 Good morning and welcome to the 25th meeting in 2022 of the economy and fair work committee. There are no apologies being received from members this morning, and Jamie Halcro Johnston is joining us remotely. Our first item of business is a decision to take items 3, 4 and 5 in private. Our members are content to do so. Our next item of business is an evidence session on the Scottish Government's response to an inquiry report. Our supply chain inquiry looked at the short and medium-term structural challenges facing Scotland's supply chain and how the challenges and shifts in supply chains are impacting on Scotland's economy. The committee published its report on 28 April and the Scottish Government responded on 4 July. The purpose of today's evidence session is to consider this response and to discuss with the minister in more detail the issues that were raised. I welcome Ivan McKee to the committee, MSP Minister for Business, Trade, Tourism and Enterprise. He is joined by Andy Park, who is head of economics at Transport and Strategy Analysis, Graham Cooke, deputy director of procurement services, Karen Flockhart, unit head of skills planning and sector engagement and Dermot Rattigan, deputy director of manufacturing and industries of the Scottish Government. As always, I have asked members and witnesses to keep their questions and answers as concise as possible. I invite the minister to make an opening statement. Thank you very much, convener, and thank you for allowing us to bring a number of officials. However, as you appreciate the breadth of issues that are covered in this very comprehensive piece of work, it is quite extensive. It is great to be back here since my last appearance in January. As you mentioned, my formal response to the committee's report in July, the global economic outlook, has weakened considerably. As the Deputy First Minister noted in the emergency budget review just last week, the whole world is facing a period of substantial economic turmoil, rising prices, storing energy bills and the resulting increased financial pressure on public services are not unique to the UK. However, the UK Government, as a result of Brexit, of an action over the summer and the catastrophic decision to announce unfunded tax cuts for the wealthiest, has made the situation in the UK significantly worse. Against that backdrop, we have been regularly engaging with businesses and business organisations, and it is vital that we take all action within our power to support our businesses through these difficult times. Our national strategy for economic transformation was published in March and, last month, we published the delivery plans for the strategies programmes. Those five strategic programmes remain right for the country and our delivery focus builds the team Scotland response that we need to deliver change. As we set out in the programme for government in September, where we can, we are prioritising and accelerating actions to help people and businesses through the current economic crisis. In tandem, through the national strategy, we are continuing to build for the long term to strengthen economic resilience, including supply chains nationally and internationally. The committee's report is wide-ranging covering the themes of people, place and product and the Scottish Government's response sets out actions that we are taking across a range of policy areas. Skills is a prominent theme in the committee's report, and the national strategy's skilled workforce programme recognises the importance of national and regional skills planning to address skills gaps and shortages and to ensure that we have a pipeline of skilled workers to meet the needs of a green economy. We have already taken action to improve our approach to aligning skills provision with employer needs throughout the shared outcomes framework, and we expect the recommendations from the independent inquiry into the skills delivery landscape next spring. We have also undertaken evaluations of the flexible workforce development fund and individual training accounts that we expect to publish in the reports this year. To expand Scotland's available talent pool, we have committed to launching a talent attraction and migration service in 2023, and I am engaging with industry to develop a talent attraction programme for the rest of the UK. The national strategy aims to position Scotland to maximise the greatest economic opportunities of the next 10 years, and we are at the forefront of delivering a just transition to net zero by 2045 with an ambitious interim target of 75 per cent reduction in emissions by 2030. In relation to Scotland, supply chain development statements set out developers' commitments for supply chain content, and we have been clear with developers our expectation of what must be delivered. I welcome the collective commitments made to invest an average projection of £1.4 billion in Scotland per project, which equates to more than £28 billion across the 20 Scotland projects. We know that the manufacturing sector will be central to a successful delivery of the national strategy. In this sector's transition to low-carbon manufacturing, we are generating new well-paid jobs, while the wide reach of the new national manufacturing institute Scotland will help to boost manufacturing research, development and innovation across the country. Since the publication of the national strategy, we have launched the £25 million low-carbon manufacturing challenge fund, which is designed to build on Scotland's existing expertise, encouraging partnerships to come forward with bids that will encourage the adoption or development of low-carbon technologies or processes. We are using the levers at our disposal to maximise the social, economic and environmental impact of public procurement in Scotland, and in financial year 2021-22, we have just under 19,000 suppliers awarded public sector contracts across Scotland. 74 per cent had registered on our system with a Scottish-based business address. In October 2020, we published guidance on supply chain resilience and diversity, reminding public bodies of practical steps that should be taken to support supply chains and help to reduce the risk of disruption to supplies caused by supply chain vulnerabilities and surges on demand. Robust and resilient supply chains are the bedrock of a thriving economy. We must take every opportunity to continue to strengthen Scotland's supply chains. Thank you very much minister. You recognise the breadth of the report and members will look to cover many issues. We do appreciate your not always the minister who is responsible for those issues, but we welcome that you have brought support along with you this morning, so hopefully we can have a broad discussion. The driver for the report came from the impact of Brexit on supply chains and the pandemic, and now more recently we have the war in Ukraine and the pressures that has put on supply chains. The evidence that we heard, the committee did feel that there needs to be more resilience within the Scottish system, there needs to be concentration between shorter supply chains and more local supply. The response that we received from the Government did not really take that broader view or that longer-term view. We recognise that there is lots of work happening in different areas, but we did not really get the impression that there was a shift or a way to think how we would respond to the existing pressures, and we would like to see future pressures given the impact of climate change and other global issues. Is there a longer-term strategy or focus to make Scotland more resilient? Absolutely. If that did not come across in the reply, that should not have been the case. The supply chain development programme that we are taking forward is very much focused on identifying areas of the economy and supply chains where we can build more resilience and shifts to having more capacity and capability within Scotland in manufacturing in particular. That covers a wide range of programmes, including of course the work on Scotland to support the building of indigenous local supply chains for floating offshore wind. On hydrogen, we recently published a report that identifies opportunities for manufacturing businesses in the upcoming hydrogen supply chain on construction, be it on the timber supply chain off-site manufacturing for the construction sector, be it in life sciences around medicines manufacture, and we are about to open the medicines manufacture innovation centre in Shinnon or across a whole range of sectors where we recognise there is opportunity for Scotland to further strengthen our indigenous supply chains and encourage and support Scottish businesses to take advantage of those opportunities. Of course, the committee will recognise that global supply chains are complicated and clearly we are not in a position either from raw material supply situation or many manufacturing processes to be able to take over all supply chains. I think that it would be foolish to attempt to do that given the wide complexity of those current global supply chains, but of course where we can for economic development, for resilience, we seek to do that. Much of that is of course built on the response to the pandemic, where, as you and the committee know, we were very successful in building up an indigenous Scottish supply chain for PPE during the period of the pandemic. The committee's recommendations suggest that the supply chain development programme could be expanded and that it might be felt—I think that you have spoken about future supply chains, whether that is in growth areas, as you have mentioned, renewable and life sciences. I suppose that we also had some concerns about just the existence of supply chains that people rely on every day, whether that is food products. We have become a nation, like many other western nations, that depends on imports to a large extent and we saw that during the pandemic, the disruption that came with that. Does the supply chain development programme include that kind of view? Is there a drive within Government to look again at whether I have relies on imports as the right balance and should we be changing some of that? Is that a view of Government or is that not a priority for— In terms of supply chains, I said that the priority is to look at where there are opportunities, where we can be competitive, where we have the capability and the technology to maximise the opportunities for manufacture of products within Scotland. If you want to talk specifically about the food supply chain, Scotland has a thriving food and drink sector, something that we are very proud of. My colleague, the Cabinet Secretary for Rural Affairs and Islands, is very focused on what we do to continue to develop that sector. Clearly, there are a number of factors that are related to agriculture, more broadly, be it climate change, be it financial support or many other factors, but supply chains, of course, is a big part of that and where there are opportunities for us to grow more produce in Scotland to support resilience. That makes sense with the agriculture sector. Is that a cross-departmental programme then? Yes, it is. It focuses on a range of sectors where we have identified that opportunity exists. However, that is absolutely open to adding more programmes to the collection of programmes that are considered as part of that work, where it makes sense to do so. It is very open for there to be agricultural programmes as part of that. Obviously, there are wider factors that impact the agriculture agenda relating to financial support, climate change, land use, natural capital biodiversity and so on. They are also part of that policy area. I will bring in other members in a second. I will invite Gordon MacDonald to come in, but I will move on to issues around labour market. One of the things that came through in the inquiry was inactivity. I know that we had a discussion about that when you gave evidence. We recognise that it is not a huge factor here, but it is a factor. The 10-year economic transformation plan says that it would systematically