 Good morning, and welcome to the 17th meeting of 2022 of the economy and fair work committee. Today's meeting is being held virtually. I am not anticipating any connectivity problems, but as it is, Colin Beattie, as Deputy convener, will take over the chain name of the meeting. Our first item of business is the decision to take item C in private, and for the committee to agree to take further discussions of our work programme in private future meetings. Our next item of business is our evidence session on broadband connectivity, and I welcome Kate Forbes MSP, Cabinet Secretary for Finance and the Economy, who is joined by Clive Downing, the R100 programme director, and Robert McGee, Deputy director for digital connectivity in the Scottish Government. As always, if members and witnesses could keep questions and answers as concise as possible, that would be helpful. I invite the cabinet secretary to make a short, open statement. Thank you very much, convener. I will take the opportunity to make some comments at the outset in what is a very important area for Scotland, because every part of the economy, every part of government is currently being transformed by digital connectivity and by the data, the technologies and the applications that it enables. Although all of us recognise the critical need for reliable digital infrastructure, prior to the pandemic, the pandemic has emphasised that further still and certainly has forced the pace of digital transformation. That really is the reason why we are investing very substantial Scottish Government resources in what is a reserved area, delivering improvements in digital infrastructure through unprecedented times. I am certainly very proud of what we have achieved, but I am conscious of the need to make sure that we complete the job and complete it well. We delivered the commitment to ensure that every home and business could access superfast broadband connections by the end of last year through a combination of the R100 contracts, the nationwide voucher scheme and commercial coverage. All remaining connections that are being delivered through the R100 contracts will be full fibre connections, delivering gigabit-capable connectivity on the ground. The R100 programme currently has ships out in the North Sea laying 16 new fibre optic subsea cables to connect 15 Scottish islands, and that is quite clearly a transformational investment. I had seen the UK Government's gigabit project as the next opportunity to deliver more targeted investment working quite well alongside the R100 programme. There is £5 billion available for investment across the UK through the UK Government's project gigabit. However, as it stands, a sort of investment that the Scottish Government is currently making in subsea cables and so on will not be possible by a project gigabit, which is instead to focus on the cheapest non-commercial premises. Project gigabit has an arbitrary cost cap of £7,000. In other words, if it costs more than £7,000 to connect to premises anywhere in the UK, the UK Government will not fund it. I know that the committee would hopefully join me in appealing to the UK Government to express the point that, to connect the hardest-to-reach areas in Scotland, will inevitably cost more than £7,000 per property. My correspondence with the UK Government Minister has not been fruitful to date, and I quote the UK Government Minister on that point when she said that the Scottish Government is seeking to have greater spend in areas like islands and parts of rural Scotland—greater spend in those areas than that will go to other parts of England—and that she cannot ask people in other parts of the country to suffer. Quite clearly, I think that all of us have an interest in connecting the hardest-to-reach areas, and if it costs more than £7,000 per property, then we need to complete the job. However, having invested well over £600 million already from the Scottish Government's budget in a reserved area, we cannot simply keep picking up the tap for the UK Government on broadband. Project Big a Bit looks like it is going from a transformational opportunity to a missed opportunity for Scotland, and hopefully we can get into a little bit more detail about that when it comes to the Q and A in this session. I could go on to talk about the 4G infill programme in terms of mobile masks, working with our project partners, WHP Telecoms, who have activated 28 masks, as well as the work that we are doing on 5G through the Scotland 5G centre and so on. However, I am conscious about keeping my remarks brief, so I will stop there and hopefully we can get into some of that in the questions. Thank you. I will start with the questions, and I will take questions from other members as well. I should note that Jamie Halcro Johnston has provided his apologies for the morning meeting. There will be questions to come on the UK Government project that you have talked about, but if we start with the R100 programme and progress on that, following the delay to concluding contracts for the R100 programme, we are now expecting some areas not to have connection until 2026-27. Is the Cabinet Secretary confident that the deadline can be met? We are seeing cost increases for various reasons, including inflation, so are you also confident that the budget that is in place is sufficient? You have talked about the challenges of reaching the harder to the more remote areas in Scotland and the increased costs that are involved in that. Is the R100 programme confident that the new deadline of 2026-27? Thanks. We are delivering at pace, so if I could just start my answer by saying that, as of 30 April this year, 7,685 premises are able to access superfast broadband through the R100 contract, and a further 2,200 connections have been made through the broadband voucher scheme. I am keeping the pressure on open reach considerably to try and roll that out at pace. In terms of the conversations right now, where I am always looking for us to go further is to identify any other properties or any other areas that we could reach perhaps through a combination of project gigabits and R100. In short, we are working to that deadline. We are working to that budget. Obviously, when it comes to the budget, I want to ensure that the Scottish Government is contributing as we are with over £600 million. Ultimately, in a reserved area, it is my duty and responsibility to make sure that we are maximising any UK Government spend in that area too. Additional funding becomes available, for example, through project gigabit, which is £5 billion that can complement our work and therefore exceed the budget that has been set, but through UK Government pressure, I certainly would not say no to that. The nuance that I am incorporating here is that we have set our budget. I am confident right now