 przestimelt, and welcome to the 25th meeting of the Economy, Energy and Fair Work Committee for 2018. I may ask everyone present to turn off or turn to silent any electrical devices, please. We have received apologies for this morning's meeting from committee members, Angela Constance, Dean Lockhart and Andy Wightman. Item 1 on the agenda is a decision by the committee to take items 5 and 6 in private. Rym ni gyd o ddechrau i amddangosodd dras o'r sgrithwyddiad o'r 2019-20 ymddangosodd. Rydyn ni'n meddwl am gyd o'r cyffredinol sy'n hi'n ffasiwyr. First of all, Helen Martin, who is Assistant General Secretary of the Scottish Traged Union Congress, Rob Gowins, who is Policy Officer of Citizens Advice Scotland, Gordon McGinnis, who is the Director of Industry and Enterprise for Skills Development Scotland, ac, ledd nhw, Mat Lanc ninhgellur, director of policy and public affairs for the Scottish Council for Development and Industry. Welcome to all preview this morning. John Mason will turn to your question to start for our panel this morning. Thanks very much, convener. To start off, focusing on employment support services, Ond yw bwdaeth o'r fflusio ar hyn o'r ysgrifwys wedi件ol sy'n cychwyn i'r meidio i ddisgordi sefydliadau. Yn cyhoeddfeydd gwneud hynny, rydyn ni'n neud o'r fflusio ar y proses that needs support? How is that all going to work on the financial side, do you think? Who would like to start off there? The actual sound system will be operated by the broadcasting desk, so no need to operate any buttons if I think you've all been here before if you just indicate Gordon McGinnis. I'll start. I think you're right in relation to the budget that has been a reduction. It's still somewhere in the region of £96 million for that. Government are obviously confident having went to procurement that they can deliver that service within the programme. I think you have to probably look at it in its entirety across the actual employability skills pipeline that the Government has, so there's five stages in that. It's not just that £96 million that plays into that space. We've got employability fund, which we deliver on behalf of Government, and then you have significant contributions from local authorities as well, which are non-statutory services but will differ from location to location, depending on, I guess, the council's ambitions to address unemployment. The other issue to recognise is that unemployment levels have fallen, and it's probably wrong to make a comparison year and year when the nature of unemployment is changing. The Government has a strong focus in helping those with disabilities and those with protected characteristics, and I think that's to be welcomed. It's early days in the launch of the new programme, so I guess time will tell, and I think the important thing is to have good monitoring arrangements and good publication of data and the quality of the service as well. It sounds like you're not too concerned about the actual budget. I think time will tell. It's early. It's a voluntary programme, obviously, so there's not that kind of push through the system. People have been in a compulsory nature to do it, so I think we just need to keep alert and, as I said, have good management information to guide the system and also think around the range of clients that are entering the programme. As I said, the employability pipeline is quite broad and there's a range of initiatives and measures that come into that, not just the new programme. Mr Lancashire? It's probably just to echo some of Gordon's points that the £96 million shouldn't be seen, I suppose, in isolation, considering the total spend on employability using skills in Scotland, which I forget the name of the report, but it was in the hundreds and hundreds of millions. So how does that reflect? How do we connect those services together to maybe reduce duplication and look to single outcomes that support both the social employability housing and all those different areas that employability and skills touch on to support an individual through? I think the other aspect on a budget of the £96 million that's quite interesting though is the quality of service provided and I think that is too early to tell right now from first staff Scotland, but if you reduce the money, that's going to the service providers themselves and what type of service they can potentially offer as well. So that might be a point to focus on when we get more data from the service providers about their outcomes, about how many people are passing through the service itself and how many people have actually got six months' employment at the end of that too. So it's a bit too early to tell, but a reduction in budget, the pressure goes on the service providers to do something more efficient, something more different to enable that service to be delivered. I think that just on that point, we would maybe be a bit more concerned about the reduction in the budget. I think that we do recognise that the labour market is quite tight at the minute and in some ways that creates a positive environment, but it also creates a challenge because the employability services are now really looking to place people who are quite difficult to place and who historically have quite a lot of barriers getting into employment. For us, we would want to see really good outcomes for disabled workers at this time because if there is such a low level of unemployment, there is no reason why there should be such a large employment gap for disabled workers. That sort of support requires more budget rather than less, and it does potentially create challenges for the providers in the way that Matt was just describing, because they are having to potentially deal with more complex things that would need to be more innovative and it is difficult to do that when your budget is falling. Are you happy with the model? It seems to me that, reading some of the papers, there is an assumption that if we just put a few things in place, any disabled person can do any job almost. I am not slightly overstating it. However, some people just face huge hurdles and will not be able to work, say, a 35-hour week or even a 16-hour week. Do you think that the system is—well, there is enough money there, primarily, to support? I think that there is quite a lot of issues about how the system works and how the system counts success. We would like to see a slightly more person-centred approach that takes more cognisance of what a successful outcome for disabled workers might look like. We also think that there is way too much emphasis on preparing the person for work rather than preparing the work for the person. Our disabled workers' committee would constantly say that there should be more emphasis on ensuring that employers understand their obligations and that employers are ready to provide the kind of support that is needed to support a disabled person into the workplace rather than helping a disabled worker to work on their CV or work on their interview techniques. It is too one-sided the system and that quality of work and support for the employer needs to be a bigger emphasis in that system. I think that one of my colleagues will go on to outcomes later, so I will probably come back to that, so that is fine. Mr Gownes, do you want to say anything at the stage? I do not have a great deal to add. Other organisations will be in a better place to say whether the budget is sufficient or not in providing employment services. Certainly, I could have the points about the importance of the system being joined up well with other things, but Fair Start Scotland is certainly not the only employment programme provided by third sector and public sector in Scotland. It made sure that they complement each other well. I will echo some of the points on measuring success. We should measure sustained job outcomes, but there are also softer outcomes that it is important to capture as well, given that the people who revolve with the programme are quite far from the labour market, so they are getting people into work or not. There are other measurements that could be used in terms of disseminating success. The other area that I wanted to touch on was the whole question that this is going to be a voluntary programme rather than, in the past, it was allegedly compulsory and there was a potential of sanctions, which there appear not to be now. Are you all comfortable with that new approach? I cannot speak for us to the eye, our members are comfortable with that approach and support it. What is revealing from the interim programme at Work First and Workable is that, while there was a voluntary nature, there were only 60 per cent of people that volunteered to go on to work first and took up the programme itself. 40 per cent of people before they even got to going through a service provider's door were dropped out of the programme entirely, so there is an issue there. Whether that may be that they found work excellent, fantastic, that is great news, that is what we want, that could be one of the reasons whether it is a changing circumstance, I do not know, but I think that more investigation needs to be done at that slip-off rate from those 100 per cent that volunteer but only 60 per cent start the programme. Where is the over 40 per cent gone? Is it that they found a job? Is it that they are doing something else? Or is it that they have not been engaged by the service provider or all the services on offer? That is where I think a bit of focus needs to be put on. Mr McGeis? I think that that kind of issue there relates to people getting sufficient information, I think, to make informed decisions about what direction they are actually going to go in. I always think that when we are talking about that journey back from welfare back into work, we need to understand where people are coming from, so they are coming from perhaps not a very lucrative financial position, but it is regular and it is guaranteed with lots of employment now, in a non-standard type employment. I think that people need to make an informed decision in terms of when they move towards the labour market, what that means for their own financial security, and I think that that plays out in some of the slip-off in terms of referrals to the programme. Right, thanks so much. Yes. Just picking up on one of the points there, talking about a sustained job outcome, for example, is that the best way to look at it, or I think Helen Martin touched on some of the issues surrounding this, getting people back into work, so someone that one person might be able to go into a particular job from having no job to a job where they work 30 hours a week for someone else that might not be possible to do that sort of level of commitment initially, say perhaps 10 hours may depend on the person, may depend on the job. Is it better to look at it as being something where progress can be made incrementally, step by step, depending on the individual, depending on the job, or how should we approach this? It's actually a pretty difficult question, in real terms, because I think that there is an issue with some workers finding it challenging to go straight into a 16-hour a week role, particularly if they've got long-term disabilities, if they've got health problems. That can be quite difficult to do, but, at the same time, we don't want to create a situation where any level of our contract is okay and is considered a successful outcome for any worker, because we are seeing more and more instances in the labour market of very, very short-art contracts being offered. I do think that we need to consider how it is that people keep themselves in a financially stable position and how it is that people keep themselves out of poverty, and we can't have a situation where employability services are driving people into really low-wage, low-r jobs that leave them in poverty and leave them in a worse position than before, because that can't be a successful outcome either. I think that there is a real tension here about how it is that you design a system that has statistical outcomes that look effective. In some ways, we would be tempted to urge caution about driving everything from a targeted approach for those sorts of reasons and instead look at what is a good outcome for that worker, make it person-centred and give a bit of professionalism into the system so that, if the employability service is saying that it is successful, in some ways, and the worker is saying that it is successful for them, that in some ways that can be the measure of success rather than necessarily setting statistical targets at the centre and applying those rigidly to every single case? I wonder if it might be partly to do with progress that can be gradual in many things in life. Rather than thinking about the question of people being told to do contracts with low-hours, as you say, a person-centred approach, but people can build up rather than going from no work into, say, a 30-hour week. Is that what we are talking about? I think that that could be a successful outcome for some workers, but I also worry about the idea that that build in up-of-hours can be very difficult to do. We have unions that are represented in the retail sector, for example, who have a lot of members who would love to work more hours and can't get longer-hour contracts. That is affecting their living standards and their ability to stay out of debt, and that is for people who are already in work. We have to be careful that our employability service does not drive those sorts of outcomes. I think that, with the changes that we have seen in the labour market and the rise of the gig economy, there are now a lot of options that allow you to do a very small number of hours of work in lots of interesting ways, but it does not necessarily mean that people have a sustainable job outcome that keeps them out of poverty. I think that understanding of whether people are better or worse financially off for going into the labour market is an important one. I would like to live in a world where people were able to do things that allowed them to go into work gradually and to build it up and to have that sort of dignity that comes with work. I think that that would be really positive, but there needs to be some give in the system. There also needs to be opportunities that are more sustainable available to people. I