address Scotland's labour market inactivity challenges. Is there work being taken forward on that? The committee in its budget report has expressed concerns about the £53 million cut to employability services. We have written that to the cabinet secretary this week. Is there, through the economic plan, what is our timescales attached? Is there an action plan to bring inactivity back into labour market? Not only is there a focus on it and work being undertaken, we are actually delivering results. Possibly for the first time, but certainly for the first time in quite a while, Scotland's inactivity rate is lower than that of the UK. Inactivity across Scotland has reduced by 20,000 over the last period in the rest of the UK and increased by 220,000. In Scotland, we not only have the lowest unemployment rate in the UK, but we have also lost a lower inactivity rate than the rest of the UK. We have also got a higher employment rate than the rest of the UK. It is still early stage, but we are seeing the results of that work. As the rest of the programme rolls out, I have no doubt that it will continue to make a positive impact on those numbers and increase the indigenous supply of labour to Scottish businesses. In terms of the specifics on your question regarding the input side of that, the prioritisation of resources across the emergency budget review had to take into account a wide range of factors. There are still £82 million being spent on employability support as we move forward and clearly as we are in a position where a very tight labour market is in play. It is about understanding where best divert resources to support, not only labour supply but business support and wider support across society at a time where it is very difficult for many individuals, families and communities to keep their head above water with the cost pressures that exist. We have got the programme in place and the national strategy is driving that forward. The details of that have been published in the project plans that were published at the end of last month and we are already delivering results in that area. The project plans do not include specific milestones or targets for an economic inactivity. It is welcome that the number is reduced to 20,000, but do we know what the reasons for that has been? Is it because of proactive engagement from the Government or is it because of the labour market being so tight? The evidence that we have heard during the supply chain inquiry and the budget has been that there are concerns about the cut that has come in in employability services. The businesses that we heard from last week were saying that it is a group of the workforce that they need support to engage with and to bring into labour market. We are still hearing the challenges there. There are many reasons for that. The biggest reason for that is immigration policy. Without a doubt, that is the single biggest issue and everybody will tell you that in businesses and everybody else. I meant that there were challenges in employing people who need that additional support to come into the workplace, so those who are economically inactive. The biggest reason that businesses and businesses cannot get people to fill the vacancies that they have is because of immigration policy and Brexit. That is absolutely clear. Within that context, we are doing everything that we can to be able to support that. As I say, I point into the data that shows that the tighter labour market is going to push numbers in the right direction in order to bring in more people into the labour market. However, in contrast to Scotland's performance compared with the rest of the UK, we have been more successful with the rest of the UK. Our numbers are going in the right direction, and the rest of the UK is going in terms of labour market and activity in the other direction. We believe that that is a consequence of the work that we have taken in terms of childcare support and other activities that have happened to employability support to help individuals to get into the labour market. Otherwise, we would not have been able to do so. We continue to move that work forward because there is a wide range of factors that impact what is quite a wide and varied cohort within that 21.6 per cent, which is still inactive in the labour market in the 16 to 65 age group. We continue to do that. As I have already indicated, there is 82 million pounds being spent on employability support. With all those budget calls, of course, everybody can say that they want more money for everything. However, as you know, because we do not have borrowing powers within the Scottish Government, because of the current constitutional settlement, we are having to match to run a balanced budget, unlike the UK Government. That obviously puts constraints on what we can do, so those decisions have to be made. I think that that was the right decision. As I say, we are getting results and we continue to invest significantly in employment. I want to continue the discussion that you have just started about immigration. In your July letter to the committee, you highlighted that the ending of freedom of movement could result in Scotland's working population decreasing by up to 5 per cent. You went on to say that the UK immigration system is unresponsive to labour market requirements. Given that we have had a number of changes in government since that letter was written in July, what discussions have taken place with UK ministers regarding devolving immigration as happens in other countries or amending the Scottish shortage occupation list? I continue to engage with the UK Government. I have a list of the dates and times and letters that have been sent on that in a whole range of issues. You are absolutely right that it is a huge break on the economy. It is a very misguided policy. Unfortunately, it is a policy that not only successive UK Governments over the past few weeks have continued, but unfortunately, the opposition across the UK, as was indicated at the weekend, has a very misguided attitude and a very unhelpful approach to this policy area. Our position is clear. Scotland needs to be an open economy. We need to have free movement and be part of the single market, single European market. We need to have a much more flexible approach so that people who come here to study or for other reasons that have very, very needed talents are able to contribute to the growth of Scotland's economy and help to fill some of the critical shortages that we have across the economy. We continue to engage with the UK Government on that and to put pressure on them. We take every opportunity. You can be assured to highlight that issue in ministerial engagement and other forums to highlight the need for the UK Government to wake up and take a more sensible and business-friendly approach to immigration. In the letter that you sent to the committee, you highlighted that a joint letter was written to the UK Government from the three devolved Governments, i Wales, Northern Ireland and the Scottish Government, calling on a joint task force on labour market shortages to be established. Can you indicate how that is progressing and whether the UK ministers have engaged on this subject? Finding UK Government ministers to engage with has been a challenge over the past few weeks, as you can appreciate. Much of that communication hasn't been responded to in where it has been. We are obviously not of the view that the UK Government is doing what it needs to do to be able to address specific issues. As I said, we continue to take every opportunity to press them on that and their responses, unfortunately, have been less and helpful, if anything, perhaps going in the wrong direction, as we have heard from UK Government ministers in recent days and weeks. Given that all approaches, not only from the Scottish Government but from the Welsh and Irish Governments in order to address labour shortages in the three countries have been, as you say, less and helpful, what can Scotland do in order to address those issues? There was talk about establishing a migration service for Scotland. Could you indicate what we can do, given that it is a reserved matter? Absolutely. There is work happening that my colleague Neil Gray has taken forward on wider international immigration to do what we can within the constraints of the very restrictive immigration system that the UK Government has put in place. That work is moving forward for the Talent Attraction Migration Service and it is part of that. I lead a group that is focused on talent attraction from the rest of the UK into Scotland. Scotland has a very attractive proposition. There are a net average of about 8,000 people per year coming into Scotland, so there are 8,000 more coming into work in Scotland and going in the opposite direction on an annual basis. We can increase that number significantly by positioning Scotland within labour markets in the rest of the UK to attract more talent to come north. That is a programme that we are working with across industry body on from a range of sectors that we believe have the opportunity to offer attractive opportunities, employment opportunities for talent from the rest of the UK. That work is well developed. We have had three or four meetings with the group now and we are pulling together various work streams that we are taking forward. It is a great example of co-production with business and industry. Something is building on a very positive start in place, but we can easily add many more thousands to that number and help to address at least some of the skills and talent challenges in the Scottish economy. Thank you. I am Simpson to be followed by Colin Beattie. Thank you very much, convener, and good morning, minister. Good morning. I am very well, thank you. This was a report and you have responded. It was about supply chain and logistics. It is clearly very important that the committee's report—I was not on the committee at the time, but I have read the report and I have read your response—is wide-ranging, as we have said, but one part of it is related to the logistics industry and, in particular, lorry drivers. During the pandemic, we could see that there was a shortage of lorry drivers. That has been a long-standing issue, not just during the pandemic. So, the committee referenced the two problems, A, the number of lorry drivers that we do not have enough, and B, the facilities that lorry drivers have to put up with. Sometimes they are at rank rotten. They really should not have to put up with some of the facilities that are out there. I am not necessarily talking about any in Scotland, but this is throughout the UK. What we need to know—I think that your letter references that—is what is out there, what is the offer for lorry drivers in Scotland. We need to know what facilities there are. My question to you is, have we actually started doing that piece of work yet, because we have been talking about it for long enough? It strikes me that it should not be that difficult to find out what rest and welfare facilities are out there in Scotland. It should not be difficult to know what the conditions are. We just need to get on and do it and then work with industry to improve where we are needed. The second point is that we need to know how many lorry drivers we need, so there are a couple of questions there. Absolutely. There are a few parts to that, and I will hand over to Andy who will pick up some of the facilities and aspects in some more of the detail. In general, you are absolutely right that there is a challenge there. It is slightly less pressing than it was a number of months ago, but, as you know, there were issues with the UK-wide authority in testing and so on, and that was a challenge back previously. I think that there has been some movement there, but there is more to be done. Another part of that, of course, is making those careers as attractive as possible. We have engaged very closely with the holly sector to work and to understand how we can do that. Part of that, as you say, is the roundabout rest in welfare facilities for drivers. There is