in our budget, but if I can go further with additional funding from the UK Government, I absolutely will. I hope that nuance makes sense, which is that, ultimately, we want to maximise the available funding. We have set out what our contribution is, but if we can secure a greater contribution through project gigabit, we absolutely would do that. Am I correct? I think that the Audit Scotland report shows that the progress in terms of R100 is slowest in the north, which recognises the more difficult areas to deliver in. We are facing similar challenges that appear that the areas that are more accessible and possibly cheaper to deliver in America are worse before we get to the harder areas. We signed the contract with the north lot one year later than the central and south contracts, obviously due to the legal challenges. However, of the £600 million, the north contract certainly has the largest share of the investment £384 million, which is double the total amount that was invested through the previous programme in the Highlands and Islands. You are right in saying that it has been delayed more than the central and south lots, but it also includes things like 16 subsea cables, which other parts of Scotland do not necessarily require. It is a more intensive process. It is arguably one of the most important parts of R100, if R100 is built on the concept that we start from the outside in. We start with the hardest to reach premises working backwards rather than doing what project gigabit is doing, which is the cheapest, commercially easiest to reach properties. I will ask for confirmation that the vessel collected supplies from Norway in May and that the cables are still expected to be laid by the end of this year? Any officials want to come in on the updated timescales, but work is progressing as I understand it as expected, unless Robbie perhaps wants to update on progress on the subsea cables? Absolutely. I can confirm the error on track and on track to be made by the deadline. You can track the ships as they do a bit of island hopping over the course of this summer. It is really intensive, but I will work over the next few months to open reach to the contractors involved in that. However, as it stands, it is very much to interact over the summer or the window, whether the weather supports such a day or so. I will bring in Alexander Burnett to be followed by Colin Smyth. Thank you, convener, and good morning, cabinet secretary. The question is on the voucher scheme. Why do you think that it has not worked as well? You probably might have hoped why the uptake was so low. I wrote to you about the possibility of extending the deadlines for the voucher system and the questions about why some of those were turned down and what will happen to the unspent money. I appreciate that you might not have all those figures in front of you. Will there be some formal report or analysis of the scheme so that we can have some proper scrutiny of why it did not work as well as it could have done? Thanks. Alexander Burnett has had a significant interest on behalf of his constituents. We had extended access to the interim voucher by three months and had significantly stepped up our efforts around advertising. We used local, national and social media. In those further three months, there was not a tangible increase in the number of inquiries or applications. I will see if officials want to come in in a moment. It is a demand-led scheme, but it is ultimately a decision for property owners whether or not to go down that route. Some areas were able to combine the broadband voucher scheme with funding from the UK Government's voucher scheme. That was a combination of £5,000 with funding of up to £1,500 for homes or £3,500 for businesses. In terms of the effectiveness, the reason that we did not extend it further is because we had not seen a significant uptake in the additional three months of the scheme. The other point is that we have also tried to use positive examples. We put a lot of positive examples on the website of how households had been able to use the voucher scheme. It had also been working with about 60 local broadband suppliers, allowing them to expand their networks. I feel in hindsight that we did everything that we possibly could to maximise awareness and to raise the understanding of how the voucher scheme could work. Why was not there a bigger uptake? I will see if officials want to come in on that, but I certainly could not see value in extending it any further because of the low uptake. Incidentally, if you want the latest figures on it, as of June 2022, the R100 voucher scheme delivered 2,202 connections. There are a further 1,008 connections in the pipeline, and 14 per cent of those have been fibre to the premises. I will stop there to see if you want a follow-up question or alternatively ask officials if they have any ideas as to why. If you have an updated figure on the unspent money in that, I agree that we all promoted the scheme to constituents. Despite that additional promotion, despite that extension, there was not an uptake. What was fundamentally wrong with the voucher scheme? People are not going to take something up if it is not attractive enough. What was wrong with the actual scheme itself? That is where I do not think that I have an answer as to its unattractiveness, because in terms of the correspondence that I receive and the communication that I have had with individuals and also the positive examples that there have been, those that wanted to use it and apply for it and secured it, we are quite happy with the process. Working with local broadband suppliers, accessing the funding, there is no significant reason being given, either anecdotally or in our feedback from those who were unable to secure the voucher, as to particular reasons. It was a demand-led scheme. You may have other ideas, but my approach to it was to try and be as flexible as possible, to say that we are willing to adapt it and extend it. One point that I would perhaps make is that the take-up of the voucher scheme compared quite well with other demand-led interventions that are available in Scotland. If you take Ofcom's Connected Nations report for 2021, it showed that just 288 connections across Scotland had been delivered through the UK Government's universal service obligation. That is less than 1 per cent of all universal service obligation eligible properties in Scotland. The UK Government's broadband, gigabit broadband voucher scheme, again, just delivered 604 connections to date. We tried to make it as flexible as possible. The terms and conditions were designed to ensure that those who chose to utilise the voucher could also afford to take a service. Across the board, we are seeing a very similar picture and uptake of voucher schemes. Finally, the unspent