 Good morning, and welcome to the committee's fourth meeting in 2019. Can I just ask everyone to please make sure that their mobile phones are on silent? We're going to move to agenda item 2 on our agenda, which is the South of Scotland Enterprise Bill. This is the committee's final evidence session on the South of Scotland Enterprise Bill, and I'd like to welcome the Cabinet Secretary and his officials for pursuing the Cabinet Secretary for the Rural Economy. Sandra Reid, the Bill Team Leader, Karen Jackson, the South of Scotland Economic Development Team Leader, and Felicity Cullen, the Scottish Government Legal Directorate. Cabinet Secretary, I think that you would like to give an opening statement, and I would ask you please to limit this to no more than three minutes. Cabinet Secretary. Thank you, convener. I'm pleased to give evidence today. The South of Scotland has a different and distinct rural economy. A new South of Scotland enterprise is a great opportunity to do things differently for the South, building both on its strengths and its traditions. We want the agency to deliver a fresh approach to economic development, to unlock potential, to address opportunities and to respond to needs, to make sure that the South has the strong role in Scotland's economy that it deserves. The bill provides the structure and legal framework for a new body in the South of Scotland to drive inclusive growth. It sets out the high-level aims and powers necessary to enable the body to support that growth. It provides maximum flexibility for the new body to shape the activities it takes forward and to respond to the circumstances of the South. It's an opportunity to set the future direction for the South of Scotland to drive the economy forward with growth that creates opportunities for all that sustains and grows communities and harnesses potential of people and resources. Our proposals have been developed through extensive engagement with the people who live, study and work in the South. Around 250 people have replied to our written consultation, overwhelmingly welcoming the proposal and the ambitions for the new agency. Working with the South of Scotland economic partnership, we heard from 536 people at 26 engagement events across the South, and we continue to work closely with stakeholders as the functions and shape of the new body are developed to make sure that it's accountable to the people of the South of Scotland. We are responding to the needs added into him by investing almost 6.7 million in the South of Scotland skills and learning network delivered through colleges to provide better access to training to a wider range of students. Last week, investment of £156,000 was confirmed to support the development of skills through training, developing land-based training across the South of Scotland. To conclude, convener, as I'm sure that there are many questions for us today, South of Scotland Enterprise will play a vital role in delivering our ambitions for the area, driving forward inclusive growth and supporting the rural economy. Thank you, cabinet secretary. The first question today will be from Morrin Morrin. Thank you, convener. Good morning, cabinet secretary and panel. When we have been taking evidence, and especially when we went to Dumfries as a committee, there seemed to be a general dissatisfaction with the current operation of Scottish Enterprise in the South of Scotland. Perhaps a bit of a misunderstanding as to what Scottish Enterprise is tasked to do and the differences between Scottish Enterprise business gateway and local authority functions. I wonder why, if the cabinet secretary has got any views on why this might be the case, and what does he expect of the new agency in the way that it will approach the enterprise problems in the South of Scotland? It is the case that there is a desire for more of a locally accountable body. Obviously, Scottish Enterprise has worked hard to discharge its duties across the geographical range of its responsibilities, which is the whole of Scotland other than the area covered by HIE. That is a massive area. Scottish Enterprise has a presence in the South of Scotland, but perhaps it may be perceived as not based in and of the South of Scotland. It has done good work over the years, and when I was Enterprise Minister I was involved in that. Most recently, I was involved in working with Steve Dunlop and colleagues in relation to spark energy. I can assure you that the officers senior under all levels of SE are devoted to their task and are good public servants and have done an awful lot of work to discharge their duties. Nonetheless, it is not a locally headquartered body. The second part of the question is that I believe that the new body based in the South can be shaped and adapted to meet the local needs, to work very closely with the business gateway and the local authorities. The partnership, shared by Professor Griggs, has built up very good relations with the leadership of the councils and all the agencies, particularly the colleges and universities that are based in the South of Scotland. I am optimistic that the new body will be able to provide that local feel and accountability and presence that perhaps Scottish Enterprise, for all the good work that it has done over the years, has been perceived by some not to have fulfilled. In terms of the new body, it will obviously be tasked with growing indigenous businesses, which I think is key to economic growth in the south of Scotland. What then will be the relationship in terms of inward investment? Are we then going to have HIE, the remaining part of Scottish Enterprise and the south of Scotland, all competing for inward investment to Scotland, or how is it going to work? Obviously, there is collaboration between the existing agencies. For example, SDI, the Scottish Development International, very often takes the lead and has the lead in respect of the first contact with an inward investor, very often coming from its offices throughout the world. The strategic economic partnership plays an oversight role. In my experience, the bodies work well together when they are required to. There is not any real element of poaching or aggressive competition in that sense, but rather collaborative working. I do not think that that is an issue. I think that there are opportunities for inward investment, but perhaps there is a feeling that the smaller businesses, which are the bedrock of the south of Scotland rural economy, could have a closer relationship with the new body. Particularly, we reach out to the traditional areas of strength and build in those areas, where in the farming community, in forestry, in tourism, in other areas, in transportation and logistics, there is an awful lot of active, small to medium-sized businesses. I think that the new body will better be able to reach out to those businesses and work more closely with them than the existing arrangements. Finally, the problems and the issues facing the economy of borders in Dumfries and Galloway are also faced by the communities in South Ayrshire, East Ayrshire and South Lanarkshire. How confident are you, cabinet secretary, that those other rural areas in the south of Scotland will be adequately served by Scottish Enterprise? I am confident that they will be. Of course, there was quite rightly, in the consultation stage, consideration given to the geographical boundaries that should apply. In particular, consideration was given to the Ayrshars and South Lanarkshire. The three Ayrshars councils co-operate and the Ayrshire deal is very much something that they are all working to achieve. South Lanarkshire is linked in with the Glasgow deal. Secondly, there are also proposals for regional economic partnerships