also the issue of modal shift to try and get as much freight on to rail as possible, which, of course, lessens the need for HDV drivers to some extent at the margins. Also, we are taking forward to look at opportunities and working with that across industry groups that I lead for opportunities to do more direct shipment for freight that is going to and from Europe and beyond by sea rather than trucking its way down through the length of the UK. We are looking at opportunities to expand the capacity to do that as well, which will help to relieve some of the pressure on HDV driver requirements, but I will ask Andy to pick up on the rest in welfare aspects of that. Thanks, Mr Smith. The strategic transport projects review 2, which we published, draft report of in January, in the final reports due by the end of the calendar, picks up that as well as the D45 recommendations. I think it's a recommendation 38 to 45, but they're not in any particular order in that initial report. We've been following public consultation over the spring. We've been working up what the priorities are for the immediate future. It's probably reasonable to say that the continuation of the work on freight facility strategies is up there with other key things, and we'll be taking forward in the short term. So, just following up on that, if I could just ask you, Mr Park, if that's okay, has that work actually been done to assess what facilities there are in Scotland and what the condition is? There was a limited amount of work done as part of STPR, but it needs much more doing at this point, so we haven't done it yet, but it has been planned. So to you minister, that, as I said at the start, that doesn't seem to me to be particularly difficult thing to do. Somebody just needs to drive round the main roads of Scotland and call in places and have a look. It's not that tricky. We just need to get on and do it. You and me all get a truck, Graham, and we'll drive round one weekend and have a look. No, you're right. There's work to be done there. As you appreciate, that's a broader portfolio brief. I take to follow up with the committee and respond back on the specifics of what's actually happening there in a timeline for taking that work forward. Okay, so if I can follow up on that, convener, just to move slightly into a different area, but we're still on logistics, and I'm going to ask you about electric vehicles. I know it's not your brief, but it is logistics, and we do want to decarbonise transport. There was an issue that was highlighted in the recent report by the cross-party group on sustainable transport, and the issue is that we saw during the pandemic deliveries increasing, so a lot more vans on the road. Few people are switching their private vehicles to electric, but not in vans, so we're seeing more petrol and diesel vans on the road, fewer private more electric private vehicles, and I think the issue there is we need to get that modal shift in delivery vehicles, but we need the infrastructure there, and it's not there now, so what are we doing about that? Yeah, I think that that's obviously part of the transition, and it's a big focus both in terms of transport for the modal shift and the net zero impacts of that, so we've published the report on Scotland's electric vehicle charging market recently, and that identifies what needs to be done, but also recognises very much that it's something that needs to be done in partnership with the private sector, because the investment requirements is something that the public sector can do part of it, but the bulk of the work there needs to be done by the private sector, so the draft vision for the future of Scotland's public electric vehicle charging network sets out the ambition to work with the private sector to develop the charging network, what being clear about what is commercially viable at the private sector will pick up itself and where the gaps are in that, that the public sector needs to fill in so we've also announced the electric vehicle infrastructure fund, which has got a target investment of £60 million, so that is part of the work that we're taking forward to do that, but you're right that that needs to move forward to enable that modal shift to happen. We absolutely understand that, and it's about working with the private sector to make sure that the investment is in place to deliver on that. I don't know, Andy, if you want to comment any more on that. Yeah, and I think that it's an excellent point about the increasing venues during the pandemic. I mean, we're still seeing whether that was a permanent shift, but it does look like it is in that direction very much. It actually ties into a whole bunch of things, including the 20% car reduction target, what is a car, what is the light van, that kind of idea, so it's all stuff we're aware of. We are exploring various options as part of, or various analytical things as part of the 20% route map work. We've been exploring ideas on a relatively small scale, but that could be scaled up around potentially setting something around community van sharing for rural locations, getting chambers of commerce to get the scale where an electric van could be bought for and used for arranging deliveries across a group of businesses. So those are things we've all been looked at, and we just need to see how things develop as stuff recovers back from COVID, but it is a live issue for us. If you look at the private car kilometres, they've stabilised at slightly below pre-pandemic levels, but some of that has been taken up by venues, but it is that whole shift from retail to online sales and so forth, which was happening anyway, but has been accelerated significantly, although it's dropping back a little bit in the more recent data. Okay, that's very useful. I'll maybe take that up with you, Mr Bulk. You seem to have a keen interest in the subject. Oh, absolutely. Good. Thank you. Colin Beattie to be followed by Michelle Thomson. Thank you, convener. Morning, minister. I've got a couple of areas I would like to explore a little bit, but just as a general comment, it seems to me that so much of the issues around supply chains and everything that goes with it seem to come back to the incredibly poorly managed hard Brexit that we've been forced to go through, and the knock-on effect of that just seems to resonate all the way through the papers that we've got here. Just coming to the specific questions, there's areas of specific skill gaps that have been highlighted to the committee during the inquiry and, indeed, in other inquiries that we've done. That's one of the areas that's around digital skills. In your response, you noted that a report on the Scottish technology ecosystem review is due to be published in the autumn. Can you provide any update on this work? The stairwell, the Logan report, I met with Mark Logan earlier last week to talk about the progress that's being made. There's work happening on the education side of that that marks leading, investing money in new computer science hardware for schools, we've invested in the digital start fund and digital skills pipeline projects, we've funded the digital extra fund, so there's a range of support for digital skills in place in terms of the broader and also the creation of the Stacks of Scottish Teachers Advanced Computing Science, which is a teacher-led organisation designed to spread best practice and advise us on implementation of that aspect of the stair review. So there's work happening there. The stair review, if you've read it, you'll also read it, it plays great emphasis on getting that education piece right first and everything builds on and falls from that and recognises that there's much to be done there. So across the range of things identified, I think we're implementing, we're making progress on it as I said in a conversation with Mark, who's in the last few days to talk about that in other aspects on tech scalars and so on that we're taking forward. Given the complexity of the digital requirements of the market, it must be quite difficult to provide, we can't provide a one size fits all, but we see from different segments of the market different needs, different priorities, a different speed of development in some things, if we can throw in the e-commerce and so on, the speed with which that's moving. How can we keep up with that in order to ensure that the skills that are being taught and passed on by our different agencies are right up to date and are giving the correct level of digital skills? I thank you to unpack that. I'll be back to identify what it is that we're trying to address in different aspects of that. In terms of what we're doing in schools, that's giving young people an appetite and a basic level of knowledge about computer science, how it works and what careers in computer science can be like. Obviously, diversity and inclusion is a huge part of that, tackling the gender gap and broadening out the reach across other groups that we want to have more widely represented in digital jobs. I think that piece of it is focused on that level, getting young people giving them an appetite for that. Clearly, what we're teaching them now and what they're going to be using in their career in 20 years' time is going to be very different and we don't know what that's going to be. I think that that brings on the second part, which is how do people that are in employment and in digital jobs and others that are coming into that later in life, how are they brought up to speed? Clearly, much of that work will happen by the industry itself because we're not in a position to say, this is the code and language you need to learn for next year or this is the network that you need to be up to speed on for whatever happens to be. Much of that is going to be taken up by the sector itself and working in collaboration with the sector to understand where that technology is going and what the latest technological developments are and how we work with them is an important part of that. The higher and further education system is increasingly tuned into engaging with businesses to understand how we work closely together and they've got the agility to be able to address and respond to those needs. As you said, it's multifaceted because we also need across the broad range of businesses where there's perhaps SMEs in some other sectors where there's a lack of even basic digital skills and awareness that's also part of the agenda to bring people up to a more basic level, so I think we're moving on forward on all those fronts at the same time, but you're right, it's a complicated and ever-evolving challenge. It's not just Scotland that faces that challenge, of course, everybody in the world faces that challenge. Just to move on to something slightly different, we have a cost living crisis. How is the cost crisis hitting Scotland's supply chain? How challenging are the energy and material prices that are increasing for industry? Are there other particular sectors that are especially exposed to this? Significant. There was an FSB report that came out earlier this week that highlighted the challenges and some of the numbers in that are obviously concerning because the vast, vast, more than 90 per cent of businesses are absolutely feeling significant pressure as a consequence of where we are. Much of that, as we know, is due to a whole range of factors. Brexit you've identified, the Ukraine situation is obviously exacerbating much of that, including on energy prices, which then has a knock-on effect across a whole range of commodities. There are sectors, I think, which are more robust than others. Some of the technology sectors and some of the advanced manufacturing sectors are feeling the pressure, but not to the same extent as other sectors, so some of the consumer-facing sectors, retail, hospitality, leisure and so on, are finding that particularly difficult and I engage with that sector and others. It's true to say that there's a range of different sectors being impacted in different ways. Of course, it's not only for those consumer-facing sectors an issue of cost pressures, as well as labour shortages