 Okay, good morning everyone and welcome to the 27th meeting of the Local Governing's Committee committee in 2017. Can you remind everyone present to turn off mobile phones and as the meeting papers provided in a digital format tablets may be used by members during the meeting. Delighted to the table, so we'll get a full house today. No apologies, I'm going to receive them from MSPs. I'm going to shoot on to agenda item 1, which is City region deals. Can I welcome Patrick Wickins director Ayrshire growth deal, Douglas Duff head of economic Development and Environmental Services Falkirk Council, Philip Ford, original skills planning lead and Paul Sealy original skills planning lead, skills developed Scotland and oh my apologies have I missed something? I was going to say, I promise you, I understand it's been indicated you might want to make some brief opening remarks before we move to question, so in your hands gentlemen, we'd like to go first. I just thought it might be helpful for the committee just to set a little bit of context for the Asher Grove deal. The Asher Grove deal is not formally agreed yet. There's a commitment from the Scottish Government but we are still pursuing formal commitment from the UK Government. The Grove deal is an all but name, a city deal. We view it as the same type of mechanism, so we expect it to have funding from the Scottish Government, the UK Government and indeed from a local partners. In that sense, it's exactly the same in our mind as a city deal and over the same period of time is our ambition. As I say, we're making good progress with the Scottish Government. We've had quite a lot of engagement with UK Government officials, but we really need a green light from the Treasury and we hope to get that in the upcoming budget on 22 November, which will allow us to go into formal discussions with the UK Government. Within Scotland, we've got cross-party support and we're very grateful for all the political parties who are working on our behalf and pressing hard to secure that commitment from the UK Government. We think there's a compelling case for Asher. There's a compelling case in terms of need, the underperformance of the Asher economy. We think there's a compelling case in terms of the opportunity. Some of the key sectors that we have are important, not just for Asher but also for Scotland and the UK as a whole. We're placing inclusive growth at the heart of what we're trying to achieve. Equity may not be quite the right word, but most of Scotland is now covered one way or another by city deals. We feel that Asher is an important part of the Scottish economy and, as such, we should be doing all we can to secure the investment to help it to realise its potential. I'm happy to represent Falkirk Council in those discussions and probably to give an update on the submission that we gave back at the time of the consultation. Things have been moving forward in Falkirk. We propose an investment zone. It's part of the proposition within the national planning framework 3 document. We've been making progress on that proposal with the Scottish Government, the UK Government and a number of stakeholders in that process. At the time of the consultation, we were reaching agreement with the Scottish Government to proceed on a business case. That work has been taking place over the period of summer and autumn. There have been a number of workshops taking place involving business and various stakeholders in the area to bring that forward. We've had a conference of business last week just to convey where the stage of that work has reached. We believe that we're in a good place now to help to carry that forward. The investment zone builds on our work on tax increment financing and acknowledges our need for infrastructure improvements, but also improvements to help to deal with the concerns of the community and the prospects for development of the chemical sector in Grangemouth. Grangemouth is at a tipping point currently. There is major investment in prospect at that location. We see that as a vital step, not solely for the local economy but for the national economy. Our work on that started back in 2013, at the time of a crisis situation that was affected by the prospect of losing the Ineos operations at the site. We're now moving that forward and we see the investment zone as key to taking that work forward. We see that as having moved things forward considerably, and we're looking forward to further discussions with the Scottish and UK Government to enable that to take place. It's been indicated, Mr Ford. I think that it's making the marks on behalf of SDS. I'd like to give a brief overview of SDS's approach to skills planning and support for the city region deals for context. At the heart of everything that we do at SDS, we have our skills planning model that looks at supporting the needs of employers and providing individuals with information to help them to make informed and sustained and good career choices. One of the things that we've been heavily involved in in recent years is developing robust labour market information or regional skills assessments. That's on a local authority basis, a college outcome agreement basis and a city region basis where that exists, and that information is then used to help support city region deal partners to develop their propositions. We've also used them to develop sectoral skills investment plans across 11 key sectors of the economy and to develop regional skills investment plans in a number of regions across Scotland, again with the support of city region deal partners. The last couple of weeks