that will ensure that there is regional voice at all levels. My view is that the majority response, both from people in the south of Scotland to Dumfries and Galloway and Borders and also in Ayrshire and South Lanarkshire is that the new body should have the geographical boundaries that it does with the two local authorities comprising the south of Scotland area. I think that was the prevailing view, the majority view and that was the basis upon which we are proceeding. Mindful of the fact—this is the last point that I will make on this question to answer Ms Watts' questions, convener—mindful of the fact that there should always be and is close working between public sector bodies of all sorts at all levels. That is the absolute expectation that is the key to getting things done, to work in a positive, constructive, collaborative spirit. I have spent thousands of hours trying to do precisely that, working with colleagues and friends in local government. Jeremy, you had a supplementary. Thank you, convener. Good morning, Cabinet Secretary. Good morning, panel. Just following on from this line of questioning, I appreciate what the Cabinet Secretary has already said on close collaboration that will be very welcomed. However, there is a view perhaps in the Lanarkshire and Ayrshire authorities that, because they will sit on the wrong side of the boundary, or the other side of the boundary of the new agency, that they will only be able to benefit from the existing agencies and the existing set-up, given that many of the criticisms that apply to those agencies already in the south of Scotland in terms of the need for a new agency to serve the south of Scotland. What does the cabinet secretary think that those local authorities in those boundary areas will be able to, will there be any tangible difference to how they access services, or will they be looking across the border to see things being done in a better way in the other two council areas and then being stuck with the old system? We are not proposing that any local authority should have an inferior or a lower service, and I do not believe that that is the case. I have, with respect, worked closely with Scottish Enterprise in respect of investments, proposals and businesses in every part of Scotland, and most certainly in the Ayrshire and South Lanarkshire over the years, not least in respect, for example, of the steel industry investments of aerospace in Ayrshire, of food and drink businesses in Ayrshire. I have seen it first hand and I have convened together with SE meetings in Ayrshire in many ways precisely to provide a local presence from time to time. I could give the committee many examples if it wished, but I should vigorously defend the role of Scottish Enterprise as covering all its areas. I think that good work will continue, but the opportunities in those areas, the growth deals in bordering areas, provide one set of opportunities. I have quite a lot of detail here about how that is operating. It is not my portfolio, but I think that I will maybe just take that as redd so that I am not usurping too much of your time. The second approach is that the regional economic partnerships are designed to ensure that there is a good performance and economic development at every part. I think that Mr Greene raises a point that will be asked by lots of others. We have to keep a watching brief to make sure that the bordering areas that will not be in south of Scotland Enterprise are not losing out. I am sure that that is an area that we will turn to, but we will monitor and keep an eye on as we proceed. One of the evidence sessions that we heard was the importance of the new agency being able to encourage businesses just outwith the area that they represent so that businesses within the area that they represent benefit from the services, whether it is provision of skills or apprenticeships. Is that something that is allowed for in the bill? I think that the borders and the area that the agency will represent might have to rely on others to supply some of the raw materials that they need for their businesses. There is a present and flexible approach that is taking where there are cross-border issues. Let me give you an example that may or may not be apt, but Glen Shee, for example, is just in the Scottish Enterprise areas that some members will know from the north-east of Scotland, but the other four outdoor ski resorts are in the Highlands and Islands. Therefore, when we were working to try to assist the whole five resorts to avail themselves of financed upgrade of facilities, Scottish Enterprise and HIE worked very closely together to work out a common scheme. Initially, they had two different ideas, but through collaboration, through talking, through discussion, through collaboration, they were able to come up with a scheme that ensured that, as I understand it, Glen Shee was not disadvantaged compared to the other areas within HIE. When there is a real issue of importance, it is my experience that there is no question about it. Ministers giving oversight, chief executives running important bodies all want to work together. That is absolutely at the heart of successful economic development and that is the way that we all seek to work in Scotland. Generally, it works fairly well in practice. We cannot foresee what is going to happen in the future. Situations will arise, but with that co-operative approach, I think that we can do everything practical in most circumstances. I do not know if Karen Jackson or Felicity Cullen is keen to add something to the mix if that is in order. If I may, cabinet secretary, just to add the drafting of section seven of the bill has been done quite deliberately. It does not tie—the body is obviously going to be operating in the Dumfries and Galloway and the Scottish borders areas, but section seven is deliberately framed to allow it to do things that help it to achieve those functions but are not limited to that area. In the example that the convener was giving where there may be a bit of play between an area that is just out worth it but would benefit the south of Scotland area that is entirely available to the body to be able to do that. That probably answers the question nicely. John Finnie, I think that yours is the next question. Thank you very much, convener. Good morning, cabinet secretary and panel. Cabinet secretary, the bill is very welcome. It lays out the aims of the South of Scotland enterprise and, if I may briefly say, the aim is further the economic and social development of the south of Scotland. That is comprehensively explained by six points. B, its second aim is to improve the immunity of the environment of the south of Scotland, but it does not explain that. We have had a number of representations regarding this comment that the provisions are weak. We have had a body such as the Solway Firth partnership, the southern upland partnership, suggesting what that should cover. It does not explain that. Is that a shortcoming of the bill or could you comment on that, please? I think that the aims in section 5 of the bill are framed in a way that is designed to be pretty general and to cover just about everything. It is framed in a way that avoids splitting or restricting the scope. That is done by avoiding specificity, by avoiding a long list of specifics. It is the current motive of drafting and that is deliberately so. It contains, as Mr Finnie says, some examples of furthering economic and social development, but those are illustrative. We want to ensure that the body has sufficient flexibility to shape its activities. It does, of course, refer, as the second of the two aims to improve the immunity and environment of the south of Scotland. That is the second of the two