and energy challenges, it's also potentially a downturn in demand as the cost pressure starts to bite across the broader population and people spend less money in those sectors. We work closely with the sector to see what we can do to support it. We also work closely with the financial services sector, which, from its position, have got an overview clearly of data across businesses and consumers that we find very helpful to help inform our understanding and response to the evolving situation. Clearly, the Scottish Government is doing everything that it can to support businesses, but how much is in the Scottish Government's hands the capability to make a truly significant impact on those costs? Are we a big player in that, or is it out of our hands? Well, as you know, if you look at much of the levers that are controlled by the UK Government, we wish that that wasn't the case, but while that is still the case, we work within that environment, be it on welfare and social security support. Social Security Scotland is doing a job that has been widely recognised by users of the services, which has been very effective, but it is focused on a small number of benefits. The vast bulk of it still comes through the UK Government channel, so decisions on universal credit and so on have a significant impact on how people are supported. Energy policy is reserved, which makes it constrained very much what we can do. We are doing what we can with Scotland and other initiatives to not only increase energy supply but to decarbonise. Energy policy and many of the levers in that space are reserved and, of course, borrowing powers are reserved as well. The Scottish Government has already identified that it has to work within very constrained limitations. Not only that, the situation is unhelpful with regard to even understanding what those limitations are, because we are finding ourselves in a position now where the delayed UK Government fiscal event means that we do not actually know what the budget situation is to allow us to be able to operate within that given those constrained borrowing powers that we have, so be right to identify that much of that is driven by levers that the UK Government continues to control. Given the fact that this is a crisis, it is a crisis for all our businesses, are there any meaningful talks going on with the UK Government and the other three nations and, of course, especially Scotland in order to try and manage that to reach any sort of common result, any improvement? Yes, as I said, there has been communication on a fairly regular basis over the past few weeks and months from ourselves and often with ourselves, as in the Scottish Government, in partnership with other devolved administrations to encourage call on the UK Government to take steps with regard to specific aspects of that, be that extending the period of certainty for businesses around about the energy price cap, be it supporting, as I mentioned, through the social security system, be it other aspects where we have called on them to take action, but as we have identified the turmoil within the UK Government and rightly the wrong turn and the new turn that they took on some of the taxation and other policies has been extremely unhelpful to get responses that have been helpful and effective in terms of what needs to be done. I will pick up on that point before I move on to my main question. The most recent, frankly disastrous fiscal event clearly we all agree will have an impact on existing supply chains, but surely it will also have an impact on supply chains that the Scottish Government will be looking to develop in the likes of Scotland and combined with the rising costs plus an inability potentially to attract key skills that we might need in terms of the labour policy and a limitation on proper borrowing powers. Is that something that concerns you as well going forward? Yes, of course it does. We are focused on doing everything we can, but as we have identified many of those levers when you talk about Scotland, much of the energy policy of course, that energy policy in general is reserved, so that challenges what we can do there and building those supply chains in an environment where you have that. Uncertainty at microeconomic level, lack of support, challenges on the skill side, cost pressures is obviously difficult, but we are in this for the long haul and we work with those businesses to strengthen those supply chains and take advantage of that significant spend that is coming Scottish businesses way through the work that we have done with developers to roll out the Scotland projects. Possibly it will be picked up by other members, but it is clearly an area of interest to create a future as well. I want to ask about free green ports, just an open question. What are you able to tell us about the current status and time lines? Without seeking to compromise you, obviously. The first point is that we worked through that process and we had our four red lines and the UK Government eventually came to accept that those four red lines were valid and agreed with us that the green port project should be taking forward on that basis around net zero commitments, fair work commitments and equal funding and two ports in Scotland. We were happy that we got that. We then, of course, went through the process earlier this year, which was a very robust process, and the teams working behind the scenes did a great job to evaluate those bids that came in. We had hoped to make that announcement in the summer, but, of course, since then, there have been a number of changes of personnel, Government and focus direction and so on in Westminster, which meant that, because it is a joint Government approach, and people say that we should work more closely with the UK Government, we are working closely with the UK Government, it is them, it is not quite clear who the UK Government is at any given point in time, which makes it hard to work with them. However, we had hoped to make announcements in August, and we are now in November. We still hope to make announcements very, very shortly, but we have been saying that for three months now. The ball is not in our court. Absolutely, with all the changes at the UK Government level. In terms of specific incentives, are you able to give any more flavour at a generic level of some of the kind of thematics? Or, again, is that all wrapped up under a few terms? In terms of green ports themselves, there is clarity on what the offer is in terms of LBTT, in terms of the UK Government's commitments on NIC and so on. That is already clearly identified, and it is the same offer that reminds me of the same offer that it has made to English ports. One of the issues around the margin on that is that much of that was determined on fixed time periods with dates. Clearly, because of the delays, we are looking to see whether some of those dates can be extended to make sure that we get the full benefit of that. Part of the complexity of that has been the trust administration's announcements on what they call investment zones, which the new administration is having a look at that to understand where they want to go with that. Even under the trust administration, there was lack of clarity on what investment zones actually were and what it would deliver, at one point it looked as if it might even have more benefits to that than to a green port or a free port, which was all a bit kind of strange. However, we are waiting for definitely clarity on that and what that process looks like, even if that still exists. That is another dimension of complexity and uncertainty that we are waiting for some clarification from the UK Government on. I think that my colleague Maggie Chapman is going to ask about investment zones. The last question was about the potential for tax avoidance using green ports. I am looking at a report from last year from the University of Portsmouth. It makes the case in the journal money laundering control over the misuse. As we know, the UK loses £267 billion each and every year to money laundering and financial crime. Given that this area is entirely reserved and the regulation of to the UK Government, have you had any discussions with them as to what steps they are going to take to use free ports, not being used for tax avoidance? Of course, that is a loss to ordinary people in the street in terms of doctors, teachers, nurses and public money generally. Obviously, it is a significant issue. As you rightly say, it is a reserved issue. It is one of the areas that are about regulation that, as we move forward on the constitutional agenda, it is important that we are clear on where we would position ourselves and the opportunity that we would take of having those powers. Following independence, to be able to address those issues, it is important that we take that work forward. In terms of the free ports in England, the UK Government will control those. We can look at the effects and impacts of that, but, as I said earlier, our red lines around the award and the operation of green ports in Scotland are very clear on a number of factors relating to net zero, fair work and controls, to ensure that the dangers that we are all alive to are very much the process with such that it would ensure that that risk was absolutely minimised. We remain focused on that. As we roll out the programme, hopefully sooner rather than later, we can rest assured that our efforts will continue to make sure that there is no degradation on any of those standards across a whole range of policy areas, including on tax evasion. Last question, just to finish off this, before we move on, in terms of conditionality, can I be optimistic that the businesses trading out of whatever Scottish free green ports are allocated have equity at their core in terms of women-led businesses and women business representation in terms of entrepreneurship? It is a good question. In terms of the conditionality, we have been explicit on that on the net zero aspects and on the real living wage and fair work agenda aspects. That was a very important success that was secured in the programme. It was great to see the bids that came forward, but they were all very focused on those aspects. They were very seized by the fact that that was an important part, a critical part of their offer. I think that we start from a good place there, more broadly in terms of women-led businesses and other areas in which we have an agenda to move forward in entrepreneurship and elsewhere and tackle diverse inclusion challenges. That is not explicit in the requirements, but it is something that we continue to take forward across a whole range of economic activity across the whole economy. You can be sure that I will continue to ask about it. Indeed. Thank you very much, convener. The economic and activity figures that you quoted. The figures that came out in October were 21.6 per cent, which is 0.1 per cent down from December 2019 to February 2020, and down 0.2 per cent over the quarter. It was a very slight percentage decrease, but that resulted in 20,000 people. The total number is 21.6 per cent, which is 750,000. The difference with the UK figure is a 0.1 per cent difference. I think that you are 20.6 per cent. That is right, that is 21.7 per cent. That is correct. We were previously higher. We have been higher for quite a long time, and ours has been trending downwards, and it is now going lower than the UK. But a 0.1 per cent is a difference. The percentage increase is quite slow, but it has equated to 20,000 people. That is okay. Thank you for that clarification. Maggie Chapman, to be followed by Colin Smyth. Thank you for being here. Thank you for what you said so far. You have probably part answered my first question around investment zones. We see in the past 12 hours or so that the announcements that they are likely to be scrapped, that the plans are likely to be scrapped. I haven't even heard that, so there you go. I would focus on prepid for this and haven't I done it? No, no. So thank you for that information. There are various conversations or various discussions around what