are jobs and skills in Scotland report, which provides labour market intelligence across Scotland in terms of supply and demand and some of the key challenges faced in the labour market and well worth a read. More specifically, in terms of how we support and have supported the city region deals, growth deals etc. across Scotland, the labour market information that we provide provides some strategic insight to help partners to make the decisions about where they might want to go with the projects and also to stress test some of the assumptions behind the projects that are being developed. We also support the framing of inclusive growth in skills within the regional skills investment plans and the sectoral skills investment plans. The information that we provide will also help to make decisions about where to prioritise effort and support as we expand our work-based learning offer in terms of foundation apprenticeships, graduate level apprenticeships and, of course, the modern apprenticeship programme, and to target those SDS products and services to specifically address areas of labour market under performance. I'm happy to take any questions. Thank you everyone for those opening statements and obviously we'll pick off different themes that were raised during those opening remarks as we go through roughly an hour for our evidence session. We'll move to questions now. Andy Wightman, MSP. Thanks for coming in today and thanks for your written evidence. Some time ago, I think, so obviously things may have changed a wee bit. We look at the city region deals and, obviously, Ayrshire and Falkirk do not have a city region deal as such or talking about them. I'm just wondering, given that, in Falkirk's case, you talked about an investment zone and aligning it with the national planning framework, it's a bit of a messy policy environment where you've got city deals that were introduced in some of haste in 2014, focused on cities as growth areas for regions. You've got a national planning framework, you've got no regional policy and you've got agendas around community empowerment. In a sense, are you just following the trend? Do you want some of the action or do you think there needs to be a more coherent approach to how we do regional policy outwith the big cities? Mr Duff, I'm happy to cover that. Our submission does make that point. At the time of making the submission, the enterprise and skills review was taking place and has been looking at this area of the co-ordination of the various area-targeted initiatives that take place across the country. We do see a need for more consistency and clarity on the models that should be taken forward. It's plain in the spice briefing, where the whole in the middle in terms of coverage of city deals and the pattern of activities that are taking place. However, in our terms, Grangemouth is critical to the nation's economy and that was seen in 2013 and is going through a major change. It's important at this point in time that we're clear about how that's taken forward. Our approach in terms of initiatives has been to position ourselves clearly in relation to the national policy picture and we have quite strong alignment there. After the INEOS situation in 2013, an economic partnership came together to find a new economic strategy for the area. That economic strategy is well aligned to the national economic strategy and has similar priorities. It points towards the tools that are necessary to deliver on the changes that that strategy hopes to achieve. I think that we do recognise that, certainly for us, we don't quite fit the picture with city regions, but we are always open to engaging with partners around us. On a variety of measures, we do engage with the various authorities around us. We participate actively in national forums to take forward the prospects for the economy. From our perspective, the tools are there. There are a range of tools that are available to us for economic development to be carried forward. It's the structure in which those tools are applied that needs more clarity. Part of that can come through the enterprise review, the emergence of regional partnerships. Perhaps we'll enable that to take place, but perhaps more in-depth structuring of the approaches that take place. We recognise the contribution that each area, each community can make towards the national economic growth, which is an important factor to consider. From our point of view, the enterprise and skills review has set out a path for economic growth and economic development across Scotland, and Ayrshire was identified as a pathfinder region in that. In terms of our work on the growth deal, we very much see the pathfinder work sitting alongside that. The growth deal would only deliver certain aspects of what we think is necessary to make Ayrshire a successful economy and how we deliver economic development services and how we do that in a way that is joined up with our partners is absolutely critical. We are working alongside the growth deal to develop a governance model, which will bring in our partners and bring in crucially the private sector to set an overview and a strategy for the Ayrshire economy going forward, but also being very clear about the types of services that we need to put in place to deliver that economic growth. By economic growth, I do mean inclusive growth, and we are very clear that that has to be at the core of what we are doing. What we have tried to do is to marry up our economic ambitions with something called the inclusive growth diagnostic, which was developed by the Scottish Government and had a pilot in North