worry about the fact that those opportunities, particularly at the low end of the labour market, are being closed down. That is what I was wondering about. If there is an opportunity to progress to increase hours, increase work or develop a job or a worker's skills, that is different than going in at a certain level and just getting stuck there, so to speak. However, it may be starting there and then progressing is the answer, rather than viewing what happens immediately as the outcome, taking a more long-term view of it, which may take a bit longer but may ultimately be more successful. I think that we need to escape the target of disability as well, because one disabled person stations to another can be very different. A lot of people present on those programmes with alcohol issues, housing problems, domestic abuse going on in the family, and you are right, Gordon, that progression is very different for someone who is just disabled and does not suffer all these other things that happen in the background, too. A measure of progression is helping wellbeing within the process itself. How do you create the contracts to be able to say, right, we have someone in Scottish disability, but all these other issues going on as well, that is going to take a lot longer to get into work than someone that does not have these other issues that are attached to them to provide their employment with. I think that, in terms of the job outcomes, we need to escape that every disabled person is going into a zero-hour contract in some kind of death star approach of a business, because we are trying to drive responsible businesses in Scotland as a key part of what we are trying to channel as a society and as a nation. While I am not saying that that might not happen in some circumstances, most of the service providers, certainly the SCDI and some of the members of ours, have come across very much trying to champion quality jobs and quality living standards within those and quality pay. I think that the other aspects of that, what keeps someone in a job, is the ability to progress, and that progression is key. You walk into a job, what are the skills needed for automation AI in the future, how do we provide those in the place of someone's career through work-based learning once someone is in post and past that six months. I think that we need to just escape that fact that every person that culture churned out of this programme walks into a terrible job in terrible conditions, because that is certainly not the case. Rob Gohans? I think that it was just to take the point that fair work is particularly important. We know from research that a bad job can, in cases B, even worse for somebody's general health and mental health than being unemployed. At the same time, I think that we would support how it was being measured on an individual basis, what works for some people doesn't work for others, what might be appropriate if a shawtails contract is appropriate for some people. It won't be in some cases and particularly if people are essentially relying on it as their main source of income. I think that those are some of the things that will be built into the kind of measuring the success of the programme alongside sustained job outcomes. Gordon MacKinnon? I think that it was just to add that probably understanding the work and relationship between universal credit and as the person progresses into it, I think that it was healed initially as that was going to provide the kind of safety net for people who were entered back into labour market particularly in shorter term jobs and that could be scaled as their ability to work and earn increased. I'm not an expert in it but I think that we should probably examine just how effective that is being as it's rolled out and how effective the agencies are working in behind the system. We were having a chat earlier on just the exchange of earnings rates and that type of thing and that would be done in a more automated way that doesn't put the individual at an inconvenience every time a check has got to be made so examining how universal credit operates in Scotland I think would be worthwhile. Thank you now, Jackie Baillie. That leads me on neatly to exploring something that I think Matt responded to which is roundabout guaranteeing fair work and I was very pleased to hear him say what some of the employers certainly within the SEDI family do but I'm wondering across all the programmes, modern apprenticeships, employability fund, fair start Scotland. Do we check? Is it a general exhortation? Is the grant given to the provider conditional on them securing a job that actually guarantees fair work? How do we do this or is it just through encouragement? I mean I'll pick up. In terms of fair work I think if I look at the modern apprenticeship programme Scotland has maintained a very high policy line on this. It must be full-time employment and it must be offer quality training. Where we are in terms of legislation is that we're tied to the UK Government's minimum wages rather than being able to insist on a living wage condition and that would be a call for government to make if they were going to apply that level of conditionality. I would caution moving to that. In some of the programmes and offers that are there just now from government, for example looking at a commitment in early years in childcare, the provision that's being funded through government, I think there's a condition that a living wage has got to be, a Scottish living wage has got to be paid. But for other sectors and I'm thinking of hospitality and some of the food and drink sectors it would probably reduce significantly the number of opportunities that were made available for apprenticeships so there's a balance to be struck there. But I think in England we've seen apprenticeships that will last 12 weeks and the young person or adults back out in the street after 12 weeks that simply doesn't happen in Scotland. We've got a far better quality criteria in the providers and our own staff in terms of monitoring, analyse this and make sure some of the papers refer to rotating doors. I'm pretty confident that we don't have that and by and large the evaluation activity that we take plays both with individuals and with customers would point to the kind of quality of the experience and the learning that they've got. So I think my sticking point is probably around where you would say it, a minimum wage for apprenticeship programmes. It does make me slightly nervous that we seem to be underlining poverty pay in certain sectors and so I'm slightly disturbed by the result. I get what you're saying about balance but nevertheless Helen, I wonder whether you would come in at this point. I mean to be fair to Gordon, some of what he says I would agree with in that I would agree that the apprenticeship system in Scotland is of better quality than the apprenticeship Scotland in England and significantly so at this point and there are definitely some extremely poor outcomes in England in terms of very very short poor quality programmes. I think in Scotland we have done well to maintain a high level of industry standards, decent qualifications that actually lead to something valuable for the young people. I don't think I agree with the idea that that means that there are no instances at all where you see young people being trained as apprentices and then not receiving a job with that employer at the end of it and the employer going on to train the next young person. I think that we do see that at times particularly for example in some construction firms and I've heard construction industry professionals say that themselves and I I think that that is something that we kind of need to guard against but it is quite difficult to do it from an institutional perspective because you know the employer at the end of the day has to decide whether or not they're going to keep that young person on but where we can we need to we need to be encouraging these to be sustainable roles that lead to long-term stable employment as much as possible for for young people. I do think that there are times when we discuss fair work that we hear fair work being equated to the living wage and not very much else and I think for us we would have a much higher ambition of what fair work actually means in the workplace and about the role that that means for workers being able to shape their own work and being able to you know have access to training have access to to to the sorts of contracts that they want to work on as well that gives them that gives them a guaranteed income that gives them sort of decent work in the ILO perspective and I kind of I think that we've gone too far on that on the kind of the living wage is the only way to measure this so much so that we now see employers saying things like oh it's okay I'm a living wage employer and the union says no but two years ago we had union rates that were agreed about two or three pounds above the living wage and you're now holding yourself up as a living wage employer but that's actually a pay cut for a lot of workers so I think we do need to be careful about unfortunately the campaigns that come back to hunt this in sort of negative ways because they're being obscured and they're being used as a badge of honour to actually push down and live in standards and push down on wages in a kind of upsetting way. I was going to come on to later on I suppose most successful businesses generate great public good jobs, prosperity, communities and as a nation we all we all reap the benefits of that going forward and I think narratives changed around that kind of old command and control type type of business over recent times and many businesses realise the importance I suppose of maintaining trust with customers employees and wider society not least in a social media driven world and I think there's a real need for businesses now that they're beginning to understand their workforce is a key to increasing productivity yet AI and automation is one way but actually it's people that really support increasing productivity and fairness in the workplace only enhances your ability to increase productivity going forward so the old approach as I said around command and control is probably starting to ease its way out of businesses in the future my question is how do we encourage more responsible businesses to invest in Scotland let alone enable the companies that we have here to to behave in that manner as well so I think that's another part of this question we need to look at great can I take us back to the budget because this is part of our budget scrutiny process and we know the figures for fair start Scotland the employability fund how much is in that has it gone up has it gone down Gordon right off the top of my head I can't give you a figure but it's holding at the same level as this country so it might be useful if you could provide us with that information and the historic one I'm also curious about local authority contributions I'm guessing they may have gone down given the type financial climate that there is but but again if you can't tell me providing us with the information would would be great too it will vary from local authority to local authority in North Lanarkshire just now putting in a concerted effort around a growth agenda and I was in Moffat last week in the south of Scotland agency in Dumfries and Galloway and in the Borders and Dumfries and Galloway have a very strong chain and access proposition probably about 55 staff attached to that and you flip over to the borders then it's a smaller number but they just deliver that services in different ways so it does vary from local authority to local authority how they've used European structural funds in the past will have been a factor as well and of course we'll need to start thinking around how those services adapt if there's not going to be that level of funding there some of my colleagues will come on to explore that in more detail with you and finally the apprenticeship levy because you know people complain it's not transparent we don't know how much money is there could you give us any ideas about that? Well I think Mr Hepburn has never hidden his dissatisfaction at how the apprenticeship levy has been introduced and particularly the impact that's had in Scottish public sector as well who also have to pay into it and I think one can figure all sticks in my mind as the Glasgow and Clyde tail border contributed about £6 million into the levy so that's a significant significant amount so with that public sector input actually a net effect in terms of what was available for expenditure and through the levy was actually reduced and as I said minister can probably give a better version of the detail of that what Scotland had done is tied to maintain a stable system and we touched on where we see some of the flaws in the English system and they have flipped and flopped in policy over a number of years and I think the system that they created the digital account looks good but we have had a number of employers and I can achieve to try and claw back to levy but further then going to hire new staff then they're also paying more wages so it's a rather challenging environment for them. Scotland has stuck with a system I think which has proven itself have expanded to the foundation apprenticeships and graduate level apprenticeships again we've used some European structural funds for that I'm often good feedback from it and that's coming back to a lot of the work that was done through the wood report and putting a stronger much stronger emphasis on work-based learning as a number of our competitor countries have so the levy I think that does frustrate a number of companies in terms of getting access to it we've created a service where we'll go out and try and maximise what individuals individual companies can get from the levy in Scotland across the whole skills system because I think if you look into the health service then huge amounts of nurses and social workers trained through areas like the colleges and I appreciate that it's not additionality but I think we've got to appreciate what we're getting back through the contributions that are made into the skills and learning system and it's totality. I didn't I was listening very carefully but I didn't hear in there a global sum so I wonder whether