might replace them on urban regeneration plans and that kind of thing. I appreciate that this is all a very movable feast. But I suppose what would be the priorities in your discussions with the UK Government around the consequences for Scotland around if we aren't going to have investment zones in the low tax and low regulation space, what would be your priorities for something if there was going to be an equivalent support for something like that? That's a great question and I think it gives me the opportunity to talk through some of the background work that we've done on that because in terms of engaging with the UK Government on investment zones over the past few weeks, we had a good look at our regional economic policy direction and there's some great work happening there. There's been the David Bell work that's been fed into the process. There's the work that we're taking forward with regional economic partnerships that I've met as a group several times in making sure that they're plugged into the national strategy work. There's the regional economic strategies that they are pulling together and that ties in with the work that we've already done on regional prospectuses to focus on regional strengths in specific sectors and align that with our investment activity at Scotland-wide level and how STI takes it under the global stage. A lot of that is coming together in quite a coherent and helpful way, but most importantly, it's led and driven by the regional economic partnerships that identify their strengths and work with us and the agencies to take that forward. We very much saw enterprise zones in that light. It was how they fit into that existing work, not something separate, but very much another tool that would help to drive forward that regional economic development agenda working very closely with local partners. I'm not giving much away here because it's clearly not happening. That continues to be the policy, but our approach to that was to, as I say, work with reps for them to identify how they thought within their regions, which sectors, clusters and regional geographies were most able to benefit from that, building on many of the excellent clusters that we've already got across many parts of the country. Also, the question about our enterprise areas and what we would do with those existing, which we've extended, but we need to make some decisions to what extent we build on and develop. Those are refocused on working with regional partners again. Thanks, that's helpful. In some ways, that ties into my second question, because you talked about the important role of regional economic partnerships and using that local knowledge to identify sectors, clusters, those kinds of things. I think there's potentially a tension between the local, regional and national levels of both investment and identification of sectors, particularly when we track it or we try and match it up with some of the skills, gaps identification work you've been talking about. I know you said there's skills enquiries reporting next spring, but I'm wondering whether you can give us any indication of who's priorities will win out in those kinds of things. The kinds of investment, the kinds of approaches to both skills and supply chain issues for an energy economy are very different to the kinds of investment skills focus that we would need for hospitality, for instance, and there are going to be geographical, very distinct geographical tensions there. I'm just wondering how you see those tensions and conflicts being resolved. I think that if you look at each of the eight areas, they've all got increasing sharpness of clarity around their regional offer. The north-east and the work that one has done on this and others, and we've worked with them and others on this, and the rep and others in the north-east has got clarity around it, clearly energy but also food and drink and tourism offer, so there's and life sciences, so there's three or four areas where they've got real strengths and you look at each part of Scotland and you can say, yeah, they are good at these three or four things, and they're good at these three or four things. I think that that is really taking shape and the skills pipeline, I think, and I'll ask Karen to comment perhaps on this in a minute, but the skills pipeline being aligned to that is important, but I think that colleges get that and they understand the regional economy, the businesses and the sectors that they work with, what's important in any given sector, and you're right, there'll be a range within there from very advanced PhD level jobs in the working with businesses that are focused on the biohub and Aberdeen in the weller jobs and hospitality that are more entry level jobs, but very important jobs as well that also require training to be able to fulfill them effectively and increasingly digitise the economy, so all of that has got a role to play in it and I think that it's fair to say that the work that we're doing on the skills agenda is increasingly making sure that there is alignment both at Scottish level and a regional level on that, but Karen? Thanks minister, just to say that the NSET skills workforce programme really focuses in on aligning provision with the needs of employers, whether that's locally or nationally. There's a lot of work already under way through the shared outcomes framework and various pieces of work that are leading into education and skills reform. The minister mentioned the independent review of the skills delivery landscape, which the independent leader is expected to make some recommendations in the spring, so all this work is really focused in on ensuring that we have that pipeline of workers that we're going to need in the future. I've got a couple of other questions, but maybe I can take those offline and I'll leave it there. Thank you, I appreciate that. Colin Smyth, before we go by Fiona Hyslund. Thank you, convener. Can I turn to the important role of government procurement in securing local supply chains in response to the first question, minister? You talked about how we built robust supply chains to deal with the pandemic. I want to touch on one example in response to the pandemic. It's a company that's mentioned in our report, one that you're very familiar with, which is Alpha Solway. It was cited as an excellent example of a business working with the public sector to create a more sustainable and resilient supply chain. You visited a company a few months ago in Dumfries and your quote is saying that expansion has created over 300 new jobs underlying the importance of the manufacturing of vital PPE to our economic recovery. We're on, let's say, the 4.8 million south of Scotland enterprise investment demonstrates a commitment to secure the long-term future of manufacturing in Scotland, while showing how public and private sectors can collaborate to address challenges caused by the pandemic. That company, as you know, minister has just shut one of its Dumfries plants and there's not 300 jobs, there's actually just a dozen and they no longer are producing PPE because the NHS in Scotland ended contracts for that. I understand that that was one of the cuts announced by the Government recently. Now everyone accepts demand for PPE, including the company that we're refocusing, but I don't think that including yourself fully expected to see the absolute cliff edge that happened there, where contracts were pretty much ended overnight. How decisions like that are going to show a commitment by the Government to build on resilient supply chains, particularly for a product such as PPE, which is a real challenge, as we showed during the pandemic, making sure that we have those local supplies that we need? Is that not a great example of building that long-term resilient supply? Very much it is, and now for us all, with great work during the pandemic and after that we engage very closely with them to understand the situation of the business. The reality is that it's not as if we're buying PPE from somewhere else. We're buying PPE in Scotland, but it's not buying any PPE and everybody understands that because we're all sat here not wearing masks and that wouldn't have been the case six months or a year ago. The demand for PPE just isn't there and obviously what we're not going to do is take public money and buy a product that's got a lifespan and put it on shelves and wait for it to expire when we don't need to do that. The demand is the issue there. The strategic long-term intent is clear and a big part of the investment that Alfa has always made with Scottish Public Sector Support has been on the melt-blown facility, which allows them to move further back up vertically, integrate further back up the supply chain and puts them in a position where their supply chain is more resilient and not relying on others for material supply and also puts them in a position where that facility with that significant investment is something that's there for the future. As and when PPE requirements increase again, absolutely those conversations and those orders will start to flow again. I'm also very clear that if there's any other parts of the public sector that is outside of our scope that is continuing to purchase PPE from outside of the Scottish supply chain, I'd be very interested to have a conversation with them. As any examples of that, I've been very clear and written to the rest of the Scottish Public Sector to bring this to their attention, to understand if that is indeed happening, but we've seen no evidence of that happening anywhere else. I don't know, Graham, if you want to comment on anything else with regard to the procurement aspects of that. The power of public sector procurement is a clear focus in public sector procurement policy. Local economic wellbeing is a cornerstone of procurement legislation in Scotland, and I've got a variety of different numbers in terms of SMEs, Scottish third sector spend within Scotland that show the significant success. There is an on-going focus on securing the indigenous supply chains and growing them, as the minister mentioned earlier, particularly through initiatives such as the supply chain development programme. I'll come back to the wider policy issue, but I want to follow up on your comments about Alpha Solway, because you say that investment gives them a base for the future, but that's not really much of a consolation to the workers who, at the height of the pandemic, put themselves at risk to produce the PPE that our nurses and doctors needed to keep safe, that they have now basically been made redundant and don't have a job in the short term, because of that cliff edge, which was absolutely nobody expected at all. You said that we're just not buying PPE any more. Are you saying that there is no PPE at all in the public sector in Scotland being purchased at this moment in time? Every time you walk into a hospital, you have to wear a face covering. Presumably, the police are purchasing PPE, and the fire service are still purchasing PPE. Why is the minister saying that nobody is purchasing PPE? Presumably, they are. If so, is all that PPE being manufactured here in Scotland being used in the public sector in Scotland? First of all, in terms of the position with the orders for Alpha Solway, too much detail orders would have been placed for demand. Those orders would have had a lead time, but there would have been clarity of what there was no orders falling on from that. There was visibility of when the demand was going to stop. Clearly, in terms of usage, that's been much reduced to what it was previously, as we all know. Of course, for strategic resilience and many other reasons, we are sitting on significant stockpiles of PPE and that is what is largely supplying the demand in the public sector at the moment. I have been very clear, and I have said that already, from the parts of the supply chain that we get visibility on, be it that Scottish Government, be it NSS through NHS Scotland and others. There is nothing being purchased at the moment that Alpha Solway could be supplying. I have written already to the rest of the public