Ayrshire. We have now rolled that out across all of the Ayrshers and we are using the evidence from that diagnostic to inform how we take forward this new shared delivery vehicle for economic growth in Ayrshire. Do you want to follow up on that, Mr Feynman? That is very useful. In your evidence, Mr Wiggins, you say that city region slash growth deal should be matched by comprehensive monitoring and evaluation frameworks deals involving an element of risk for local authorities, many comprise of payment by results mechanisms. That is in relation to convention of city region deals. Is that critique overcome by some of the thinking that is going on in Ayrshire at the moment? I think that it is too early to say in Ayrshire because we have not got to that point of negotiations with Government. Do you want payment by results model? No, I think that we are open to those discussions. The question for us is how can we secure the funding that we think is necessary to improve the infrastructure in the area? Of course, if grant funding were fully available, that would be our preferred option, but equally we recognise that public finances are tight. There is going to be an element of risk in this, and that risk has to be shared across all parties. When we are in discussions with either the Scottish Government or the UK Government, we are open to all forms of investment. In fact, Douglas mentioned the TIF, and that is a similar payment by results type process. Growth accelerator models have been used elsewhere in Scotland. All we are saying is that we are open to those kinds of discussions to try to secure the best possible result for Ayrshire. Can I ask a question about the governance framework? I am focusing on the city region deals rather than skills in this line of questioning. How do you ensure the good governance, in particular the participation and engagement of communities in all of this? There is a big community empowerment agenda, and yet city deals or growth deals by their very nature, in the name is a deal-making process between local authorities and two Governments. There is a risk that the conventional democratic engagement that takes place in local authorities on a day-to-day basis around planning, for example, gets missed in those. Can you say something about how you envisage how engaged communities are, your residents, in those deals? From our point of view, that is something that will come through the new governance framework that we want to put in place for the pathfinder. We have an interim governance arrangement at the moment, which is seeing us through a deal negotiation phase. That comprises the three local authorities and senior members from each of the three authorities. We are in the process of designing the new governance model, but we are quite clear that it needs to include a whole range of our partners, including the third sector and community representation, so that we have this overview of everyone who can play a part and participate in the growth and prosperity of Ayrshire. The growth deal will just be part of that. The growth deal is a set of projects, but what all the local authorities and partners are doing is a much broader set of initiatives, including skills, employability, planning and regulatory services. There is a whole range of levers that we can pull to improve the working of the local economy. As such, we want the pathfinder to be able to embrace all that and articulate the relationship between growth deal projects and the whole range of services that we need to deliver that economic growth and that inclusive growth. That will include how we work with our communities. Our governance structure is probably simpler because we are not engaging other authorities in our process, so the investment's own proposition that we are working on currently focuses on our council area and embeds itself with the range of other activities that take place through our community planning partnership. The community planning partnership brings together all the public sector and third sector bodies in the area to advance the overall ambitions for the community, and there is quite extensive involvement of the community in that structure. Our input to that is through an economic partnership, which is the lead body for advancing the economic activities of the community plan. That does engage business in its work, so that brings the business component to it. It acknowledges the breadth of various activities that are taking place in relation to the development of the economy and carrying forward the economic strategy. The economic strategy has three pillars to it. It is about growth, investment and inclusion. In terms of inclusion, there are quite extensive activities and networks in place to move that forward in terms of particularly employability, but in relation to the likes of supported business and employment and community engagement in regeneration activities. We have quite a clear governance structure that allows us to take that forward, and there is scope in each stage for community involvement. In terms of input to the investment zone proposition itself, as Patrick Sane said, that will encompass a range of projects. It will be important first of all to her site of the prospect of that being carried forward. It is important in engaging the community to involve them at a point when there is something clear to discuss and at a stage when that is a bit uncertain as to what can come forward that can introduce confusion and it is important to avoid that. At the stage where we are at, we are trying to flesh out the package, and that will be the basis for