money. How much is that? Where will that go now? I will need to come back to you on that. Obviously, all the full broadband funding that I have made available is still available. That £600 million figure that I have identified to reach 100 per cent of properties is still that £600 million. There may be ways to redeploy funding, but it will be spent on broadband. I will now bring in Colin Smyth, who is followed by Colin Bitey. Thank you, convener. Good morning, cabinet secretary. You talked about the challenges facing rural areas accessing digital opportunities, in particular connectivity, but there are also barriers when it comes to skills and, indeed, an understanding of the business opportunities that good digital provides, especially for small businesses, which obviously make up the vast majority in rural areas. Last week, you announced that you were scrapping proposals for a rural entrepreneur fund. Whenever we have a round of the digital boost funding, it is always very oversubscribing a lot of businesses and we do not get to access it. Can I ask what specific support is being provided to businesses in rural areas to ensure that they do not fall behind big businesses in our cities when it comes to breaking down those barriers to digital opportunities? That is a really good question. As you will know, there is always a reluctance to talk about the opportunities of broadband when not everybody has access to broadband quite yet. However, you are right in saying that, through the previous programme, 95 per cent of properties have access to broadband, 95 per cent are not necessarily making the maximum use of it. That work was stepped up during the pandemic. Digital boost has been running now for a number of years and it is one of the most effective ways in our commitment to spend £100 million through digital vouchers or digital grants. It still stands. Obviously, in the first 100 days of this Parliament, we have provided £25 million to spend on digital connectivity. That includes software, but it also includes the skills side of things and digital boost has been quite effective in that. Our commitment to that still stands. You are right, in recent times, that it is being oversubscribed. Incidentally, prior to that, it had quite a low subscription rate, so trying to promote our digital products, whether it was a digital loan scheme or a digital booster otherwise, was quite challenging. I think that businesses are increasingly coming round to the understanding of how digital can be transformational. It is primarily through grant support. That grant support still stands and has not been changed, but, at the same time, that grant support also brings in the opportunity for training and skills. There is a lot more to that answer. For example, there is a lot more in terms of the training and the reskilling piece, because, ultimately, what businesses also need is digitally equipped and trained and skilled employees. There are various programmes that we support. One of the first things that I ever did was the digital start-up scheme, which was taking people furthest from the job market and providing them with intensive retraining or reskilling in digital skills and supporting them to find work. There are other areas that we can do that. Is there not an argument, however, that we need something very specific for small businesses in our rural areas? We know that they are not grasping those digital opportunities often because they are not the skills, but they do not have the awareness. It is not about just bidding for digital boost funders, it is about bringing those businesses up to a standard, where they are fully aware of the opportunities that are out there. That is a big problem for small businesses in rural areas in particular. Here is an example of something that we have tried to do. You will be familiar with CodeClan, which provides intensive retraining or reskilling for employees in digital skills. Intentionally, we supported them opening a facility in the highlands, specifically geared towards rural businesses. It was different from the CodeClan that is based in Edinburgh and was specifically geared towards rural businesses. There are examples of things that we have done. We need it both ways. There also needs to be an appetite to embrace that. I think that, whether it is in the middle of Edinburgh or in Skye, the same challenges will exist around skills in a very competitive environment. If you think that there is perhaps some ways that we could adapt the digital boost scheme or digital grants that make them particularly relevant to rural areas, it is perhaps something that I would certainly be open to suggestions or ideas of what that might look like that was specific to rural areas. However, I think that it is a challenge right across Scotland. I will take you up in that offer, cabinet secretary, to the convener of prevent me from doing it just now, but I will certainly follow that opportunity up. I turn to the issue of mobile connectivity. Again, challenges are facing rural areas. You suggested in your opening comments that the 4G infill programme had connected 22Mass. I understand that the intention was to deliver 45Mass by 2022. Is the target date of 45Mass sites and the completion date of 2022 still on target? The 28Mass are live, so the most recent one was in Aberdeenshire. The Scottish 4G infill programme is investing £28.75 million and it is at up to 55Mobile, not-spot areas. We publish regular programme updates. We are still committed to being on track to connect as many mobile mass as possible. It has not always been plain sailing. The two challenges when it comes to mobile phone mass are that, firstly, because mobile connectivity is a reserved area, we have to work collaboratively with the commercial providers. We do not have the powers of regulation to perhaps enforce or compel that we can build the mass, but we still have to work closely with the commercial providers to ensure that those mass are then used. The second challenge is, of course, the fact that being a reserved area through the past few years has been quite difficult. However, I think that it is one of the most successful programmes that we have. We have the 28Mass now live, and the money is still there for us to connect up to 55Mobile, not-spots, which we will do as quickly as possible. I was not clear, cabinet secretary, that the Government has caught a specific target of 45Mass new by 2022. I was not clear whether that was still a target or what the actual new target date was for all the 55Mass that are planned. We have a pipeline of all the further build activity and the site activations from now until the programme concludes. The programme concludes in March 2023. I would be happy to provide more information to the committee on what the plans look like between now and