sector where we don't have visibility to ask them if anyone else is purchasing PPE, so we can have a conversation about what would need to be done to be manufactured in Alpha Solway. To the best of my knowledge, there is no one else purchasing PPE beyond that that Alpha Solway could manufacture, but if anyone else is aware of any examples of that, I would be very interested to hear about it to follow that up specifically. However, we have been very proactive in terms of what we have done on the bits that we control and the very strong signals that we have sent to the rest of the public sector about the critical importance of the Scottish supply chain in working with the public sector procurement to make sure that everything that can be made in Scotland is made in Scotland. I do not know what you are asking me, but we should be spending public money to buy stuff that we do not need to keep people on jobs. That may be a view, but I do not think that the current situation with the requirements or pressures on public sector finance would be a good use of public resource to buy stuff, keep it and then throw it away later on. I do not think that that would make sense. I am saying to the minister that I want an absolute assurance that all PPE that is used in the public sector in Scotland is manufactured here and it seems that maybe the Government is not entirely clear on that at the moment, because it seems really surprising that just a few months ago you were talking about the creation of 300 jobs and all of a sudden that stock, we all knew, supplies would be reduced as it was moved out of the pandemic. I do not think that anybody expected that cliff edge and I assume also yourself. Given the comments that you made just a few weeks ago about the future of that company, certainly the workers that have lost their jobs were not expecting that particular cliff edge, but I am just curious when it comes to procurement rules as to whether or not we think that they have been adequately changed to really increase the reliance or the focus on local supply chains, because it does seem to me that if an example of PPE suggests that maybe some is still being produced out with Scotland, that is a really example of where I think 100% should be absolutely produced in Scotland, but there will be lots of other products that can be produced around the world and I am not clear that there is enough focus on our procurement rules to really emphasise that if it can be made in Scotland it should be purchased by the public sector in Scotland. For example, if I am a purchaser in the local authority or the police or the fire service and I want to buy PPE, for example, does it absolutely say in that system where it is manufactured? Does it say that it is supplied by a company in Scotland, but does it actually say where it is manufactured? How much information do we provide in where a product is manufactured and how much emphasis do we put on ensuring that the public sector, where it can, is absolutely buying products produced here in Scotland? Absolutely, we do. I understand that stuff. I have been manufacturing for 30 years, I understand how this works. We are absolutely 100% focused on this relentlessly, but you will also know that it is illegal to specify what you have just asked for us to specify because within W2O procurement rules, GPA rules, FTAs that we have internationally with the EU, trade agreement, et cetera, et cetera, you have to have an open market. We do everything we can to make sure that as much of this product is manufactured in Scotland. We make that visible, we produce guidelines on that and we work very importantly and this is the importance of that investment into Alpha Solway to make sure that those businesses in that supply chain and other supply chains have the capacity, the capability, the expertise, the technology to be able to compete on what is a global market, to be able to win those contracts in Alpha Solway than a great job in winning those contracts. They did that fair and square, beating competition from around the world and that is because of the support on training, on investment and elsewhere that went into them from the Scottish public sector to support that. All of that has to be done within those rules. That is the legal reality of the system that we operate in. However, as Graeme alluded to, her success within that has been quite significant. Within SMEs in Scotland, 47 per cent of the spend that we make in the public sector procurement in Scotland goes to SMEs in Scotland, which is significantly in advance of anything that is happening in the rest of the UK where that number is in the 20s and across the EU where the average is somewhere in the 20 per cent to a high 20 per cent range. We have made significant progress there. The results demonstrate that, but the focus continues to be relentless on that and we look for every opportunity to beat through the supply development programme, through roundtables that we have with SMEs to understand challenges for them to access the public procurement process, through working with partners across the public sector, through what we are doing on the innovation portal in the recent Scotland. The innovative portal has just launched that invites Scottish businesses with innovative solutions to public sector challenges to put them online so that we can assess them and find a public sector procurement route for them through the work that CIFTECH does to put them out public sector challenges. All of that stuff is relentless on it. We have a tremendous focus on it. I meet regularly with procurement officials to take that forward. All of that is done, of course, as you understand, within the legal restrictions that we have. What we are really helpful, minister, is a follow-up response. You said that you are making inquiries, which seems quite strange so many years into her pandemic. You are making inquiries as to whether or not the public sector is right across the board purchasing PPE entirely within Scotland. I think that it would be really helpful if you were able to write to the committee and explain what the outcome of your inquiries is. We shall do that. We should give it an assurance that it is all being absolutely— We do not have the power to tell a local authority— We give the power to ask—I think that that is a debate that has to be had around the police, for example, the fire service and others, which are our national bodies now and how much central approach we have to something as important as PPE. However, what I think would be really helpful is to know that that product was absolutely 100 per cent being purchased by the public sector from manufacturers in Scotland. I think that it would be good to get the outcome of your inquiries on that. I will respond to the committee and let you know the outcome of that. As I say, if a local authority decides to purchase something, we are not in a position to tell them where they should buy that from. I think that if we did that, there would be others who would say that we shouldn't be doing that. However, I have written out very clearly to make those points very strongly to all public sector authorities, and I will be very happy to update the committee on any responses that we get in that regard. Just before I bring in Ms Heslop, I just ask that 74 per cent of contracts were Scottish through the public procurement system, which the committee welcomes. The committee did ask if the data could be improved, and we could see that by region or by a smaller base rather than just the whole of Scotland. That is why we recognise the value of the contracts being awarded across the whole of Scotland. We wanted to see the potential for more value to local economies. Is it possible for that information? I will ask Graham to pick up on the details on the data. Thank you. Each year, we publish the Scottish Ministers Annual Procurement Report. That includes breakdowns by local authority area of public procurement expenditure, breakdown by the SIMD quintile, the Scottish Index of Multiple Deprivation classification, so that we can see whether the money is going in terms of disadvantaged to relatively prosperous regions of Scotland. We also publish the split between urban and rural classifications. Does that tell us—and you could share that with us—that it would be helpful. Does that tell us, for example, that I represent Ms Collins in five councils' contracts? Does that tell us that if they are going to five companies or that they are going to companies that are in more deprived areas? Do you understand what I mean? The annual report gives the figures by local authority area. The aggregate report does not give the detail by public authority. However, public authorities also have, within the Procurement Reform Act 2014, a statutory duty to publish their own annual reports on whether expenditure is going, what they are doing to support SMEs' third sector supported businesses and the economic growth socioeconomic factors right across the piece. Does anybody bring those two reports together? I think that the committee would maybe—that would put, I think, what we were looking for was probably the information on those two reports combined. However, if you were to be able to share—I will let Fiona Hyslop in—if you were able to share maybe the reports that you referred to with the committee, that would be helpful. Absolutely. The annual report does combine the—so that the Scottish Minister's annual report is the aggregation of all of the individual public reports—sorry, reports on public bodies from right across Scotland. The requirement kicks in at £5 million in annual expenditure. So anything below £5 million wouldn't be covered by the report? Below £5 million, there isn't a statutory duty, but we do still encourage it nonetheless so that we consider it to be best practice to publish an annual report. Okay, that's helpful. Thank you. Fiona Hyslop to be followed by Jimi Helco-Jolton. Good morning. Thank you, Minister, for your letter replying to our inquiry. Of course, you gave evidence to this committee during the inquiry, so this is now the second time we're engaging with you on the resilience of the supply chain in Scotland, but it is a continuing issue, not least because of ongoing issues around Covid, as we've just heard, issues around the hard Brexit and also the impact of Ukraine. I want to focus particularly on manufacturing, engineering and construction, and we know that you can't micro-manage private markets and international obligations are understood, but we can create incentives. What we're interested in as a committee is to what extent has the experience of those disruptions that we talked about influenced change in the supply chain markets generally. If we cover construction, one of the things that we heard about was real disruption over that period, but also a desire by the sector to be able to source more locally if they could. That's resilient, but we also contribute to net zero, so the issue around carbon miles. What improvements have there been particularly around timber? We've got a debate this afternoon on forestry and net zero, but improvements in sourcing of timber locally. Are we able to use business regulations? To what extent can you try and influence pan-government things that can help in terms of business regulations and low-carbon materials? What is the potential for some kind of specification of carbon miles that might have to be internationally agreed, but that's probably the direction that we're going in? Yeah, thanks for that. I'll let Dermot come in and talk specifically on more of the timber and broader stuff that we're doing in that regard, but on timber it's one of the areas of focus in the supply chain development programme. In Scotland we manufacture more of our housing stock from timber than is the case in the rest of the UK. We see opportunities there from an embodied carbon point of view to do more of that. There are technical issues, but the Construction Innovation Centre best over in Blantyre is very much leading the way in terms of the research working with universities and others on that, in