further engagement with the community when it is ready. At the moment, I am going to bring Mr Gibson to get a strong constituent's interest, so he wanted to explore a line of questioning. He just clarified something with community engagement. I think that there is a line of questioning by Jenny Goverth last week in relation to projects that may or may not be considered. It is part of city region deal or the various deals that are being proposed here. At what point those who are crafting what a deal might look like goes to a community or community organisations and says, there are various options here. We are talking about inclusive growth. There is only so much money on the table. What would communities' priorities be and engage with them at a co-production stage rather than presenting communities with a ffata complet? Here is what we are doing for growth or inclusive growth. Now you can tweak at the fringes, some of this, I think, and I want to explore that again this week. There were issues around community buy-in at the very early stages. Are there any examples of co-production, and then we will take Mr Gibson in specifically on their shire stuff? Perhaps not quite as far as co-production, but we have used a number of standard community events across the ashes where they have community conferences to talk about the deal and listen to community groups and community representatives about some of the issues they face and some of the concerns they have, and we have looked at that in the context of developing some of our programmes. I think that the other thing that I would say is that the deal is only part of the picture. What we have to see is that the deal projects fit within the broader pattern or network of projects on services that are delivered by all of the partners in the local area. It is part of the issue, and it is not the entire solution. That is helpful. No-one else seems to have done another way about what we are suggesting, either, should point to Mr Wiggins. We are not singling out the witnesses here, so do not worry about that. Mr Duff, do you want to do any examples? I would mention our work on community planning. That is the principle model by which communities are engaged in defining the ambitions for the community and how they should be delivered. Through that, we have done consultation on the plan itself. We acknowledge one of the priorities in the plan. There is a clear commitment to inclusion, and among the priorities is the need to reduce youth unemployment. That brings a range of existing activities. That is the point when we can look towards the prospects of new money coming at being introduced. It is Patrick saying that it is not just about the growth deal. We operate a range of inclusion programmes. We have been successfully recently for the fair start programme in the Forth Valley, so that is an opportunity for the third sector and others to shape how that would be delivered. We would use those mechanisms, and it is a discussion more about community priority and how that can be met and how the services are shaped to meet it. Is that helpful for community planning partnerships? Is it helpful to focus where the community priority sits? That becomes helpful to the committee. Mr Gibson, there is some matters that we want. We will get to skills development Scotland shortly. I do promise you. One of my questions is going to be for Skills Development Scotland as well, actually, based on what Mr Ford had said in the previous answer. I was just going to ask, convener, just on the back of the questions that Andy Wightman had asked. Patrick Wiggins on page 2 of his submission said, I quote, "...given the need to ensure inclusive growth, all city region growth deals should illustrate how they achieve the same." He talked in his response about the inclusive growth diagnostic. I wonder if you can tell us a bit more about what that is and how that will impact positively in terms of delivering for the most economically challenged parts of Ayrshire, such as, for example, the Garnock Valley. Inclusive growth diagnostic is a tool that has been developed by the Scottish Government. It is a tool that does an intensive analysis of statistics and speaks to a number of individuals and stakeholders in a local area. It identifies the key barriers to economic activity. That can be a range of things, from economic barriers to social barriers to infrastructure barriers. It covers everything from skills, healthcare, childcare, child provision through to local transport issues through to jobs, local jobs, skills. It ranks a whole series of barriers based upon the evidence of a local area in terms of what is stopping them or what is hindering them getting access to employment opportunities. For Ayrshire, 18 barriers have been identified. What we are looking at is looking at those 18 barriers. We are looking at the strategic priorities for Ayrshire as a whole. As Douglas said, it covers things like economic opportunity as well as issues to do with skills and how we achieve inclusion. We match the two together and that is forming the structure that we want to develop for delivering the Pathfinder. The types of services that inform us will become the basis of the Pathfinder and the services that will deliver to local communities. We hope that by reshaping our services and bringing in new infrastructure funding we will be able to tackle some of those areas that have deep-seated long-term deprivation problems by having a fresh look and a fresh focus and prioritisation of service activities to try and hit upon the key problems that those particular communities