March 2023. We are still working—I am not as familiar with your figure of 45, but we are working to try to connect up to 55Mass by March. Just a final point, cabinet secretary. You mentioned that we need providers to use those mass. Are we seeing mobile companies stepping up to the market and using those mass that are being created, or is that simply a case where we have one provider because, again, that is a challenge for people in rural areas if they are not using that provider? Is there an uptake from commercial providers where we have several sharing mass rather than simply one provider? Yes, that is the short answer. Over the past three years in particular, we have seen a massive effort from mobile commercial providers to work with us on the infill programme. It is to their credit that, even though we do not necessarily have the powers of compulsion or regulation, they have chosen to work with us collaboratively to make those mass a success. Obviously, when it comes to mobile operators, many of them are looking at how they can deliver their coverage obligations through the infill mass programme. Robert McGee? Yes, convener. I was just going to add a little bit more detail on the 4G infill point. Just to confirm, as the cabinet secretary said, we have got 28 sites that are activated that are currently live. We have got another 20 towers that have been built. Towers are in the main, served by fibres, so there are some connections that get operators kit installed and then services go live. However, there will be a steady stream of those throughout this year and over and above that with another five towers that are currently in build. It was really just to demonstrate that we are already well in excess of that original 45 target. We have already stripped that and really managed to create real momentum. That is after a period where the programme had to shut down deployment in those early months after the pandemic hit. I think that we are really pleased with the momentum that has been generated. Just to confirm that we are already in excess of that original 45 target. Thank you. I will now bring in Colin Beattie to be followed by Fiona Hyslop. Cabinet Secretary, just a couple of questions on connectivity. Can you provide an update on the test 5G networks that are established in Orkney and at Loch Lomond? Yes, I can. In terms of the 5G networks, we obviously have that working alongside the 5G centres. We are working in those areas, particularly on the 5G networks. I will see if any officials want to come in on the two specifics, because I am not as well versed in the two local examples that you mentioned. It will probably be more familiar with the more general point around the 5G centres that we have. I do not know if any officials want to come in on updating on those local examples. On that, I guess that we have, obviously, a 5G deployment panel that is very much a commercial endeavour. What the Scottish 5G centres have done through wave 1 projects that they delivered in the first stage of their work has really been to test the technology, deploy some private 5G networks in both rural and urban locations and then really generate lessons on how those networks can be deployed in those situations in future. To make some work that has been done in Orkney, that is a really successive project that I have built up there. Again, the other element within wave 1 of the 5G centres work was making public sector assets more accessible to telecom companies. We have a really strong academic base in the centre, in the knowledge of university of Stratclade, Glasgow and other academic partners, and putting that together with industry. As I said, what we are looking to do in the coming years is to start to generate those lessons on how networks can be deployed in different ways, utilising different models in rural and urban environments. Just on the back of what you are saying there, is there an expectation that the network will be maintained by a commercial operator? There are a number of different instances. I guess that the work in Orkney has been looking at utilising some of the new freedoms on spectrum, some of the new flexibilities on spectrum that I have introduced, which could see different models that might not necessarily be a mobile network operator that would maintain it. It could be more of a community led model or a new mobile player that is more local in nature. That is what the pilot projects in those areas are looking to test. As I said at the start, primarily we are in business 5G deployment and will be led by MNOs. We have already started to see that the 4G infill programme and the shared rural network have started to see mobile network operators deploy in far more rural places than they have traditionally in the past. That trend will continue, but clearly we want to support the development of models that will add value to that and potentially support more local solutions as well. Listen to what you are saying. Is there an end date to those tests in Orkney and Loch Lomond? In connection with the maintenance of the network, when will there be clarity as to the model that is being used? That is probably one that we can fall up in writing with, because I do not have the detail to hand on specific end dates. We can certainly get some more detail to the committee on that. Also, is the model likely to be used? Yes, absolutely. As I said, the lessons from the first phase of the Orkney programme have already been written up and shared in other informed and next stages. We can go into quite a bit of detail on that in the follow-up. I wonder whether the cabinet secretary would comment on her expectations for the commercial roll-out of 5G networks across Scotland and other areas of Scotland where additional public support or subsidy will be necessary to encourage the private sector to act. We have the 5G strategy. We established the 5G centre to try and facilitate that investment in deployment, development and commercialisation of 5G in Scotland. There is funding that is already in place from the Scottish Government with an additional £4 million, which was announced last September to deliver that S5G connect programme. Obviously, that is a network of 5G innovation hubs. There is public investment in that already, but the aim is to try and accelerate the adoption of 5G and to realise the technology's potential economic contribution. The difficulty is that all the issues that we are discussing just now are reserved. In terms of our role, our role has to complement the work that is already going on, either commercially led or UK Government led. That is where we are deemed on the 5G centres, creating these hubs. You might be familiar with the fact that the hubs are in Forth Valley, Dundee, Dumfries, Kilmarnock and Aberdeen, and they will all have a different