assessments that are provided by the Scottish Government in light of the challenges that we've all experienced in trying to understand the current situation is to draw that net wider not to attribute it to um let me start again to attribute the carbon consequences to that spend to the whole of Scotland so what happens as a consequence of capital investment spend in terms of shifting behaviours encouraging for instance a displacement of road traffic onto rail say we dueled the the railway line north of Perth um what would the carbon consequences of that be which go well beyond the you know that might actually be a high carbon investment in the point of lane of steel um but you know that's an investment that over the lifecycle of it ought to kind of support a shift in transport behaviour similarly if we're investing in a greater network of cycle paths um obviously that's a that's a carbon investment that has to be laying tarmac and such but you know a lifecycle assessment of that should show that it displaces and encourages active travel so I think it's necessary for the net to be thrown quite wide in capturing the implications of what the Scottish Government's capital investment spend is because that capital investment has a purpose and that purpose is a public policy and it needs to be seen in the round and when you do that I think you're then able to capture the longer term benefits that are prescribed to that expenditure that's all questions answered from the the committee um thank you very much for joining us today and we're going to suspend the session for a couple of minutes. In resuming our evidence in the Scottish Government's budget I now welcome Derek Mackay, Cabinet Secretary for Finance, Economy and Fair Work. He's joined by his officials Dr Simon Fuller, Deputy Director of Economic Analysis, Rachel Gwyan, Deputy Director for Infrastructure and Investment and Claire Hamilton, Deputy Director of Decarbonisation Division of the Scottish Government. Welcome to everyone. And we have some questions from our members, the first from John Scott. Thank you, good morning, welcome cabinet secretary. Can I ask you what role do you have in making the Scottish Government's capital budget proposals work together with climate and environmental targets particularly under the new year round budget cycle? Thank you for the question and good morning to the committee. I see my role as part of the essentially overall government corporate organisation delivering on our targets both statutory and what we've set out by way of policy. We have published the national performance framework as well that sets out the objectives of the country, our purpose and within all of that I'll work with cabinet secretaries and ministers to deliver on our commitments and ambitions, not least on our carbon commitments and the climate change plan, so principally understanding the policy objective and then working with cabinet secretaries to ensure that there's necessary investment, so it's certainly a collective approach with individual cabinet secretaries and I bring together the fiscal function of the government naturally. Thank you. Can you give us a more detail on how the cabinet secretaries actually work together to, I mean, when you're allocating the capital budget and you're thinking about decarbonisation or missions, what role do the cabinet secretaries for the environment, climate change, landform and for example transport work together in order to realise that vision? Out so when we look at capital particularly and infrastructure, I work very closely with the infrastructure secretary, clearly that role has changed, Michael Matheson now holds that role, so infrastructure secretary including Keith Brown and now Michael Matheson, I'd work more closely on the capital plan recognising their role in infrastructure spend, but all cabinet secretaries have an interest in terms of their portfolio and the allocation that they would get in terms of their capital spend. Specifically to the question around environment or rural economy, there would be bilateral meetings, there would be that engagement through the budget process working towards the budget to deliver their specific objectives, but one committee that I found very useful on this particular agenda is the Cabinet Sub-Committee, which has met to focus specifically on climate change and emissions and that of course has fed into the climate change plan. That's separate from the annual budget round because that's specifically on that plan, but annually for the budget I'd engage with all cabinet secretaries, specifically those in terms of climate change and as they say, the infrastructure secretary essentially has had a role in the allocation of capital spending as well. Of course the purpose of inviting me today is to explore how in this new budget process we look at what's different from what before. Whether there's no change within government process to the budget, what the budget process review group has tried to do is give the Parliament deeper engagement into the pre-budget period and I suppose that's where this dialogue is useful and I'm happy to explore that as much as you are. Thank you. Stuart Stevenson. Thank you. Can you perhaps give us an example of a change to a plan that is derived from the carbon impact of what a proposal might have been? I think that you would have to take that back to policy. What are we trying to achieve as a Government and then how does that feed into actual spend? I suppose a substantial area would be say electrification of the trains, the transport networks when it's a policy. We know it's an aspiration in terms of more sustainable forms of travel and there has been substantial investment into rail specifically and that's understanding the impact of vehicles on the roads so we make a policy choice, we want to continue investing into rail so it's a policy choice and then it's manifested in massive spend on both railways generally and electrification of rail so that's of course a huge example of that. There'd be many areas of spend within the estate for example we're trying to make buildings more energy efficient for example that's understanding the emissions coming from our estate of the buildings and how we take that forward so from massive policy to just better practice from existing resource. Therefore the success of the carbon approach the Government's taking lies in that becoming a part of the assessment of the earliest possible stage of any decision and therefore the time it reaches the Minister for Decision these issues have been dealt with and and matters are coming forward in that way so that's so you're really saying the whole carbon assessment is embedded in the system right from the very first time that the matter is considered. I would say so in the very thinking of ministers and government policy right through to individual decisions on actual spend you would think about the impacts from the policies that we're making and as I say that word that is now driven by the climate change plan which is setting out our ambitions for a country. Thank you convener and good morning cabinet secretary. Could I ask you if we could turn our discussion to the infrastructure investment plan and as you'll know the Scottish Government's response to our committee's last budget report