aims. The fact that there are two aims—one is social and economic development or economic social development, and the other is immunity and environment in the south of Scotland—gives it, if you like, equivalence to economic and social development. I do not think that it is necessary to have a whole long list of things that would be dealt with by way of implementing those powers. That is really, I think, convener, for the action plan at a later stage to go into. I think that I can reassure Mr Finnie that the framing of the powers is, I believe, done correctly so that it provides the very widest powers for the agency to assist in improving the immunity and the environment of the south of Scotland. Obviously, we may come back to this stage 2 and we can have a more detailed discussion, but I am extremely confident that this new body will have the power, if so advised, and if it decides to do so, to advance the immunity and the environment of the south of Scotland and to do that in conjunction with its other aim. The next question is from Jamie Greene. I appreciate what the cabinet secretary says about not being overly prescriptive on the face of the bill as to what should be in the action plan and what the aims of the agency are in great detail. However, this has a sense of deja vu. The cabinet secretary will recall the work that the committee did on the islands bill. We had the same argument that things like transport connectivity, digital connectivity, whether or not they should or shouldn't be included on the face of the bill. The feedback that we got in the sessions that we had in the south of Scotland were very much that those are two of the main issues, specifically digital and physical connectivity, and they should be addressed and highlighted in the legislation. Why are they not at the moment? The drafting of the aims is, as Mr Greene says, framed in a very wide manner. Section 5, subsection 2, amplifies what is meant by economic and social development, including inclusive economic growth, providing, maintaining and safeguarding employment, enhancing skills and capacities, encouraging business startups and entrepreneurship, providing commercial industrial efficiency, innovativeness and international competitiveness, and supporting community organisations. Those are the aims of this body, but it works alongside Transport Scotland, which has national responsibility for, for example, trunk roads and railways and other modes of transport. It sits alongside the work that is being done by the Scottish Government in partnership with local authorities on R100 in order to aim to provide access to superfast broadband to all in Scotland, especially looking to those remote areas. It is horses for courses at the end of the day. We already have bodies that have the expertise in those other areas, and we expect that they should continue to carry out their work in those areas. They also have the budget for transport and connectivity. The south of Scotland will not have the budget to do that. It will not have the executive responsibility, and the budget follows that executive responsibility. As you know, I never wish to go on for too long, but this is the serious point. I absolutely accept the concerns that Mr Greene expresses will be those that one would hear at all public engagement meetings. The key thing is working collaboratively with all those other bodies and we are necessary to bring them together, to work together to deliver, to improve transport projects, to deliver R100, and that is indeed how to do things successfully. Notwithstanding what the cabinet secretary said, surely I refer back to previous legislation where we had this very argument that we shouldn't be prescriptive. We ended up in a place where part 2 of the islands bill specifically says that improving transport services and improving digital connectivity, among many other things, is on the face of the bill. Therefore, it is incumbent on the agency to deliver on those, regardless of who owns the budget. There is precedent to putting those issues on the face of the bill. One could argue that there is still scope if there are two very specific issues that the community wants to see in the bill. We will no doubt debate on stage 2. Those matters are more detailed. That is absolutely right. Parliament and individual members are perfectly entitled to bring forward amendments. I wasn't myself steering the islands bill through, so I can't speak from that knowledge or experience. I think that the approach that we have set out does in no way constrict the body in the achievement of those ends. There is a risk in setting out duties on a body with no budget. If one does that, it can lead to raising unfairly expectations that a body in charge with duties doesn't have the budget to deliver. It just seems as a matter of common sense that we should be canny about doing that. We should make sure and call to account, as I'm sure that committee members do, Transport Scotland and other agencies who have the budget and the staff and the expertise, quite frankly, and the knowledge to deal with those important matters. I guess that this will be a conversation to be continued. The next question is from Gail Ross-Gail. Thank you, convener. Good morning, panel. Cabinet Secretary, on the aims of the new agency, we've touched on them already, and there's two separate parts, to further the economic and social development and improve the immunity and environment of the south of Scotland. What timetable and criteria is there set out to assess whether or not the agency has been a success? For part A, the economic and social development, we then have part 2, which goes on in further detail, to see how that's going to be achieved or what we want to achieve from it, but there's very little, if no detail, for the immunity and environment side of it. How do we assess that? Obviously, the body hasn't yet been set up, so it needs to get set up and running. The bill provides for various formal requirements, which are all part of the accountability of the new body. For example, an action plan in section 6, for example, in section 14, an annual report. I know, for example, that Councillor Elaine Murray was expressing the view that reporting back to the communities is extremely important. I agree with that view. The more that a body communicates effectively with those who it serves, the better things tend to be. I would expect that, as the body discharges its functions, its performance will be assessed, it will be accountable to ministers and through ministers to the Scottish Parliament. The committee will, of course, be able to call, as you can at any time, its office bearers to give evidence and scrutinise its performance. Those are all tried and tested methods of accountability to assess performance. There is also the requirement, of course, to submit proper accounts and accounting records and send a copy of it to the Auditor General. The new body will be subject to scrutiny by Audit Scotland, entirely independent of Government in the normal way. That is how all those matters have been dealt with. I would expect the action plan to deal specifically with the environmental responsibility and that that will be formed part of the scrutiny that I have mentioned by Parliament, by Audit Scotland. With the emphasis being really on local accountability, there is a particular desire that, as I understand it, it has been expressed both to this committee in its evidence sessions and to others in the course of the work leading to today. Richard Lyle, yours is the next question. I turn to the powers of the new agency. The committee has received a submission from a former solicitor in the legal section of Scottish Enterprise. He expressed concern about the