have. What are the service activities? You previously mentioned that you need to look at the types of services that you need to put in place. Say a place like Cabrony, what would be the services that we are going to do? Again, you would expect the normal business development services. You would expect to bring in as much closer alignment with skills in terms of some of the work that we are doing with skills development in Scotland in terms of developing the Pathfinder and the growth deal. We would want to be able to make sure that we can link more closely to our community development colleagues to make sure that they are focusing on some of the key barriers to the economy that have been identified through the diagnostic, and they are heavily involved in the work. We also need to look at some of the infrastructure issues that could do with local access to transport to help people to get into local employment opportunities and to look at some of the digital constraints that people have in some of those communities in terms of access to infrastructure and access to skills. There is a whole range of different services that are currently dutted around, but it is about pulling together and giving them a real strategic impetus. Last year, I looked to try and move my constituency office, just an office for three or four people in the Garnock Valley, which is an area of about 20,000 people. There was not one single place in the whole Garnock Valley where there was an office available, not because there weren't many vacant premises or loads, but there are no actual facilities or physical structures for a business to move in to. If I always wanted to set up a business and decide to move from Renfisher or Glasgow to Garnock Valley, there is actually no way physically to move, regardless of any services that you may wish to provide in terms of skills or what have you. Even that basic element is not on the ground, so how do the growth deals deal with something like that? I am just wondering if Mr Ford can comment as well about it, because you were talking about market failures and physical structures such as not a key to unlocking that. For other committee members following this inquiry, can you give an example of the type of infrastructure that is missing that is not relocating? It would be interesting for the committee to know whether that has been identified within the deal. For example, Mr Williams talked about digital connectivity, which is really important, but you have an office in which to work from. As I was saying, we have a simple parliamentary office. We thought that we need to move because the rent was too high. We actually negotiated a 40 per cent reduction rent in the end, but there was nowhere that we could have moved to. We physically could not move anywhere else in the Garnock Valley because there is not such there are no office type facilities available. If you want to set up a business, one, two, three people and somewhere like that, you actually cannot do it. Whether you have the skills or not, there is not a physical location. Part of the deal surely is not just about upskilling people. If you are going to bring in the private sector, which is part of the deal's ambition, you really have to have somewhere where people can physically go in those towns to operate a business from. Is there an opportunity for low commercial profit prices to know that that has already made office space for companies to move into? Is that something that has been identified? Yes, absolutely. I could not agree 100 per cent more on the chronic market failure in a commercial property sense. The values of commercial property just do not stack up in terms of the cost of build. Some of the work that we did previously with Irving Bay, the value of some of the properties that you create is only about one-third of the cost of developing them. It is a huge market failure. A key component of our particular growth deal proposals is the spectative build of new business premises, because we recognise that there is this chronic market failure. We need to get the skills and infrastructure in place, but we need physical places where people can work. They need to be modern and of good quality. If we are going to attract the type of business that we need to attract to create the value in the economy, we are just going to raise living standards. Mr Gibson, I am cautiously going to let you back in for one more question, because I am quite sure that it is not into Ayrshire and it is more general. That is a kind of Ayrshire, but it could also be a more general question, which is Glasgow's city deal that has been running since 2014. We have already heard that there still needs to be some buy-in from the UK Government in terms of the Ayrshire growth deal, so there are no dates as to when that is likely to even commence or it will successfully conclude. I am just wondering what impact that is likely to have on Ayrshire. If other areas are getting up and running, we went to Glasgow Airport last week and we heard about three projects in that neck of the woods that is going to have 275 million investment. The hint last week was what they said in response to the question for me, was it? That might create a ripple effect that might benefit Ayrshire. My concern is in actual fact that it will suck skilled workers out of Ayrshire and it might cause considerable displacement activity. I am just wondering what the view of the panel is, because Falkirk is also in a similar position with Edinburgh's growth deal. Are you concerned that delays in growth deal will in fact adversely impact on the ability of Ayrshire