committed to the next plan taking into account Scotland's climate targets. Are there plans for a refreshed IPP and how will it take the proposed stronger climate change targets into account? So I think that the current thinking around infrastructure investment is quite clearly influenced by these high level commitments we have around climate change. Instantly not least the commitment that was secured at the last budget in terms of capital spend and the proportion of low carbon spend there. So there are on-going decisions around that infrastructure investment. The IIP is a high level document. I think that considering some of the recent announcements around infrastructure spend is outlined in the programme for government there will be a need to look at further iterations of that. Of course it was last published in 2015 but I also need to be careful I should make unilateral decisions today at committee because the infrastructure secretary might have something to say about that who has a lead responsibility for the plan. Of course I would set out the finances and the considerations therein but I think it's fair to say that having published the document there's been iterations throughout because of the nature of infrastructure spend but I think we would be looking at its revision will turn our mind to that and when we do that to answer the question quite clearly of course the ambitions in climate change plan and the direction of travel towards that low carbon economy we will have to feature in such a revision. David, Mark Russell has a supplementary question for that. Yes, thanks convener. Cabinet secretary you made a welcome commitment as part of this year's budget process to increase the amount of low carbon capital spend throughout the lifetime of this Parliament. I'm just wondering if that is consistent with what is in the IIP because we've been looking at some analysis which suggests that in the short term from year to year the proportion of low carbon is increasing but if we look at the whole IIP within the round there's perhaps some suggestion that it may be increasing over time so how do you what was your response to this? I think I was watching some of the earlier evidence so I witnessed the point around the difficulty in taking a year from year compared to overall I think it was yourself that made the point around you might have a good year or a bad year but direction of travel is really important. The commitment I've made of course was for the annual budget but that wasn't just a one-off that's the direction of travel that we want to continue so I suppose when we're looking at the longer term on infrastructure we want that direction of travel to continue and to ensure that we keep within that in the longer term so that commitment for the budget proportion of low carbon spend year on year means from here on in as best we can so I suppose we'll be able to look at the totality when we have the next full infrastructure plan but I think it is important at least if we're doing it year on year then surely the long-term trend within that would be the right direction of travel. Just to be clear then is you saying that the commitment that you made as part of the budget process is consistent completely with the IIP or that the IIP will need to be reviewed? So the IIP gives us the headlines of commitments the budget year to year is exactly what we're funding so exactly what those capital commitments are so we want to deliver what's an IIP but of course there's that need to revise it in light of financial commitments and other developments keep within the ambitions for the low carbon economy but importantly what's spent on capital each year is where I try and achieve that commitment because that's the most meaningful place I can do that if that's clear to me. Claudia Beam. Could I ask you in a bit more detail cabinet secretary to tell us about the IPP and how does this relate to the infrastructure investment board? Do you expect this board to give you advice that takes climate change into account for the IPP or indeed for the budget processes we go forward which was highlighted by Dr Gardner and also my colleague Mark Ruskell? Could you say anything more about that? Again I need to be careful I'm not encroaching although we're a team approach in the Scottish Government I'm not making decisions on behalf of other cabinet secretaries directly I know some committee members are eager that I do do that I'm eager that am I absolutely absolutely I just make the point that I don't lead that process and I don't want to mislead the committee in that regard so I was specifically asked what advice I would get so the infrastructure board within the Scottish Government looks at a range of issues including the strategic approach, the finances, the contribution to sustainable economic growth and all of that and yes I would expect it to be taken all the environmental issues into account as well as it advises on the delivery of infrastructure commitments and the options going forward. Again to be clear with the major commitments around infrastructure spend we do need to look again at the long-term infrastructure commitments and all the thinking that's been developed over the last number of years will have to feature in those spending decisions which have not yet been set out but for my part when it comes to the annual budget we're absolutely looking at the environmental contribution in every spending decision that we make in relation to that carbon and capital profile. Would you see the monitoring commitment that's been made by the Cabinet Secretary for Environment and Climate Change, Rosanna Cunningham as something that will help with the budget process as that I think that commitment's made that that will come in October because our concern as highlighted by Mark Ruskell and you will have heard earlier is that there's an ongoing assessment and that that fits into the budget. It's been very difficult for us as a committee to analyse the budget previously because it's been sort of things have appeared simultaneously and we're looking at it you know at level 4 and thinking well what can we do now you know whereas it's beforehand perhaps and ongoing that's important. So I think timescales is the issue here um the of course to understand the reason why the Scottish budget is in the timescales that have been set out is it really has to follow on from the UK Government's budget for a range of reasons the fiscal framework and the all the decisions that are taken there and how they impact on the Scottish budget so I can't go any earlier than that and I've tried to to deliver a Scottish budget within three weeks of the UK budget. Interestingly I also have been advised previously by Treasury I'll get 10 weeks notice of the UK budget timescale not any content just the timescale I get a courtesy called the night before but some of the content's headline that's very interesting because the clock's ticking right now on that 10 week timescale if that holds. So if there's monitoring information earlier than that it may well be able to inform the committee and yes ministers as to progress but I still don't present any draft information this is a process point of interest to any draft budget earlier than that because the first presentation I make of the budget is on Scottish