decision to exclude compulsory land purchase, information-gallon powers from the bill. I believe that those are important powers and should be clearly set out in the primary legislation. Why does the bill not grant powers to acquire land by compulsory purchase, nor powers of entry to land and powers to obtain information? Should the agency not, as I know you wish, have the same powers as Scottish Enterprise and Highlands and Islands Enterprise, as you have already said, to drive the economy forward? If they are all going to work together, should they not all have the same powers? There is a principle argument that there should be an equivalence of powers, but experience has tended to suggest that the powers of compulsory purchase have never actually been used either by Scottish Enterprise or by Highlands and Islands Enterprise, namely the way that they worked has never required these powers to be used. We do not believe that the power of compulsory purchase is necessary for the south of Scotland Enterprise. We expect that the body will work collaboratively. Obviously, compulsory purchase is very much a last resort. In fact, it has not been a resort at all in other economic development agencies, but the new body will have the ability to purchase and sell its own assets. It should be clear that that is the case. To work with others who have separate statutory powers, including local authorities, I know that Brian McGrath from Scottish Borders Council and Elaine Murray from Dumfries and Galloway Council have expressed the view that the arrangements that we are setting out are adequate that local authorities possess these powers. Working with local authorities is the way around that. In the sake of complete this, Mr Lallow mentioned two other issues, the power to enter a land and the power to require information. I think that I would like to consider both of those aspects separately. This is obviously prepared to stage 1. I would like to reflect on those individually. We have spent some time looking at compulsory purchase because there is a lot of focus and discussion about that. Maybe we need to spend a bit more time looking at these other areas to see whether or not there is a need to do anything about those particular aspects. We can come back to that, convener, if I may. If we have anything useful to add before stage 1, we will write you there on end. I welcome your comments. I know that in previous bills you were pressed by members on compulsory powers and I welcome the comments you have made. Thank you very much. Thank you, Richard. The next question is from Cullen. Thank you, convener. Good morning to the panel. At present, the bill gives ministers the powers to appoint the chair of the agency, all the members of the board and the agency's first chief executive. When gathering evidence on the bill, we have heard calls for local communities and stakeholders to have more say on who is appointed to the board. Is that something that you are giving consideration to? The appointments are made on merit. They are regulated by the 2003 act. They are overseen by commissioners for ethical standards in public life. They are subject to the code of practice for ministerial appointment to public bodies. The process for appointment, convener, is one that is very heavily regulated by statute. Yes, ministers make the decision, but I think that it should be made clear. That decision is very heavily influenced and circumscribed by the legislative framework that has been set out and in practice very often the minister is really in the position of making approval of a set of recommendations that emerge from a structured process designed to provide fairness, transparency and accountability. I cannot emphasise that enough. I also have heard the evidence from Elaine Murray, for example, that she is less concerned about ministerial appointments and more about reporting back to my previous issue. Maybe that is a point of view. It is one with which I have much sympathy. Plainly, we need to appoint a chair and a chief executive if the bill passes stage 1, preparatory to the setting up of the body. That is done in stages. The appointment process and the full legislative regulations will apply to the appointment of the chair and the chief executive, convener. It does not work that the minister picks whoever he or she wants. That is not how it works. Nor would it be appropriate, nor would I conceive of a proceeding in that way. There is a formal process that must be observed, Parliament set it out, we will follow it and I believe it is fair. The last point that I am making is that I hope that this is something that Mr Smith and other members would welcome. We must make sure that we reach out to attract people in the south of Scotland, particularly those who may not think of themselves as having a role as a board member of this agency but have an awful lot to offer. Therefore, the suggestion is made by many, by leaders of the councils I believe and many others, that we should have a recruitment campaign that is advertised locally in local papers is one that we should pursue. There is a budget for this and I am going to ask officials in order to deliver what I understand to be a commonly expressed view. The recruitment campaign should really reach out, not just in Dumfries, not just in Hoik but across the areas using local papers and other forms of communication, including I expect social media, that is not my particular area of expertise, but we must reach out to try to get people beyond the usual suspects. It is not an easy thing to do because generally people that might have a lot to do are extremely busy doing what they are doing already, very often running businesses or holding down important posts in public bodies. However, I think that there has been a common view that we should do that, so I am determined that that should really be the practical way that we get the best calibre and contribution of local people to the south of Scotland enterprise. One of the key groups in that work is clearly going to be young people. We have a huge problem of outward migration of young people in the south of Scotland, a real demographic challenge. What mechanisms will be in place to really involve young people in the running of the agency? I think that there is a particular issue about young people just at a strategic level. It is common with the Highlands and Islands is the propensity for young people to see their future out with their own area, to see their career prospects and life being lived outside south of Scotland, outside Highlands and Islands Enterprise. I have to say that one of the successes of HIE and others has been to stem that trend. For the first time, a significant majority of young people in the Highlands and Islands actually think that they have a future in the Highlands and Islands. That is a terrific thing. I think that that is the overall strategic aim that we want to deliver. I am not quite sure how many people necessarily want to be board members of south of Scotland Enterprise, but we should reach out to everybody to ensure that they have an opportunity to do that. We are engaged, of course, with organisations such as Young Scot and the Scottish Youth Parliament. I regularly meet representatives of bodies at various public events. Already, they are reaching out and playing a part in the affairs of public policy. If there are other specific ways that Mr Smith or others have about what we should do, we are very willing and open to consider how we do that as effectively as we can. I think that the key is how people can hold the agency to account whether they are young people or other key stakeholders. As a bill stands at the moment, ministers have the power to alter the agency's aims