 Good morning and welcome to the 8th meeting in 2022 of the Finance and Public Administration Committee. We have one item on today's agenda, and that is to take evidence from two panels of witnesses as part of our inquiry on the Scottish Government's resource spending review framework. The evidence that we gather will inform our response to the Scottish Government's consultation. On our first panel we will hear from Myrran Kelly, chief officer of local government finance from COSLA, who I am delighted to say is attending in person, and Eileen Rowand, executive director, finance and corporate services, Fife Council, sit for directors of finance who is attending virtually. So welcome you both to the committee meeting and thank you for your written submission to the inquiry and understand you have no opening statement so I shall move straight to questions. So the first question is obviously questions relate to your written submission and you have said that what you basically talked about was the amount of spending and you have said that for example a lot of funding and you have said especially employability funding has been notified late in the financial year and limited to spending by 31 March. It was clearly frustration within COSLA that you are getting late notification of resources within the financial year but how much of that do you believe is within the Scottish Government's control or do you think it's because of Barnett consequentials? What do you think of the reason or a communist of the two? What's the reason for that? I think in the specific instance of the employability funding that funding as far as I am aware was known by Scottish Government at the start of the financial year so was a late notification. We have since obviously received the flexibility to be able to carry that forward into 2022-23 which is very welcomed to enable that critical investment in employability. But the challenge that presents the late notification of funding be it for this or for other elements is that it's not the most effective use of resources, it presents challenges in our planning and working with our partners in the third and independent sector to effectively design and deliver services that best meet the needs and the intended outcomes for the funding. There was an explanation given as to why it was salat in the financial year? Not to me, I'm not aware of the detail of that. Ms Rownd, do you have any understanding as to why that is a case? I mean I tried to find out from the Scottish Government why that funding has arrived to lay. Obviously if it's something that's so essential I would have thought you'd be champing at the bit to obtain those resources. I'm sure we have been. What I would say is perhaps just standing back from that and about the sort of announcement of late funding. I think the resource spending review framework really gives us an opportunity to look at a level of known funding over a period of time that allows us to plan. So obviously there's been instances in the past where we have received funding late in the day but I think it's important that we focus on moving forward and how we can have a greater level of certainty. I think that if we can work through the spending review and obviously have that certainty in future year figures it will allow us to plan for a kind of collective outcomes that we want to achieve. Yeah, I mean I think I would agree with that. I'm sure everyone else would too. I think certainty is important but clearly obviously the Scottish Government does not always have certainty in terms of its own funding so it's difficult then to pass on that certainty. Do you not agree? Yes, most definitely but I think as Mirren said there are cases where there has been some certainty about funding and it's taken some time for us to obviously reach decisions on that use so I think collectively moving past that and agreeing in advance where spending will occur will certainly help us move forward. I know it's challenging and I think we all want to try and have that ability to plan and respond when there is a level of uncertainty. Yes, I mean I think that's something others might want to focus on a bit more but just to go over go on to your overarching priorities obviously you know you talk about in terms of meeting child poverty targets and addressing climate change and securing a stronger fairer greener economy. You said there's a little comment on the data and drivers behind these three power priorities. What are the data and drivers you feel should have been included? So there are other data sources, the Scottish multiple, I always say this in the wrong order. The multiple deprivation index would obviously give some good indication particularly around child poverty and key issues around there. There's significant amounts of employability data and economic data that could be used to inform some of those. I think for me the focus on the spend in health and social care didn't seem to quite link with the three key priorities set out and obviously the spend on social care is the demand-driven projected spend rather than the investment that might be put in at the front end to prevent that spend being needed. So looking at evidence of how you can improve health that those would be key areas of evidence to look at when informing the resource spending review for the longer term. Okay that's actually very helpful and in terms of your submission you talk about that there being no clarity on what a national care service will look like or deliver. So what would you like it to look like and what would you like it to be able to deliver? We all agree that there should be significant investment in social care to support our communities. How that is done, there are different opportunities there. We have structures in place which could if the level of investment that's being discussed could be utilised immediately rather than the potential risk of a structural change creating delay to improving those services. At probably a similar point, we all know the pressures on social care with an ageing population and we've seen an increase in spending in that area but it's mirroring outlines where obviously dealing with a lot of demand failure and I suppose trying to shift that focus to health and wellbeing, keeping people well at home longer, investing in housing, supporting children and families, all those kind of core areas. I think there's a danger if we just solely look at that national care services as the solution and it's just obviously taken that wider perspective and obviously appreciating the role that local government and our partners play in that. Okay and you've said in your submission that the framework also fails to recognise the impact of structural change on current services and the resource implications of establishing new structures so what are the resource implications? That will depend exactly on the detail of what a national care service looks like and what that means but for example there would be things potentially like harmonising terms and conditions across a number of workforces, IT infrastructure, the governance structures, potential duplication of support services, there's all of those foundational layers that currently exist that are either at risk of being duplicated or seeing change that increases costs rather than investing in existing structures. So do you have either of you have any ballpark figure as to how much additional resource would be required to deliver that? I don't think it, yeah. Sorry. Sorry. Joe, it's really the opportunity cost that comes from structural change because it is disruptive setting up a new organisation. The focus on that change actually detracts from a focus on actually making improvements because there's obviously limited capacity and the resource is required to focus on that structural change so it's not necessarily pounds and shillings to know it's more the disruption that it causes. I think the failure port has put high-level figures on the level of additional resource that's required but we know from work that we've done in this area that there's certainly more work required and I think we have to understand, Joe, the, I suppose we can look at increased costs in an area but we also then have to understand the impact that that will have elsewhere on the resources that are left and what that means for core services. Yeah, I mean I think obviously if there's additional resource implications then one would expect that to be funded from core budgets but I'm sure you'd agree though that you know the Government doesn't want to undertake structural change for the sake of it so therefore I'm sure they believe and because I may not agree obviously with all aspects of this but surely they would agree that the reason they're doing this is to actually be able to improve the service overall in the long run and they might even be of the view that while there may be short-term disruption it might be worth it for long-term improvements, is that not the view that they have and is that not why they're going down that road? Why else would they be doing it if they didn't believe it would make improvements in the long run for the people who require these services? I'm sure that that is the case and I suppose what we're just highlighting is that in the short to medium term it will be disruptive and there will be a change in focus and it's not quite clear by the framework that's being published that if we look at the level of resources that will be available to the Scottish Government over the medium term it is going to be very challenging so if resources are going to be redirected to one area they will have to come from another area or efficiencies and redesign will have to happen so I suppose it's just within that context that we obviously want to ensure that money is spent wisely as do the Scottish Government I am sure. Okay thank you again I think others want to probe that a bit further but one of the things that you talk about and this is a real issue for the committee and has been for a long time is you talk about in a quote a genuine focus on preventative approaches and I think that's really critical and you talk about whatever greater levels of funding being directed to the NHS and there are other ways in fact in which you could tackle child poverty for example you talk about housing education employment but surely one of the difficulties is the politics of that so for example say the government decides yeah you're absolutely right we agree 100% what you do next time we get a Barnett consequential we're going to actually give a quarter of that directly to local government we're not going to actually you know put it all into the NHS surely the difficulty then is that the media and indeed opposition politicians would then come down on the Scottish Government like a ton of bricks and basically denounce it for underfunding the NHS exactly at a time when there's huge waiting lists and blah blah blah so surely the issue is that everybody knows in my view what has to be done but sometimes the politics gets in the way and that you know you know given the hostility of the media for example you know there's something maybe we'll think well is it actually is it actually worth it and that we cannot necessarily say to the public these are the changes that are going to be delivered uh I'm you know five or ten years when people might say well if you put money into the NHS now I might not have to wait so long for my operation or whatever so how does how do we actually get square that circle with what we believe might deliver better in the long run because you talk about the you know the NHS basically you know dealing with the actual fixing the problem rather than actually solving the problem how do we actually do that at a time when we don't have additional huge amount of additional resources I mean if obviously there's a lot of money for both local government and NHS we could do that but how do we actually manage that difficult political situation I think that's exactly the challenge that we all face and I think one of the steps to take forward is having that open and honest discourse with the public to sort of to kind of increase that understanding about why you might need to invest in different parts of the the whole system it's it goes back to some of the some of the Christie principles and that whole system approach of preventative spend and I think it's it's maybe reigniting that and I don't I don't dismiss the challenge that that is but I think it's it's one that needs to happen if we're really committed to actually improving the outcomes that are needed I think focusing maybe discussion or trying to increase discussion about the wider determinants of health that contribute to that healthy life for all of us and within our communities is potentially a way that we could do that and it's it's not just local government obviously that contribute to that though we are we are a key player but improving housing improving education improving transport and infrastructure and in a way that is is a right space approach and recognises the structural inequalities could really lead to significant health improvements as well but it is long-term and you don't see the benefits immediately and I do agree that that is part of the challenge when it comes to comes to these decisions. Eileen Rownton, do you want to come in here as well I believe? Yeah yeah I mean I agree totally it is very challenging it would be different if we had increasing resources because it would be far easier to switch resources to you know areas but would be preventative and you know when I look at my own council you know it's a dilemma that I face when we do our medium-term financial planning you know similarly to the Scottish Government we look at the resources we expect to receive we then look at our pressures that will come through and it's quite apparent that we can't actually afford to actually fund all those pressures and then it's obviously back to the drawing board as to how do we direct resources to where we will achieve the greatest outcomes but I think there's a real challenge to us when we work in the public service and that you know we've kind of got a duty and a responsibility to try and achieve what's best for the citizens and I suppose that it's kind of taken those informed decisions using evidence in order that we can try and shift the resource so that we don't continue just to spend the bulk of the money on treating people when they're ill you know and we try and get further upstream and we're able to invest more and you know important things like affordable housing keeping people active looking at how communities can support people so it is very difficult and I certainly recognise that. Yeah I mean I think one of the difficulties is disinvesting from areas which are perhaps not so effective in switching resources you know I mean it really is difficult at time when resources are not increasing such that so that you do have to make these difficult choices and just just one final question from me basically in its regard to how your priorities link in with the national performance framework you've said that there needs to be an improved mechanism for assessing how we're reaching the national performance framework goals so I'm just wondering what that mechanism good or should look like. I'd like to see much clearer links between the budget and the national performance framework so that we can see where the spend is going towards these outcomes I think that that would help all of us and assist I know that there's been calls from for the human rights budgeting approach I think that that could assist in that would be a key one. Okay Ms Rowland you get it Rowland sorry do you have anything you want to add to that at all? Yeah just to kind of recognise that it's challenging I mean I think there's over 80 indicators and we obviously probably measure what can be measured but I think I agree with Mirren the challenge is how do you actually tie the allocation of resources more to the outcomes that you want to try and deliver against and it certainly isn't easy but I think if you look at where spend has been allocated in recent years and if you try and link that to the national performance framework I think it does throw up some questions as to our resources being directed to the correct places both at a national and a local level I would say. Okay thank you I'm now going to open up the session to colleagues around the table and the first to ask questions will be Douglas to be followed by Daniel. Thanks convener and it's just really to dig a bit deeper on to the preventative approach that we're just speaking about I keep banging the drum that you know I always feel that the best early intervention and prevention is done at a local government level and I get what the convener is saying that it's often difficult to move budgets but I guess from my point of view health spend doesn't always have to be spent with the NHS you know it could be a health outcome but it could be spent in local government for example and I think that's the same as injustice but how does local government make the case for that and you know it is a more data that could be provided that shows more the outcome and you know to demonstrate to government right spend the money here and we will save that money on health and justice later. I think that is part of the challenges because it's always it's long term change that you try and address and it's a lot of those are about the structural inequalities so tracking the benefits through the system over the lifetime of people is definitely tricky. I think that's something that there may be value in having a look at all of the reporting that is