budget day when I present it so I think there is a slight for your purposes mismatch between the monitoring use receive and then how you're trying to influence the budget that you haven't seen but equally I can't publish it in earlier for the reasons that I've given I can't publish a draft draft budget and I suppose that's where we're trying to explore this process with you what are the kind of things you would want us to be considering in advance of the Scottish Government determining the budget as opposed to simply you scrutinising what we've proposed after and I'm afraid that's in your hands not in mine but I totally appreciate the point around monitoring and information I still can't present the budget any earlier than I do because it wouldn't be a credible budget because of the timescales following on from from the UK timescales but does that information can it help us yes I think it can. Without preempting what we might say as a committee one of the things that came up this morning was the fact that in terms of infrastructure projects there's at the moment about I think it's 29% that are actually low carbon and one might consider if we're not going to lock in as as Dr Gardner says to having to retrofit projects later that those could be perhaps more overarching assessments which could be made in the lead-up to the budget possibly. Yes, that's my helpful suggestion and I think to answer the point it can help and inform it just but you were concerned about the timescales you have to review everything. The assessments come out at the same time as the budget because it's informing what we think the budget achieves at that point and at that point it is a settled budget and I'm sure you appreciate all members of the committee will appreciate that concluding the Scottish budget within three weeks having taken into account the fiscal commission and everything else is heroic in itself but that means all the assessments have to come at the same time because once we've cemented and determined the budget we're then presenting the carbon assessments. A heroic task for everybody. Could I just turn our thoughts as my final contribution to the national performance framework and ask you how you see the infrastructure investment board which proposes to measure its effectiveness by relevant national outcomes and related indicators and would you see the reduced Scotland's carbon footprint obviously as one of the relevant indicators of success and what involvement do you have in that process? Yes, in essence I do. The performance framework should guide everything. Government, agencies, partners and as was our aspiration wider society does as well so the purpose, objectives and monitoring within that should influence all of those considerations and recommendations coming forward so yes that should be taken into account. I've had overall responsibility for refreshing and delivering the national performance framework so I have a keen interest to make sure that it's both resourced and delivered adequately but of course Cabinet and First Minister have launched this and signed it off as well but every part of government should be contributing towards its objectives to ensure that we meet those so yes it should feature the considerations of all parts of government including right through the civil service as described by Ms Beamish. In your role as Cabinet Secretary for Finance would you see that you have the opportunity perhaps or indeed the obligation to look at whether those outcomes and indicators are being honoured and what would happen if you thought that they weren't because it is a real concern and it may be a point of possibility for shifting from 29% to a lot more of low carbon infrastructure? We take collective responsibility in any event so all of Cabinet, all ministers should be thinking about contributing towards that and if there were areas where we weren't achieving then there's a collective engagement to resolve that notwithstanding as I say we have the performance framework but of course we'll have the statutory duties under the climate change plan as well so again every part of Cabinet is expected to contribute towards that because ultimately we arrived at the plan through the process of Cabinet discussion as well through the Cabinet sub-committee and bilaterals. Before I turn to other members of the panel I was going to ask you sort of the same question that I asked Sam Gardner when we're looking at low carbon initiatives, infrastructure spend and preventative spend. How much of a long-term view do you take in your role as to the savings that there could be around the long-term view of those projects actually allowing us to have more money at our disposal as a result of some of those projects? I think it's wise investments now. My ministerial career has involved local government in planning and transport and finance and the economy so I've had a lot of exposure to a lot of the issues that really matter in that regard and I'm sure you don't want me to ream off the areas in which we've spent I think very conscientiously not just for the immediate benefits but for the benefits of future generations, whether that is in the environment or whether that is in transport or doubling the active travel budget or the decarbonisation or transport, forestry, energy efficiency and we know we've got more to do around land use and agriculture to pick on a couple of other examples there but I think it's clear that through a lot of the decisions we've taken there are long-term benefits of that and I was listening to some of the examples given earlier about sometimes there might be a carbon output from the spend at that point in time but the long-term benefits, the generational benefits are worth it but we're absolutely committed to this direction of travel and that's why we've been increasing areas of spend such as active travel, sustainable transport, the electrification agenda, more charging points for example and then specifically I think some of the community elements so the climate challenge fund for example has distributed over 100 million pounds, many beneficiaries of those projects as well so it's as much about raising awareness, behaviour changes, it is actual physical spend on the capital infrastructure of our country and in everything we do it's not always captured but higher standards whether that's building standards or how materials are used has shown I think an environmental awareness that maybe wasn't there years ago but is absolutely mainstreamed in policy spending standards now, I don't know if that helps. It does, thank you. Now to Finlay Carson. Morning, the climate change delivery board formerly known as the emissions reduction programme board oversees the delivery statutory emissions targets. Now can I ask the cabinet secretary, in your specific role do you receive any advice from the climate change delivery board? I wouldn't have done, my information comes generally well has come more recently through the climate change cabinet subcommittee which looked to all the detail what portfolios were expected to do and all the commitments and policies within that so that's where the advice that I would have been receiving and then contributing to has come from. I should add though that the work building up to the climate change plan has meant