by regulation, to approve the action plan, to decide the location of the headquarters, to issue direction to the agency without consulting the agency, which is slightly different from high. The bill is very clear on how the agency is held to account in reports to Government ministers, but what mechanisms are specifically in place to make sure that the agency is being held to account by local stakeholders and by local community? It is absolutely right that all public agencies are held to account through ministers and through ministers in turn to Parliament. We are all elected and that is the principle way. That is why we are here. We are in the Scottish Parliament. You hold the executive to account and that must always be the main way that accountability is exercised through the democratic system that we have. The key element that seems to me of the question that Mr Smith quite fairly raises is how the local communities feel that they are served by the new body. I think that in part it is really up to the new body to develop methods of communication, for example, whereas there will be a headquarters, there has to be a headquarters. Nonetheless, the intention, as I understand it, is for the body to have a presence throughout many parts of the South of Scotland enterprise area, not to be based in one office in Euthan's and Boswell's or Dumfries or anywhere else, but to have a presence to use co-location with other public bodies. The South of Scotland economic partnership issues a newsletter. It has held 26 meetings, a tremendous power of work and some of my colleagues were involved in attending. A great many of those meetings in the evening after their working day was over. There has been a tremendous positive amount of work that is done. I am sure that Mr Smith will want to welcome that positive work that has been done thus far. Already, the partnership is the precursor to the statutory body. It has shown that it is absolutely determined to reach out to local communities. The action plan will deal with that and the oversight by this Parliament and indeed by myself will make sure that local engagement and accountability are very much at the heart of the operations of the new statutory body. Will you give a fair observation, however, to say that at the moment the bill is silent when it comes to local accountability? It is very clear when it comes to Government accountability but when it comes to how we develop local accountability the bill at the moment is silent and simply saying that we hope that the agency might do it. Does that go far enough? Should that not be an obligation on the agency within legislation to make sure that those mechanisms are put in place to hold the body to account locally? I would not accept that as the characterisation of the bill. This is not a plot against local accountability. The bill sets out as one of its provisions in the aims section 5, supporting community organisations to help them meet the community's needs. It is already reaching out to communities. I think that it is up to the agency to develop the best ways, given the unique geography and circumstances of Dumfries and Galloway in the Borders, about the best ways to deliver that. If there are any particular suggestions that this committee has about specific examples about local accountability and how a framework can be set up to deliver that in specific ways, I am happy to work with the committee on looking at that and seeing whether those are matters for the bill, for the action plan or for the body itself. We are open to and we are actively working on how we make the body as accountable as possible. To be fair to ourselves, if there are specific suggestions about how to do that best, we should really help, rather than just general remarks on the topic. I will just push on. Can I bring Gail in and then come back to you? Gail. Will, like HIE, a member of the agency set in the local community planning partnership? There will be close links with the community planning. That is an obvious way in which I am glad, Ms Ross, to mention that because I should perhaps mention that in fairness to Mr Smith, community planning partnerships will be a very much a way to do that. I mean, if I can give an example from HIE about what one of the things they are doing at the moment and Mr Finnie will be aware of this, I know his interest in the finicular way is that a senior official and officials indeed from HIE have been working with the local community in the area served by Finicular in order to navigate the very significant challenges faced by the structural problems that have arisen in the finicular railway. It is a model, frankly, of working with communities. They have received widespread recognition from community leaders, councillors and others that they have reached out to the community, set up meetings to discuss something of real concern. People do not really want to have a South of Scotland enterprise official coming chapping at their door for no reason, but when there is a problem, when there is an issue, that is really when there is an expectation that an enterprise body really gets in a booter, as I would say, goes to speak to people, to hear what they have got to say. The example that I give is a very difficult topic, but one where the community engagement has been an excellent example of how things should operate at this level. Cabinet Secretary, when the various evidence sessions we had, we had conflicting views on whether the two councils should be represented on the board. One council thought that it was a bad idea, the other one thought that it might be a good idea. Do you have a view? I think that it would not be desirable for there to be automatic positions on the board. Of course, councillors are welcome to apply for membership of the board and have their applications considered along with everybody else. There are many public bodies that arguably have an interest, a perspective, a contribution to make. I personally think that the system we have of public appointments means that we have a system designed to pick the best people that apply and the real challenge is to get the best people to put their names forward in the first place. Elaine Murray suggested that the ministerial appointment was the way to go and she will be aware, as the minister formally herself, of the public appointments process and be familiar with that process. Councillors do play a part in many, many public bodies, for example SNH, for example councillor Stephen Hagan from Orkney on Visit Scotland. There are many examples of councillors playing an active part in many other public bodies, and that is the model that we should follow. We move on to the next question, which is Peter Chapman. The Enterprise and Skills Reviews recommended the establishment of a strategic board to align and coordinate the activities of Scotland's Enterprise and Skills agencies. The board was created in November 2017 and the strategic plan was published in November 2018. The bell team confirmed that the South of Scotland agency would be part of that strategic board. Given the importance of the strategic board to the Scottish Government's Enterprise and Skills reform agenda, why is there no mention of it in either the bell or the policy memorandum? As I understand it, the strategic board is not a creature of statute. It is an arrangement that has been set up in partnership. Therefore, it does not appear in any act of Parliament. That is no reason for it not being mentioned in this bill, if it is felt that that would make a useful contribution. The arrangements for the way the strategic board works, and I was not the minister who set it up. Keith Brown was dealing with that. The arrangements, I understand, are informal and