you could write to the committee with an indication of the cost and the other thing I'm interested in is you know given that this is a new pot of money coming in is this all of the money additional or has it displaced existing training budgets within either SDS or the broader government? At a government level it has displaced the previous funding arrangements for that in terms of landing on a precise figure I think Scottish Government are still working with the HMRC to get an attribution across how much is actually you know paid by Scottish employers for Scottish employees that has not been an easy thing system wise but I'll take that back to government colleagues and ask that to be to be furnished to you. Thank you very much. One final question convener and just a very quick one. Were any of you involved in actually the design of First Art Scotland and if you were I'm not getting any engagement so you probably weren't if you were would you think still needs to be changed? Sorry no SDS so we assisted government and we contract managed the delivery of the workable Scotland and the work first Scotland programmes through that kind of transitional period. In terms of the detail I think it's too early for us to be sitting here saying because I think some of the client groups some of the people we worked with last year we've done an interim evaluation with Cambridge Policy Consulting and in Scottish Government and certainly there's positive messages back from Mark in a 60% feeling that we're more able to negotiate work in terms of if they had a disability and to declare that disability so hopefully some of the lessons learned from the systems that were developed and I think the spread of contractors that we have in the new system on that regional basis of the working in the nine regions I think should give a lot of interesting information back and be able to compare and contrast against what's working whereas in the past at a UK level we tended to have a very big operational area with maybe only two kind of prime contractors so I think we'll be learning that we can get from within the system just now but the system as it stands has been managed and procured by Scottish Government themselves. I was going to say just to add to God that SEDI weren't directly involved in the design but certainly a number of its members were through Kirsty and Employability Support Scotland in terms of the committee that they ran individually. I probably was in a different role back in the day but I think there was involvement via the service providers through Employability Scotland. I'm going to sneak in a tiny little question that the convener has allowed me to do and again Gordon I'm afraid you're it. Contracts for First Art Scotland are three years. I understand contracts for the Employability Fund are one year. Why is there the difference and do you not think promoting stability whether it's voluntary sector, private sector for any training provider would be a thoroughly good thing to do? I think I wouldn't disagree with the sentiment we operate on an annual funding basis so hence we would deliver contracts on that basis. What we do try to do through the commissioning process is work at a local level with the local authorities and local employability partnerships to get the best fit through the employability fund. I don't think we'll have seen significant shifts in provision from a year-to-year basis but there's a kind of quality assurance mechanism built into that process but obviously providers in particular in terms of the kind of business would look for contracts to base as long as they possibly can. Are you retending each of those one year contracts? Is that what I'm hearing from you? We work through a procurement process on an annual basis. Is there not an opportunity lost in all that re-tending for the same companies by and where you could monitor quality? There are not necessarily the same companies and we do it through Public Contract Scotland so it's open and transparent as we are legally obliged to do. Moving to three years might be sensible but I will leave it at that, convener. Enterprise and skill agencies are often a subject that the committee looks at. Obviously, they are vitally important in delivery down the line of jobs and job quality and so forth. If you had the opportunity to direct them, how would you use their budgets to improve job quality across Scotland? Did I catch out there? I include myself as one of the skills agencies so I was going to let my colleagues have a go first. Who would like to take the question? Helen Martin? I think that there's a very simple answer here. You consider job quality when you are considering whether or not you fund people to take on apprentices or any other training scheme. Right now I don't feel like there's any assessment of that within how the schemes work. People get access to public funding to offer apprenticeship schemes without any consideration of how well they've done previously to support people to stay on and work. The jobs quality at the end of that, we know that there are frameworks that exist in sectors where the job quality is routinely very low. There is no consideration of whether or not there is appropriate to be funneling public money in that way or how we can incentivise, through the use of those contracts, and other forms of public money in a different way of working. We see business support going routinely to companies that have very low outcomes. You only have to look at the grants for Amazon. It was positive to hear that the First Minister talked differently about that just this week. There is a lot more that we can do in that space if we wanted to. That was about ensuring that every bit of public money that we have goes to supporting the type and quality of employment that we want to see in Scotland. It is legitimate for us to have an interest in what happens in the workplace, because so much of people's livelihoods and their outcomes depends on what happens within that working day. For too long, we have stood back as policy makers from having that kind of scrutiny on the workplace and left it as the domain of business, and they can do whatever they want. That has been an on-going deficiency in the system? Absolutely. I am encouraged by some of the things that we are hearing today and some of the approaches that have been taken in the work that the Scottish Government has done in the past few years. For a very long time, that was very much at any job. It really does not matter what type of job it does not matter if you are out on the street again six months later, a year later. I think that there were very, very poor outcomes for people. It has really caused a very large distrust of the type of work among low-pay workers, because the outcomes have been so poor. Even more people have been finding employment, the outcomes have been quite poor, because the type of employment has not always been as good as it should have been. There have been other types of employment, as Matt referred to. It is not as if this is the only outcome that is available, but I think that there has been a large suite of it that has been a kind of low-pay, low-quality, and then you just revolve into on-employment, into low-pay and on-employment. It does not help people to get the kind of life outcomes that they want. I think that we would consider that it would be important for the rich Government to do as much as it can to promote fair work and decent work. I think that that would include through various programmes that it funds, to pick up on a point that was made earlier. I think that that needs to go beyond pay, although payment for living wage is very important. We can conclude under the misuse of zero-hours contracts, seen through the issues that CAB clients come in for advice about, that, in many cases, misuse of zero-hours contracts has caused hardship, caused difficulties for people enforcing their rights at work. There are other factors, whether employers pay people on time, whether they assert their basic rights at work, and various factors such as those. I think that it is something that Government should be promoting. I think that doing that through the use of some of the programmes that it funds is a way to do that. I think that it goes back to something that I said earlier about around responsible businesses and the nature of that changing in Scotland as well. If we are talking here or this is leading to more conditionality in business support around quality jobs, we are already on that path anyway as businesses begin to change, begin to value their employers more in Scotland. I also think that it is no surprise that Governments are listening to those discussions about how we create fairer, more equal quality jobs in the workplace. Businesses are ready to have that discussion, to listen to those reviews and to look at the rewards that might take place in terms of increased productivity. It is an area that we cannot just nosedive straight into without a broader conversation with business to understand where we are at at this moment in time. I also think that we also have to look at where Scotland's place is in the global economy in terms of our competitiveness, in terms of our need not to try and deter investment into businesses in Scotland. The business support potential conditionality does that. How do we strike a fine balance in that too? We do not want to discourage business investment. We want quality jobs. What is the conversation that we need to have without diving straight first into conditionality and business support is what I am trying to put across? I think that there is a danger of broadbushing some of that stuff. The statistics that we have got in terms of evidence and evaluation from the apprenticeship programme has somewhat shown a satisfaction level of those that are completed over about 86 per cent. These are 2016 figures and we will repeat the exercise this year. Four out of five apprentices had, were still in employment six months later and could report at least one career progression step within it. The apprenticeship programme delivers, I really think, a strong return for Scotland's economy and for individuals participating in the programme. If I switch back to the South of Scotland agency, one of the targets for them will be to reach as many of the small to medium-sized companies that are within the area that are challenged with rurality and business development. Obviously, we want the best results and the best commitment to fair work, but there is a balance to be struck in terms of where they are on a journey and where you pick them up and where you want to take them to. We have been working with Scottish Funding Council, Scottish Enterprise and Highlands and Islands around the enterprise and skills review. There have been four missions committed from the strategic board and one of those is about productivity, workplace, innovation and new business models. We will work in partnership with the agencies around how we implement that. There is strong reference in the air to fair work and also to the closer growth agenda that the Government is promoting. I am just looking at what you are saying, Gordon, about the positive aspects of someone getting a job. I realise that everybody has to start at the bottom and work their way up, but they have to see the opportunity for a clearer progression that I would have thought into a decent-quality job. I would say that a good number of those jobs are. Helen referenced the construction earlier on. A lot of the construction frameworks are set at industry rates that are agreed with the trade unions. It is under the Ian Rogers from the Painting Decorators Federation. We will probably take exception to Helen how she referred to it, because Ian drives a high-quality agenda. They want the best young people in and they pay in excess, way in excess of what the apprenticeship pay would be required to be because they want to attract suitable and good caliber young people. We need to look at the frameworks and how qualifications are structured. We have developed the Scottish Apprenticeship Advisory Board, heavily populated with employers, and we are asking them to help us to progress the agenda, not just around things like fair work, but around equality and diversity. They then take ownership of the qualification standards themselves. The committee's recent work on European structural funds has highlighted a need for increased regional focus to economic development. How would enterprise and skills agencies or how should they use their budgets to address economic disparities between regions of Scotland? I think that we are working and certainly have done a lot of work with Scottish Enterprise around regional partnership across the three issues that we have been working with them on, the Ayrshire growth deal. From an SDS perspective, what we have tried to do is provide an evidence base and understand what those anomalies are, where there are challenges, where there has been growth, and where there has been certainly negative growth or much slower growth and then commit the resource in behind those plans. Whether it is around city deals and working there, we have also produced regional skill investment plans that are aligned to city deals and some of the opportunities that they create. The ones that we have done for Edinburgh and Lothians make great play of the bigger opportunities around data analysis and artificial intelligence. I think that there is a range of ways that we can work with the agencies and local authorities. Judging the criteria for your investment is about safeguarding jobs in a particular region, it is about creating investment, what type of size of businesses are in the area that you want to invest in or have in an area to see what is the infrastructure there. Those questions for a criteria approach are probably one where the regional partnership could have impact in terms of asking those questions of business and the wider community within those regions. What role would you see for local authorities in that? I think that local authorities are key economic development agencies and I think that role has been quite overlooked in recent years. We have seen a real push down in local authority funding and yet at the same time we see business relief rates being prioritised within the previous Scottish budget. I