that I think there's the requirement to establish a new governance body to deliver the delivery of the climate change plan so I think again this is more my environment colleagues in terms of cabinet secretary to look at how that is structured going forward but my work would have come through the cabinet subcommittee that's where my briefings would have come from and what I would have been contributing to. We know that Scotland is some of the most unique and fragile environments and as such we have a strategic environmental assessments are undertaken when plans are likely to have significant environmental impact but financial plans are excluded from those assessments and there's no requirements to have environmental assessments on the infrastructure investment plan. Would you see a value in a voluntary approach to these strategic environmental assessments to any new infrastructure plans? I think overall it makes more sense to deliver them project by project because then you know what you're dealing with, you know what the project is, you know what the spend is, you know the geography and I think it's a far more credible process. If we start to do it for plans I think it's a bit more nebulous, a bit more difficult to judge and properly quantify so if you say take the whole IIP you don't necessarily have the detailed timescales, the geography, all the information at hand be a very bureaucratic and expensive exercise if we're doing it properly and it still might not give you the information you really wanted so I think project by project gives you a more robust set of figures. I don't take my word for it if you would like an economist in the government to explain how nebulous, not that all advice is always absolutely clear for me I have to say but if you want further advice from an official on why project by project is more meaningful than assessing over-arching plans then I'm sure Simon Fuller could add to that to convener for that. No no just to add to what our cabinet secretary said I think the challenge sometimes doing these assessments for the infrastructure investment plan as a whole is just the sheer scale of it so in order to do the environment assessment rigorously that what you'll have to look at will vary hugely depending on what type of infrastructure has been considered, the geography in which infrastructure is being invested in and so on and so I think there's a risk that by trying to do this strategic environmental assessment for the plan as a whole you're going to almost inevitably have it at a higher level and maybe not quite superficially but maybe just you know at a higher level of aggregation and perhaps looking at individual plans and programmes on the ground which then give you arguably a much more robust and much more meaningful assessment of what the impact would be for individual projects. Thank you. Finlay, I'll be happy with that. Notwithstanding what you say I mean there is a need for a high level appreciation in terms of a direction of travel in terms of your overall investment and I appreciate what you're seeing about the aggregation but nonetheless the aggregation of the total must ultimately lead to an overall picture which provides a direction of travel which we're going to come on to in further questions but I think that is concerning the committee, the high carbon investment future, others will come on to that, just wanted to get that out or maybe you want to comment on that at the moment. Yeah yeah absolutely I share the view that we need that understanding but the specific question I was asked should we adopt a strategic impact assessment for the plan we don't think that that's the best tool do we need a national understanding of direction of travel and emissions and input and proportion of spend yes but that's a slightly different question I share that the objective that's a slightly different question to the very specifics of us process of an S strategic impact assessment on an overall plan is quite a different tool so I'm just I agree with the ambition here but the tool I think is as we've tried to explain not the right one. Okay we're moving on to talking about the programme for government and Mark Ruskell has some questions around that. Yeah thanks I'm obviously last week's announcement you know announced higher capital spend there was a focus in the headlines on low carbon spend will that impact on the balance between high and low carbon capital going forward and how will that then influence the IIP so will the programme for government then you know effectively force a revision of the IIP? Again I think it's a very fair question and is the question I suppose that the 7 billion headline figure that we've committed to is that captured within these aspirations right well in essence we I was what we've done is we've set out that headline commitment recognising you know the proportion of GDP that that's spent on infrastructure will be returning to Parliament I think I'm sure we said within a few months both the commitment that Mr Matheson gave to return to Parliament clearly I'll have an interest for the budget as well the and as I tried to touch on earlier on in my answer further iterations of the infrastructure investment plan will be required so I think that the the policy direction the climate change plan the commitments around proportion of spend will all have to be taken into account as I say that a 7 billion pounds commitments at very early stage it's important to set the ambition the mission out there that we're trying to deliver but of course it would fit within our ambitions for transition to a low carbon economy the detail is of course to come in due course so I mean programme for government obviously one year very ambitious announcement this year with it with increasing capital how do you take account of the need for change over multiple years and this perhaps relates to IIP again perhaps if I could focus you on one example which came up in in the budget this year and that's rail reinstatement projects there is a local rail development fund a number of communities have bid into that they're getting you know success there in terms of applying for money to do feasibility work on rail reinstatements however if those projects are successful and there's good business cases made for capital projects going forward obviously that's going to place a demand on government to see these projects through to completion and to reopen these these rail routes and stations across Scotland so how do you how do you factor that in to the to the pipeline we've got a policy which is raising expectation which is doing good feasibility work now around Scotland to bring communities back into the rail network but we're still some way away from realising that low carbon capital investment so how does that work then in relation to IIP in individual annual budgets is it about an annual negotiation within this parliament around capital spend or is there a longer term commitment that government government can make to these longer term more embedded infrastructure changes over time again without trying to step on the infrastructure secretary's toes naturally from my point of view finance secretary there are many areas where there's multi-year commitments right now and that does include transport housing and digital so