done because local government reports you know puts in lots and lots of reports into Scottish government but it's not always it'll be to different departments in different areas so it's not necessarily all brought together and able to be analysed in that way. I do know that the national performance framework will be reviewed shortly so that that might be an opportunity to have a look at the the current existing data where that data is going and how can we pull it together better to demonstrate what is achieved and what what the most effective use of our limited resources are. So is that something that you think COSLA could push ahead with and try and look at because you know the community is right everyone that comes in here so you know so we want we want more money and it's you know as a government it would be great to give everyone more money but there is a finite pot and it's really to try and demonstrate that investing in local government will give you that return later on. It's something that we've said we would like to work with the Scottish Government with and I'm hopeful that we'll be able to take that forward on that kind of wider that wider scale of the current data and how it's used. For me I think there's a strong case but it just needs to be made a little bit better to be honest and I don't know if that's something that Ms Rowan wants to add to or? Yeah I was just going to highlight that there has been a study done looking at the reduction in local government spending in England and adverse impact that that has had on life expectancy. I think it was Lancet and Mirren probably knows a little bit more about it than myself. So I suppose it's trying to kind of use national research as well that's been done elsewhere that looks at the impact on investing in communities, parks, ask time centres, youth, work children and young people and the positive impact that this can have and collectively working together with the Scottish Government so that we have that shared understanding. I, like you, I would be advocating that when we receive health consequentials that the presumption isn't just that they would be spent on health. I think it's really important that we look at health and wellbeing and we do try and look at being able to invest some of that resourcing to preventative spend. And do you feel then that there's maybe a possibility to, you know, let's take health spend for example, almost and I hate ring fencing because we want to get away from that, but almost to try and demonstrate, right, you know, we can make that investment in health at a local government level, keep it almost separate so you can identify it, so then the government can almost track that through and see what the savings might be later on. Yeah, it's difficult isn't it? Because sometimes it's hard to actually evidence the benefit that that has, you know, from one year to another, so it's, you know, Mirren said it's more a kind of longer term approach and I suppose it's perhaps having some faith in what you believe as well. You know, if we want people to stay healthier at home, they have to be fitter, we have to provide them with opportunities, you know, we have to make sure that there's there is communities that can support them to be at home as well. So we won't always be able to have the evidence for that, but we will be able to do some work to demonstrate that, but it will be over a period of time. Because, you know, back to what the convener said about, you know, paper somebody's operation, surely the best way is not to have that operation, you know, to invest in leisure facilities, for example, at a local government level, so people are more healthy and then there is less of an impact on the health service later and there's a way of, and I know it's difficult, a way of trying to show that and demonstrate that, then I think it would be easier for the Government to actually move some of that spend to a more preventative and a local government level, so any thing you could do on that I think would be really worthwhile. That's me, convener. Thank you. Daniel, to be followed by John. Thank you. I mean, perhaps unsurprising, I'll be sort of picking up on comments made both by the convener and Douglas. I mean, I'm most interested in your answers under section 2, and the convener sort of asked you a bit about the evidence that you would allude to, but a number of comments and submissions have questioned whether or not the three priorities or the three priorities identified are sufficient. I don't think anyone's questioned that any of them are rightly there, but I think there has been some question as to whether or not they fully capture, I mean, in particular, I think the third one, securing a stronger favour or a greener economy, I think, that one billet point is doing an awful lot of work. So, I was just wondering what, if you were to add to that lesson, obviously you wouldn't want to add dozens, but if there were one or two billet points you were adding to those priorities, what would they be? Likewise, I would be interested to hear what you think an analysis of the drivers might look like to supplement what you have already said about the use of SIMD as a data source. In terms of adding priorities, that's one I can't answer right now because I can't pre-empt our formal response, which will be going to leaders for agreement at the end of the month, but I agree that there might be other things that could be covered within that. As you say, some of them are covering quite a lot of ground as they stand, but that's a question that I can't pre-empt our position on. In terms of the use of the drivers, I found that some of the data isn't pulled together very well. Surely, that is one of the opportunities to do that, because we know that there is a lot of data out there. That section just referenced a couple of key data points rather than the whole breadth of information that already exists. I think that there are opportunities within the spending review itself to pull together and do some of that analysis that will hopefully help to inform everyone on the best use of resources to achieve whatever the priorities are decided on in the end. Thank you. Eileen, I believe that you want to come in. Yes. I think that our submission highlighted that the priorities are aligned to COSLA's priorities. I took the opportunity to look at that for my council as well. I suppose that the area that was obviously coming through, which you probably would not expect, is the role of local communities. It goes back to the points that I was making earlier. If we want people to have health and wellbeing improving, it's really important that we have strong communities. As Meryn said, I'm sure that COSLA will be doing a submission at the end of the month. From my perspective, I suggest that there might be something that we could want to add along with the importance of the book. Thank you. Looking again at what you've gone on to say in section 3, you talk about recognition of long-term pressures on public services. One of the things for me in a comprehensive spending review, which is essentially what that is, is that it's not just about mapping out how you intend to spend money over multiple years. It's also a point of reflection about how effective your spending has been in the past. I wonder if what you are saying is that there is insufficient recognition of the role that local government plays in making things better across those three priorities and, indeed, underfunding of local government making those things worse. Is that a point that you are wanting to make? If so, are there any particular things that you'd want to pull at in terms of where the financial situation that local government finds itself makes those things better or worse? Yes, absolutely. You summarised that very well. One of the key pressure areas that is recognised as one of the drivers of public spend within the consultation, the framework itself, is around the workforce and workforce costs. Workforce is a resource that delivers all of those policies. They are the ones on the ground making the changes, and Eileen will correct me if I've got this wrong, but it's about 60 to 70 per cent of local government budget that is spent on our workforce. Where we see additional asks and policies introduced, even if they are fully funded, if our core budget is not sustained to enable the inflation and pay-up lifts, we see downward pressure on our workforce, which has an issue for capacity, morale and local economies. Local government is often the biggest employer in a local authority area, so our staff and workforce are big drivers of the local economy. The pressure that we face on our core budget has quite a lot of knock-on implications. That's a key point that isn't always addressed. Eileen, is there anything you want to add to that? Yes. If you look at the funding position for local government over the last seven or eight years, the local government share of the blocs has gone from 34 per cent down to 28 per cent. At the same time, we've seen significant increased investment in areas such as education and social care, both going up by more than 20 per cent, which is obviously positive. However, it is adversely impacting on areas such as roads and transportation, culture and leisure, economic development and planning. I suppose that it is looking at the impact of budget decisions on core service delivery and how sustainable that is. I've just recently taken my council through its budget, and I'm questioning the future financial sustainability of the council, just given where we have come from in recent years and the challenges that we will face going forward. It is very challenging. Finally, one other aspect of this is that, in terms of consultation and responses on how well money is spent, there is another element to this, which is the principles by which the decision making is carried out. Do you think that there needs to be at least some consideration given to the sort of the, you know, subsidiarity is a bit of an obscure word, but actually making sure that the decision making happens as close to the point that actually takes effect as possible. Is that something that COSLA would like to see taken into account in the review? Yes, absolutely. I think that it goes to the development of policy as well, not just the decision on spend. Developing the services that are really going to work locally for your communities to achieve the aims, I think that needs to have the principle of subsidiarity as well. Aileen, any final comments before I hand over? No, I think that the framework document outlines an approach looking to empower individuals and communities to integrate service provision and prevent negative outcomes. I suppose that there is a lot in that approach that I would agree to. I suppose that it is getting to the detail of the how, which is really the difficult part. I do not know if we have alluded to it already about how you actually are able to shift resources to prevention. We obviously believe that local government play a major role in that. Okay, thank you. John, to be followed by Ross. Thanks very much, convener. There is a lot of material in here. I have noted down some of the comments from witnesses, but I have not always noted who they are from. Some of them might be from you and some of them might not be. However, one of the comments that some of the witnesses gave us was that the whole review is at too high a level. There is not enough detail in it. Is that something that you would agree with? If so, what else should be in it? How more detailed should it be? It is quite high a level, but that does not mean that we cannot engage on it to make points and try to develop areas. I am aware that this is the first spending review in quite a number of years that has been handled. There are learning opportunities here on that if we find that it has been too high a level. I do not feel like I can pre-empt what is going to come out of the spending review itself and the level of detail that that document might provide. Are you okay with that, Ms Rowland? Yes. I think that the priorities are high level and I understand why that is the case. I suppose that sitting behind that is the Scottish Government's national performance framework, which is far wider. I think that the real challenge will come. We obviously have those priorities, but then we have the challenges that are set out within the framework document. I think that the real challenge will come as to how you can square that circle, because it certainly will not be easy. There will be things that influence the spending review that might not all directly tie back to the priorities. It is not an easy exercise. Another theme that came out certainly from COSLA but also from other people was the whole idea of multi-year funding and a bit more certainty over, let's say, five years to start with. That came from COSLA, so local government would have more certainty. It also came from the SCVO, who we are hearing from later, and of course quite a lot of their funding would come from local government. Can you describe how you think it would make a difference if there was that much more certainty? I am attracted to that model, but it gives a bit of inflexibility. To say that Glasgow City Council awards money to a local group or charity for five years, then there is not a lot of room there if they are not performing halfway through. Can that not be changed? Have you thoughts around that area? Yes, absolutely. A key point there is that knock-on effect of single-year budgets throughout the whole system and the whole economy. It does potentially mean that you are not able to develop the most effective solution, especially if you are given money that has to be spent within a particular year. Even if you are informed about it at the start of the year, you need to do the consultation with communities, potentially design the services, then tender and commission them, so that can create challenges. In terms of longer-term funding for third sector or independent sector, you would absolutely need to build in sensible performance indicators or the agreed outcomes that you are seeking to achieve and review points if that is appropriate for that particular service that you are looking at within your community. Ms Rownd, multi-year funding? Yes. Most certainly, it is desired by local government. It is extremely hard to plan over the medium term and you do not know the level of resource that you will receive in the year 2 or year 3. For example, I have undertaken an exercise just now trying to do some scenario planning within my own council. It certainly would be easier if I knew what that year 2 and year 3 figure was likely to be rather than trying to make assumptions based on economic estimates and what I think will be the priorities of the Scottish Government. We have discussed this area in directors of finance as well. The certainty that we would have if we had figures for a three-year period, even if there were two latter periods, figures that were indicative would allow us to plan far more effectively. Even if that means resource reduction, we would take better informed decisions on the options that we would be exploring at an earlier stage and it would lead to more effective service delivery. That leads quite well on to another question that I was going to ask. I will start with you this time, Mr Rownd. One of the witnesses talked about that we as the Scottish Parliament or the Scottish Government should take the five-year approach. In order to give more certainty towards the end of the five-year period, we should actually not spend all our money now but we should save some and put some into reserves. Following on from what you just said, that picture would give more certainty, but I have a feeling that local government and others would not be happy if we held a lot of money back. I think that you are probably limited as to the level of resources that you could hold back anyway. I suppose that what we are looking for is that councils certainly hold reserves because we are able to, but we use that for one-off shocks and to deal with things that we are not planning for. I think that we have got a responsibility to look at the money that we get from the taxpayer to look at how we can spend that and deliver the services that are required. I would give an example with my own councillor. I would always receive a bit of criticism if I was trying to cut services and there was no real need to cut services because funding was available. I am obviously put under a bit of pressure to ensure that we effectively use the resources that are at the disposal. I would not advocate holding money back just in case. We have not got enough money and we have to ensure that we use it as effectively as we can. Ms Kelly, are you agreeing with that? Yes, I am. I think that the key point that reserves can only be used once. Even if yes, four and five are turned out not to be as optimistic as whatever assumptions are put in place, that can only minimise or potentially slow a change rather than address the long-term fact that there is less funding available so that the sustainability issue comes in. One of the points that has come up many times is the whole concept of new policies coming in. You have mentioned this to yourself, Ms Kelly, today already and then what is already happening. Given that it looks like we are going to be fairly tight for money in the next few years, would you go as far as saying that we should not have any major new commitments or new policies? We should just focus on what is happening at the moment and try to do it as well as we can both in the local government and the Scottish Parliament. Should we pull back on