never could quite understand the economic literacy of that. Why would we not consider a high money enters the area in the round in a much more strategic way rather than saying that we are going to slash the budget to the council but, at the same time, we are going to support high streets simply by slashing business rates? I think that the result of that is quite clear. We have local economies that are really, really struggling and we have high streets that are dying. We have a lot of issues around access to public transport within local areas. The bus networks have really been eroded and that has an impact on productivity. It has an impact on people's ability to simply get to work, to get into town and to spend their money and then they do not even have money in their pocket because their pay has been held down, local businesses are struggling because the biggest employer in the area, the local authority, that those wages have not risen and it has this negative cycle. I think that we too often focus on simply one element of the economy, what is happening to large private sector businesses or even what is happening to small businesses, instead of looking at that whole local economy and thinking about how every bit of that budget can work together to support outcomes in that area. We are quite keen on the idea that this budget should consider more a kind of foundational economy approach, looking at how it is that you keep money in local areas, looking at procurement models like the Preston procurement model that prioritise local spend from the public sector going out and how that actually supported communities in the long term. We have far too many examples of small things being done to boost the economy in one way that are completely undermined by another line in the budget in the same document. We really need to step away from that approach. Skills agencies through their budgets and so forth, do they have a grip of the big picture across the whole of Scotland when we are looking at the disparities between the regions? I would say probably no, like Gordon might disagree with me, but I would say that that is a very difficult challenge for an enterprise and skills agency to have, because ultimately this is about how different levels of government work together and how the system works in the round. One of the issues that we have in Scotland is a round transport, and there is a round our kind of transport network. We have roads going north. There is no motorway to Aberdein. The roads going north are not really fit for purpose. The train lines going north are very, very poor. The investment in the train line is extremely poor, as we know. I can talk all day about the problems with rolling stock and various issues on the trains. We have issues within our age and fleet and our ferry services. That is the infrastructure of Scotland. That is what gets your products for me to be. That is what gets people to their work in the morning. That is the sort of stuff that we need to be really focused on if we are going to see a step change in how our economy functions. It is an aside when we talk about economic development, that very basic infrastructure. The only bit that is given any real focus from the Government is the digital infrastructure. In my view, there is a real big programme to push that out. The other stuff feels like we are sticking plaster on what are quite serious problems within how the economy functions. There are things that need to be looked at in the round. I do not feel like the enterprise agencies can be left to do that on their own, or the expectation that the enterprise agencies correct all of those things on their own does not seem viable to me. Who should do it? The Government. Just to continue this look at the enterprise agency and the skills agency and Colin's view of what we should be looking at in the big picture, there have been a couple of reports this year about automation. We had the city's outlook report that suggested 230,000 job losses over the next decade, and we had the SCDI report that came out about two months ago, which suggests that there were 800,000 jobs potentially at risk in the near future. I am just wondering if businesses are geared up to face that challenge and what should be the role of the enterprise and skills agencies to support them to face that challenge? I am happy to take off. We are in the middle of another industrial revolution. We are presently in it and it is not going to happen. It is happening already and it is here. Obviously, there is a role for the enterprise and skills agencies to support businesses being fit for the future, not least having the skilled workforce that we need to support automation and AI to ensure that we have an economy and a workforce of the future. I also think that there is a role around the agencies to, while we have mentioned and some of those figures can be extreme at times, is how do we create more foreign direct investment into the country and what are the agency's roles in that? We will get a Scottish Enterprise and the SCDI and others in terms of bringing investment into Scotland to develop us as a frontrunner in the AI digital revolution, so we are not left behind. We are at the cusp edge of that and jobs are still retained and curated. There is certainly a role for SDS around retraining support, work-based learning as a critical angle and factor in that. What is critical to that is that the fourth industrial revolution cannot be seen in isolation. It cuts across every aspect of our society and we have been calling it from the rooftops over recent times about the need for government to introduce a fourth industrial revolution commission and not to look at the negatives but to look at the opportunities that it provides us to create further jobs to have a world-class workforce, which we already have, but to build on that, keep us at the forefront of the world economy and drive that direct investment into Scotland. As I said, the agency has played a massive role in the investment and re-skilling of our workforce to achieve that. On that point, do you think that there is anybody within the UK Government, Scottish Government or any of the agencies that are looking at that in terms of the manufacturing, because somebody has to manufacture the robotics, the sales, the maintenance etc? We were in a situation where 30 years ago there was no mobile phone industry and yet look at the jobs that were created through that. In order for us to take advantage of that, somebody has to be planning for the future. Is that happening? It is in pockets, so SDS will be looking at it certainly early after that. I know that Gordon Steam is in particular from a skills perspective. There will be pockets of that in Scottish Enterprise. The bits that are missing is the glue. What is it that we want to achieve in a fourth industrial revolution? Do you just want to be part of it or do you want to be a front runner? Do you want how do you realise the opportunities? Things happening in isolation and great things, not bad things. Good things happen across industry, public sector and the agency. The problem is that it is not joined up and it is not pointing to one's particular aim and vision if that will be a digitally front-running nation where our people are X, Y and Z. I am making this up as a long and sensitive objective of that, but that is the key part. It needs some kind of commission. It needs some kind of private public sector agency discussion to bring that aim to a reality. At the moment, that is the conversation that is not happening. If there is some way that the Government can facilitate that, I whole-heartedly know that SEDI board and members would support a fourth industrial revolution commission taking place. Well, we also did a report this year with the Scottish Government on automation that looked at how high automation was already impacting the labour market and we did a very small survey of members. It was having an impact, but we were still at early stages. There were some sectors where we had started to see high numbers of job losses, for example banking, retail as well, but for most sectors it was in very early stages. There was maybe more of a question of how jobs were changing rather than how jobs were necessarily being displaced. We share the kind of concern that that could be quite a significant change to the labour market going forward, which is why the STC recently wrote with the CBI through the Scottish Government on the issue of skills and in work training and the need to prepare the ground for supporting employers. Through a kind of tripartite approach, where employers, unions and the Government, sort of work together to try and make sure that there is the proper framework put around in work training, because I think that the focus has been rightly at the time of the recession very much about youth unemployment and about supporting young people back into work. I think that the world has kind of moved on and changed a little bit, so it's not to say that we want to see any reduction in skills budgets for apprenticeships or anything. We absolutely don't, but it is to say that we need more of a focus on in work training and we need much more of a framework that allows employers and workers to kind of drive that change, because I think that it's very difficult actually for people in SDS to sit within an agency and sort of design a skills system that meets a very changing labour market that's rapidly changing. It's very difficult to do that, so in some ways the employers and workers need to talk about what it is that they need in order to support their skills, because we have to remember that most people who are in work now are going to be the people who are in work tomorrow when the jobs are looking different, so we do need to think about how the current workforce adapts. I'll share with the committee a paper that's been done by SDS around what we have deemed as meta skills, but we believe that it's a type of skill set that will make a difference in an environment that's going to move a hell of a lot quicker than it's moved in the past. We've done a significant amount of that. That's not just for SDS, we're socialising that with our partners and stakeholders and asking them to how we can incorporate these skills into the qualification structures and curriculum that we have, and certainly doing that with Education Scotland. On the enterprise side, the work that we're doing there links into things like the National Manufacturing Institute for Scotland, and probably that comes closest to what Matt's describing there as a programme of work, so that's not just focussing on the developments that are going to take place in Shinnon but on a wider operational model, and it's not just purely about that manufacturing but much more on the digital side. You then have to look into areas like innovation centres that have been supported by the funding council and things like Datalab and others, so collectively, and as I said, it's maybe not there as a coherent package, but there's some really stunning work that's going on across Scotland, and I referenced earlier some of the work in the city deal from the University of Edinburgh around data and analytics, and that's leading at a UK level. I wouldn't want to be too dismissive, but in terms of presentation, Paul, you could be a bit better. I think there's also a language issue in terms of when you're speaking to companies. A lot of them are not clicking on to industry 4.0 when you start talking through some of the challenges that they face, what some of the competitors are doing, and the penny starts to drop when they make the association. So there's a language that we need to reflect on in terms of when we're speaking to businesses. We've touched upon conditionality of business support, but I'm just wondering, should inward training be part of conditions of receiving public funds? Helen mentioned earlier on that it's been an area where the UK Government, for the last probably 30 years, has been completely hands-off in policy terms. England have dabbled in bits of work through change to gain and other things, but I think that we see a need for that and certainly the work that we do with industry and businesses. We've got a product called Skills for Growth, which will work with SMEs, and maybe for three days, consultancy support, trying to hone in on the priorities for them to invest in. I think that across the board when we touch on the demographic profile of the workforce and the need for people to change, there needs to be more development in the workplace. We also need to make more of e-learning and the network of regional colleges that we've got as well as a bit of an untapped potential there. To the panel in general, obviously, the Scottish Government's programme for government mentioned increased conditionality, but I was just wondering what your view was on that and what should be the key conditions that should be attached to any public funding? I think that I've just shown it probably the most already in the discussion. What I've said previously doesn't change. I think that this needs a further conversation with businesses before we take that position forward. The nature of business is already changing into the fact that people rise and power in their workforce, ensuring that they're getting training, ensuring that they're getting the support that they need is already happening. Whether that's happening across the board, I wouldn't like to say, and I don't believe that I could comment, but I do think that it needs a further conversation with businesses to understand. On the back of that, I do think that we need to start looking beyond our shores in terms of already attracting those types of businesses that are already doing this stuff by nature into Scotland to locate, to bring their talent here, to support our economy moving forward. As well as putting increased focus on business support, we need to put increased focus on our competitiveness and bringing businesses that are already doing this, just as a matter of course. I think that it's important. I think that one of the good things that was put into the national performance framework was a focus on access to training for workers. I think that that was a really important addition to the national performance framework because it is a statistic