naturally there will have to be a long-term approach to this and I should say that an overarching objective of the new infrastructure investment will be sustainable economic growth and an emphasis on that throughout so I think we will of course we'll look at the the waiting and the assessment of what projects feature but it will be within that policy objective of low carbon I actually think rail is a really good example because we know that it is a success story it contributes in a positive way in terms of the economy and the environment and connectivity as well and infrastructure and it can also tackle exclusion either individually or geographically as well so the government's got a strong proud record on rail investment and we'll want that to continue and for me that's been maximising resources from UK government as well to try and ensure that we get our fair share of rail resources and that has been a battle over the last year and to continue doing that with our own spend will be critical so we will take a long-term approach as I say I'm trying to express it with a massive headline commitment around infrastructure spend that there will have to be further iterations of the IIP and we have moved on in policy terms on what features within that and to say it's a substantial commitment that we made in last year's budget process on the direction of travel and the trajectory for capital spend around low carbon and it's one that we want to continue. I have a further question on that the long-term visually important when it comes to those infrastructure projects particularly rail but the way that they are assessed sometimes can be looking at the current population the current passenger numbers but not actually looking to long-term but maybe repopulate in an area or expanding a population I mean is that something that you look into we're looking at these projects? I think that there's stag appraisals and various appraisals that can show the difference that one form of transport can make over another form of transport and the investment that's required and what the return on that is but yes it looks at the potential how it could lock economic opportunities to be look at border rail for example it's the benefits of it have been profound and it's it's incredibly popular and it's surpassed our targets I think that's a good example of where it's made a geography more accessible but it's delivered economic benefits in its own right so I think they can all be part of the considerations some rail considerations of course might just be that there's other forms of transport but not rail and rail could allow that shift from one form of transport into a more environmentally friendly form of transport. Right we're moving on to talking about local authorities and Richard Lyle has some questions. Yes thank you morning cabinet secretary in the space analysis of local authority capital expenditure balance categorised by climate impact the top six on climate impact are Falkirk, North Lanarkshire, Glasgow, Perth and Kinross, Easton-Bartonshire and somewhere you know Renfrewshire they have the highest proportion of investment categorised as high carbon in all cases this is the result of proportion of high levels of investment categorised as road or airport investment. Using the government's methodology how would the Scottish Government engage with local authorities to discuss their approaches to the climate impact of their capital budgets? That's a very curious question from a former council of course Mr Lyle. Incidentally I know these other places as well as Renfrewshire I don't know I get out a bit as well. The essence of the question is we don't have a monitoring regime over and above local governments own monitoring of their capital spending relation to emissions it's not the nature of the relationship we don't instruct them how to spend therefore we don't have our own processes to hold them to account for their emissions as part of their capital grant from the Scottish Government. If the committee feels we should do something different I have to say that would be a departure from what Parliament usually asks us for in relation to fiscal freedom of local authorities but we don't pursue them in the kind of fashion that was suggested in the question. On a subject we touched on it slightly earlier and I know it transgens into over into another area but what would you be asking councils to do? Likes courageous climate impact in any projects could you be asking them for instance as I have been pushing in this parliament for quite a number of months now I welcome the government's movement on it installing electric car charging points in new house building we now have solar panels on roofs why don't when we're building new houses from now insist that everyone including private and public house builders install car charging points because we can't just install them in the street if all the cars in the street can't plug in at the same time why don't we have a plug in home? Yeah again I appreciate the point there are many areas where we do compel local government to meet certain standards I think planning is a good example or where there's national planning policy or the national planning framework is a spatial strategy or building standards so there's regulatory compliance so there are environmental standards there is a leadership on this upon local government as well but Parliament has previously debated the principle of how closely we should hold local government to account for emissions so whilst there's an expectation to show leadership compliance to abide with all the standards that are set out and that has been progressing I just say in relation to the fiscal point in terms of the resource they have from the Scottish Government on capital we don't compel them to spend any amount on for capital a specific purpose that said of course we're investing on housing for example which is a substantial investment by the Scottish Government to local authorities that it meets all current standards so it speaks to the point that Mr Lyle was making around expectations on policy but that's set through standards as opposed to holding local government to account for their individual capital spend which is for those local authorities and their democratic systems in audit as opposed to government holding them to account that's that's not what we've insisted upon policy change again if i'm i'm not being clear here policy change can be delivered through national policy but i'm answering for the finances i'm not suggesting that we stick it to councils as you say i was a counciller and I and I would uphore that so but what I am saying to our suggestion should we not be having a discussion on how they can reduce their carbon footprint those discussions do happen i'm sure the planning minister would speak to that i'm sure the environment secretary would speak to that there's many bilaterals there's much engagement with causal and local governments on their actions to reduce emissions i'm just speaking for the financial element and the capital spend which I understood to be the theme of the day so i'm just been very clear with the distinction i'm not objecting to using policy to make progress but we don't hold local government to account for the cap for the specific capital investment