terms of mass laminated products and products that are able to be utilised more extensively in the supply chain. I've engaged with sawmills and others, in that regard, in terms of what they can do to increase output, etc. One of the issues with timber, of course, is probably perhaps the longest lead time item that we've got. It's a 30-year lead time, so it's a challenge from that perspective. Of course, the decisions that they take now, you don't see the results for a very long time, although Scotland's coverage of forest continues to increase over time, which is to be welcomed. There's also other factors that it's worth mentioning, which might identify how complex that is. There's clearly a biodiversity challenge in terms of what species you choose to grow, because the species that you might choose to grow to mass produce housing stock are not perhaps the species that you might choose to grow, or that balance might not be what you might want from a biodiversity point of view, so that has to be considered. That's part of the issue in terms of native species and so on, and getting that balance right is something that we're all committed to. Further downstream, the work that's happening to my colleague Patrick Harvie and others are taking forward on about the heating buildings, the decarbonisation of property and so on, and the net zero agenda. Making changes to regulation that encourage Scottish supply chain are absolutely a fact, but, of course, a primary concern is always going to be making changes to regulation that deliver the best cost-effective solution for the net zero challenges. Again, getting that balance right is something that we're working across Government on to make sure that it's balanced, but it's true to say that all of that work is happening to try to get that right balance and move forward as fast as we can. Before we ring down the concept of carbon miles as being, whether it's in the private sector or the public sector, becoming more of a factor, what engagement is there on that? Clearly, it makes sense that it will help to deliver net zero, it's not just local, it's national and international, but where are we in Scotland in looking at that issue in particular? I'll let take it, I'm coming on that specifically, but I think you're right that there's international work on that at EU level and elsewhere in terms of carbon mechanisms. There's always going to be a challenge there in terms of how far you can go with that before you hit other restrictions that we've talked about in terms of WTO procurement rules, et cetera, but whether it's scope, we're keen to move it forward. Criam, you maybe want to put some more detail on that, thanks. Carbon miles can be considered as part of whole-life carbon counting. You couldn't just isolate carbon miles from everything else in the lifetime of a product, that would be too close to a proxy of bi-local, which would trip over the WTO rules. It is incredibly complicated to do whole-life cycle carbon counting, so it has to be done in a proportionate way to avoid putting an unreasonable burden on to particularly SME bidders. Counting according to mechanisms that haven't yet even been agreed internationally would be a sizable burden on businesses bidding in for work, so absolutely it can be done, it's complicated, but rather than count carbon particularly, Scottish public procurement policy takes a broader look, a more nuanced look, to see exactly what is being done to reduce environmental impact, including carbon, but also reducing waste, less use of rare earth elements and so on. Just because it's complicated and hard doesn't mean that if it's the right thing to do, we don't have a look at it and see what we can do. I think that we're going to bring in Derbent and if possible, if there's any additional on timber, but also the cement and how realistic that is. If we can crack cement from an environmental impact, that's a dual hit of local supply. I have conversations with Scotland's cement industry in terms of what we can do there yet, and green cement is obviously an area of focus for the sector. It's obviously a huge investment and technical challenge, but it's something that we've had conversations with the sector in terms of how we can do that. The big cement works. Dunbar has seen recent investment to reduce the amount of gas that they're using there and their kilns. So individually companies are making efforts there to reduce the carbon intake to their processes. I think that businesses at Dunbar too are making more use of the rail, so their product wasn't moving around so much on the road. The sector is moving from materials that they know and understand to new materials that I think is a bit of a challenge, because they have to give warranties to the people they're selling to, so if they've been using materials, steel, cement, concrete that they know and then they're moving to wood or other things, there's a bit of thinking about that for them, because they're going to grant warranties maybe for those buildings for 10 years or 20 years, and there's insurance, implications etc. So I think there is a bit of resistance to change, not always for bad reasons, but because people want to be convinced that the materials they're moving to will do the job on site. There is great innovation going on through the innovation centre that's now called best. They're doing a lot with clients, builders and other people to show what new other materials can be used, particularly around timber, but it takes a while to change for that reason, particularly people having confidence in materials. Which is why Government can have a role, and what we're interested in is what's Government doing, and clearly building regulations are potential. So we just want assurance that you're not just being passive in this, that there's an active role by Government in this area. No, and the minister's been, you know, we're speaking all the time to people about things like what we could do in terms of specifying types of techniques for building, et cetera, et cetera, but all of those, you know, if we're going to make a change, they all do need to be evident space, so we have commissioned evidence on various things which may lead to some changes in terms of what we might specify for our affordable housing programme, et cetera, et cetera, but it's all got to be based on evidence. Can I just move on to manufacturing engineering, and again it's just to get a sense of to what extent has there been a step change because of those crisis and the continuing crisis, you know, that we're facing particularly from Brexit, et cetera, for engineering companies, and we've got quite blunt kind of view, I think, from the chair of the national manufacturing innovation centre that over a decade Scotland had lost some of the key manufacturing and engineering skills, so therefore if we are trying to build resilience, but also in the areas for growth, not least in renewable energies, there's quite a lot of development that would need to be taken, and also looking at their work in low-carbon, to what extent has there been a shift of the dial by their impact and the number of companies that they're working with, and how do we tackle that particular challenge around manufacturing and engineering, which is quite clear that centralisation across the UK or indeed internationally has meant that we don't do as much of this kind of work as we would have done previously, and the issue is, again, we can't micromanage everything, but to what extent does that mean helping those companies to develop? Yeah, so just to finish on the last point, yeah, there's work on going on building regulations, there's a new 2024, the new building heat standards getting put in place, there's work happening on that all the time, and those standards have been updated to take out the factors we've talked about. In terms of manufacturing, well, it's been, the decline of manufacturers has been a long-term issue in western economies, but particularly in the UK over decades, when I studied manufacturing engineering in 1980, and it continues to be an issue. But in terms of what we're doing about it, it's important to recognise that these aren't things that you turn on, that a switch takes a long time. The technology, the investment, the expertise, the creditations, the market credibility, all that stuff takes a long time to build up. From our perspective, it's about identifying where Scotland has the opportunity to have globally leading positions in specific manufacturing sectors, and then to double down in support and build on that, both through a combination of inward investment, but very importantly as well through growing indigenous supply chains and businesses in partnership with that. If you look at some examples, I mean an obvious one is the small satellite manufacturing cluster, which has been build up over the last decade or two, and is now a world leading sector, and we continue to get additional inward investment into that, continue to grow those businesses, but a really strong focus from all parts of the public sector support ecosystem to support that. The Scotland-wind investment that we've talked about is £28 billion committed by developers. To be honest, the issue isn't getting the developers to commit the money, the issue is getting someone to spend it, because you need £28 billion both of capacity in the Scottish supply chain to deliver on those projects, and that is something that we're actively working with hundreds of businesses, engineering businesses in Scotland who are part of the clusters within the sector, and very much working with Scottish engineers and others for engineering businesses who haven't looked at energy supply chain as being an opportunity for them and other sectors to diversify into that, and that's going to be a combination of information, encouragement, skills support, investment support, networking, accreditation, etc, etc. All of that needs to click to get this thing to work, and we're hugely focused on it, and then Ms is doing a very solid job at the centre of that ecosystem, but there's much else happening around about it as well to make that deliverable. Just finally, on that, what we hear from the engineering sector in particular is that they may not get contracts for five years, but they have to build that capacity and start building that capacity now, so I suppose the issue then becomes what, if anything, the public sector can do to provide that bridge. It's almost like a bridging development to allow them to build up the capacity, the skills and their companies, ready to make sure that they get their share of that for those contracts, some of which will come sooner, some of which will come later, but they might not come for some time, so that's the role of the public sector to build that result. Otherwise, we won't have the supply chain that we obviously want. Absolutely, it's specific on Scotland. There's a number of parts to that. There's the big international players who absolutely understand this and they're dealing with that, but their investment decisions on what they're going to make in Scotland and what they're going to make elsewhere is driven by a number of factors, so I was giving them the reassurance and the as much clarity as we can in what is a very complicated scenario with lots of moving parts, because consenting, planning, grid connections and a whole range of other things all impact this as well as the supply chain aspects and the energy aspects of it, so that's part of it. There's many, many businesses, pretty much every business now, at least 80% of the businesses in the oil and gas sector are moving into renewable energy in the supply chain, so we work closely with them to give them information and the technology and the current connector into the network so that they're able to advantage of that. Then there are other businesses in other sectors that are supporting to move into that, but it's a complicated piece, you're right, businesses in some cases are going to have to make investment decisions in advance of knowing what's going to happen, and through the work that