focus. However, that is where we can add value, contribute some funding, but it has to be ultimately commercially led or UK Government led. So, based on what you were saying previously and what you are saying now, it would appear that there will be regions of Scotland that will need additional public support, not necessarily from the Scottish Government but perhaps from the UK Government in order to get the private sector into action. Well, I do not think necessarily that it is always investment that is required to get the private sector to operate in this area. Obviously, we are talking about the 5G providers in this regard, about them rolling it out. We obviously want to incentivise them to roll it out. We are doing that in a number of different ways, not least through the 5G centres, but ultimately it will be a commercial decision taken by the providers. We can act as an incentive, we can do things like develop use cases on private 5G test networks, we can support SMEs with the skills that they need. Obviously, if a commercial provider needs appetite for adoption and commercialisation, then it is more commercially attractive to them to roll out. I think that there are other ways of us trying to incentivise commercial providers to roll out 5G. Okay, thank you. Back to you, convener. Thank you, on our big entrance and a head slot to be followed by Mikey Chapman. Good morning, cabinet secretary. Clearly, £600 million by the Scottish Government in effectively a reserved area is a considerable investment, and this digital connectivity has to be for a purpose. How are you ensuring that the R100 programme, the 425G support, is filling in with the Scottish Government's aims and responsibilities in devolved areas, particularly, for example, the green recovery or the wellbeing of the economy or, indeed, city deals or the work of the enterprise agencies? How are you making sure that there is a synergy with your national transformation strategy for the economy to make sure that we are getting the best value for this additional complementary spend? That is a great question. In terms of our objectives, both economically and socially, both rely on adequate broadband infrastructure. I take those two in turn, from an economic perspective, tech is forecast to be the second fastest growing sector over the next few years. The economic opportunities for Scotland are enormous, and we have seen in the past few years a number of, for example, global businesses choosing to relocate or to establish their tech hubs in Scotland. The Barclays campus, for example, as well as some of the other banks establishing tech hubs in Scotland, is doing that because they recognise that we have the talent, the pipeline of labour and also a growing reputation on technology, but that relies on the basics, as it were, of broadband connectivity. On the social side, you will be aware of the work that was done during the pandemic on connecting Scotland, so trying to reduce digital exclusion by providing devices, internet connections, training support for digitally excluded low-income households. That has transformed their lives when we get it right, when we get the skills alongside the hardware required, because those who were perhaps feeling isolated or excluded or lonely during the pandemic could now reach other people. Both of those examples are probably in our DNA as a Government on the economic aspirations for prosperity, but also on our wellbeing aspirations for inclusion and so on. Both of them rely on broadband connectivity, and we could wait and wait and wait for the UK Government to deliver the infrastructure that we need, or we get on with it ourselves, and we have chosen to get on with it ourselves. I might ask about delivery. Aspiration is all well and good. The cities, from a commercial point of view, would have been certainly connected to the levels that are required anyway, so it comes back to Consmis's point. How are we making sure that the additional Scottish Government spend of over £600 million is leveraging, particularly because we are the economy committee? Economic growth in the areas that your plans—the Scottish Government's plans and the delivery of those that you have gone through—are going to make a difference. What difference does it make? Instead of desaspiration, how do you know that it will be delivered and what will success look like for those places that have been connected where the Scottish Government spends? Colin Smyth was right in saying that the infrastructure is insufficient. Once you have done that, that is great. If I use an example on that, and again going back to the digital boost funding, which used to be in the region of a couple of million pounds a year and is now up to £25 million, the other thing that we have done differently is that it now needs to leverage in private funding. It is not just a case of receiving a grant that you spend and then you forget about it. That needs to be matched essentially by private sector investment. Already, you are doubling the investment almost immediately between public and private to invest in digital connectivity. If I go back to the economic strategy, one of the most effective ways of improving productivity that was identified is that private sector investment in capabilities. In terms of outcome, you know that we have a commitment to improve productivity significantly in line with OECD comparator countries. If you want the metric of success, that is the big metric of success. The steps along the way are for how we ensure that every penny of public sector spend on digital is doubled by the private sector. That is an example of aspiration where we want to get to in productivity. In reality, that has already happened in the digital funding that has been spent on improving capabilities and skills. The other example that I have already cited of talking about past tense where that has actually worked is that if you talk to some of those banks, you talk to Barclays, why locate your tech hub in Scotland? Part of the reason is that they think that it is an attractive place to establish a tech hub because of the combination. That is set to create considerable numbers of jobs. It is creating considerable numbers of jobs. Barclays is not the first and it is not the last to have done that. There are tangible outputs of where the investment has been made and we are seeing results. I am very familiar with the digital boost fund and the instrumental in delivering it as part of economic recovery. Some of the evidence that we have had, particularly for female businesses, because of the nature of their business, has had some challenges in accessing the digital boost fund. I would be grateful if the cabinet secretary could agree to look further at the access to that fund for women and rural areas, as has been pointed out