new initiatives? I think that we absolutely need to take the time to consider what can be achieved and what is currently being done critically before new policies are introduced. There is the opportunity to consider the things that we are currently doing across the national and local government. There may be commitments that we could look at. Does that free up resource or opportunity to do something different? How can we jointly develop that and jointly consider it? At the moment, the struggle that we see within our budgets is the pressure on core and the impact that it has on other services, given how much is currently directed. There are risks there. All political parties make promises at elections at council level and at Scottish level, and we want to do new things. Do you think that we have to cut back on the new things? I think so. I would rather be able to say that you can deliver on new policies all the time, but I think that it goes back to what Mirren has outlined about the affordability and sustainability over the medium term. If you look at the likely level of resource that will come from the UK Government to the Scottish Government, it is going to be tight in 2023-24 and 2024-25. With the pressures that we are going to face on inflation, on pay and non-pay, on construction and inflation, rates are just now fairly scary. We have to deal with these core issues before we get beyond looking at what we can afford with new policies and linking back to what Mirren is saying is how we can do with our existing resources and direct some of those to policy initiatives. That takes us back into that territory about the engagement between local Government and Scottish Government, looking at how we can work together to deliver on our shared ambitions. The position that we are going to deal with in the next two to three years is going to be extremely difficult, so it is trying to ensure that we take wise decisions. My final point, if I may, is that the share that local government gets of the total budget has fallen from 34 per cent to 28 per cent. Would your colleagues be arguing that we should choose a figure, like 34 per cent, and that should always be fixed as the local government shares? I think that that is something that can be looked at through the fiscal framework, and there is obviously going to be on-going work with the Scottish Government and the local Government looking at that. I suppose that what I am trying to highlight is that, if you look back, you can see an erosion of local government funding. That certainly has an impact on things like roads, culture and leisure and the services that we provide. I think that there is an opportunity for us to look at perhaps a rules-based framework that could tie funding to a level, but that is something that would have to be worked through jointly through discussions on the fiscal framework. I was first selected to this Parliament in 1999. The local government had a higher share of spend than the NHS, but of course the ageing population has paid to that to a large extent. I think that the issue about having a set proportion for local government or anything else is that the Government can then decide what it considers to be expenditure within that particular remit, so there are always ways of getting around things. Anyway, I realise that that is at least one party's policy. Anyway, we shall move on. Ross. Thanks, convener. I am interested in, if you could just expand a little bit on a couple of points, in the causes written submission and partly based on the exchange. I think that it was your response to some of the convener's initial question. You were critical of the lack of data and drivers for the key priorities in the RSR, but I was making the presumption that the data and drivers are the indicators in the national performance framework and the data that underpins those. Could you just expand a little bit on whether you are critical of the lack of clarity over whether or not that is indeed the case, or is your criticism that the indicators and the data that underpins it in the NPF at the moment are insufficient for that role? There are a lot of challenges with the NPF indicators. Obviously, some of them, the data sources are on several air lags, which make it difficult to track the progress of outcomes. That is one of the things that they are considering what can be looked at as part of the review, to make sure that we have the most useful data for that. I think that that would be helpful for all of us. In reference to the comments about the framework itself, the section on the evidence and the drivers were only picked up one or two. The concern is that that shapes how people respond to consultations rather than to be fully engaged in giving a response to the consultation on the framework. Other key drivers might not be set out or the indication from how the Scottish Government will approach that around those other areas. Just slightly further on, in your written submission, there is some criticism of the NPF goals. It is about improving mechanisms for assessing whether or not we are reaching them. There is a line here. We should be able to go to the spending review, not just setting out some high-level numbers that are limited in their usefulness. Could you just clarify which high-level numbers are being referred to there? Is that a criticism of the NPF indicators? It was intended to show the lack of join-up between multiple strategic positions taken, so the budget and the NPF, as mentioned. Sometimes the interaction with the programme for government and how all of those are linked together and feed into each other. You mentioned that the framework as a whole does not reflect the reality of the past 10, 12 years and the pressures that the public sector has faced over that point. Were you looking there for a framework that better reflected that? Is what caused us looking for more about the narrative rhetoric around it, acknowledging that, or are there some specific points that you think are missing that would have better reflected that reality? Is that just a case if you do not feel that the Government has acknowledged it, or are there specific mechanisms, specific changes that you would make to better acknowledge it going forward with the review? A couple of other respondents said that the immediate impact that we face now in relation to the pandemic and the rising inflation could have been more explicitly acknowledged up front. From our perspective, compounding pressure on local government and local government services is one of the key things that we feel, and we are not the only part of the public sector that does that. I think that that could have been better recognised within, and I hope that that will be picked up throughout, due to responses and throughout the discussions that the Scottish Government is having on that. Aileen, you mentioned, like every other local authority and the Scottish Parliament, that you have just gone through your budget setting process. How much of a role does the national performance framework play at council officer level in the budget setting process? Are the NPF indicators part of your day-to-day discussion when you are preparing options for councillors? I would say that we try to ensure that the budget does not drive policy decisions. We obviously develop our planning documents within the local authority, but we very much ensure that those are aligned to the national performance framework. Within Fife, for example, we have the plan for Fife that looks at our priorities, and I have already said that they are closely aligned to the priorities that are in this document. As part of the budget process, we look at where there are opportunities for savings and where there are opportunities for investment. Obviously, there is close dialogue with local members as to what their priorities are, and they are guided by the planning documents that have been agreed to. We try to ensure that the decisions taken by members align to our plans, which are influenced by the national performance framework, because there is a very close alignment between what local government is trying to deliver and what the Scottish Government is trying to deliver. If you look at the national performance framework, in the different categories, local government plays a really important role, so there is close alignment, so hopefully that helps. I do not like budget to drive policy. I like it to be the other way around, but sometimes it does come down to the numbers at the end of the day as well. Absolutely. Can I just add one brief follow-up? Has a councillor ever asked you whether to prepare—whether it is about preparing options for the budget or just questions that are about the drafts at stand? Has a councillor ever directly referenced the national performance framework and the indicators in it? Have you ever been asked how does that contribute to X indicator, or is the discussion at local level entirely based on the strategy for Fife that you have just mentioned? I am not criticising either councillors or council officers, by the way. I am just trying to get an understanding of whether the NPF does inform day-to-day discussion. I suppose what does inform day-to-day discussions is that we obviously look at performance indicators with our members, and we do that not just at the budget point. We do that throughout the year and we look at how we are performing. A lot of the indicators that are actually in the national performance framework are indicators that we look at locally. We are considering that as part of our business as usual in our performance reporting. In the past, in different budget cycles, we have put performance information right at the forefront of members so that they understand where we are spending the money, what we are doing with the money, and we do try to make that link rather. In the past couple of years, it has been a bit different in our budget setting process because we have been dealing with the pandemic. We have had a high level of one-off money that will not be here forever. I would not say that the past couple of years have been normal, but I think that there is that commitment to always look at performance and what we are doing with the money and what we are achieving when we are taking decisions on the budget. This year, a couple of areas that have been influenced by what we are spending in parks, on roads and the concerns that are coming back from the public in those areas. We know that there are concerns about our performance, and that has led to increasing investment in those areas, but it is just using one-off money because that is what has been at our disposal this year. I have a couple of questions for you, Eileen. It is a discussion that we have had a number of times on the committee about the benefits of multi-year versus single-year budgeting. In principle, everyone understands that. How aware are you of the challenges that the Scottish Government has had because of its inability to undertake multi-year budgeting? When I look at my budget, I take a budget report up. I look at the position for the UK Government, I look at the position for the Scottish Government and, for the past, I do not know how many years we have done medium-term financial planning, where I have had to make some assumptions on the level of funding. Audit Scotland is obviously very encouraging for us to do medium-term financial planning, even if the level of resource is unknown. I am aware of the position of the Scottish Government. I know that you are in a position now where you have figures over the medium term, but I realise that that has not always been the case. That has hindered medium-term financial planning. I advocate that, even without the figures, you can always do some kind of planning, as long as the figures in years 2 and 3 are indicative. I suppose that they allow the Scottish Government to indicate where the priorities are and where they are likely to spend money. I hope that that helps. I suppose that the framework is attempting to do that as we all move beyond what has been a difficult financial time. One of our other concerns in the committee is, in general, the lack of understanding of how the budget process works for the Scottish Government and how that has a resultant impact on everyone else's budgets. You will clearly understand, for example, that it was literally the 11th hour of the night before stage 3, when the final figures came in. In terms of your colleagues in SIPFA and in the council, how clear is that understanding that the Scottish Government—I think that it was the Cabinet Secretary for Finance—described that it was trying to land a 747 on a postage stamp, which describes it very well. However, how clear across the board within SIPFA or within councils is your perception that the understanding is in place? Perhaps that might be a question for you as well, Meryn. I take up two or three budget reports to my council in the year. I align the position at the UK Government level and what information the Scottish Government has at their disposal. I am in a process with my own council where I am asking them to make plans. We started this perhaps back in March, and we are planning for the following February. We are based on the kind of advice that I am giving to the council on what I think the level of resources is likely to be. We flex that once we get the Scottish Government's budget, and then we flex that again when there is kind of late minute decisions. The councillor is very aware of that kind of changing position, and I suppose that there is a reliance on the section 95 officer to prepare them for that. I hope that that responds to your question. I suppose that the other thing that is going to your accountancy background is that I have asked on a number of different occasions whether the kind of data that you described the opportunity cost earlier of going through this really curmudgeonly process is collected because that is often a waste of time when you are doing projections that are promptly zapped. Do you collect data on how much time is spent in the process? I suppose that that is one area that if I were to illustrate that it is in efficiencies, I would be looking to say whatever number of days is being used to do this and then it is all changed at 11th hour. Do you collect that data in terms of SIPFAR or COSLA? I think that that is probably more qualitative data, because the financial planning that takes place I am making assumptions on what I think the level of funding will be for the next two to three years. I am guiding my authority through a process that allows them to develop plans. In the past two or three years, we have not been that far away from the figures that have actually come out. Where there is difficulty and where there really is an opportunity cost, I would say, is that we have not had figures for years two and three. With the financial challenge that we will be facing, it is really important that we are able to take time and plan for that. We will have to redesign services and that most definitely needs a period of time to get into that process. I think that there are multi-year settlements that would allow councils to do that financial planning with a greater degree of certainty. I know that within my own council, when I am looking at scenarios just now and I am asking officers to bring forward proposals, there might not be enough, there might be too much. We could be more focused on what we are asking people to do if there was more certainty on the level of resources in years two and three. That is a message that has come through clearly. In terms of COSLA and the submission today, how commonly understood is the budget process that the Scottish Government goes through within COSLA? For example, do you understand that there are 11th hour changes and a resultant impact in the financial flow-throughs? Is that something that you are clear about? Yes, absolutely. It can be very hard to track and keep track of. I think that the last two years in particular have shown a greater variation than others, as last-minute additional consequentials come through from the UK Government with the Covid spend. We have seen that, for instance, this year, the £80 million funding for local authority economic recovery was very much the 11th hour. We sought to ensure that our governance processes were in place to enable discussions with the Scottish Government on that and how it could be best utilised to enable it to get into the local government finance order, which obviously has to be put to Parliament as well. You said something very interesting when you introduced your comments about opportunity cost when it came to the development of a new social care system. You mentioned the fact that it is not just the cost of introducing that new system, but of the fact that there may be resources that have to be taken away from elsewhere. Could you just expand on that? Do you mean that, in terms of the administration of any potential new system, it would be an additional administrative burden, or do you foresee that some of the services that you provide on the ground might have to be changed and removed from social care services? I am probably basing my comments on the experience that I have had when we perhaps moved to a national police service and a national fire service. I was probably involved with work on the latter. For me, there is a huge call on management capacity to focus on actually transitioning to that change and planning for that change. What I would say is that there is only so much change capacity within an organisation, and it actually diverts from areas such as service improvement and making other changes. I suppose that it is trying to provide