agreed. Both HIE and SOSC will automatically have a place on the strategic board represented, I think, by the chairman and chief executive. That is right and proper. It is an interesting point to make. It is one that I will check up and pursue just in case there is anything that I have missed. The answer is that it is not a creature of statute so you do not really expect it to appear in statutes. I do not think that there has been any necessary amendment to the act of Parliament setting up either Scottish Enterprise or HIE, so far as I am aware. There was no real need to do so here, but the committee has raised it. We will give it further thought and come back to you if there is anything else we have to add. I welcome the cabinet secretary's answer. That is useful. Let's see where we end up with that. My second question is, what level of involvement will the Scottish Government have in setting and approving the new agency's business plans and budgets? It is probably a more meaty subject than the last one. Obviously, the budget responsibility is one for the Scottish Government working with the Parliamenters, which we are acutely aware of at the moment. The budget will be decided through the normal budget process as is the case for Scottish Enterprise and Highlands and Islands Enterprise. The action plan has to be prepared by SOSE and any modification must be approved by ministers. This is the process that exists in respect of both Scottish Enterprise and HIE. I think that it works fairly smoothly. Of course, Parliamentary committees are quite entitled to and to hold me and the heads of bodies to account whenever the occasion should arise. The action plan is the management of day-to-day operations. It is the basis for the management of day-to-day operations. It is an executive function, which is rightly performed by the statutory agencies involved, subject to oversight by the minister to make sure that there is oversight that the aims are being fulfilled and that the budget is being deployed in the most effective manner in order to deliver the aims most effectively. Does the cabinet secretary have a figure in mind of what the new agency's budget is likely to be? We do, and they are not only in mind, but they are in writing. There is detail set out in the financial memoranda. There are two points that I would like to make. The figures are there in the record, but there are two points that I would like to make. Broadly speaking, although there were different views expressed, there was broad agreement that there should be an equivalence of the budget as between the south of Scotland and the HIE. There are different views on that, but I think that that was the broad conclusion of most people. I think that, perhaps initially, there may have been concerns in the south of Scotland that there was going to be short change putting it bluntly. I think that the commitment that the Scottish Government has made in principle to this approach has asswaged any such concerns. The second point that I make is that there has to be a gradual assumption of responsibilities. The way that we envisage that going ahead is that the new body has to be set up, it has to acquire staff, it has to acquire premises, that will take time, it has to find its feet, the board will be appointed gradually, I think, and not in a winner, so it will take time before it's ready to assume its full responsibilities and equally it will take time before it's ready to be able to operate its budget on a full level. I just make those two points, and I hope that I've just kept them quite general. I'm quite sure that officials could fill in the rest of the time, convener, with more detail if you want, but I'm happy to answer any supplementaries on this. We certainly don't need to fill in time. We've got lots of questions on the budget, which I'm going to take now, and Stuart, I'll come back to your questions later. John, I'd like to take yours, and then I'd like to take one from Mike as well. Yes, Peter Chapman's taken us on to the financial memorandum, I think, and this whole area of the comparability with HIE. We've just done the islands bill, and there are clearly huge challenges with the islands in particular, but also the highlands. It's a very remote area. Some of the areas are miles and miles away from a railway, or anything like that. Slightly play the part of the devil's advocate. We really are surely not saying that the issues in the south of Scotland are the same scale as HIE, and surely the funding per head is not justifiable to have the same in the south of Scotland as in the highlands and islands. That's interesting. Glasgow MSP is making this observation. Broadly speaking, the consensus is correct that, in principle, there should be equivalents. I think that the south of Scotland has many similarities with the highlands islands in terms of the sparsity of population, in terms of the predominance of very small businesses, in terms of the number of very small communities. In that respect, there's more in common, I think, with the highlands and islands than there is with the central belt, with respect, which is entirely differently composed in terms of its population. The population density is 24 people per kilometre, so the south is the most sparsely populated area outside the highlands and islands, and 53 per cent of the population of the south live in remote small towns. That's an entirely different situation from the central belt issues. Mr Mason is well aware of issues about deprivation generally, and Bovertine works on those issues assiduously. There's hidden poverty in rural areas. It's not so obvious, it's not perhaps so vocal, but it's there. Some of the most deprived areas may exist in rural parts of Scotland. The last thing that I would say is a general point that HIE has helped to promote the highlands and islands for tourism, for renewable energy, to use its marine resource. Those have been big success stories. I think that there's a slight feeling in south of Scotland that although those great success stories haven't had the same coverage, the same airtime, the same promotion, that's something that struck me in as many engagements in the south of Scotland. Now, whether that's right or whether that's wrong, I think that having a budget roughly the same level as HIE will, over time, allow the new body to do what HIE has helped to do over four or five decades, over five decades now of existence. I hope it won't take that long incidentally, I'm sure it won't, but I think that there is that feeling that south of Scotland needs to have a stronger recognition and the budget is necessary to deliver that. I completely agree with what the cabinet secretary has said. It's a rural area, there's poverty in rural areas, a lot of it's very remote, there are similar issues to HIE, so all of that I agree with, I think it's a question of scale. Last Wednesday we went down to Galashales in an hour on a perfectly good train and came back again on a perfectly good train. There is nowhere in the highlands and islands I can get to within an hour of this Parliament. It's a question of degree, and if HIE has got roughly one member of staff for every 1,500 population, SE Scottish Enterprise has got about one for every 3,000. That's absolutely fine, and I'm happy with that. My question is, if South of Scotland Enterprise is going to have more than SE, I agree, but should it be the same as Highlands and Islands or should it be somewhere in the middle? My question is, as somebody from the central belt who is happy to support an emphasis in the south of Scotland, surely does it really need to be at the same level as HIE? I doubt that those arguments will run and run, but our proposal is that there should be broad equivalents on