previously. I am happy if he could agree to that to hand back to the convener. I am very happy to agree to that. We are keen to be adaptable, as I said to Colin Smyth. If the committee has ideas of how to make the digital boost scheme more accessible, I would be very keen to work with the committee on that. I think that that is something that the committee will contact you about. It is evidence that we have heard during our town centres and retail inquiry. I will now hand over to Maggie Chapman to be followed by Michelle Thomson. Thank you, cabinet secretary. Good morning, and thank you for what you gave to us so far this morning. I have a couple of questions following on from Fiona Hyslop's questions. One of the things that has become very clear is that we are coming to the end of the retail sector inquiry and thinking back over the winter resilience. Having the infrastructure in place is really important, but it is how we build into that infrastructure, the resilience, to cope with either bad weather events such as storm arwyn or things such as ensuring that, as businesses and residences, we need to move to omnichannel or multimodal interactions, whether that is home working, whether that is bricks and clicks in retail. How does the Scottish Government ensure that we can have not only the infrastructure, but the support that backs that infrastructure up to ensure access to reliable connections, access to resilience connections and fast access to maintenance that will be required if there are connectivity issues? It is an area in which we have got to work very closely with the commercial providers at the end of the day. We have talked about maintenance. Obviously, we have a real interest in supporting local broadband providers, so ensuring that it is not just some of the bigger businesses that are benefiting from the big roll-out of R100. Ultimately, that means that, when it comes to resilience, we need to work quite closely with those organisations. There is a massive skills question in this, because when it comes to whether it is—let us take the Connecting Scotland programme—if an individual who had previously been digitally excluded and is now accessing broadband, we need to be on hand quickly and ready to respond to that need. There is quite a number of different partners that we have in that regard, including things such as housing associations, to reach that. My point is that, when it comes to resilience, it needs to be localised resilience and it needs to be at the point of need. That includes both the providers, whether they are small, medium or large, as well as other partners that are perhaps more trusted, such as housing associations or banks, such as the Barclays Eagles programme, trying to equip more excluded customers with the skills that they need. There is a huge programme in all of that. Ofcom has a role in that, too, when it comes to resilience and ensuring that all providers are meeting a certain standard of embedding resilience. I appreciate that there are challenges as well as you identified earlier about what is reserved and what we have powers over. Following on from that, you talked about building in connections and networks to secure resilience at local levels. Are there alternative models of ownership or control that we should be looking at? There is obviously an important role for the big broadband corporations to be supporting and mobile connectivity to be supporting that. In terms of community ownership, there is potentially quite adaptable, flexible and very localised, that can secure the resilience that small towns, small villages and rural areas need. What are your thoughts on that? I am extremely supportive of that because I represent an area where there has been perhaps a disproportionately high reliance on local community solutions, whether it is Lachillnet, Lohaber or Cromarty Firth on the Black Isle. There are lots of localised examples. Certainly, the broadband voucher scheme that I mentioned earlier provided an opportunity to work with about 60 local suppliers to give them the opportunity to connect. Communities have been absolutely dependent on local suppliers. The worst thing that we could do right now is to only focus on, for example, one major provider that, unfortunately, makes it harder for some of those community schemes to be commercially viable. There is a challenge that we need to manage carefully. Through the voucher scheme, there is an example of a 60-local broadband provider. I could go through listing a number of local suppliers, whether it is CloudNet, Newark New Islands or Shetland broadband LLP, who use voucher schemes to connect eligible properties. There are examples. Most of the time, when you start with a household, they just want a reliable connection. No, that is fair. I think that, especially as we see the continuity of hybrid working post-pandemic, that is going to be very, very important. Another question is about the use or the application of the connectivity, whether it is broadband or mobile connectivity. Maybe that links back to something else Fiona Hyslop was talking about. There are real opportunities, economic opportunities, that maybe are emerging now. For example, one of the things that I can think of is how we use 5G data to manage traffic flows, to better predict supply chain issues, to better predict accidents and the links into health, the links into food supplies, all of those things. I am just wondering where in the policy and strategy landscape is thinking happening around those kinds of issues? Yeah, so definitely the thinking is happening. If I could perhaps draw your attention to the internet of things, because that is part of our digital strategy. Examples already of how we are using internet of things to, exactly as you said, to provide reliable data about the world, which then informs decision making and improved services. At the moment, that is being used to monitor river levels for flooding. It is being used to prevent damp in social housing. There are some superb examples, and I have had the privilege of visiting some of the social housing, that are using the internet of things. It is remarkable. There are also examples around the health and wellbeing of livestock, again seeing examples with cattle and understanding the performance of industrial machinery. Back in 2017-18, the PFG and the subsequent 2017 digital strategy, we committed to ensuring that Scotland had that underlying infrastructure to support widespread networks. We will continue to implement them. That is a good example of where we want 5G to get to. However, it all boils down to data. How do you use the data? How do you have an ethical approach to the use of the data as well? That will be one of my final points. Data trusts and ownership of data are interesting questions that I am not sure anybody