that stability for the workforce, too, if management focus is elsewhere and they are not focused on where they potentially need to be. In relation to that, we have had comments in the Parliament rather than in the committee that there are concerns among local authorities, not just in Fife, but other local authorities who feel that there is a huge potential cost involved in changing to a national care service. If that was to deliver far better results, there is a case that can be made for that. What we are being told in this Parliament is that there is concern that that might be very difficult, particularly in difficult financial circumstances. Would you, as the financial director for one of the councils, feel that there is sufficient evidence available when it comes to the provision of social care that could prove that the new service on a national basis might be better in the long run? That is a difficult question for me, is it not? Obviously, there is an aspiration to have a national care service, and part of it is the devil in the detail on how that service will be delivered and how that fits with local decision making. I can understand about the desire to have a national care service. From my perspective, I think that there is going to be an increased investment, and I think that COSLA's position has been that increased investment. If it had been used within existing structures, we perhaps would have got the change quicker without the disruption of moving to a national care service. Obviously, that is a political decision. Indeed. Thank you very much for your very helpful answers. Ms Kelly, on the basis of what has just been said, am I right that it is COSLA's position that some of the potential change to a national social care service could potentially be extremely difficult in terms of the use of the current services that are available? Our position, as Eileen said, is that if there is significant additional investment available, it can be put into the current systems and structures. It is not that we cannot see that there are areas for improvement, but we absolutely want to see them improved. However, part of the challenges that we see in social care is that the constrained funding that has been forthcoming for the past 10 years and more, and that pressure is built and built. There is a risk that, while structural change creates a distraction from what could be investment in services and redesign to improve the lives of people right now. Just to confirm that, in the current financial circumstances, it is your preference as the body that oversees local government that you would probably get better options of finance going straight on to the front line just now, rather than with any major reorganisation? Our view is that we can do things now within our current structures, and it is not that there would not necessarily be a place for a national care service, but that is exactly what it does and what it is seeking to achieve and deliver. I think that that is why we have some differences. Thank you very much. That was absolutely perfect timing to the second, Liz. Thank you very much to our witnesses for your evidence, which has been very helpful. That has concluded our questions, so I will now call a break until 10.45. I welcome to the meeting our second panel of witnesses, Paul Bradley, policy and public affairs manager, Scottish Council for Voluntary Organisations, David Melhawish, director of the Scottish Property Federation, and Alison Sim, director of the University of Scotland. Thank you all for your written submissions to the inquiry. There are no opening statements, so we will move straight to questions. I would like to begin with University of Scotland. I found all the submissions actually really interesting in a great contrast, so I will be asking you all probably a similar number of questions, but just to ask Mr Sim, you say in your opener, you're quite direct, basically, you say in the last paragraph on the first page and I quote, put bluntly, other areas of Scottish life that should be prioritised for investment, including higher education, look as if they will have to fight for the left-overs from the highest priority commitments. That's on the back of you saying that the priorities that the Scottish Government have should really obviously include universities and higher education. The issue of that, of course, is that every single organisation that comes to this committee says the same thing, more resources for our sector, you just have to fill in the name of the sector. The question that I want to say is that, and I know that you've made arguments about why it should be the university sector, but where should those resources come from and how much additional resources do you believe that the Scottish Government should be placing into your sector? Well, I recognise what you say. That really underlies our comments here. With a scarce public resource, everybody is competing to make the best possible case for a share of that, and we recognise that in the consultation on the resource spending review, there are really serious projections of what needs to be spent on things that I think everybody regards as a good thing in terms of health spending and making sure that we've got decent social care and social security. That does leave the problem that we describe. If you're not overtly prioritised within that, what is going to happen to your sector? From our point of view, we will be making a case strongly in our submission to the spending review that investment in higher education is one of the key things that you should be doing if you want to create a sustainable and green and inclusive economy. Actually, it's not simply an investment in a sector per se. It's an investment in growth for society and economy. It's an investment in making sure that we've got the people with the skills that will drive the future economy, that we're actually delivering the ideas and innovation that will be clusters of growing business and attracting inward investment, and that we're really sustaining the anchor institutions that sit at the heart of so many of our communities. So we think that we've got a strong case. We recognise that politicians have got difficult choices to make, but we think that investing in a sector that can really generate inclusive growth and actually generate future tax revenues by growing that pool of talented people and by growing those clusters of economic growth. We really think that there's a strong case for investing in that, and we're concerned that the projections in the spending review consultation document make it look to us quite difficult to achieve that. So we sit here with honest concern. Okay, I do appreciate that, and I think that you've actually made a very strong argument actually in your paper, but the two questions that I asked initially still haven't been answered, which is how much additional resources and from where should that come, because you talk about, I mean, we had a discussion in the previous session as you'll be aware about preventative spend. I mean, a lot of the kind of growth that you're talking about isn't going to come this year or next, but the money is going to have to come out of the budget this year and next. So where should that be? Most of those resources be found from, I mean, local government made a passionate plea prior. I know that SCV are obviously keen as well to have additional resources, so I just ask from where. I can't answer that question. I think that that's a $64,000 question. Sorry, the Government makes its priorities, but if people only come and ask for additional resources, it's surely incumbent that people then say where the resources should come from taxes or elsewhere in the Scottish budget. I think that that is genuinely the hard decisions that Governments have to make, and I think that we are here representing a sector that believes it's got a strong case for investment because it will create opportunity, because it will create growth, and indeed because it will create tax revenue, but I think that it's the politicians who are going to have to sit down and actually make those tough decisions between a number of good cases. I always say that we have an exceptionally good case. Coming back to your question of quantum, when we put analysis in the autumn in anticipation that what we would have seen in December might have been a multi-year spending review outcome, we made a multi-year case that said, over a period of a spending review, if you're really going to optimise our contribution, we had quantified investments that came to about £240 million building up over a period of spending review. We also recognised that Governments are facing tough constraints and tough choices, and while we were setting out that's what we would take to maximise our contribution to the Scottish economy, we recognised we might not get the whole way on that, but it was a reasonable quantified assessment of what investment it would take over a spending review period to get us to really make the best contribution that we can to Scotland's inclusive growth. That's helpful to put someone on what you would require. One of the areas in the paper that you mentioned is that capital review projects are suffering further real-terms erosion of support for research and innovation over the coming years. The Scottish Government has a 9.7 per cent real-terms reduction in its capital grant allocation. How can you ask for additional funding in capital when the Scottish Government is the only way to meet its capital requirements at a time of high inflation to borrow almost up to its limit? Again, this is a matter where the Government has to make choices within the scarce resource available to it. We recognise that, but we are making a case that if you are going to make those choices, and the Government always has a margin of discretion as to how it prioritises its resources, then investing in capital and universities gives you a good return. Last time, we got an additional allocation of capital of Scottish universities. Over 90 per cent of it was spent with Scottish businesses creating a virtuous cycle of growth in the economy. It also helps us to do what we think students deserve to study in facilities that are really of the quality that we think they deserve. The problem that we face at the moment is an £850 million maintenance backlog to bring a lot of the estate up to satisfactory condition, largely because we are sitting in a lot of 1960s and 1970s buildings that, frankly, are beyond their design life. Yes, you are absolutely right. Of course, the Government has to make tough choices, but we think that there are good reasons among those tough choices, among that margin of discretion that the Government always has, to make investments in higher education, in meeting students' needs and, indeed, in making sure that we have the facilities and capital resources that help us to bid for competitive funding from outside Scotland for research and to help us to attract talent and international students to Scotland who will not be coming here if they think that what we have is not of internationally competitive standard. In the resource spending review, do you think that the Scottish Government should be planning for additional student numbers, both domestically and from overseas? Do you like to see a growth programme built into that? If that is the case, how do you envisage that 1 to 2 per cent a year higher than that? What would the balance be really? How do you think that the Scottish Government should balance the number of Scottish domicile students with those from elsewhere? At the moment, we are not specifically arguing for a significant increase in Scottish domicile students. We have prioritised arguing for students to be funded at the level that we think they deserve. Our core problem on a teaching site has been the erosion of the amount of money that we get to teach each student. That has gone down by about 12 per cent to 13 per cent since 2014-15. In real terms, we think that it has now gone down by just over £1,000 if we project into likely allocations for 2023 over £1,000 per student in real terms erosion. Our priority has been to argue that students and the support that they get through pastoral and career services and mental health services and the rest should be funded at a level that reflects the cost of provision rather than to make major growth. However, there is potential for growth there. We have an increasing demographic of young people coming through school, young people with good qualifications and aspirations for higher education. There is room for growth, but that has not been our top priority. You mentioned international students. Every university is ambitious for growing the number of international students. They are great in terms of their cultural and educational contribution to Scotland. However, to be candid, given that teaching of Scottish students is underfunded by 157 million pounds a year and that research makes the loss of over 300 million pounds a year, according to funding council figures, the international students are plugging that gap. Everyone is ambitious for growth, but no-one needs to be reminded that there are huge geopolitical risks in that. There is a serious concern that the sector and its future are basically being bet on one thing because the core funding of teaching and research has been eroded and has placed that reliance on international income to a degree that is massively exposed to geopolitical risk. Thank you for that. That is also very helpful. Mr Bradley, looking at your own submission, you say in the last paragraph that you talk about the tough financial environment, and you say that that is preventing voluntary organisations from long-term planning, as well as harming financial sustainability and predictability for lenders and requiring the frequent and resource-intensive process of chasing small funding pots at the expense of focusing capacity on service delivery. We are all very familiar with that, and you are going to say that, ultimately, this is happening and that the Scottish Government is about to address its core priorities. How, in terms of the review, do you believe that that situation can be improved? I think that there is hope at SCV and hope in the sector that the review will lead to mainstream of multi-year funding across Government, and not just multi-year funding in terms of here is a three-year block of funding that is guaranteed, but multi-year funding that includes all the positive terms that voluntary organisations need, things like inflationary uplifts each year, flexible ability to direct their funding to where they need to, especially over a longer period of time where things change and need to adapt to needs. An example that was given to me recently was from an organisation that had not received an inflationary uplift in 13 years, which meant that it got around a 27 per cent rule terms cut in the funding that it gets from local government over that time. We cannot expect voluntary organisations to continue to deliver the services that we want them to do on that type of funding. In our submission, yes, we are asking for more money in terms of there should be inflationary uplifts and there should be a contribution to core operational costs for organisations, particularly because there has been a shift to more project and service funding and forgetting all the kind of support that organisations need to just run their organisation, HR, IT and also voluntary organisations ability to contribute to the Scottish Government's agenda on things like fair work and decarbonising. They cannot do that if they are only given project funding to focus on specific services. However, I think that our hope is that it is not just about increasing the level of funding, it is about getting the most out of the funding that is already there. I think that that is really important. This is about a whole kind of system change around how funding is allocated to voluntary organisations to ensure that they can make the best impact they can in their communities. I would say that asking organisations to apply for funding, chasing their towns to stay open within a one-year annual cycle, is wasting a lot of money. It is wasting a lot of Government money, it is wasting our taxpayers' money because that funding is going to organisations and they haven't then used that capacity in that time rather than focusing on service delivery and supporting people by finding new pots of money to try and make up that jigsaw of funding. That is what we want to see from the spending review. We want to see, regardless of the priorities that are set out, a mainstreaming of multi-year funding across Government and, importantly, not just in terms of Scottish Government funding to voluntary organisations but from local authorities who should hopefully get multi-year settlements, local Government funding of voluntary organisations, which is crucial. It is about £500 million that is given from Scottish Government to voluntary organisations, which is around £1 billion from local authorities to Scottish voluntary organisations. That is the importance of getting it right at local Government level 2. I am very pleased to see that COSLA, in its submission, had said that they want to see multi-year funding for the services that they commission, but there has to be questions asked if that does not happen at a local level. Why has it not happened if multi-year settlements have been provided between Scottish Government and local Government? Thank you very much for that. I visited a social enterprise mum constituency yesterday, and they echoed more or less exactly what you are saying. I recall when I was a