the budget allocation of 2020-21, 2021-22, 2022-23. The proposed total budget allocation is £32 million, £37 million, £42 million for those three years respectively. That's envisaging this gradual ramping up of responsibilities so that once it's able to discharge them, it has the budget to do so. I think it's important also, I'll just make this final point, convener, that the new body does impress, it does act, it does make a difference quickly to show that it's worthwhile. To do that, the budget that we envisage will enable it to do that. I'm quite confident that that will happen in a variety of different ways. I take the general points that the devils advocate. I should point out, although we did go down to Gallashield on a perfectly good train, half the committee was standing like a huge amount of people on the train, so it might have been good, it was somewhat overcrowded, which I think is a phenomenal problem down there, but we'll pass on that and move to Mike with the next question. Thank you, convener, and good morning panel. When we were in Dumfries and Gallashield, there seemed to be a tremendous amount of confusion from the people that we were taking evidence from, formally and informally, as to about the £42 million, which the minister has just mentioned now. According to the financial memorandum, staff costs will be approximately £10 million and the budget will build to, as the minister has just said, £42 million. The question really is focused on, is this what people are terming to us new money, in other words, additional money that's coming in to set up this enterprise agency, or is it money that was allocated anyway or would have been allocated anyway to other agencies and even with the council development agencies? My question is a simple one, but I think it's quite an important one. Is this new money, or is it coming from other development budgets? The budgets for the years 2020-21 haven't been set, so in strict, pure terms, the money is not coming from any other budgets because there are none. A simple answer is that the budget of £42 million, which would be in year 3 of operation, represents an increased overall funding for the area. Mr Rumbles makes a point that this is a new body, it's a new body coming in to provide a function that we all, I think, believe has got the potential to do a lot of good. The more good it does will be a factor of its working effectively with the other, particularly with the councils. The key area is how the councils and the statutory body co-operate, and in particular how the business gateway services, which Mr Rumbles knows, are designed, local authority-led and designed to assist smaller businesses, dovetail with the activities of the statutory body. That process, that relationship, is obviously something that there's been discussion about already, constructive, amicable discussion between the Scottish Government and local authorities at a high level, but I think it will need to be the subject of further discussion about how we get the best deal for the public, for all sizes of businesses. That may result in some people who are currently, Mr Rumbles, working in local economic development roles and local authorities deciding to take up positions in the new agency, and whether or not local authorities will wish to continue as is or look at reshaping their economic development functions and departments is obviously very much a matter for active discussion and debate amongst all to get the best outcome overall. I hope that that gives an overview of the question that Mr Rumbles poses, but overall there will be an increase in the funding for the area for economic development. I can imagine there would be an increase. My question is not a critical question, if I can put it that way. I'm very keen that this succeeds and I think it's a very good thing and the Government's bill is a very good bill. I'm just trying to make sure that expectations aren't unduly raised by people who've given us evidence and who we've engaged with because there seems to be an understanding. Certainly, I got that at Gallus Shields when I was there with other members of the committee. That this was all going to be extra money coming in and I just wondered if you could give us an idea. I know you've just said there will be more money, but some of this money is going to be new money. Whether the minister has any idea, I know that budgets haven't been set to 20. In fact, we're going to vote on the budget tomorrow for next year's budget, but can he give us an idea of how much of that budget is new money just so that we can make it clear to people who have been approaching us? I think that computation would be an extremely complex one to perform and I'm not sure, and this is not meant to be a concoction of Sir Humphrey, but I'm not sure if the statistical evidence is available in the form that the member seeks. The reason for that is that I'm not sure that Scottish Enterprise has done a geographical analysis of the deployment of its budget over the years, and even if it did, it would show massively differing amounts of money because a large investment in one year may be followed by a lack of large investments in subsequent years. I think overall there will be an increase in funding, quite substantial increase in funding for the area. I'm not able to say how much more it would be, but we listen to what the committee raises. It's the point, it's accountability. You can go back and we'll have a look again at the question, I think, of preparatory to stage 2, and there we are. The last thing I would say is that it's up to us all to provide leadership to explain the opportunities of this new body to communicate that locally, and I'm quite sure that that will be done. We'll engender quite rightly an element of interest, expectation, and we have to fulfil those expectations once we raise them. That's one of our responsibilities. Thank you, cabinet secretary. Move on to the next question, which is Stevenson. Thank you, convener. One of the issues that has been brought up with the committee is that Scottish Enterprise will still have a role in the south of Scotland, which seems to be a little bit of confusion about that. I note that Scottish Enterprise, for example, will continue to be responsible for things like regional selective assistance and Scottish manufacturing advisory service in the south of Scotland. Dr Murray, in talking to the committee, talked about memorandum of understanding between various agencies. Is it your understanding that that is likely to be the most effective method of ensuring that there is good collaboration and neither underlap nor overlap? MOU, that's one way of doing it. Yes, you're right that SE will have continuing role, just in the same way that SE works very much with HIE in respect of areas where it has the expertise. The manufacturing advisory service is one of those areas. For example, there's no point in duplicating an expert range of services in every single economic development agency. The Scottish Investment Bank is another example of a body where one wouldn't expect there to be three Scottish investment banks serving the three economic areas that have their own development agencies. Whether it's by an MOU or other means, I think that the key thing is the effective joint working. Generally, that's a factor of how the chief executives, the chairman, our chairwomen and ministers, officials all act together. There's many, many areas where there is a shared overlapping function between HIE and SE, for example, and where necessary ad hoc arrangements are made. For example, task forces are set up for the labour delivery group, which I chair, where the Scottish Government works with Highland Council, with HIE, with SNH, SEPA and