has got to grips with. I think that there is interesting thinking around that, but I know that that is probably not so much the topic for today. I do not know whether you have any comments on that. As we move to a very clearly digital economy in which everything relies on some kind of digital connectivity, whether it is food production, livestock monitoring, traffic management or all of those things, there are interesting opportunities to think differently about broadband and mobile connectivity provision and the charging. There is obviously a very clear desire for universal provision. I wonder if you had any thoughts further down the line on how you see a future Scotland perhaps viewing universal provision. I think that we will need to be in a position of universal provision. I do not think that it is optional. I also think that it has the potential to be transformational if we get it right. For example, if that universal provision is a great equaliser across geographies, income levels, communities and so on, then it has the potential to be transformational. I guess that my concern in that regard is that we have a vision but it ultimately is a reserved area. Telecoms is fascinating because the entirety of it is reserved. All the powers are over regulation and so on. I think that our spend has got to go hand in hand with regulation. If you take, for example, the banking sector, where banks close local banking hubs and they expect their customers to increasingly rely on connectivity and broadband, then we have to put in place support for those customers and there has to be alternative provision. There is an example where in some cases the pace is moving so fast if we are leaving some people behind. We need to be conscious of how we take everybody with us if we are to realise that transformational objective, where broadband is another utility that you absolutely expect without question. I will leave it there. Good morning, cabinet secretary. I want to take it back to the macroeconomic environment. As you know, inflation was at 9.1 per cent CPI at May 2022. We anticipate that it will peak considerably and, of course, we have had Brexit and the pandemic in terms of issues around supply chains. Indeed, as you know, our committee did an inquiry into that. In what ways, if any, might the UK macroeconomic environment have an impact on either rising costs for delivery or the timelines for our existing programmes? It will inevitably have an impact on the roll-out. An obvious example, which is coming back to me through various different providers and so on, is about labour. At a time where there is an extreme shortage of, for example, engineers, ultimately you need boots on the ground to roll out any major infrastructure project. If that labour market has been reduced through a hostile visa system, you end up with providers and contractors and subcontractors all just recycling the same workers to try and deliver that roll-out. The second thing is, of course, in terms of the inflationary impact on the cost of major infrastructure builds. Inevitably, again, there is an inflationary impact on some of those costs. Certainly, the major infrastructure initiative, which is huge, will not be immune to the challenges that our economy is facing. I am going to pause and see if Robbie wants to come in on any other technical impact. I hope that that is sorted. On the inflationary impact, it is something that we are obviously monitoring proactively across all of our programmes. The nature of the contracts that we have offers some protection. For example, our 100th essentially is a fixed-price contract. The only changes that can arise relate to predetermined survey assumptions. There are some inflationary pressures that can trigger those in some circumstances but not across the piece, so it is not impacted by wage inflation or that kind of thing. However, it is a fact of life, as it would be said, that the cost of raw materials component parts of the networks that have been built, those costs are increasing. On other contracts, the 4G infill programme that we have talked about, or supplier WHP, has secured some of those components quite far in advance, which has isolated that from some of the most recent rises in costs. I think that I talked about earlier on the construction of terrors as large as it is complete now, the process of the 4G infill programme. We also have some contingency that is built in with that programme to be able to meet costs of terrors. There has been a proactive approach to managing that as we go, which we expect that the impact certainly in the S4GI will be minimised, but certainly with our 100th we are taking the same approach. We are working to open reach to mitigate the impacts. We are looking to innovate as we go and trying to push costs down, in effect, to reduce how much network build and components are needed to reach rural communities. I think that the ability to innovate and make the build more cost effective, as well as some of those contractual protections, will be a significant factor in allowing us to mitigate the risk of costs that we are on. That is heartening to hear that about what you have built into the contracts as a protection against the increase in costs. Therefore, going back to your cabinet secretary in terms of labour force issues, the engineers in particular are real boots on the ground that have to be deployed. It is not like you can send a bot or anything like that. Sometimes I look at the detail reporting of each of the programmes and, obviously, they have the standard function pulling out issues. However, I think that it would be useful for the committee to have more flavour where a gap in labour availability is pushing out timescales, because I suspect that that is an issue that is going to continue to run when we look at other sectors. That would be useful if there is more information available about that. If I were to quote the chief executive of open reach, he has described the process of recruiting workers from the EU post Brexit as, I quote, tortuous. He has stated that the home office point-based process is, I quote, constraining the rate of fibre build in the UK. Robbie has set out a lot of the protections that we have put in place, but you only need to listen to people like open reach. That has featured in probably every meeting that I have had with open reach for the past year and a half or so is a challenge about recruitment of workers. That is over and above what some of the local suppliers have identified in terms of struggling to source equipment due to the global supply chain issues such as fibre-fixed wireless, fixed mobile hardware, and some stockists are capping the amount that can be ordered. That is where we have stepped in and offered, for example, greater flexibility to the delivery timescales