member of the social justice committee in this Parliament about 22 years ago, we had an inquiry into the voluntary sector, and one of the things at that time that came out was the problem of initiatives whereby funders often look for new initiatives for one to three years, and then, of course, the third year of that project, they are often very nervous about whether they will survive. The staff are wondering if they are going to have another job or looking for other pots of funding, and often good projects are established, and then they can be discontinued. Two decades later, it seems to me that the situation has not necessarily changed that much, or certainly not as much as it should have done. Is that a specific concern still of SCVO? There is almost an emphasis on the new rather than what is actually working and delivering on the ground, and it is proven to be the case? I have been carrying out interviews with senior leaders of voluntary organisations recently, and we have also tried to do a bit of a randomised sample to get different views from across Scotland and different sectors. The issue that keeps coming up is that there is a big focus from independent funders, but from Government to on new projects, and to quote one organisation that feels at the mercy of funders, whoever they are, in terms of their decision maker and their priorities at a given time. If you are running a successful project that is delivering on important outcomes, whether it is a public funder or an independent funder changes their priorities in terms of what they want to fund, you are left looking for where else to go. I think that there needs to be more support for voluntary organisations to manage that transition between funding. What is really important is that funding very rarely covers core operational costs. It means that organisations, particularly small organisations, without hefty reserves are unable to fill that gap between projects, and that puts them at risk of lack of financial sustainability. It is absolutely something that we recognise and see. Even in the multi-year funding element, even though that is what we would love to see mainstream across Government, there is so much more change that could be made to improve that situation. Organisations waiting until March to find out—probably still waiting to find out if they are going to get their funding for next year—that is no help when you are working with auditors and trying to prove that you are good to go on a going concern basis. Some auditors now are even asking voluntary organisations to show two years of planning ahead and they just cannot do that, particularly if they are waiting on letters from Government to confirm that funding will be allocated. Even with single-year funding, there is so much more that could be done to improve the timeline of decision making and the timeline of payments. Some organisations have spoken to recently that funding for the new financial year last year did not get their funding in the bank until October. That is quite a substantial amount of time that some organisations will be able to manage, but others will not be able to and put them at risk. Even with the Children and Families Fund that has kept rolling over year on year as decisions are made around what replaces that, organisations only found out before Christmas that that would be renewed again for another year. However, it is a challenge for organisations in their planning. One organisation that I spoke to said that unless they got that confirmation from the Scottish Government, they only had about four or five months operating costs and they would have to close because they relied so much on that core funding from Government. It is about, yes, it would be lovely to have more resourcing and I think that what we would say is that funding the voluntary sector is a choice of Government to deliver on the outcomes in the national performance framework and the type of fairer, stronger, greener economy we want. However, if we cannot have more funding, let us look at how we change the funding system so that we get most out of the funding that is already there. I think that that is really fundamentally important because at the time of financial challenge, I am not convinced that there will be significant additional funding. Let us be realistic about it, but if it can be spent much more effectively and efficiently. I can only imagine how difficult it is for staff year on year out, wondering if they are going to have a job following start financial year and having to wait months and months for these processes. It really is unacceptable on something that we need to fundamentally address. Now, David Millish, you have in your paper in the second section, you talk about about resources being directed towards areas of Government dedicated to supporting economic development. I will put to you the question that I really put to Mr Simmel on, how much additional resources do you believe should be put to that and where should these resources be funded from? I think that our intent in that is to suggest that some of the challenges we need to provide the platform for the new economy, which is one of the priorities of the resource spending framework, looking towards the transition to net zero and so on, are so huge that there is no way that either public sector or private sector can independently try and address them. We think that we need to see a significant increase in capital funding, although much of our response in that was directed towards resource spending. I think that resource spending would be into supporting the various economic and enterprise departments of the Scottish Government to be able to support business to help to grow the economy and therefore provide the tax revenues earlier in the discussion was the virtuous circle that was mentioned in that. There is no doubting that if you look at some of the costs now associated with the need to transform our built environment and our economy, you are well into the stretch of tens of billions over a 10-15-year period. 200 million capitalisation or even 1.8 billion over the period from the Scottish Government is really just tapping into resource, so much more has to be done to try and provide a platform for the private sector to come forward with the support that it can to provide that key investment if the objectives of the transition to net zero economy are going to be achieved. I hear what you are saying, a significant increase in much more, but how much and what does that mean? Is it 5 per cent or 10 per cent? Given the fact that, as I already mentioned to Mr Sim, there is a significant reduction of 9.7 per cent in real terms in the capital allocation that the Scottish Government has, where are we going to find those resources from? If we are going to look at a financial review that looks at things long-term, we have to be able to surely put some numbers on those, whether it is percentages or amounts. Saying a significant increase does not mean anything to me. Statistically, a significant increase can be 1, 2 or 3 per cent, although people might think that it is 10 or 20 per cent. What does that actually mean and how should that be funded? I would have to work with some of the comments earlier, which are obviously not the politicians, who can only paint the problem in a way. We do think that there are strong arguments for some enhanced borrowing powers, and I think that that is one that is a debate between the different Governments that is going on now. There is, I say, a little doubt of the pressures on the Governments budgets. We do recognise that, but I think that if you are going to break that spiral of decreasing revenue that we have painted in our submission in terms of the concerns around Scottish income tax, our concerns about the tax base of the non-domestic rate system as well, if you are going to break out of that, you have to do it through trying to build growth into the economy. I think that it is for the Government to help the private sector by building the platform for that investment that can come forward. What we would say is that 200 million are thereabouts capitalisation for SNP, is the Scottish National Investment Bank. We have always said that we feel that it is far too little and that more needs to be achieved in that. Given that that is a bank and that, therefore, that is hoping to leverage additional finance, I think that that could be a way of the Government potentially maximising its investment. Kate, I am not going to be able to pin you down much further. Although you have mentioned enhanced borrowing, that is something. In terms of non-domestic rates, I was going to move on to that, but you did touch on that, so I will mention that just now. Basically, you mentioned something that, on other members of the committee, I identified, which was the significant prediction in rising non-domestic rates that will come over the next few years, which I raised, I browsed about, and I think that a number of colleagues did as well. In your statement, that implies an expectation of rateable valuation at uplifts for commercial properties, which may not materialise as the economy adapts to the post-Covid era, particularly if there is a reduction in the number of NDAs producing commercial properties as billings are changed to alternative uses. How do you see the market going? Do you feel that that predicted rise in non-domestic rates is achievable, is it even realistic, or do you think that things are going to stay much the same or possibly deteriorate? What does the SPF feel that the position is, and how would that fit in terms of the Scottish Government's framework going forward? With major reservations that the uplifts are going to be achieved, I think that we've seen in the pandemic an acceleration of the decline in retail property outlets across the country. On the other side of it, there's probably going to be an increase, probably, in central belt grade A, so top-level office rateable values. Our point is that we do not think that that increase or potential increase is going to accommodate for the decline in the commercial property rateable value tax base across the country as a whole. That's why we do question the expectations of increases over the next few years. You go on to say that there is a well-documented change in consumer behaviour that you talk about, and the loss of economic productivity and tax revenue associated with those roles? I mean that offices may not be in as much demand given the changes in working lifestyles as well that are on. You're already seeing the transfer, potentially, of some offices' conversions perhaps to more residential uses. Potentially, that will improve council tax base, but I'm not certain at this stage, so we're really just primarily focusing on the NDR base. Okay, thank you very much for that. Mr Bradley, when the question was asked, does the framework probably reflect the current economic and political context, SCVO responded that, and I quote, there is little recognition of the integral role played by the voluntary sector in social and economic life. From whom is there little recognition? My understanding is that there is a lot of recognition at all levels in Scottish society, so I wonder if you can expand your thoughts on that a wee bit. Yeah, I think it is far better in Scotland than even just looking at the UK Government's leveling up report last week or a couple of weeks ago referring to the charity sector as delivering 1,000 acts of kindness. I think that we're in a much better space in Scotland than referring to the sector in that way, and I think that it is recognised that we're a crucial part of the Scottish economy. I totally get that, and I think that we've seen that in terms of the Government's response during the pandemic and the speed in which they work to deliver emergency funding to the sector, and it highlighted the importance of the sector. I think that our experience, though, is that if you look at the development of economic policy in Scotland, it is very difficult to see the place of the voluntary sector in terms of those different products and different initiatives. In the National Investment Bank, we've mentioned that already. We're trying to think about new ways in which sectors are funded and supported. There's no reason why voluntary organisations who are delivering some significant services couldn't access that type of loan, flexible finance, and it's something that SCBO worked very hard to get in the bill was to ensure that voluntary organisations would be able to access that, but there's been no discussion about what that could look like in the future, so that's one example if we're trying to think about innovative ways in which we support the sector. Even if the Council for Economic Transformation Strategy has been published as we sit here now, I had a little look through before I came into the meeting and there's a few mentions of the sector in there, but mainly focusing on public and private sectors and a lack of any voluntary sector engagement in terms of the top table of trying to set that economic strategy for the next 10 years. So if you don't have voluntary organisations or a representative of some sorts engaging in those kinds of discussions, then there's a missed opportunity there in terms of getting the most out of a sector that delivers care, digital inclusion initiatives. It's so important for volunteering, mental health services, a whole range of things. If you look at the sector in its contribution to the national outcomes, it covers all that. Why is it that the voluntary sector is always missing from the discussions about the economic direction of Scotland? You're probably aware that last Thursday we took evidence from the sector's state, Michael Gove, and I put forward some of the concerns that SCVO had raised in the submission directly to him, because obviously SCVO and voluntary third sector is a multi-billion pound. I make some of the ability by contribution to Scotland to just in cash terms, not to mention its phenomenally important social aspects. Were you reassured by the responses that he actually gave? Because when I obviously put those two in me, he kind of indicated that the UK government wanted to do a lot more in terms of support for the sector. Yes, and thank you for raising that in that session. We'll absolutely contact organisations that are in receipt of the funding just now and face a cliff edge to ensure that they get in touch with their elected representatives, that's what we'll do. We are engaging with the department for levelling up and colleagues in Scotland in the Scotland office and so on. My understanding really is that there's uncertainty within those who work in the civil service, so there's obviously going to be uncertainty for voluntary organisations just now whose funding is facing a cliff edge. There's also lots of other changes in terms of funding just now. If you look at things like employability too and funding into that change to no one left behind and move to local service delivery, there's lots of organisations that are facing an end to their funding in different areas and the EU structural social funds are just one aspect of that. We are concerned but we are engaging with UK Government on that. We're concerned that there is a lack of, we've said this from the very start and I know that members of the cabinet have raised this in Parliament around the fact that there is an absence of Scottish Government in terms of the delivery of the UK share prosperity funding in Scotland and I think that that's what we're concerned about. We don't know who's taking the decisions here in Scotland around what's being funded for UK share prosperity fund. An example would be in the UK. The UK Government have said that for the first two years they won't be focusing on funding people and skills. They have oversight of that and that's what they're saying to local authorities but they will support some continuation of successful projects where those are at risk in Scotland. We don't know because obviously England and UK Government aren't responsible for that but who has taken the decisions on what's going to be funded in Scotland through the UK share prosperity fund in the first two years and then the following years. There's a lot of confusion and I'm very pleased that it was raised in the committee last week because we're concerned that local government has a big role to play in this but we're concerned about voluntary organisations getting access to that funding, particularly given the cliff edge that organisations are facing to funding. Okay, thank you. There's just one final question and I'll open with Mr Sim. So I'll close with Mr Sim before allowing colleagues in and it's with regard to the framework properly reflecting current economic and political context. Basically what you've said is that shouldn't the Scottish Government set a priority of making Scotland more competitive in attracting a working age population from outside our borders and stimulating robust economic growth to create jobs that attract them now putting to one side the issue of obviously external migration. Obviously there are a lot of people from elsewhere in the UK that we can attract to Scotland. Why do you feel that the Scottish Government is not doing that? I don't think it's necessary that the Scottish Government are not doing that, it's just if you read the consultation document on the resource spending review, it kind of sounds like it's making quite static assumptions about our demography and economic growth whereas I felt that the consultation paper could have communicated a much stronger ambition for economic growth and indeed for demographic growth of our working age