they make by way of instructing them how they should spend it bring it back to the Scottish budget angus mcdonald has got some questions around that I mean if I could briefly touch on options to improve future Scottish budget information and climate assessments now the Scottish government's response to this committee's last budget report committed to providing the committee with annual information on the proportion of the overall capital budget allocated to low carbon projects and programmes so perhaps you could give us a bit more clarity with regard to when in the budget cycle do you expect that information will be available as soon after the budget as I could possibly provide it naturally in working to the budget and that would be budget close incidentally not even draft budget parliament's well aware minority government requires negotiation and I engage with other parties so the start of the budget can change to the end of the budget so on conclusion of the budget is when I can publish the essentially that information that that high level information and I do appreciate it is a high level exercise that we undertake and I am interested in the committee's views around the detail of them what would be helpful but in terms of timescale it's as soon after the budget as it is agreed and I can then publish it naturally I'll be trying to understand those figures as I work away through the budget to keep to the commitment that's been given but sharing with you is post budget okay thanks clearly we look forward to receiving it as soon as you can share it last year was the first time the government published information categorising its in-year capital spend as low neutral and high carbon are you open to improvements in the methodology for example breaking down the larger areas of spend like housing roads rail and health to provide more detailed information yes I'll be quite a foolish cabinet secretary to come to committee and say I'm not open to improvements of course of course I am and I know what the committee will be driving at here so I am open to improvements in that regard it was a process that was agreed to try and understand the level of spend and the direction of travel I think it's hopefully achieved that purpose but I'm open to improvements so that I'd welcome improvements to methodology thank you very much convener cabinet secretary do you have any concerns about the effects and jobs by endeavouring to move to a low carbon economy what do you have you made any assessment of that that would be considered in terms of the climate change plan I of course would say jobs can be created in a transition to a low carbon economy as well and I think the direction of travel is a necessity but we have to understand the impacts and mitigate where possible as well but on a lot of the areas of spend that I've been able to identify whether it is on a transport or forestry or energy efficiency actually jobs can be created by doing the right thing by the environment in that transition as well or digital or renewables these are areas of growth and not necessarily the threat of job losses by that particular transition however and other colleagues would be better placed to debate this in terms of the detail as they understand it but if some decisions were taken that might have an impact then there would be an impact on jobs that we would want to understand it would be very negative if we don't take the right decisions around that so that is why in the transition to low carbon economy we think about all of the impacts but I just wanted the positives to be on the table as well there are positive to come from this journey in addition to the environmental positives because of the leadership role it can give Scotland the innovation and the jobs that come from more sustainable futures as well but yes if a Parliament or Government took a decision on no more types of industry then those people in that industry might have something to say about it naturally which disrespect is what Mr Scott is driving at I'm just asking if you consider on balance if the effect on the jobs is likely to be positive or negative by this transition from the limited assessments that you've undertaken thus far Ministers would always consider the full impact of decisions as they go forward sustainable economic growth considers people as well as infrastructure but I just make the point that there are choices here and it's important to remember and keep in mind the impacts of all of those choices last year's analysis the low to high analysis of the capital budget appears to have covered only 80% of the expenditure what steps are being undertaken to get the last 12% in or what difficulties are there in doing that okay part of that difficulty relates to the local government budget that was just discussing with Mr Lyle that's why that bit doesn't feature within it financial transactions is the other area seidel budget capital budget only not the financial transactions so it's financial transactions that are not part of it but all seidel is with the exception of local government just to make sure I understand what's being said by financial transactions is it suggested that there are financial transactions that have a measurable carbon impact probably a will but it's hard to assess them I suppose because financial transactions are largely around I'm sure as the member knows loans or equity schemes that comes from UK government so we can only use them within the private sector for specific purposes actually there'll probably be a range it can be very micro as well I mean capital spend is spend on projects some of the financial transactions can be to individuals as well therefore it might be quite hard to judge their full extent of whether it is high medium or low carbon impact so I think it's the complexity of the individual transactions the reason that they weren't captured to get to the point of if you would want it in analysis how do you get it there so just just to be clear then these are transactions that essentially just flow through the government's books untouched to third parties is that what I'm hearing I wouldn't describe them in any shape or form that particular way in front of treasury but we we use them to support particular policy objectives and Mrs seems and asked you know can we try and get them in that overall capital spend that they're just quite different from that traditional capital spend we know ultimately what's being invested in through the capital program the capital spend I've addressed the local government point but financial transactions is down to specific projects and individuals some is easy I think there'll be a variety on the scale of their carbon impact it might be worthwhile for us to do further work on this and respond to committee wants to look at financial transactions but I think their nature is more complex than traditional capital spend that you're judging that profile by so so I'm understanding that many of these financial transactions is essentially a money coming from the UK government that is essentially ring fenced for a particular purpose but nonetheless the policy decision is to the detail of how it's spent is a matter for the Scottish government now is that a correct playback of what it's got absolutely so so therefore I think I may suggest