that, when you look at it, is going in the wrong direction. I think that the measure is around the number of employees who have access to training courses within the past six months or the last three months. A, it's very low and B, it's sort of dropping. We would be very concerned by the fact that you are much more likely to have received a training course if you're in already a very high-skilled role. Again, there's this kind of disconnect between the two ends of the labour market that we would be intensely concerned about. You have high-skilled work where workers are offered support and they are offered the chance to update their skills, maybe, but then you have the low skilled end of the labour market where employers tend to take a churn approach. There doesn't necessarily seem to be the same investment in the labour market investment in skills over the longer term. For us, part of the conversation needs to be how do we ensure that there are routes through from low-skilled to high-skilled jobs and that low-skilled workers are also offered those opportunities? With the changes in technology, we are much more likely to see that hollowing out of the labour market increase rather than decrease. We are much more likely to see the outcomes for low-skilled workers reduce rather than increase. There is a real danger that there are a group of workers for whom this change is quite a negative change and only pushes them further down into poverty and bad quality jobs. Although I think that every job can be a good job, I do not really like to think of it in those terms, but I know that that is the way that the discourse often works. To reiterate some of the earlier points that were made around fair work and using it as an opportunity to drive that forward, it might be possible to write some of the fair work convention that did an excellent piece of work that really got to grips with what fair work is and what fair work actually means in Scotland. I think that one of the points that they have emphasised is that it is good for employers and business too, so it might be an opportunity to try to link that in with some of the funding that is provided. Thank you. Well, if there are no other questions from committee members, may I thank all the panel for coming in today? I will suspend the session briefly to allow for changeover of witnesses. Welcome back to our session on draft budget scrutiny and welcome to our second panel of witnesses. We have Kirsty McHugh, chief executive of Employment Related Services Association, and John Downey, director of Public Affairs at the Scottish Council for Volunteer Organisations. We will start the session with some questions from John Mason. Thanks very much, convener. If you are in the previous session, you will not be surprised that I am starting on the same subject, which is around the budget. Our understanding is that previously, when Westminster was in control of this area, the budget was considerably higher. We are now talking about £96 million over three years, and I just wonder if that budget is going to be sufficient. I think that it was the ERSA that said that that would target 38,000 workers and maybe was suggesting that it should be more than that, so maybe you could give us some comments on that area. It is quite difficult to compare like with like in terms of this budget settlement vis-à-vis what we had before. Matt in the previous panel referred to the Cambridge Policy Associates' work, which was back in 2012, which at that point found that £660 million was being spent on employability in Scotland, only 12 per cent of which was coming from the DWP. There is a much wider pot, that is clearly six years ago, so it would be worth doing that work again. The Department for Work and Pensions, in the settlement, cut the money hugely. They did for their own programmes as well. The picture now is that they are expecting the majority of job seekers to be supported by Jobcentre Plus, so Fair Start Scotland is a really targeted programme, only supporting 38,000 over the three years. If you look at the £96 million, that is a maximum amount of money that the Scottish Government can spend on the programme, but it is a payment-by-results programme, so not all the £96 million might be spent. One of the things that we have been saying is that, as the programme goes on, if we think that we are looking at underspends, let us take that money and reinvest that in more job seekers. Whether the money is going to be enough—there is never enough—depends on the intensity of the need of the people who are referred and take up the opportunity to go on to the programme. Also, whether the providers can bring in some additional money around them, because it is not just about First Start Scotland, it is about what else can be aligned and co-ordinated. Are you suggesting that there is a real risk that the £96 million might not be spent? It is a payment-by-results programme. It will not be spent. What we do not want is money disappearing elsewhere, so we would like some assurances. Let us get some early warnings of that and pull it back and use it for the job seekers who really need it. A couple of things on the alignment of budgets is that we had some concerns. First of all, programmes that are funded by the European Social Fund, which is the biggest ticket funding stream for employability and skills and anti-poverty work in Scotland, it looks like that a lot of local authorities are taking the view that, if a job seeker is on First Start Scotland, they then cannot access ESF provision. That was a problem with predecessor programmes. It is proving to be a problem now. The second thing is interpretation of ESF rules. People are taking different views, but it is a real issue. The other one to flag is that ITAs, the individual training accounts, they can be really valuable, but it appears now that, if you are on First Start Scotland, you cannot get access to an ITA. That does not seem right either. Actually, these are very vulnerable people with quite a lot of needs, so we need to be pulling money in from all over the place to be able to help them. I think that what Kirsty is saying here is that, in a sense, they are not coherence around the budget and how it is spent. The £660 million is spent by a variety of agencies, a public-private third sector. What we are doing now is not aligning it effectively. That actually takes a look at the person, what their needs are and how we take them forward. At the moment, what we have is that we can get a pot of money here to get support, but that cuts out from the level of support that we might need. For all that, there is a different look. It gets back to your conversation at the end of the previous session about the fourth industrial revolution, if you want to put it on that. What skills do we need to create a fairer and more prosperous Scotland? One, we do not want people to be left behind, which, in the Scottish Government, was because I know one left behind strategy, which we are totally in support of. The budget alignment and spending of money do not match up. There is clearly much more thought that needs to be given about what we are spending in terms of employability, where it is invested, whether it is nationally or locally, who is most in need and we are getting to the right people. There is a bigger picture in terms of the budget. The £96 million is, as Kirsty said, that may not all be spent, but that is one of the whole flaws in the Fair Start Scotland programme that was payment by results and not payment by progression, because people with those furthest from the marketplace, although I hate the phrase, do not go in a linear process to get a job, and I will sustain that job, particularly if they have mental health, alcohol or drug problems. That is not going to happen. So, there is a whole need to rethink how we interlink the programmes, how we interlink the money and a bigger picture spend on the budget. I suppose, in some sense, I am not saying that the £96 million is immaterial, but in the big picture it needs to fit with what else we are spending. Kirsty mentioned European social fund. I sat last year on one of the growth fund parals, which was given £150,000 to organisations to help them grow, create jobs, and that was the third sector. The problem was that we were looking at investing in organisations that were doing employability programmes throughout the country, but we could not tell, or no one could tell us, was the local authority investing in the same type of programme in that area because we did not want to duplicate. We do not have enough data to show that we are spending the money that we are using at the moment effectively. I think that that is a flaw within the system as well and does not make to use the budget limited or not as effectively as we should. There are lots of bigger issues than just the £96 million that needs to be considered there. Jackie Baillie was asking previously, and I think that we are going to get more figures perhaps from SPICE as well as to how, about the whole programme, because I think that is right. I think that the point has been made that we all need to understand better where all the money is. That is across employability. You have mentioned other things like health and so on. Do you think that, first start Scotland, has any impact on things such as housing, childcare, health and those wider issues? One of the key things in terms of getting people into a job is having them in a secure housing environment, particularly ex-offenders. SAVO, we are on our Community Jobs Scotland programme, so we are creating 700 jobs a year in the third sector. Those jobs are very targeted at people with long-term conditions, ex-offenders, veterans. It is very much people who have heard us to reach, so our members are creating those jobs. However, when you have a young person who has got a catering lifestyle, they might have come to a prison, creating a job is not the problem, it is all the other issues surrounding them that need to be thought through, they need support to access benefits, to get some housing. I remember that we had some Scottish Government officials who were shocked at one of our Q&As on Community Jobs Scotland, where one of our members was giving a young man £500 deposit to get his flat, because they considered him to be a volume employee. There are some areas where some of the budget that we need to hear, particularly for people furthest from the market, who have issues, we need to think about the other needs and how we can support that. There is a third sector trust. I was talking to a few months ago and they get about £97,000 a year to young people who are getting their first job through the likes of Fair Start and other programmes, who might need driving lessons, if they are getting a chef's job, knives, they might need a suit to go for an interview. They do it through third sector organisations, but that is about supporting the person to actually get that job. Because the public sector has to be more rigid and the third sector can be more flexible. Is that just the way it works, or can that be improved on, do you think? I think that that can be improved upon. I think that the public sector can be flexible. We have seen it in other areas as well. I do not think that third sector is flexible and public sector is not flexible. I do not think that that is the argument there. It is about taking those lessons and saying how we can do that. I know that trust, for example, they initially gave out the money directly to young people, so they had a few issues with where it was spent. Now they do it through organisations. They learned the lesson of how they actually say it. Particularly housing is critical for young people. We have seen that if they want to sustain a job, sustain a tenancy and actually make that work. If they have not done that, they have not got the security that enables them to go to work every day. First, Scotland is well designed in that it is quite so specific in terms of the levels of service that the Scottish Government is making sure that the providers give the job seekers, but at the same time, it is quite flexible. We know that there are likely to be common needs. It is often about a lack of job history, confidence or skills needs, etc., but we know that there are people on the scheme with long-term health conditions or they are recovering from drug and alcohol, they have criminal backgrounds, they have housing needs. Often, the reason that somebody is not working will be a mix of them. It might be that there is not a bus, so it can be quite practical things. However, the First Star Scotland specification is pretty good on that. It sets out when childcare costs can be covered, for instance, that sort of thing. It is not just about what the providers themselves do though, it is about their partnerships and their knowledge of the other local organisations, many of which are going to be third sector in those localities. What is the issue that I wanted to come on to next? You are talking about partnerships, especially with third sector. I know what Mr Downey is going to say on that. Do you think that there is potential for the third sector to be more involved, or how can they be involved? I will go first. It is interesting that last year we released a briefing last May before the contracts were announced for Fair Start Scotland. The feedback that we were getting from our members was that the decision to adopt a single contract within each area has minimised the involvement of small and medium-sized third sector organisations, particularly those who specialise. The procurement process was not sufficient for the formation of consortium. The commissioning programme was overly complex and inaccessible for many organisations. We sent that briefing to ministers before the programme contracts were announced, because it was feedback that we were getting through the process of the engagement of the third sector. I think that that was a real missed opportunity. I am hopeful that it will not be missed the next time, so I think that there is huge potential. Were the third sector not prepared for it? What was happening was that a lot of small and medium-sized organisations were opting out of the process of bidding for any of the contracts because, one, the procurement process favoured larger organisations. The other