for the voucher scheme-led solutions, where the supplier can demonstrate that they are experiencing such issues, but, quite clearly, they are all grappling with these macroeconomic frustrations, some of which are fixable right now because you could fix it with, for example, visas that are specific to particular industries or visas that are specific to particular skillsets. Absolutely. I know that that is a matter that you have raised on a number of occasions. I thank you very much, cabinet secretary, and thank you, convener. I thank you. I'll now bring in Gordon MacDonald. Thank you very much, convener, and morning, cabinet secretary. I wanted to ask you about the project gigabit in the UK Government's £5 billion was set aside for the harvest to reach 20 per cent of the population. The UK Public Accounts Committee highlighted that the UK Government digital, cultural, media and sport department had only allocated £1.2 billion of that £5 billion. It hadn't awarded any new contracts, and it wanted to ensure that taxpayers' money was not wasted and that public funds were only used when absolutely necessary. Do you share the UK Public Accounts Committee's concerns that the UK Government's approach to rolling out project gigabit risks perpetuating digital inequality across the UK? I think that the way that it is being approached right now creates a massive risk in that regard. To add to one of the criticisms that you have identified, there has also been criticism that the commitment has been watered down, so it is now a commitment to reach to for nationwide gigabit coverage by 2030 with an aim to reach 99 per cent of coverage. We know, based on their approach and the arbitrary cost cap of £7,000 per premises, that that just means that they will secure connections to the easiest to reach most commercially valuable properties. Inevitably, it will be properties in my hard-to-reach constituency, Alexander Burnett's hard-to-reach constituency and other members' neural constituency if they just take the approach of reaching the easiest properties. You are seeing that from the response from the UK Government Minister, where she is saying essentially that if we focus on the hardest to reach properties, it will be at the expense of easy to reach properties in England. The whole point here is to try to reduce digital exclusion and to create a level playing field rather than exacerbate that divide. At the end of the day, we fundamentally need a change. It is not additional funding, but £5 billion is available. I do not think that it is necessary about more money, but it is literally about the belief that let us connect our islands and the most rural peninsula. Let us get to that house that is down the beaten track and cannot be connected for anything less than £7,000. The UK Public Accounts Committee said that rural and remote areas should receive significantly increased investment on the basis that the commercial sector will be unlikely to be able to fill the gap. If we are going to significantly increase investment in order to cover the hardest 20 per cent, what discussions have you had with the UK Government recently about this and is there any sign of movement on it? It is an issue that I raise with UK Government ministers whoever they are and whenever I meet them, such is my concern about it. Whenever we end up in a visit together or whatever it is, I raise the issue. I have raised it with the Minister for Leveling Up, obviously with the digital minister, and I will keep hammering it home. For me, it is very binary. If the cost cap remains as low as it is, the UK Government is essentially excluding the properties that have most to gain from superfast broadband. We have taken an approach with R100, which is to start with the hardest to reach and work backwards. We are willing to invest the funding, but ultimately, if we want to finish the job, then it is going to take a more flexible approach from the UK Government. I do not think that it is appropriate to say that connecting an island is at the expense of connecting a town in England. It is fundamentally different. If you want to hear about the official discussions, I am sure that Robbie could come in. My discussions have been, no matter when an unsuspecting UK Government minister and I end up at an event together, that is an issue that I raise. Cabinet Secretary, would it be possible for you, either today or in writing, to give us an estimate of how many households are likely to be impacted by the £7,000 cap? Is that some information that you already have or are able to share with us? We will do our level best to do that. It might be in percentages rather than absolute figures, but we will do our level best to give you as much information as possible. That is helpful. If you have any comments on off-com, do you talk about inequalities within the current funding system? I understand that off-com recently published their Scottish report, which was in December of last year, on where you see them as an organisation fitting into the situations that are facing in Scotland and what they contribute. Off-com are vitally important in all that, because they determine the criteria for services that are delivered. They certainly have no role in setting the parameters for project gigabit, because their job is to regulate and establish standards, but when it comes to UK Government investment and so on, they do not have a role. I presume that your question was more about the generalities of their role, rather than specifically about them. I understand that the role of off-com, but whether in the discussions around Scotland getting a deal that works for us, is the information provided by off-com helpful in consideration? Is it something that they do take into consideration? They do have the Scotland report. Is it part of their remit to look up where inequalities are within the UK? Insofar, they cannot determine, for example, how project gigabit is spent or otherwise. There is a limit to their role, but they have an important role in ensuring that they have an objective on that equality point. However, I think that there is a limit there in terms of how they determine that Government funding is spent, but they do have an important role. For example, they determine criteria for services that are delivered under the UK Government's broadband universal service obligation, so they do have a role in that regard, but I guess that it is limited when it comes to how UK Government funding is spent. It is certainly limited in the politics of the situation, but the information that they provide can help to support some of the cases that have been made today. Thank you very much for the session this morning. Cabinet Secretary, that brings us to the end of the session, and we will now move into public discussion. I will close the meeting.