to the cabinet secretary it would be proper for this committee and other committees to explore that further and I think I think we'd probably welcome a better understanding because I think the label financial transactions I suspect is probably one the accountants use but is misleading for us in considering policy issues you know I think that's helpful I'm very clear on what financial transactions are what they're used on what I spend them on what I allocate them on I just think it's quite complex to try and get them to fit into this process but I'm happy to explore it and return to the committee so you have a deeper understanding of the carbon impact of financial transactions because I do think it's complex it's very variable you know some can be helped to buy schemes for example so that might be getting people to move from essentially into better standard accommodation that might be more might have lower emissions from that property for example or agricultural payments it's been used for loans so there's a variety of uses for financial transactions it doesn't fit within this because the commitment specifically in the budget process last year was for capital spend and financial transactions are a different thing if from your point of view the committee wants to understand the carbon outputs coming from financial transactions I'm happy to again explore that and see if the committee wants to take it further it's just more complex and it's not actually as close to the spirit of the commitment around the capital budget as I think committee thinks it is. Clearly I'm only speaking for myself because the committee as a whole was not discussed the matter but I'm pretty confident number of colleagues would welcome some increased understanding of what's going on here while recognising that it won't be possible to pin down every CO2 and other molecule. I can be I'm happy to do more work on that for the purposes of the committee. I agree Mr Stevenson I think it'd be it'd be good to understand the nature of the opportunities here as well we've had you know information presented to us about what local authorities have been doing investing in low energy street lighting for example so you know loan funding obviously can bring about quite substantial change and you mentioned agricultural subsidy again can bring change if there's cross compliance there with with climate or whatever so it maybe is an area that's been overlooked and it would be useful to get some analysis on it. Just being clear with the committee I'm answering the questions as accurately as I can I'm just expressing when a question's asked about you know the commitment as it relates to the capital budget and then we talk about a different system of financing I'm trying to give full some answers about that but also in the spirit of the question I've been trying to answer that because I could point I think you'll welcome some of the information around financial transactions how they've actually been targeted towards low carbon purposes whether that's investment by say higher of education so there's there's ways we've tried to target it towards this agenda as well it just doesn't neatly fit within the commitment that we were discussing moving on to another area Richard has a question yeah I think you covered the factor of local government data in any future reporting but are you open to applying the same high to low analysis to any new infrastructure investment plan and would you be open to including this analysis to the six month updates that you already published? I think I have partly covered that that's not the spirit of the agreement that we have with local government on the Concorda or the financial arrangements I understand that you know this committee may well wish to recommend that or want that but that's not the relationship that Scottish Government has with local government on how they spend their capital allocation to us in that sense and then how they how if they would follow the same monitoring or evaluation regime as us if that's a matter you wish to raise with local government that of course would be up to you if they want a national monitoring regime I hate my doots but I think they're committed to this agenda but I'm not sure that they would want government to oversee a monitoring regime of their capital spend so I'm not particularly keen to pursue that but if that becomes a committee recommendation of course I would have to consider that but I have no plans so to do Do you think there should be a policy target for the proportion of low carbon capital in the infrastructure pipeline or a ceiling for the proportion of high carbon capital expenditure? I'm not particularly attracted to that because I think then that it would become quite formulaic I think if we've set out a climate change plan that sets out very ambitious targets how we deliver that we're expected to work towards that and I think separate to that is the although aligned but there's the commitment of direction and travel of low carbon spend so I think for those reasons I think these are good principles and all of our other understandings will help inform what we're doing but I'm not particularly attracted to a further set formula that might bind our inputs I think we've been discussing over the course of the morning even how some immediate spend might bring long-term benefits but that might even bind our hands to do that if we set an artificial cap or formula that then said right whatever you're doing on capital spend must fit within that if all the other policy commitment statutory obligations and commitments we've made are being followed I think it's a very welcome direction of travel that the committee would support so I'm not attracted to an additional formula or cap in that regard. Thank you, I can well see why you'd want to retain as much flexibility as possible. The annual carbon assessment of the draft budget does not present emissions associated with the capital budget separately from revenue but the Scottish Government letter to the committee helpfully does this for the five-year financial strategy. Would you give this change in presentation consideration for future reports? We can give that further thought. Give it much. Okay I'd just like to we've got some time in hand so if yes. You say you were sorry to come back in but I'm always wondering what I'm going to ask the cabinet secretary. You would say you were watching earlier on the television witnesses. On a question that I asked, a point was made in the Scotland's way ahead project when they recommended the creation of an independent Scottish infrastructure commission. Basically I said that most organisations have a regulator how important you believe that an independent Scottish infrastructure commission would be and would you be in favour of it or against it or neutral? I now regret that with time in hand that doesn't mean that you have to detain me any longer incidentally but it's actually a very fair question. I think that again I would be stepping into other colleagues' areas of responsibility and going beyond cabinet approval as well to make a unilateral decision about whether we should have an independent process. What I would say though is the UK's infrastructure commission does look at UK-wide issues and a briefed Michael Matheson and