concern was that the private sector would win all the contracts, but all the big boys in the third sector would not disrespect them because they would get to them on their own board. Likes of enable and wise group would be able to cope with it? Yes, they would all be able to cope with it. The chief executive wise group enabled Scotland on our boards, so we know the concerns. What I am saying here is that a lot of the third sector, small and medium-sized providers, were opting out of the processes simply because they found it inaccessible, and they were going to be left as some can translate it. They were not able to access it. The procurement process actually worked against what Scottish Government was aiming to achieve. The aims of FAIRSTARP, the aims of what Scottish Government wants to do in terms of employability that we do not have any issues with, are hugely ambitious. The principles are right, but the procurement process is actively working against achieving those aims. So, maybe we can learn from that for next time and when would you make it more than nine contracts? Is that how you would do it to make them smaller? Well, if we had the nine contract areas but you can split into smaller contracts, because actually part of the process here is what we need to do is, yes, you can create partnerships with the larger primes and a subcontracting situation where you get specialist providers, but actually what we want to do is be able to create a level playing field between the big players in the third sector and small and medium-sized players where actually we can form more groups of consortium, because there are lots of very small organisations in medium-sized organisations who are involved in employability but are very specialised providers. They would not be technically termed employability providers, but they are actually helping people to turn their lives around and get them into jobs. And will they not think that they will still be used under the present system or can they not be used? They can be used and some of them are being used, but the feedback that we are getting from some of them is not with all the primes, but some of them feel as if they have been squeezed out in terms of the subcontracting process, and hopefully what Scottish Government is talking to them, some of that will come out. Certainly some of the primes, there are great relationships between them and the third sector subcontractors, in other areas I would say there are issues, as I say, some people think they have been squeezed out. So all of this provides us with, first that Scotland is what it is at the moment, I think what we need to do is make sure that the next stage is different to achieve the ambitions that we all want to see. OK, that is my cue and then that is me finished. I probably agree with John around that and I was very involved with an expert reference group behind the scenes in terms of making sure that we got this right because I see procurements all over the UK. What I see again and again is that you have great policy intent and the commercial processes come in sideways towards the end and you get a particular outcome. I have seen it across public services and there are a couple of things. The procurement was actually very quick, so the amount of time that the providers were given to put in bids was too quick. We spoke to the minister about this about five weeks, something like that and we spoke to the minister and he understood that and it was slightly extended, but that meant that you did not have the time to put the consortia together as John is talking about because that takes longer. The second thing is that commercial processes generally do not like consortia. They judge them as more risky. In the scoring criteria, what you see again and again is that consortia are measured a little bit lower, so inherently there is something wrong, which means that you have not got a level playing field. I think that I disagree with John on going down to lots of micro contracts, and it is probably not a good thing. We have nine at the moment. Let's see how that runs. If you make them too small, you lose a lot. You increase costs. Let's just see how those go on and then take a judgment for next time round. I think that it is in that nine concept. I am not saying that we should not do that, but this is about the specialisation and the support that those furthest from the marketplace need. Particularly around, if you look at the no-one-left-behind strategy, how the people there are going to access. A lot of the fair start—I mean, it was in the committee's own notes for this discussion about parking and creaming—is easy for contractors at all levels to pick people who are not that far from the marketplace, who may need a boost in terms of their confidence after losing the job, help with a CV and getting them a job, but those will be further problems and need much more specialised support. I think that part of that in the process would be that they would get that specialised support and then they would move on to say fair start Scotland, because they need to sort their lives out or their alcohol or their drug problems before they move on to fair start. We see it quite a lot in terms of community job Scotland. We work very closely with Project Scotland, and we know that working from them, someone having a volunteering experience before going on to community job Scotland makes a huge difference, as does mentoring in that process. That volunteering experience helps a young person to get ready for community job Scotland, which is a real job, and you are in there. There are different ways in which we can look at how we structure the fair start within different contracts. If you are looking at people who are really far from the marketplace, what are their needs? They might not be ready to step into fair start at the moment, which is aimed to get them a job, which is a great thing, but they might need some help with a programme first. How do we help them on the journey that they need to go on? Is it more of a broader perspective in terms of looking at outcomes for individuals? Rather than taking a point in time at what has happened then, look at their progression and, if they are on a path of progression, so to speak, in terms of their employment or employment prospects. I totally agree with you. We use the phrase, which I do not like that much. I take a person centre and approach. You look at the person and make an assessment of their needs at a point in the community contact with the public sector. You have a young person who, perhaps, is an ex-offender, is at a prison, there is a bit of housing stuff to be sorted out, you might have other problems. What does he need to do next? Is it a volunteering programme? Is it something else? Then does he go on to a job programme? We can design that. We need much more at the beginning to be assessing and making sure that we understand what a person's needs are, particularly in the light of a moving economy and what skills people need. We talk a lot in the moment when young people are all digital natives, digital natives on smartphones are not actually digital natives for the needs of business or the third sector when they move into a job there, because they do not have the skills that businesses need. There is a whole range of different things that we should be looking at how we see people. To be honest, that is what the Scottish Government went through, fair start and their overall aims in terms of employability. I understand the difficulties to have to be fair start, but— I might come back to you on that and perhaps Mr McHugh will have comment on it as well. Part of the difficulty is assessing the effectiveness of any programme. How do you do that if you are not looking at snapshots in time or specific outcomes at specific points in time? How do you marry the two together or fit the two together? First, our Scotland is actually for people who are quite a long way from the labour market, but they are assessed as having a fighting chance of being able to get into work within a year. If they do not fit that criteria, they do not get through the door, they do not get referred by Jobcentre Plus or another referral agency. What we should not have is people who are very close to the labour market and are able to get into work of their own accord. We have to be very clear about that in terms of any concern about parking and creaming. It is only £38,000 and it is really targeted at those people. I had a very quick question and just a bit of clarification that I was looking for. We talked about who the successful bidders were for the contracts in the nine areas, but the actual providers are predominantly third sector and public sector. In one area where the third sector is not involved in delivering that contract, it is predominantly the public sector that is doing it. What would have been the difference if the bidders had all been third sector, successful bidders would have been third sector? What would have been the difference in providing that programme? Are you looking at what the Scottish Government has provided so far on there? What they are actually saying that the subcontractors are? Yeah, exactly. For instance, west, the successful bidder was a third sector organisation, the wise group, and then of the one, two, three, four, five third sector delivery partners, only one is in the private sector. That is working quite well in some areas. In other areas, a number of third sector organisations who were initially on some of the private sector primes subcontracting lists are not taking up those opportunities. They are not. What we need to see and will be due to the figures quite soon, I would think, is what the reality is in terms of who is providing all those services, and how long it will be sustainable as well. That is another issue. I am sure that that list gives a great picture of the third sector provision within it, but we have to wait and see on some of that because, certainly, some of the feedback that we have had is not from all the areas. It depends on who the prime is and what those relationships are. For example, people plus win the contract in Glasgow. They have no infrastructure in Glasgow. One is how they win the contract in the first place. One is the wise group, one is the west, and they have strong infrastructure in Glasgow. We have just thrown that in there in terms of pool plus. We are starting from a way position behind other people in terms of their infrastructure and their relationships with the third sector. As we talked about, partnerships, subcontracting and consortium take time to build those relationships. I will be interesting to see how we progress on that and how it will work. I think that it will be a bit of a movable feast. I would not make any judgments yet. I am not negative or positive, because I know that, in some areas, the prime contractors and their third sector partners are working brilliantly together in other areas. We are feeding that into the Scottish Government as we go forward, and we will be. We just thought that the best providers, regardless of sector, were completely sector blind in relation to that. We have all-in membership. One thing that affects third sector organisations is nervousness about a payment-by-results contract. Sometimes they do not have the ability to do the financial modelling, but that is not just about third sector organisations. They are smaller organisations, so a private sector small organisation might be in the same issue. However, we find some situations where trustees decide not to get involved because they do not like the level of risk that is involved. That is inherent if you go down any level of payment-by-results contracts. Where first ask Scotland is better than predecessors is the fact that it is a more benign payment-by-results set up, and there is a 30 per cent service fee. For the end of the predecessor programme, it was all payment-by-results, which is a really hard thing to cope with. Colin Beattie, I think that you wanted to come in on that point. Yes, the payment-by-results. We have talked about it a fair bit. I would like more about your views on it and the appropriateness of it. What would the alternatives be to having that in place? Is there evidence that skews provider behaviour towards parking and creaming? Payment-by-results, I think that there is a lot of experience now within this sector of being able to deal with payment-by-results contracts. That was not the case when I took up this position eight years ago, so I think that there has been a huge learning curve over that period. The evidence shows that, for people who have very intense needs, having too much of a focus on the result is wrong. You have to have more of the money coming up front, but it is not just about the payment for individual job seekers. It is about the amount of money going into the pot for that provider overall. The concern is, as I said earlier, about providers being able to do the modelling and being able to deal with the risk. Particularly for subcontractors, the prime contractor can have different payment terms. You can have a specialist as part of your subcontracting arrangements. If you do not put in a PBR contract, you can just pay them all up front, so there is a potential to do that within this as well. I think that in some areas, in some approaches it works, but I think that what we need is a mixed model here. We do want to pay people for the results and get someone into a job, but I think for us, the journey to employment is not that straightforward for a lot of people, so I think that what we need to think about is that we need to understand where the people are targeting and we can go from there. If we are looking at what we are trying to do here overall on employability, we need to be looking at people's progression and how we measure that and how we pay people for it. I am sure that every MSP understands the financial position that most of the third sector finds them selling in terms of their funding. One-year funding in three years is an exception, so that works against third sector organisations, and taking that risk in terms of that, particularly around the procurement process that I was talking about, funding was a big issue. The 30 per cent is better than previously, but what we need to be thinking about there