we're doing, the enterprise agencies are doing with support for that, the Scottish National Investment Bank in some cases is doing, and they're working with private sector investors, we're keen to be able to make sure that where there is a gap and there's something needed and done to make sure that the supply chain is robust and ready, we're proactively engaged at quite a detailed level to make that happen. Would that be you or Michael Matheson who'd been able to do that? We worked together on that, we had a call just this evening, yesterday evening specifically on this issue and how we align the work of the public sector to support that, so Michael leads on the energy side of it clearly, but my involvement in the supply chain is where I kind of pick it up. Thank you very much minister. Thank you and I have one member left to ask questions, which is Jimi Helgo-Johnson. Thank you, good morning to the minister and to his team. The committee's conclusion 6 in our report featured some criticism of the cluttered landscape of policy commitments, funding streams and initiative to transition to net zero. In the Scottish Government's response, you mentioned that an, I quote, bespoke advice and support for businesses, including specific support for SMEs is also available through enterprise agencies, dear away Scotland business gateway and the Scottish environmental protection agency. You also went on to discuss the investment in the green jobs fund, the green jobs skills hub and so on. Can I ask you ministers, does that not sound like part of the problem of a cluttered landscape rather than an answer to it? We are very conscious of the fact that we need to make sure that there is clarity on funding streams from government and from agencies and that we are aligning and minimising any potential for confusion or clutter in that. One of the actions within the national strategy specifically on that is to look at business support and understand where there are funds that are doing similar jobs and how we reduce the number of funds or to make sure that it is the right number of funds to deliver what we need to deliver and do not make that landscape any more cluttered than it needs to be. It is important to recognise that different businesses are looking for different types of support for different types of challenges and that in different sectors we are focused on different challenges and opportunities. To some extent there will be a number of support mechanisms, but we are absolutely seized of the fact that we need to make that as simple as possible, both from a business perspective so that they can navigate it more easily, but also from a public sector perspective to make sure that it is as efficient as possible on the delivery. Theremit is what others are working on specifically on a programme to streamline those funding streams, so if you want any more detail, I would be happy to talk more on that, but if that is something that you want to do. It sounds encouraging that you are looking at ways of streamlining. Perhaps it would be useful if we could perhaps get an update from you at some point about how that is progressing and whether that will deliver a more streamlined process. I am delighted to do that. I also wanted to look at some of the issues and get some clarifications on issues around SPPR and infrastructure. I am sure that you will recognise, as a business minister, the importance of dualling of the A9 between Aberness and Perth, as well as the dualling of the A96, that these are vital public infrastructure projects that could have a massive boost to the north of Scotland, particularly in my highlands and highlands region. In a debate last week, your colleague Jenny Gilruthy, Minister for Transport, said that the Scottish Government was still committed to dualling both roads as promised. Can you just confirm that that is the case and there will be no downgrading of those commitments on either road? Far be it from me to criticise the miso responsibility for that policy area, so I think what the transport minister said stands, but I am going to ask Andy just to comment more specifically on the projects. Yes, so both those projects came from strategic transport projects with you, one, as you will be aware, and we are about to publish the final report for STPR2, which will build on an additional programme of investment for the next 20 years. After we have published STPR2, we are going to publish a delivery plan that will combine the bits of STPR1 that are not finished yet, if you like, with the recommendations of STPR2. Initially, the hope was to publish that at the same time as the STPR final report, but given the uncertainty over future capital budgets, we have recommended that the likely plan at the moment is that that will be published, the delivery plan will be published at some point probably in the spring when there is greater clarity over capital budgets. The rationale being that if we publish the delivery plan now before the Scottish budget was finalised for next year, then we'd probably have to change it given the great amount of financial uncertainty. That's not completely locked in yet, but likely, and that will cover existing projects, including the A9 and the A96. Okay, thanks for that. It was those bits that aren't finished yet. If I can quote you, interesting to me, because minister, you'll be aware that there's been slow progress on both of these projects. A9 dualling is meant to be completed by 2025, and it's clear to you, any one of that target date's not going to be met, but we've not heard that yet from the Scottish Government despite it being, say, obvious to anybody who uses the road. Can you also confirm that the 2025 target will be missed and also confirm whether or not the revised timetable for completion is being prepared and will be delivered as part of that new delivery plan for April next year? It's very indicated that this is obviously outside of my portfolio area that the transport minister has commented on that, and what I will do is invite the transport minister to respond to your specific questions on that, rather than me talking from a position of not having the full information as it's outside my portfolio. I'll do that as a matter of course, following on from this meeting. If you want to put any request on that in writing, I'm sure that you should be delighted to answer your questions. I'm grateful for that. This is an issue that's been raised a number of times with various ministers over the last few months and maybe longer in terms of the delivery. I mean, from a business point of view, as I say, you will recognise how important that road is to the highlands, to the highlands and islands and particularly the A9s, to the highlands and further beyond that, all the way through to where I'm from, and yet we haven't had that confirmation that within two and a half years the entirety of the road was meant to be dual. Sorry, Mr Halcro Johnston's order to interrupt, but I think you've made your point well and the minister has given the response. I don't think that the additional question is going to get a different response from the minister, so if there's another area you wish to ask about, I can give you another question, but if not, I'll… Well no, I was trying to get a clarification on something that's vital in part of… I do appreciate that, but I don't want to say it for anything. I do appreciate that and I appreciate you taking the opportunity to raise it at the committee, but I think the minister has indicated that he would ask the transport minister to give us a response on the specifics of that, and he's not placed this morning to give you the guarantee or the commitment that you're looking for. I don't think that we'll get any further on this point, so if there was any other issue you wish to raise, I can give time to do that, but if not, I'll move on. No, this was the area that was covered in the report that I was interested in and I was looking to get a clarification, but okay. Okay, thank you very much. Before we… I thank the minister for having run over time a little bit. Can I just briefly return to where we started, which was the supply chain development programme? The committee's inquiry was prompted by disruptions to supply chains, and we were looking at… I think that Ms Haslop picked up on some of these issues. How do we put resilience into the system that will deal with disruptions, because the supply chain development programme does seem more focused on developing new supply chains, supporting supplier development, but maybe not so much on how do we make sure we're a country that is fit and able to respond to things that are unexpected, that are shocks to our economy. You know, you think these things are never going to happen, but we've had three in the last few years. Would it be the supply chain development programme that's the focus for looking at that, or is it somewhere else in government that is looking at those kind of events and how we respond to that? Well, there's a number of parts of government that will be looking at that. Your right supply chain development programme will look at opportunities to build Scotland's economic capacity and onshore and establish a bus supply chain within Scotland, where we recognise we've got the capability to be able to compete globally and build indigenous industries on the back of that. Clearly, if we're talking about something that happens and there's a risk to food supply or something, then that's the resilience work within Score and within the Scottish Government group led by the DfFM Deputy First Minister that would look at those specific, very short-term resilience issues, if there was a concern about, as I say, food supply or some other aspect of that that was going to impact the country in the very short term, and that's the same group that we look at other disaster recovery-type aspects as well. Okay, thank you. If it's very brief, Mr Simpson, I reckon. It is for clarity because it's for something that Mr Park mentioned, and that was the STPR2 delivery plan, which is actually mentioned in the minister's response to the committee in your response. You say that that delivery plan will be published later this year. Mr Park has just said that there's slippage on that. He used the phrase spring, which can mean quite a bit. People have actually been waiting for this for some time, and the committee's report does refer quite heavily to the road network, which is why Mr Alcro Johnston was asking about it, but so can you say why is the slippage and when exactly we're going to see this? The original publication date was based on what we thought was the certainty of the resource spending review and the revisiting of the capital spending review in the spring, and so whereas the various changes over the summer have happened and the greater uncertainty around budgets, the decision has been recommended that we delay publication of a plan until we have certainty on the budgets. The STPR2 final report with the recommendations will come out before Christmas, but the plan itself needs the certainty of knowing what future capital budgets are otherwise we'd probably have to rewrite it within three months since yesterday. You're getting support from SNP members, that's not surprising, so he's saying it would be out by March? I'm not giving a date, I would say it will be delayed until after Christmas after the Scottish budget has been set and we know what capital allocations are for the immediate few years, which we don't at the moment. It was in a position where it could have been published before Christmas, but it just makes no analytical or practical sense to do that now because we don't have that certainty. We will perhaps have a little bit more certainty next week, but until that feeds through budget processes, it's fairly straightforward. If we published it now, we'd be revising it as soon as we knew what the money was. I apologise for the chunkering in the background. Thank you. It brings us to the end of the evidence session. I thank the minister and his officials for attending this morning. I now move into private session.