population. It seemed to take it as a given that we would be seeing this rebalancing between working age and an increased non-working age population. Looking at it from a university perspective we are one of the huge magnets of talent to Scotland, whether it's in the rest of the UK, whether it's from the EU and further internationally. Just a bit of recognition in the spending review that there should be prioritisation given to things that can be done in society and economy and that leave us in talent and that create growth. I think that that could have had a stronger emphasis. It felt a bit like it was assuming that we were on a particular economic and demographic trend rather than asking hard questions about how you can buck that trend and really hypercharge demographic growth and economic growth. To be more ambitious in that context. I hope that we don't mind if I continue questioning on exactly that theme. In your submission you were very clear that one of the issues that worries you is the fact that when it comes to things such as research, innovation, artificial intelligence, etc. That is now classified on the capital side of spend rather than on the resource side of the spend. The national performance framework obviously concentrates on the latter. Could you just expand on what you would like to see in terms of what I think all of us in this Parliament would argue is one of the great strengths of the university sector in Scotland is research and development. You mentioned earlier in your comment about Scotland being able to attract the absolute finest people to come here. What would you like to see in terms of the recognition for that because that is obviously one of the sustaining factors of the sector? We have already seen output from the capital spending review and its outcome that, as a convener, noted projects real terms decline in capital expenditure for universities. That is a concern. A basic structural issue is that the core Scottish Government funding, which, as Ms Smith says, is now categorised as capital, the core Scottish Government funding for research, a piece for essential research, infrastructure, essential research staff. That is a platform that one uses as a university to go out and bid for competitively one research resources, whether it is from UK research and innovation or industrial sources, or hopefully we will be back into horizon Europe soon as well. Those leverage a huge amount of money to Scotland. We lever in about £800 million a year in Scotland for research and then that catalyzes economic growth that generates ideas that then turn into innovation, industrial growth, company growth and attraction of inward investment. Our concern is that, in an experimental sense, what we have seen is a really substantial real terms erosion of core research funding from Scottish Government since 2014-15. I do the figures here from the top of my head that is about a 13 per cent real terms reduction. That corresponds with an actual reduction in our success in leveraging in these external resources. Back in 2013, we were getting just nearly 16 per cent of UK investment in research and innovation. The latest figures are that we are down below 13 per cent of that resource, that UK-level resource, coming to Scotland. Again, coming to the virtuous cycle of creating growth, and I think that there are various economic estimates, but I think that the estimates range are about an eightfold to tenfold multiplier in economic growth from your research investment. We think that we are seeing a slow degradation of our capacity to be a real motor of innovation and economic growth. When it comes to the outcome agreements that are established between an individual university and the Scottish Funding Council, is it true to say that what you have just announced is the main concern of individual universities as they approach their discussions with the funding council about their outcomes that are being determined over the next while? Do they all share that view that that is where some potential problem could really hit hardest? I think that there are three things that keep them awake at night when they are looking at the outcome agreement. One is, as you say, the progressive degradation of our capacity to compete and lever in research resources into Scotland from outside and create growth through that. As I alluded to earlier, there are also seriously worried about the amount of money that is allocated for each student, for teaching and for all the pastoral careers and mental health support that students need. That is already for 2021-22 eroded in real terms by about £850 per student since 2014-15. We reckon that there will be over £1,000 in real terms next year. We are getting on average about £7,400 per student compared to England getting £9,250, so it just does not pay. What you see then is people, staff having to work harder and harder to meet the needs of students from a diminishing resource, which is a serious concern. The third thing, and again this release of economic growth, is funding for knowledge exchange. We work with a lot of businesses, universities work about 20,000 businesses a year to provide consultancy and expertise and about 35,000 people a year to continue professional development at universities. That is typically done at a loss, not least because Scotland is an SME-based economy, so it is the right thing to do, but it is a lost leader. Again, we are seeing year on year erosion of the funding. It goes into having a staff that can really do that detailed engagement with business, where it can be so catalytic for employment and growth. Addressing that long tail of uninnovative businesses, there has been such a break on the Scottish economy. My final point, Mr Sim, is there evidence when it comes to the cutting edge of innovation and research where Scottish universities have punched well above their weight for a very long time? Is there evidence that Scottish universities are finding it more difficult to be at the leading edge? In other words, if there are projects where the knowledge exchange that you spoke about in international co-operation, which has absolutely been crucial to many universities in Scotland over the last two decades, is there evidence that you feel that that is being undermined because of funding? Brilliant stuff is being done across the sector. In May, we will see that the results of research excellence framework across the UK and, hopefully, it will affirm a lot of really top-class international strength in Scottish universities. However, the objective evidence that I would come back to is the reducing competitiveness of getting out there and winning resources. Those are, on the basis of having high-quality bids, often high-quality collaborative bids, having the world-class facilities where you can do research having the world-class researchers. I still think that we are doing well. I still think that there is absolutely fantastic research across the sector, but that metric is a really worrying one that shows that where we used to be heavy-weight in competing above our weight, we are maybe a bit more welterweight now. I will ask each of you a question. I am beginning with Alasdair Sim. I am just leading really off where Liz left that. In your submission, you state that the teaching grant has declined by 13 per cent since 2014-15. I am just wondering if you could bring to life what the practical impacts of that have been. Your submission is saying that we cannot carry on on that slow decline. If we are sitting here in five years' time and that trend has straight-lined, what will be the consequences for higher education as a sector and, indeed, for individual institutions? That can be quite a difficult area for individual institutions to address, because, going back to the beginning of his conversation, they are all competitive trying to attract international students, since that has become so core to the business and to getting the resources into the sector to enable us to do our best for Scottish students. I will try and generalise. I think that what one already sees across some institutions and would see more of is an erosion of staff to student ratio, that the staff are having to support more students and support more students more intensely, because not only are you having to offer teaching and feedback, but our experience is that staff are now having to address, frankly, increased welfare and mental health needs of students. I think that that was increasing before the pandemic. It has been accelerated by the pandemic and also to address the lost learning that students have faced as a result of the pandemic, whether they are coming on from school or college or wherever, or even from the early years of university. The disruption to their learning is meaning that they are now needing more intensive input from academics and access to services. You have already heard students saying that, if they wanted pastoral support or if they wanted careers advice, they are not always getting it as quickly as they would want to. The risk that they face over time is just more stress on staff, more or less attention to the individual student. I think that institutions do everything that they can to avoid it, because you have to put the student absolutely in the centre of everything, but if the resource keeps diminishing in real terms, it just gets harder and harder and harder to do your best for the student in terms of teaching, support and the student being in the quality of facility that they deserve. Can I ask a very direct follow-up question to that? Obviously, we cannot charge fees for tuition, but will that lead to a situation where institutions will charge fees for things that they can charge fees for, such as increasing accommodation fees or indeed fees for access to other things on campus that are not tuition? I do not know the honest answer. I think that looking at it from a values-based approach, there has been such a strong and right emphasis on making sure that access to university is socially inclusive and that people are not denied opportunity because of the circumstances that they come from. Those would be really hard steps, but I am also being candid that, increasingly, there are stresses on the system that are affecting students and staff. Moving on to the Scottish Property Federation submission, first of all, as a former retailer, I was pleased that you were highlighting the issues that were faced by that industry, but the specific point is that we cannot rely on non-domestic rates. I think that the broader point is that the document that is presented essentially treats the resource funding as fixed and uncontrollable. To my mind, there is insufficient examination of what things the Government can control to increase its revenue, primarily around income tax, which, given that that is set to become an increasing problem, has set out in the Fiscal Commission forecast. I am just wondering if the Property Federation has thought about what sorts of things need to be included into that, what levers and dynamics are at play within the economy that the review should take into account? I mean, there is also directly related to that. Of course, just last Friday we saw UK Government coming up with ideas of an online sales tax, which would have impacts on business rates potentially down the line. It might not help to the clarity of the budget setting process because I think it would be a sort of funding rebate, if you like, from the initial view. However, I think that in terms of priorities and things that need to be addressed, we are about wanting to grow the tax base through growing the economy. I mean, that is really what we want to see. We want to see our towns and cities thrive and be able to have that built environment and that puts a roof over the economy, supports a new place for people to live and learn, supports the higher education sector as well through accommodation needs and other needs that it has. That is going to take some support in particular through the planning system, and we make this point in our submission too. That is a sector that has had, I think, budget cuts for around 40 per cent over the last 10 years. I mean, obviously, COSLA were on talking to you earlier and very understandable pressures that they have on that budget. However, the Parliament in 2019 basically voted through 49 new burdens on planning departments across Scotland, and they have not had the resource allocated to help address that and begin to support the economy, to begin to support the transition to net zero. I think that planning must have a much higher priority within the resource spending framework to be able to be that platform for investment that hopefully gets us into that virtuous circle. I mean, we are hugely concerned about that. Actually, in the scale of funds across Scotland, I mean, I think the RTPI put a figure on about 60 million over, I think, a decades process of those new burdens. This is one where resource has not come forward to support the planners to address those issues. In the context of a multi-billion budget, this would seem an area where it is not asking for additional volumes of hundreds of millions, but it could be so crucial as a catalyst to supporting the economy to rebuild. I know for our sector that that is a deep concern. I think that it is conveniently led off by saying that most sectors ask for more money but they do not offer to put more money in. I mean, I think that this is for once a sector where we have said we pay higher planning fees to help to contribute towards the economy. Planning fees have just gone up, of course, quite recently. Our members do wish to see an improvement in services part of that, which I think is only fair enough, but I think that for us that is probably the most critical lever into the day-to-day spending that we see across local government across the country. I mean, I think that that link between the planning system and the productivity and the economy is one that is often overlooked and I should probably just advise the committee that my wife is a planning lawyer after making that comment, which does not stop me from railing against the planning system at home. I just did a quick word count of the document and I was surprised to find that jobs only appears once in the Government's document, employment only appears twice and productivity only appears once. I mean, I just wonder if you agree with me that the document and the review once it is produced should probably have those words featured a few more times than that. It's a slightly flippant question, but I wonder if I can bid it to you. Well, yes. I mean, all the other ambitions will simply not be achieved unless you have a growth in employment and people paying the tax revenues to support the wider ambitions and would include productivity as part of that. So, yes, we agree. Finally, Mr Bradley, I was listening to your interaction with the convener and what struck me is that we continue to talk about the budget and about the voluntary sector as though it's just that, as a sector made up of volunteers doing nice extra things. Do we think that we need to have a proper discussion and reassessment? I don't think that that is the nature of most of the organisation, really what we're talking about. What we're talking about is independent, not-for-profit service delivery providers, because they are staffed by professionals, the services that you are delivering are delivered by professionals. Indeed, probably your significant number will be that all that they are doing is essentially delivering services on behalf of the public sector, or at least the majority. Is that a fair reflection and do we need to have a bit of a grown-up conversation about the relationship between quote-unquote the voluntary sector and the state? The voluntary sector is made up predominantly of organisations that are led and run by volunteers, but, particularly when we're talking about this multi-year funding aspect and the delivery of services, are those organisations that have the staff teams? What we've been trying to do at SCVO for a number of years is trying to work more collaboratively with the Scottish Government and with COSLA to try and look at how we can strengthen collaborations, strengthen partnership working, and also I think really importantly that's come through all the conversations that I've had with organisations from across all the different sub-sectors, whether it's about poverty or environments or health and social care, is the need for there to be greater recognition in the public sector of the added value and the contribution that voluntary organisations bring and the importance of those organisations being involved in very start planning processes and conversations around development of contracts and so on. We are working just now with COSLA on a programme called Strengthening Collaboration, and it's been running for about a year now and we're currently looking at all the obstacles that have stood in the way in terms of partnership working between the three sectors, but I think it's clear that a programme like that needs to be resourced effectively to be able to actually bring those different partners together and really look at practical areas where we can make a difference and improve how the different sectors work collaboratively, and obviously that's funded through the third sector resource budget line, which was cut in the budget by about £800,000 this year, so there's going to be restrictions on what you can do, whether it's going to impact on strength and collaboration or it's going to impact on the volunteering action plan or the social enterprise action plan, but yeah, I think we do need to have a conversation