is how do we work a model of payment? I guess that there is an outcome percentage of it, but we are measuring people's progression on that, and that is the key to it. There have been very successful programmes in different areas. I remember Oxfam ran a programme in Manchester, and it was very much payment by progression aimed at a particular group. There are different models that we can think about in terms of how we use that. We say that you get someone off drugs and alcohol and you get them job ready. It is part of a specialist provider's role in working with another employment provider, and that is a payment there. The employment provider may be paid for getting them into a job, so there are different ways that we can do things. We have a straightforward model here that is not taken into consideration the journey and progression that people are making. How practical is it to have such an individual model? The thing about payment by result is, obviously, that it is one size fits all. There is a distinct point at which payments fall due. I used to be saying that it should be tailored to individual circumstances and to the progression of that individual towards the final goal. How practical is that on a national basis? I have seen programmes run like that, where there have been payment. For instance, you have helped somebody in terms of their finances or they have achieved stable housing. You can pull together a model like that. The Scottish Government has choices. How much focus do it want to put on work and sustained work as the outcome vis-à-vis other things? Those are political choices at the end of the day. However, the amount of money available is also a concern. If you focus on those progression outcomes, do you then disincentivise people from doing more of the work-type bit? Actually, there is only a finite amount of money in this particular pot. If we are looking at the overall pot, we are spending £660 million, as Cassidy said. We were in 2012, but it is less now. We are probably slightly less, but I suspect that it is around £600 million. That is a lot of money in anyone's terms. First of all, we need to make sure that we can get the right data so that we know what local authorities are investing in employability programmes, Scottish Governments investing and other agencies investing. We can see where it has been invested and what they are doing with it so that we are not duplicating. I think that part of the lack is. I referred to the ESF programme that we were talking about earlier on. When we were giving money for programmes, we were asking the representative from Slater—I know that there was supposed to be one there today—what local authorities are investing in those types of programmes. They cannot because they do not have the data. I know that Scottish Government is trying to address that issue in terms of a more joined-up approach. At a national level, we know what we are spending, how does it relate to a local level and how can we integrate and align spending on that. If we had that data, a payment-private progression model would be much easier. One size fits all model, as we have seen from UK Government programmes, but it has not really worked in the past. We need a much more sophisticated model. That might take five years to move towards that, but that seems to be the way that Scottish Government for me in talking to them want to go in terms of much more person-centred, personalised, so that no one is left behind in the marketplace of the future. The change in marketplace that we talked about in terms of the job squeeze and the skills that we need is much more important than we get people in. I think that it is thinking about the outcomes as well, because we have an issue that we think that if someone goes through a jobs programme where they are even in fair start, they want to get someone into sustained employment. If they could not at that point, they could get them into a really strong, voluntary opportunity, which would probably get them a job in the future. I think that that is a really positive outcome. We are thinking that over the next 18 months needs to get a bit more sophisticated to make sure that the next stage of fair start Scotland builds on where we are from here. I think that Government to us seems to be up for that debate, but it is something that we need to have with the private sector, the public sector and the third sector engaging in that. A common theme seems to be an emphasis on joined up. Just on a slightly different angle, if you are looking at fair start Scotland and the previous transitional programmes, how well are job centre plus and the devolved services working together? The official answer is that it is too early to say. The big difference between those programmes and the DWP-run ones is Scottish Government job centre plus, but even in England they do not always work as happily together as they might do. Work coaches, the people within job centre plus who are seeing the job seekers and assessing whether they are ready to go on to fair start Scotland or whatever else it might be, have huge numbers of pressures on them, not least the roll-out of universal credit. The concern is that a new programme gets introduced and it takes them quite a long while to understand what it is, what the eligibility criteria are and the main issue that I could have told you two years ago, three years ago, still in my mind now, is getting the right number of referrals through and actually the right people through. That is what you as a committee should focus on, because that is where this always goes wrong. To make the point, the number of referrals organisations get will be a critical measure in this whole thing. It is an interesting one. I think that the relationship over the last couple of years with the Scottish Government employability and job centre plus in Scotland has moved forward and has improved. The discussions that we have had seem to be working closer together. I know from our point of view that the CVOs move to community job Scotland, we have got a second D from job centre plus in to help us, so that has made a huge difference, because they had relationships with the job centres, so I try to place people and get people referred through and made it hugely easier for us. There is much closer work in how successful that is, yet it is really hard to judge. To be honest, we will see by the time we get to the end of fair start how it is working, but it is cursed at the end of the referrals through which I have always been problematic in some areas. Glasgow, for particular, had issues in the past, but we will see how that works. I think that we are at a very early stage. She is interesting. First start Scotland, of course, is completely voluntary, which is good to completely back that, but some job seekers, because they are being referred from job centre plus, think that it must be mandatory, because they just take for granted as mandatory. Then they will go along and they will meet the First Start Scotland provider at which point they realise that it is voluntary and that they might not want to engage. There is something about job centre plus having the right information to be able to do the sale, as it was, of Fair Start Scotland, to make sure that people really know what they are signing up for before they are actually getting to the First Start Scotland provider. The alternative is that the First Start Scotland provider goes into the job centre, but at the moment we have some job centres who are open to that, and other job centres are saying, oh no, you cannot come through our doors. It is very early days, so we are hopeful that that will get better. To be pedantic, we were talking about the right people. Can you define the right people? The people who meet the criteria for the specification. What we do not want is people being referred to Fair Start Scotland who are seven months pregnant, or just about to go into hospital because they are going to have an operation. Most of my areas have been covered, but let me come back to procurement because that has raised its head on a number of responses. We have talked particularly about Fair Start Scotland. What is your view about procurement in relation to the employability fund? Are many of your members involved in that? Do they appreciate the one-year contracts, not that I want to lead you in a direction, rather than the three from Fair Start Scotland? I would be interested in your view. It is interesting. Last year, I was at the Precure X conference and the finance minister was standing there saying that we will get a world-class procurement service in Scotland, and everybody is looking to see it. Technically, that might be true. The processes are all good, but it is not the level and the outcomes that ministers want. That realisation is there. Having spoken to the new cabinet secretary of the economy and finance when he got his new job, procurement came up very strongly. I think that Unison Scotland released some figures a few months ago by the number of contracts that SMEs were getting in Scotland. I think that, in terms of the overall procurement processes, it is working against what the outcome that ministers want in terms of whether it is the economy or whether it is creating jobs or elsewhere, because it is usually focused on the technical, bureaucratic and the inputs in the processes. I think that there is a bit of change. There is some innovation in the system, the tech stuff that is going on. There is some more interesting stuff, but in Fair Start Scotland, there was a lot of input from the sector. There was an advisory committee and others, and those people on there did a great job of putting the third sector perspective. There was a lot of consultant but not listening. When you looked at the way the process went, you now understand the timescales and the difficulties, and hopefully we will improve that for the next time, but we still have issues around procurement and commissioning. I referred to in your last session about fair work. The fair work convention has got a subgroup at the moment looking at fair work in social care, which is a hugely problematic area. It is an area where the turnover of staff and the whole contract commissioning issue is again hugely problematic. I know from seeing the draft introduction that one of the recommendations there will probably be that frameworks and commissioning in social care just do not work. We need to change the dynamic on it and how we look at awarding those contracts and what the type of care we want to provide for people. Ministers should be looking at the overall procurement system and delivering what they want. 10 billion a year has been procured through various systems. Are we getting the best value out of that? Is it delivering the outcomes at fair start in 10s and others? To answer the question, one-year contracts, we want to move. There has been a lot of movement from different funding models from the Scottish Government, particularly on the equality side and others, to go to three-year funding. I think that trend will continue. I know that you are smiling, Jackie, but I think that there is a definite commitment to do that. We are working on different funding models with them, so I think that that will come sooner rather than later. There is a review of the equality fund at the moment. Generally, one-year contracts are hard to deal with. People want certainty. That said, I am conscious that the Scottish Government might move to three-year contracts. Some of my members might have preferred the one-year one, but they did not want it to be successful. We have to look at that broader amount of money, as John says, and how it fits together. The review of the Employability Fund is a real opportunity to make sure that we are using that money as best as possible. Fair Start Scotland was a comment earlier on that it was well designed and flexible. We had the transitional programmes prior to that. How important were those transitional programmes and what were the lessons learned from them? We had two, as you mentioned earlier, workable and workfirst, which was a continuation of work choice, the disability programme. I think that they were really helpful for Scottish Government officials, because I was really conscious and I was quite close to them. It was the first time they had done that. Having the transitional run at it was helpful. The other thing, of course, is that we did not want to gap between provisions or the end of the DWP ones. You need to keep the capacity in the market, because it is about keeping your front-line staff. If you lose them, you lose everything. I think that they were really important. They were pretty small. They were not going to change the world in a huge way because of the numbers, but they did flag up some of the issues. For instance, in Glasgow, it felt like the transitional programmes were competing with some of the Glasgow council run schemes. How compatibility came through really clearly about that. As an expert group, we were getting live lessons from those transitional schemes, which we are feeding into thinking about design. The focus on service standards, which comes through in First Star Scotland, was another learning point. John, do you want to come on? Yes. In some senses, I probably see First Star Scotland as a bit of a transitional programme in its sense, because it is the first time that the Scottish Government has had to do this. Our conversation with senior officials around it is that I am doing more research into wider employability, particularly the user experience, the streamline of funding and the conversion of how we allocate the funding. It is important to make more localised decisions, because that is important in terms of people's needs. We are conscious of the overall collective impact of all of that. The conversations that we have had and wider review, think talk to providers and participants are all beginning now to happen. That is a great thing, because we will see that as a transition and we can make it better the next time. It will help to improve the wider amount of money that we are spending on employability overall. The process at the moment will take time, but we can see that we are thinking in the right direction at the moment, but it will take a bit of time. I am looking on First Star Scotland as a