myself on their views and recommendations so it certainly serves a purpose. Is it Scotland specific? No it's UK-wide but I thought it spoke to very pertinent messages around energy, digital and infrastructure so I would have to defer to the infrastructure secretary to answer the question. Do we appreciate independent advice to help influence Government decisions? Of course we do. Do we like a deeper understanding of how our decisions are impacting both the environment and the economy? Of course we do but whether we need an independent infrastructure commission to do that I wouldn't like to say it would go beyond my brief in an unfair way to speak to colleagues' interests. Yes again if the committee is making recommendations of course Government considers committee recommendations of course we would consider it if that becomes your recommendation. Thank you very much so that brings our panel to a close. I was going to close but make it very brief and I'll let you in. I was thinking about the uncertainty around climate change because in a few weeks time we're going to get the recommendations from the international panel on climate change that may well revise the science and revise our understanding of what we need to do and obviously these assessments come every every couple of years. So how do you deal with that kind of uncertainty because it seems that we need to build in to our action on climate change a certain amount of innovation and a certain amount of focus in terms of going beyond where we are right now in terms of carbon reduction targets? So how do you respond to that because you've got a capital programme, IIP, it's pretty clear, it's pretty fixed but you know up there the science and the understanding of what's happening in the climate is changing so how do you kind of work with that uncertainty? I again the cabinet would have to be alert and alive to that prospect but at least in the Scottish Government you've got a government that listens to experts takes this international challenge seriously, wants to be a world leader and we have a parliament that feels the same and therefore we have to be quite adept and agile to respond to whatever policies or international commitments emerge and what the technologies are to help us deliver that. I'm very mindful of my exposure on this issue that the assessments, the evaluation statistics have all changed you know over a period of time internationally and we've had to respond with that, understand our own baseline, our own contribution and the policies that we're trying to achieve and haven't done so much as a country and bear in mind we're on track, we've met our targets and I would argue the most ambitious targets in the world it does have to be resourced as well and the policy changes have to follow and that has been happening around energy, transport, land use and then all the other interventions that we make. We know that we've got much more to do and that's why we have a plan and it has to be resourced but I think we have to be quite agile and adept to do that and ultimately we will be advised again by the cabinet sub-committee if and when required but it's about now getting on and delivering that plan but being agile. Budgets are set annually of course they are but where I can I'll try and set multi-year budgets because you can actually get greater value and greater certainty from multi-year budgets but I am beholden to a UK spending cycle not getting into the debate about real-terms reductions but a budget cycle that doesn't help me with long-term planning but that said there has been multi-year commitments around infrastructure, housing, digital utilities and we want to do more of that and if you look at specific investments whether it's charging point as I say decarbonisation of transport more around rail or other elements of spend, green buses or even just elements in the programme for government very recently have shown we're alive to this and incidentally we're spent or we're on track to spend half a billion pounds on energy efficiency over the period in this Parliament and surely that's to be welcomed as well so it's keeping a focus on it but being agile and we're absolutely committed to this agenda and that's why we've tried to preserve the funds that are financed and that's indeed to expand them where appropriate and a smaller but substantial scale doubling the active travel budget was a substantial commitment as well in a period of financial challenge so we want to make sure that the resources are aligned with the politics and the policies but it's very true to say that the international understanding may change again at least what we know in Scotland we have is a consensus to do our bit and play our part as opposed to ignore the challenges of climate change that some have chosen to do thank you very much I'd like to thank the cabinet secretary and his officials for coming along today we're going to suspend the meeting briefly to move on to the next part and allow the panel to leave thank you very much right we now move on to agenda item five on subordinate legislation the fifth item on the agenda is considered the crc energy efficiency scheme revocation and savings order 2018 si 2018 oblique 8 4 1 more details on this negative instrument can be found in paper 4 do we have any comments on this Claudia? just a very quick comment thank you convener just that any simplification which I understand this to be is always to be welcomed and it's more likely that people and organisations will be supportive of it if they can understand it more easily mack had a bit of a question really convener and it was really about the understanding of how this now impacts on the climate change levy because if the crc goes and I think it you know welcomed that it will go add to lead to greater simplification and it's transferred into the ccl and the rates increase then you know what's the impact for that does scotton get barnett consequentials as a result of that do we see the climate change levy at its increased level because incorporated crc then resulting in more spend coming back to scotland and also just had a point re for the record just about why the climate change levy doesn't allow an exemption for renewables given that renewable energy is you know part of the solution to climate change it shouldn't be getting in my opinion taxed on its climate impact because it doesn't have a climate impact well those are questions that we can write as a committee to the government and this is an obvious answer which I've missed somewhere okay we'll look into that and if there isn't an obvious answer then we'll certainly ask for one okay right does the committee agree that it doesn't want to make any recommendations in relation to this instrument okay so it just leaves me to mention the future meeting details next meeting is on the 18th of september and the committee will consider the scottish crown estate bill at stage two can I remind members that the final deadline for submission of amendments is 12 noon on wednesday the 12th sorry Tuesday that's it was i do apologize that's a mistake in my notes Tuesday which is today at 12 noon as agreed earlier the committee will now move into private session and request that the public gallery be vacated as part as the public part of the meeting is now closed