about the health of the voluntary sector in Scotland and the role that government and parliament can play in that UK Government are doing something similar at the moment in terms of working with the charity commission around what they're planning to do to monitor the health of the charity sector and the wider voluntary sector. I'm not saying that in Scotland they should take a similar approach, but I do think it would be good to have a conversation about the role of voluntary organisations in Scottish society. We are not just a group of organisations, 45,000 organisations that turn up at a time of crisis, we are essentially always in a time of crisis somewhere, but we are there day to day delivering vital services, 100,000 employed staff, at least if you take universities out of that equation and so on. A crucial part of the economy, larger staff based in the financial sector in Scotland, we need to look not just at the services that we deliver and how do we improve that and improve people's lives, but also how do we deliver fair work and good support for employees in the sector. Thanks, convener. I mean, I've covered a fair bit of ground already, but one of the questions asked the previous witnesses, which you might have seen, was just looking at the framework overall. Is it at too high a level? Should there have been more detail and maybe I can start with yourself, Mr Milhoosh? It is very big and false. I think that that is true. I mean, I think it's right to go for multi-year and maybe that dictates a bit of very high level consultation at this start, but yes, I think that that would be a fair reflection to say and certainly in our response. We buried through the Government's own budget to try and see where things go in the future years, which does go into much more detail, but I think that that would be a fair concern. I mean, I'll come on to the others on that same point later. Another witness, which I previously quoted, suggested that one way of giving more certainty over five years is to hold back money at the beginning and therefore spend less and build up a bit of reserve and then would have more certainty for further down the line. Is that something you would support or what? Certainly not the idea of a contingency reserve, but the difficulty is actually just finding that I suppose the spare cash to be able to start creating one at this point, but the concept certainly I think is a good idea. Okay, and a specific point for yourself as well. I mean, it was mentioned already when you're answering Mr Johnson about the idea that I think the UK Government's been floating of some kind of tax on online retailers. I mean, is that something you're supporting or is that something you think that would take pressure off our having to tax the shops and the street? So it only came out Friday, so I must admit that we're still going to look at the details, but I think that the concept is that the online sales tax would help to lift the burden off retailers in particular, I believe, are the UK's proposals. Obviously, that would be a very specific in England's case, but I think that the support for retailers would then go back through the devolved administrations for some form of targeted support, but obviously that presumably would be within the remit of the Parliament once that process happens. Okay, thanks. Mr Bradley, can I come on to you? I mean, the same general point, if you'd like to, do you think it's at too high a level? I think, you know, the priorities in there are good and they're worthy. I think that the final, the third priority around a fairer, stronger greener economy, I mean that heading alone you could probably fit the whole voluntary sector in there and what it does. So in that sense, yes, it is quite a high level. I do wonder about the absence of the national performance framework and there's obviously a couple of links, you know, a kind of a throwaway paragraph around linking to SDGs and the NPF, but how are we using the national performance framework to decide our our spending priorities over the next few years? I heard in the previous session kind of the assumption that we're using indicators from the NPF and that's underpinning all of the stuff that's in the framework, but there's no explanation of that and I think, again, it's a sign that we have a framework that we call the national performance framework, but yet we're not really necessarily using it to drive our performance and so every time I guess a personal flexion is whenever I look at a new document, looking at whether it's advised your group on economic recovery or this, there's always a different framework. There's a wellbeing framework or there's a national performance framework or there's free pillars or there's these three priorities and it's, I think it mentioned in the previous session, there seems to be a bit of a disconnect between all of this and it's uncertain, I guess, for organisations because they're trying to work out where they fit into this, do they contribute to child property priority? Well, yes they do because they're employers, not even just thinking about the direct services that organisations provide, but I think beyond these priorities we must see across all of government a shift to multi-year funding. Okay, I'll maybe come back to that point in a minute. I mean, I was interested again Daniel Johnson's line of questioning about, you know, what people think of the voluntary sector because it does cover an incredibly wide range of things. I mean, at one end you have got the, what I would call, you know, small charities, genuinely they are all volunteers, they're getting no public money and you're representing them, but you've also got big organisations, couriers, whatever, who are getting a lot of public money. I mean, do you think as a sector or some of these organisations have become too dependent on public money because they started off relying presumably on donations mainly? I think that organisations have been asked to, well, organisations since the financial crash have been trying to diversify their income, but the challenge with that is that also you then end up with an organisation that's potentially managing, one organisation I spoke to recently is managing about 36 different funding streams, so then you've got 30 different funding streams, 36 different funders, different reporting processes and everything and then you're bogged down and all of that, so I think we do need to look at how the voluntary sector is funded overall and supported to make sure that it's fair for organisations, the small and medium-sized organisations too, but I think that the funding from government, other funding sources are very reluctant, not all of them, but other funders beyond government are very reluctant to provide core funding, they want to fund projects or specific activities and to deliver a service or an activity or a project you need an organisation and where do you get the funding from to pay for all those different things that that organisation needs to do to stay afloat, but also all the different things that the organisation needs to do to decarbonise to deliver on Scotland's fair work ambition and all the other government ambitions that we want to contribute to because we're a key sector. The multi-year funding that we did raise in the previous session as well, it works all the way through, UK government gives it to Scottish government, Scottish government, local government and often local government to voluntary organisations, would a compromise be that if Glasgow City Council couldn't guarantee a particular charity 100 per cent funding for the next five years, at least they could guarantee the 80 per cent say and that would give some certainty and then they would have to say what we're going to have to flex the remaining bit depending on what we get. I think that voluntary organisations are, we're pragmatic, we understand the challenges that governments face and we understand the challenges that local government face in Scottish government and I guess what we want to be able to do as organisations is to be able to plan effectively and have that financial certainty that I think Cosly were talking about, we need that in the voluntary sector, we need that to be able to retain staff to develop services, to put funding into services so we can develop them for the long term. Actually even just supporting people, supporting people in difficult points in their lives, takes longer than normally an annual funding cycle and if we're just focusing on that then we're not going to be able to deliver on what we want to do so I think in terms of the specific example there could be a range of different options I guess but I think voluntary organisations are definitely pragmatic and understanding of the challenges and that indicative funding, knowing that yes things are unpredictable but for a voluntary organisation the risk that's transferred from government to voluntary organisations is substantial compared to the risk that a Scottish government will have in terms of funding that's coming to them. Voluntary organisations simply don't know if they are going to get any funding and that's a big difference between local government, national government and voluntary organisations. Yes, because they would know if they're not exactly what they're going to get but they're going to get a chunk whereas your members might end up getting nothing in April. Absolutely, yes. Okay, thanks. Finally, universities, Mr Sim, I don't know if you wanted to comment on my general kind of questions, is the framework too high? Should the Scottish government be trying to hold back reserves? Yeah, I will. I'm not necessarily sure I'm concerned that the framework is too high, I think it's more that it's maybe too exclusive and that there are really important contributions that aren't necessarily embraced in the three priorities. I think, for instance, individual growth and opportunity and what higher education can do to actually help you as an individual realise your talent and opportunities, that's not really reflected. Intergenerational impacts, I mean there's obviously rightly an emphasis on child poverty but how do we actually address intergenerational impacts with interventions, for instance getting more adults into higher education and indeed completing the uncompleted national mission of driving forward widening access to higher education for people from socio-economic disadvantaged backgrounds and also international. Again, I think we should be ambitious for Scotland as an international actor, from my perspective obviously we should be ambitious for higher education as one of Scotland's economic and reputational beacons. So yeah, not so much concerns at its high level, more concerns that the well-intentioned priorities are perhaps exclude other things that are really really important to individuals' growth and to Scotland's well-being and growth. On the reserves point, I mean I think a point you make is actually really interesting because actually it's exactly what universities have to do, you know, any surplus that they as charities generate gets held over as a reserve because that's largely where you have to find that margin for at least being able to do some investment in facilities and also the resilience against shock in an unpredictable world. I think that public finances, you know, work a bit differently with limited capacity to carry things over but I think what you point to is really interesting as an example of how universities have to manage their business. I think that the recommendation from funders is that they should at least maintain about 2-3 per cent surplus each year as a reserve so you've got that investment margin and so you've got that resilience and that's been extremely hard to achieve for a lot of institutions over recent years. Well, I'm interested in you touching that because that actually was my next point and probably my final point because I took the chance having been at Glasgow University to look at their accounts and their reserves at last July unrestricted reserves were £766 million and total reserves over £1 billion. That is more than the Scottish Government is allowed to have in reserves, let alone actually have. I just wonder, you know, that that's more than their total annual income. So when Glasgow University and I accept and maybe one of the richer ones is sitting on so much money, you know, how can you plead that we're not paying enough for a student? There's a massive spread between different institutions on how much actually they're able to carry over and I think in the last accounts that we saw, not the ones from 2020-22 but 2020 because they're not all complete yet but 2021, I think about half of the institutions were actually indeficitly weren't able to carry over anything from one year to another at all. Now some institutions, as you say, have done better than that. I don't know the details of Glasgow finances but I do also know that they've also taken on massive amounts of borrowing to fund a really ambitious expansion in the west end that hugely increases their impact for good on their community in Glasgow and likewise across the Clyde in Govan. So, you know, I think there may be a balance there between, you know, what the money they actually need to have in the bank to demonstrate that they're an investable proposition so that they can actually do these things that then get out and generate community benefit and economic benefit and research and innovation strengths. So, you're right to point to the issue but I think that if you're managing the university as a very, very big charitable institution, you do want to make sure you've got a margin there for investment, you've got a margin for resilience, you've got enough in the bank that you're actually an investable proposition when you want to go out and potentially borrow money to go out there and do something that's going to generate good for society and economy. I mean, I accept a lot of that. I totally accept that universities are doing good. I'm very proud of the fact that we have some of the best universities in the world. I just think that when the Scottish Government has so tight for money for the next five years that, you know, really, we maybe need to see a little bit more of a financial contribution from universities because I don't think that colleges hold these reserves, I don't think the NHS holds these reserves, I don't think local government holds these reserves. I mean, the actual, just not to spend all my time at Glasgow University but, I mean, the creditors figure is £252 million. So, that's a fine figure and presumably that's what's been used for investment but, I mean, the cash and cash equivalence is £488 million and the investments are £247 million so there appears to be a lot of extra money sitting there. And I just think, surely, if we do not accept that if the Scottish Government is tight for money, we need to concentrate on the colleges and we need to concentrate on the NHS and the local government and the universities really have to tighten up a little bit themselves. I think that there's a lot of priorities that Governments go to balance. I mean, I've said I recognize that but I do think, you know, two final things on that. One is, as a charitable institution, you know, having a reasonable reserve is actually just what you should be doing as prudent management and secondly, I think that there is actually pretty different across different parts of the sector and different institutions. You know, I think that there are some, particularly the ones that I've got that international capacity to go out and leverage in the international resource that are typically in a slightly more robust condition than perhaps some of the more modern universities that don't have that sort of reputational standing internationally and have to work harder to generate that additional income. I mean, I think that Audit Scotland looked at this twice in the past five years and their overall conclusion was that when you looked at the sectors a whole, the position of particularly University of Edinburgh and University of Glasgow as a really, really big institutions and really huge competitors in that international environment that masked a stress that was widespread throughout the sector. So maybe we should target our support more at the other universities? I think there are fairness arguments, so actually, you know, students should be funded at a level that reflects the cost of teaching as a student, I think, as a fairness argument that applies across the sector. But by putting your argument surely, we should pay more for a student, maybe at, say, Caledonia than we do at Glasgow. You know, I celebrate the fact that University of Edinburgh and University of Glasgow have got something in there to invest, but, you know, they are also looking hard at, well, how do we actually do the best for students within the resources that we get? I mean, you know, having a decent reserve as a charity is where you should be, but it doesn't necessarily exempt you from having to make the hard examination of what you actually got, what you need to support your borrowing to invest in your facilities, many of which, as I said, you know, even at the great universities. There's a major backlog of investment needed in facilities. Have you got what you need to actually have the staff-student ratio to do the best for your students? I mean, no-one's exempt from having to make these hard decisions, and I think, you know, as a matter of fairness, Scottish Government should be funding the teaching and support of students at a level that probably reflects the cost, not least, as coming back to the beginning of its