transition and things will get better. As you said, it is very early days and First Star Scotland might well be a transition programme. How would you measure the success of the programme? A number of people who start the programme and maintain on programme rather than dropping out. The number of people who are—obviously, we have the things about job outcomes, sustained work—that is absolutely true. The number of employers who are engaged is really important. The reputation of the programme overall, Job Centre Plus and the other referral agencies is a great provision, and they really want to fight to get their clients on it. Then there will be all the other things that the evaluation will pick up, but we will not see in the hard statistics along the lines of somebody who is able to manage their health condition better or they are in stable housing. I agree with that. I will be interesting to see that, as we talked about referrals earlier on, the types of services that have been commissioned in different areas of what people's needs are. I know that people are supposed to be relatively close—not always totally close to the market—but have some issues. What other services are being commissioned by the primes to provide the support that they need? How is the programme of engagement with participants and employers and providers actually helping to change the dynamic as we go along? I think that that will be an important lesson for them, particularly for the next time. How can we use that to be more flexible as we go forward? We are changing as we go forward in tweaking rather than actually saying, we will wait until the end of three years and do an evaluation. That on-going learning will be really important for it. Jeremy Hulker, Johnston. A lot of the areas that I was going to cover have also been covered as well, but just to talk about briefly the voluntary nature of the schemes, what happens to those clients that refuse to engage with First.Scotland? It is a voluntary programme, so if you have the conversation with Jobcentre Plus as a major referral agency and you say, I don't really want to do that, that's absolutely fine. It's voluntary. The concern is for those people who get some information from Jobcentre Plus, go along to the First.Scotland provider at which point the penny drops that it is voluntary, and actually it's a year-long scheme and the level of commitment is relatively high. I think, oh goodness, this isn't for me. Maybe because they do have an operation pending or because of other family reasons. The problem there is that they encounter the referral and they are not able to be re-referred maybe a year on when their circumstances change. I think that's a flaw in the programme design. Say that they choose not to get involved with the scheme or they go on to the scheme and they do drop out, what is the option for them after that? Jobcentre Plus and anything else that Jobcentre Plus might want to refer them to. What there isn't is the ability a year on for them to say, actually, I'm ready for it now. So they will be excluded from that scheme for a period or for a good? For ever. Unless you've got, let's say, there's a health condition issue. There's something about health and disabilities. You'll have to check this where you may be able to rejoin, but for the bulk you've only really got the one chance. It's literally a one go. Just not quite on the same subject, but you've mentioned, obviously, the figure that this is a scheme aimed at 38,000 people. Is that the maximum number of people out there that would fit into that criteria? Or how many people would fit into that criteria? A much larger number. And what kind of number? Goodness. So you've got the disability employment gap. I think the FTUCs all mentioned that earlier on. A lot of those would be within scope of this particular programme. Do you have an idea, John? It would be high. It's much larger. It's much larger, and I think the disability gap. I think you and the Scottish Government are currently looking for ideas on how we deal with that as a separate issue as well, because it actually is a difficult area, something because it's actually getting the right level of support that employers need to take someone on. Once someone is in, because the disabled is in a job, employers absolutely want to keep them because they're usually really good, but they're actually making the right level of support. So is that additionality that some people need in terms of that area which makes it slightly difficult for problematic? I think it's one of those things because if we look to the wider employability issue, certainly looking at it, if you look at job centre plus what they're offering us, if you're over a certain age, they weren't offering any support at all, and I think what we need to be looking at within what people need and actually the labour market is what support we can offer people in different areas, whether they've been made redundant six months ago or they've been out of work for three or four years because of a health issue, and actually I think that's where the better assessment of needs and actually what understand, better understand the labour market, where can we point people in jobs to? We all know for example that care is increasingly a huge area in Scotland, it's going to create more jobs, a lot has got high turnover at the moment, given the nature of the pay and the nature of the job and the contracts that organisations have. So we can look at where we can create different jobs, but actually what we're going to do to get those people into those jobs and make them job ready, the employers want to take them on. I think that part needs to be wider, holistic look at the employability agenda. One lesson from Workable last year was that referrals weren't coming through and we dug around a bit and some job centres, because they've got new freedoms and flexibilities, were only seeing people on employment and support allowance twice a year. So they weren't actually seeing them to be able to have the conversation about this new provision which had become available. Now that's an issue. I visited my local DWP on Friday and one of the issues that they were talking about was care and the shortage of carers and how to get more people involved. Can I jump on to another very quick subject as well? You talked about the relationship between the prime and the delivery partners or the subcontractors. There are some at the moment where those relationships are less difficult or not quite that. Are there any where those have completely broken down? Obviously, there's a conversation with the prime and the subcontractors about what you want them to do, how much you're going to pay them, and obviously some people might feel they've been squeezed in the margins on that and some people have said that to us, but then obviously you've got an option whether you want to take those contracts or not engage with the prime. As some have done and said what we're going to opt out, we were on your subcontracting list, but we don't like the look of that. That's a choice people make, but I think we need to be careful not losing really good specialised providers, but I think a lot of that will come out once we see the referrals, what systems, what's being commissioned, and actually the actual list at the end of the first quarter of who the primes are using. I would be more concerned about the referrals not going through to first start Scotland as sufficient numbers because that will hurt the subcontractors really very much because if they're smaller, they're quite vulnerable there. We know of any cases where some of the subcontractors have said stop putting themselves forward for those contracts. The Scottish Association for Mental Health decided not to be part of this, and there's an issue here going back to the very first question about the money available for something called individual placement support, which is a very well evidenced mental health intervention, which integrates mental health support and employability support. It's expensive. SAIMH are an expert in relation to that. It is probably not affordable on this programme. The minister wants to see it across the whole of fair start Scotland, but I don't know how the providers are going to do that. That was an issue of the funding and perhaps the funding needed to be provided by the contractor up front. The figures that I have seen quoted in terms of doing proper IPS, individual placement support at the fidelity levels are about £20,000 a place. I think that the interesting thing on this is that certainly a lot of organisations, whether it's prime and subcontractors, have been very open with the Scottish Government in terms of being transparent and actually saying, here are our costs, here are the figures, here's where we can do stuff for. I think that they are getting a more realistic view of the potential costs for the future, what that actually means and what it costs to help someone with mental health problems. They do out the book accounting. So there's much more transparency privately within the system. Right. Thank you very much to both of our witnesses. I'll suspend for 30 seconds while the minister comes in to deal with the next item of business. The committee will now move on to item 3 on the agenda. Welcome, Jamie Hepburn, Minister for Business, Fair Work and Skills, who is accompanied by Victoria Morton, lawyer from the legal directorate constitutional and civil law for the Scottish Government, and also Richard Dennis, who is the chief executive for the accountant in bankruptcy. We are now looking at the debt arrangement scheme Scotland amendment regulations 2018. So I'll invite the minister to make his opening statement on the instrument. Thank you very much, convener. Can I begin by thanking you and the committee for taking time to consider these regulations? They aim to make out a small number of important changes to the debt arrangement scheme, providing greater flexibility and accessibility to the programme. The debt arrangement scheme is something that I believe we should be proud of. As a first of this type of scheme in the UK and a highly successful debt repayment programme, providing protection to those wishing to repay their debt but need more time to do so, it's an important mechanism in helping those who find themselves in difficulty with debt. Over 6,000 people have used the scheme to pay off their debts, helping them from having to either become bankrupt or to enter into a protected trust deed. It has also allowed a substantial return to creditors with almost £200 million having been repaid since 2011. The proposed changes reflect feedback received in consultation with stakeholders about how to enable more people to benefit from the scheme. In particular, they reflect a request from the money advice sector to increase the scheme's flexibility. I share their view that the change proposed will allow more people to successfully complete repayment programmes. If I may, convener, I'll briefly highlight the two most substantial changes. The first is to remove the requirement to contribute the full surplus income that a person has as part of any debt arrangement scheme. This is to allow debtors a better chance to deal with any unexpected events that they may face. Creditors may have to wait longer to be repaid in some cases, but I believe that it is in their interest to see debts repaid in full through a successful debt payment programme rather than written off through bankruptcy. Its stakeholder feedback has also led to the proposal to allow housing debt to be excluded from proposed debt payment programmes. In the majority of cases, the right choice will still be for all debts to be included, but the scheme can only work if it offers the debtor protection from enforcement action. I take the view that the mandatory inclusion of housing debt could, in some circumstances, pose a threat to an individual's housing status. That is something that we clearly want to avoid, but there is also a concern that this possibility may have put some people off signing up for the debt arrangement scheme that I could otherwise have benefited from it. We are also using the opportunity provided by the regulations to make a number of other improvements that are likely to affect only a very small number of cases, but given the regulations that give us the opportunity to make such improvements, I think that we should take that opportunity. For example, regulation 10 modernises the list of language to reflect changes in the law around same-sex marriage. Regulation 4 extends the powers of a debt arrangement scheme as administrator to fix accidental errors to reflect experience gained in running the scheme. Regulation 16 extends the circumstances in which the debtor may apply for a payment break as a result of a fallen income to include cases where that income comes from benefits. In response to it being highlighted during the consultation process, regulation 6 creates a sensitivity clause to afford vulnerable applicants the same level of protection when entering an insolvency solution so that where appropriate those confirmed as being at risk may have their address details withheld from the debt arrangement scheme register. The regulations provide the opportunity, I believe, to significantly enhance a highly successful programme, and they have received widespread support from across the sector. I hope that I can rely on the support of the committee, but I will, of course, be happy to take any questions that you may have for myself or for Dr Dennis and Ms Morton. Does any committee member have any questions on that? No. Therefore, in that case, we will simply move to agenda item 4, and we move to the formal debate on the motion to approve the affirmative instrument. I would invite the minister to formally move the motion. Does anyone wish to speak on the matter at this stage? In that case, I will simply put the question. The question is that motion S5M-13670 be agreed to. Are we all agreed? Yes. We are agreed. I think that the only item for the committee to agree then on this point is that I, as convener in the clerk, will simply produce a short factual report of the committee's decision arranged for it to be published. Are we agreed on that? Yes. Thank you very much. I will suspend the meeting and now move to private session.