a variety of other bodies. When needs must, when there's a need to have that collaborative working, it exists. An MOU is one way of doing it, but at the end of the day, it's the individuals, it's the people that make these things work or not, as the case may be. We're not a huge country, so getting everybody in a room, Mr Stevenson, is one of the advantages we have over our good friends down south when it comes to tackling serious issues as they arise. Perhaps, finally, one of the balancing concerns that's been raised with the committee is that of additional bureaucracy associated with the introduction of a new board, which is not displacing in entirety some existing services. How would the cabinet secretary respond to concerns that are being expressed on additional bureaucracy? Bureaucracy and element of bureaucracy is always going to be with us. Sometimes I wish that were not the truth, but I think that the aim really is to ensure that the body operates in an efficient way as possible, and that the rulebook is the servant, not the master, and that that's the way things should operate quickly, responsively, going out to speak to people, going out to find out what's happening is the way that things are achieved. If there's any specific examples of bureaucracy, I'm very happy to look into them and to see what can be done about them. I think that the real problem of bureaucracy rests in more complex schemes than the administration thereof. I hesitate to mention the common agricultural policy or administration of forestry applications, but where one has a complex process for the administration of public money, that tends to be the area, in my experience, at least where one has an inevitable consequence that sometimes the process seems to be taking too long and becoming the object rather than the fulfilment of the process. I haven't quite detected that bureaucracy is a significant issue in many cases with the enterprise functions, which tend to be a bit more proactive and ad hoc in their arrangements. Although the administration of grant applications can sometimes give air to concerns and issues. At the end of the day, we're all elected people here. We exist in part to hold public bodies to account and to get answers, to get things done as quickly and as efficient as they can be done, and that's an important and necessary part of the roles that we all fulfil. Jamie, you had a question. Just briefly, following on from Mr Seaman's line of questioning, there was genuine concern, I guess, over the confusion of whether this agency will sit as another layer on top of Scottish Enterprise or will sit alongside. Given that there is some comparison between the aims and objectives of each of the agencies and, I think, dubiety over whether any funds will be redirected from Scottish Enterprise to the New South of Scotland agency, does the cabinet secretary accept that there may be confusion over lines of accountability in terms of the objectives of each of the two separate agencies? I don't see why there should be any such confusion. The two bodies will sit alongside each other. They will be equals. The South of Scotland body will not be subservient. They will have an equality of relationship. There are different bodies. SE is bigger. It will have a bigger budget. It's serving a bigger area, a bigger population, rather. But they will be equals. It will not be a case of Scottish Enterprise running the new agency. It will run itself. It will be the master of its own fate, accountable to ministers and Parliament. Thank you, cabinet secretary. I think that that's all the questions we have. I mean, I would say that there's huge expectations that have been voiced regarding this bill, and the committee will have to reflect on its reports. I thank you for the evidence that you have given. I would ask cabinet secretary if you and the witnesses could leave quietly so we may continue on with the other matters that we have on our agenda. But thank you for the time that you and your team have given us this morning. Committee, I'd like to move on to agenda item 3, which is European Withdrawal Act, SIs. We have received five consent notifications as detailed on the agenda. These cover transport, the rules for awarding contracts, agriculture, including the transfer of legislative functions and provisions concerning financing, management and the monitoring of the common agricultural policy and fisheries. All the instruments are being laid in the UK Parliament in relation to the European Union Withdrawal Act 2018. Of the SIs, one of the SIs is categorised as A. Two of the SIs are categorised as B and two are categorised as partly B. To the extent that the transition from the EU to the UK framework would be a major and significant development. Are there any comments from the committee? I note one from Stuart and then from Richard. It's just a small point in relation to the cap and its replacement. The denomination in which the calculation of payments is made remains as euros even after, but I note that it is said that that is only to allow the transition year that bridge covers both in and out and that it will subsequently be changed. I think it's just important to put perhaps an observation on the record because I think others who read it might be slightly confused by that, but there isn't much information about when and how that bringing it back to sterling would be achieved. Although I imagine that it probably is in somebody's plan what's in front of us doesn't actually say it. As the committee is considering something to do with CAP, I should note a declaration of interest that I am a member of a farming partnership, although Denton tends to say anything on this. If anyone else intends to speak on this and wants to make a declaration, please do, Jamie. Thank you, convener. Just briefly, this one relates. Sorry, sorry. It should have been Richard first and then Jamie. It may be a typing error or it could be a mistake. On page 2 it says agricultural transfer of functions EU exit number 2 regulations 2018, but on page 10 it says agricultural transfer of functions EU exit number 2 regulations 2019. I will leave that for—I'll leave that. It's interesting to note that, in amongst this, wine changes, CAP, changes, CAP financing management monitoring, there's 127 amendments, which is quite amazing when you go over and read them all. When we come to the next one, the common fisheries policy transfer of functions and people may want to analyse those amendments that are over 60 amendments in this SI, but I've been interested to know if the 2018-2019 is just a change over or a typo. We'll check that out and come back to you, Jamie. Thank you, convener. My query relates to the public service obligations in transport at SI, which affects PSO services on rail, bus and tram. I believe that the rail aspects are a whole reserved matter, but I think bus and tram areas may be affected and reserved. Article 4 limits the maximum duration of PSO contracts awarded under the regulation to 10 years. I just wondered if it doesn't state in the notes if that is a change from the existing CAP. Is that an increase, a decrease, or it's just a continuation? It's just a query. Okay. Are there any other points? Well, I think there's a couple of points there that require clarification, which I'm very happy that the committee right to the Government and asked for clarification. The basis that we do that is that the committee agreed to write to the Scottish Government confirm at its consent for the UKSI's referred to in the notification to be given and to request a response from the Scottish Government on the wider policies that have been identified in the papers. Yes. We agree. Thank you. The committee will now move into private.