conversation, because that huge reliance on international students, you know, while it's great educationally, it's great culturally, it's a massive geopolitical risk. Okay, thank you very much. John Douglas. Thank you, convener. I just want to dig a bit deeper into that, you know, the teaching grant of 7,400 that you mentioned. I guess that the Scottish Government would pay that for all Scottish students and would have been paying it for all EU students in the past, and that will sort of reduce over time. So the EU contribution side of it, is that a significant chunk of the overall teaching grant that comes in? I couldn't give you the EU student numbers if you give me a second, but I couldn't actually give you the exact portion of the teaching grant that was allocated to students. At the margins, it's, you know, what we're seeing is a cohort by cohort reduction in the number of EU students funded from the SSE teaching grant, so that is, you know, that that is helpful. It's unhelpful in the sense that we actually really liked having the European students, a lot of courses, and I think, you know, prickly at Aberdeen benefited from having a really strong cohort of European students there, they brought real skills, but yes, it does create a little bit of cohort by cohort flex in the system. I mean, we have seen a 50% crash in the number of EU students coming since fees were introduced for EU students, but we still hope to welcome those. I just think back to the original question that the convener asked, you know, where the extra money would come from. I guess there is quite a significant saving to the Scottish Government on not having to pay those fees, and I guess what they could do instead would be to increase the, you know, the rate per student to make up some of that without actually having to cost them any more because they're actually paying less because they don't have to pay for the EU students. I think that gives some a tiny bit of flex. I mean, I mean, I think when you look at the aggregate level of reduction in EU resource, and also the fact that other things have had to be absorbed in this year, over £7 million of new graduate apprenticeships are being absorbed into that core teaching grant. It means that the margin of discretion is quite low, but, you know, if I were to sort of express a shred of optimism, I would hope that the funding council, given what you've said about the EU students, might be able to put a little bit extra into the funding of each student this year. I don't think that they would have the capacity to do anything that matched inflation or anything like that, but I think that they may have a margin that enables them to at least make some sort of cash advance in the amount that students are funded at per for universities. I guess there is a little bit of flexibility in there because that has reduced him. Thank you for that. David, what to talk to you about one of my favourite topics in this committee is non-domestic rates. You know, like yourself from your submission, I find it hard to believe that in just four years NDRs are going to go up by 25 per cent. Obviously, we've got new tone date in just a month's time, revaluation a year after that, so for it to rise by that amount, I guess there's only a few options. The NDR base would have to increase significantly, revaluation would have to increase significantly or the poundage rate would have to increase significantly. Do you or any member see where it's going to come from? I think that we're very concerned about the upwards pressures on the poundage rate, given that we have the reservations expressed earlier about the growth of the rateable value tax base. That's a major concern because you're then getting to talk to a competitive nurse across the UK and so on. There's obviously higher rates for larger businesses right at the top, which are already beyond other parts of the UK. I think that the overall shape of the tax base is one of great concern. It's effectively relatively few shoulders because, obviously, the Government's policy is to have a lot of rate relief at the lower rateable value thresholds or even exclude it. That means that, for a growing tax base, I think that's more pressure on fewer shoulders. We're very worried about it because we don't see that growth is the answer, even though we've been very supportive of a lot of government initiatives, business growth accelerator and so on. It's not always perfect, but I think that the intent there has been excellent to try and support growth in the economy. We struggle to see where it goes and, obviously, where we've been in the north-east. The last revaluation came in just as the economy changed remarkably, and that led to the Government's support being having to introduce it very quickly too in a way, although arguably not as far as everyone had hoped from the industry side of things. I would see a marked change coming up in the forthcoming revaluation. I would have thought for north-east offices and so forth. I think that there are a lot of businesses in the north-east that have been in the hopes on the revaluation, and it's been delayed for a couple of years. It's been quite frustrating. Another area that you point out in your submission is the empty rates relief. In the north-east, I see plenty of good commercial property being bulldozed to save on NDR. Do you think that devolving that to local authorities is going to make things better or worse? We've been talking to local authorities, and it has to be said that this policy transfer is something that is only just beginning to get the heads around. I believe that there are discussions with the Governments about financial transfer to support the cost of relief, which is much lower now than it once was. The problem with the way that the system works in particular at the moment is that the rates that property companies, landlords and developers will pay for properties that have fallen vacant largely because they have no market anymore are just part of the cost. You have insurance, you have facilities, you have all sorts of costs, so the rates are really an additional tax on failure, if you like, because quite often they do not have a line-up of tenants coming in, and it actually skews the market, which may well come through in the revaluation because a sitting tenant will be able to say, well, if you don't basically accept a rental offer of next to nothing, sometimes it is nothing just so that the tenant takes the rate, then guess what, we're off elsewhere, and we'll leave you with that large tax burden with no income to pay it. We've often heard in this chamber, in particular, on this policy in there that this is an incentive for landlords to let property, landlords like to let properties because they like rental income, and we'll just make that point straightforward. The system now, in areas where you do have fundamentally weak markets, I'm afraid, is the case that the landlords are really over a bow in many ways in having to take very little in the way of rental banks, which should come through in what the assessors start to find. That is another reason to question the estimations of the growth in NDR over the next few years. In terms of speculative development, I guess it would just be too high a risk there for people to come in and build without knowing that they've got a guaranteed rental at the end of it. Developers are a lot more complex, and they give a project a lot of risk as part and parcel of that project. Developers will have the cost, for reasons that were explained earlier, of holding properties whilst they're trying to revitalise them, bring them back into use. You obviously have processes that have to be met and gone through in regulatory terms there, planning and so on. The BGA was there to help speculative development, but at the moment the financing for speculative development, we're in a very risk averse world and really we have been since the financial crash and arguably had only just begun to see the flickers of recovery in many ways, even in certain aspects of the central belt, I would argue. I think that that is a deep concern. I think that the thinking around empty rates policy, which is transferring, as you say, in a year's time, will affect a huge number of public rate payers as well if vacant properties is something that we do feel needs to be rethought. All we really ask for from our members is a chance to do something to get some of those properties back into effective use, which may well be a change of use. My point of view is that a lot of local authorities are going to have people queuing up at their door expecting local authorities to be able to do something around rate relief, because we see the same thing about the local rate relief schemes that they've got the power to do, but they don't have any money to do. We've heard earlier about the squeeze on local government resources. I would be concerned that your members are going to be queuing at the door of those local authorities and that they've got no money to offer any schemes at all. Yes, and our members don't want to be in that way, they want to be producing new properties to support the tax base. At the same time, with the pressures that they have themselves, it's hard for them to try and regenerate our towns and city centres if they're having to fork out a lot of taxing rates where they don't have the income coming to cover it. I guess that the key thing would be if we really want city centre regeneration, there needs to be proper schemes in place at a national level, because local government can't really afford it. I believe that the discussions are going to take place between the Government as they transfer that into each policy, but we don't know where that will lead to yet. I'm not sure of the figure myself. You've quoted per head for students, but what percentage of funding does the university sector get, the overall percentage from the Scottish Government? There is hugely by institution, if you're looking at somewhere— Well, aggregated, like always. I aggregated, I think it's about 35 per cent. I thought I had it in here, but it's very, very variable between institutions. Of course, yes. As I say, with the UHR, UWS, we're about 60, 70 per cent from the Scottish Government, if you're at St Andrew's, it's more like 15 per cent. Do you know what the aggregated percentage is for the rest of the UK? I'm just interested in— It's radically different in England and Wales because of their fee structure. Basically, even though the money that they get per student is 9,250, it's coming to the improved student loans company, that's not counting as government expenditure. In accounting terms, their dependence on Government funding would be much lower. Obviously, in actual terms, they're basically able to cover costs on teaching home students in a way that we can because we're getting less than 90 per cent of cost of teaching home students. I suppose that leads me on to my main question. We in this committee, when we agree and inquire, were helped very ably by the clerks in devising what is asked in terms of calls for evidence. In one of the questions, it says, does the framework properly reflect the current economic and political context? I was a bit surprised in terms of the SCCO and obviously yourselves that you didn't reflect on the political context, because what you highlight there is clearly a political context where the rest of the UK has gone down a fee route and the loans on students and the Scottish Government has elected not to do that. I was just checking earlier—I don't know if my figure is correct, it's probably a few years out of date—but, for example, in Holland, 61 per cent of funding to universities aggregated comes from central government. That's clearly starting a different—so I suppose to yourself, Alistair, I was quite surprised not to see a reflection of the political context when we connect it also with your comments about attracting a working-age population outside of the worders. Obviously we know and it's come out this morning that Scotland's been greatly affected by Brexit. Also, yourself, Paul, you mentioned about SNP, and I agree with your figures about £2 billion capex is low. I personally would like to say it much higher. I suppose my question to all three of you is what makes you avoid this kind of political contextualisation. Before you answer, I'm well aware that we are living in quite polarized times in Scotland. I understand that, and I say that not from one side of the fence, I'm merely recognising that as a fact. As a relatively new member, what I'm seeing with this committee and the economy committee is that people are reluctant to tell it how it is for fear of getting into what is quite a polarized debate at the moment. From my context, sitting in this committee where we actually were interested in the numbers and the financial transactions, that reluctance is inhibiting understanding. I think that we saw that earlier looking at talking about COSLA and SIPFA. My question then is, in the light of your comments this morning, if you were going to re-complete the does the framework properly reflect the current economic and political context, is there anything that you would like to add that's not in your submission? Yeah. Now you're on it. Let me not be inhibited then. I mean, I think two things. I mean, one, I think I've alluded to this already, is actually surely the political and economic context for Scotland has got to be ambition for growth, inclusive growth, green growth, but ambition for growth, because it's a good thing in itself, because it provides opportunities for people, and then because it creates this virtuous cycle of actually generating tax revenue that supports the decent public services that we all want. That's what I felt was not front and centre in the spending review consultation in the way that I felt it should be. I'll also just, you know, you asked the contrast in policy position between Scotland and England on how we fund students. Now, there is a really broad cross-party consensus in Scotland now that publicly funding students is the right thing to do, but I think we would respond to that and say that actually puts an increased onus on Scottish Government to step up to the mark and actually fund them properly. In England, the government has slightly sort of stepped away from that responsibility, but I think in Scotland, given the strong political consensus that students should be publicly funded, there is a strong argument that they should be properly publicly funded at a level that reflects the costs of teaching them and providing them the services that they deserve. That has been substantially eroded since the policy decision was made last time Scottish Government examined its way back in 2010-11 to really plunk firmly for that policy and to choose that policy in a really permanent way. Since that policy was chosen, particularly since 2014-15, we've seen the policy, which is widely supported and maintained, but the funding of it eroded. See, I knew you would enjoy it. Thank you for that. To the other two panellists, just to finish up, is there anything you would like to add to that question? Perhaps it's triggered some thoughts coming out of today. Paul, I can see you're taking a deep breath. No, there isn't. I think that our submission—I don't think that we do hold back as an organisation in terms of highlighting the issues that we think are there. I know that many charities do feel that way, do feel that they have to hold back because of their funding arrangements. In my five years at CBO, I have not felt like that. I would want that to come across in our responses. To the committee, back in pre-budget scrutiny, we were clear about the need for the Scottish Government and UK Government to look at how it managed to navigate the whole multi-year funding issues and working together. Of course, we are careful in terms of treading into difficult areas that we shouldn't be treading into as a voluntary organisation, as a registered charity, but our submission this time is purely about what the Scottish Government is going to do. It has the power now to deliver a multi-year spending review, and that's what we wanted to focus on. We've been focusing on things around UK Government and other places in other submissions, but in this case we've been focused solely on the Scottish Government's allocation of funding to voluntary organisations and to local government, hopefully, to voluntary organisations. A huge question. I guess, as an interest group, we tend to focus on policies rather than on politics, because politics can change very quickly. We're keen to work with whoever the Government or opposition of the day are in that broadest sense. We alluded earlier to the fact that we thought that there ought to be some more enhanced borrowing powers for this Parliament. The differential between what the Scottish Parliament and Scottish Government can borrow when you compare that with Public Works Loans Board and individual councils, and we've seen some of the great things that Dundee has done and led with making use of some of those enhanced borrowing powers. It seems to us to be a clear demarcator that a better agreement could be found somewhere along the lines, but you're probably right. We do usually not enter into too much of a political dictate, but we do think that there are some improvements that could be made between those kinds of balances. I think that that appears to have exhausted all the questions that we have as a committee. I just want to thank our witnesses for their excellent evidence-giving today. I'm going to call a two-minute break in order for us to get into private session just for a few moments. Thank you very much.