to compete relative to areas that have growth deals? I think obviously in Glasgow's case it is too early to say that there is concrete evidence of that because they are still in the early stages of development, but yes there has to be a concern that Ayrshire is a secondary or tertiary market in commercial terms and the more investment that happens in the centre of Glasgow or close to the centre of Glasgow is likely to suck up demand in the Scottish economy and that will make it even harder for areas like Ayrshire to achieve its potential and that is one of our concerns. We believe that with the right investment we can achieve that potential, but there is a concern that there is a timing issue in all this and we do not really want Ayrshire to be left behind. There is a bit of an expression that whenever there is a recession Ayrshire or somewhere like Ayrshire tends to be first in and it tends to be last out and that means that you are constantly behind the curve and what we want to try and do is get to the point where I suppose we are competing on equal footing. Doffers are similar concerns around Falkirk but if you do not get on the ground quickly and progress some of this then you may see a displacement effect from your region. I think that there is a concern, we have a concern in relation to our current commitments with Tiff and so Patrick is saying that the Tiff model is a risk based model is about the council borrowing from public works own board to provide infrastructure. That infrastructure stimulates development in property provision. The rates, the non-domestic rates uplift from that property comes back to the council and repays the borrowing. If the development does not come, then we do not get the money to repay the debt. There are different gateways and there are review mechanisms that allow us to make sure that that is on track and currently it is. When we entered into it, there was not the prospect of all the city deals taking place around the country so we took cognisance of what was around us at the time and were expecting that we could achieve a level of growth seeing what was around us. That position has changed and there will be an expectation of development taking place around us that we have to have an eye to with the Tiff. However, we are looking towards the fact that we have two USPs. One is our prospect in chemicals and what that can come forward. The other is in relation to tourism and we have seen pretty massive expansion in tourism arising from the gel piece. Maybe it is three because it is two horses, but what we are looking at is that the city deals and the Tiff and the growth accelerators and so on in some are about Scotland seeing its prospect for economic growth across the board and making the most of each area's unique contribution that it can do. The prospect that we see in particular in the chemical sector around Grangemouth can only happen in Grangemouth because of the kit that is there and the prospect of feedstocks and so on and the costar that exists there. Ayrshire exhibits that as well. It has strengths in its chemical sector and in the aeronautic sector and so on. Part of our plea is to acknowledge that and to acknowledge the diversity of the profile across Scotland and play to its strengths towards seeing what can come forward in each locality around the country. It deals if they are to be structured should play to those strengths. That has been the argument that we took in establishing the Tiff initially. We have concerns about the Tiff as being such a dedicated tool that has got those risks. It is not sufficiently flexible in how it is applied and so we are looking at the investment zone to give us that more flexibility that we see will give added growth. That is the plea that we are making in our submission that we need greater clarity to enable that kind of thing to be realised. Mr Wiggins, I apologise but we really need to move on. I know all the MSPs around us on this table know that the USP is a unique selling point. Mr Whiteman, don't they? I am going to move to Mr Simpson in a second where the question was around the pacing of various city region deals, displacement, drawing, money and investment from one part of the country and other potentially. Is there a skills element to that as well? Are SDS aware of any displacement in the skills sector in relation to the different pacing of different deals? I thank so much displacement. I think that one of the things that Phil mentioned in the introduction is around the granular detail of the labour market information now so we can really build upon the comments that were made there about where there are regional priorities. Using an example between Edinburgh and Glasgow, both are very big for financial and business services but they are not necessarily in direct competition with each other because they focus on different elements of that. The west side might concentrate more on insurance and aspects relating to life and wealth management and retail banking and et cetera on the east. I think that what you can do is look at where the regional strengths play to the advantage of Scotland as a whole and really capitalise on where those strengths lie. In your corner, SDS is monitoring each of those city region deals or growth deals to make sure that SDS is well placed to support any skills gap that might emerge. One of the things that was suggested there in the introduction was the building of new products. The regional skills assessments are already well established as annual publications that are bought into by ourselves, the enterprise agencies, the funding council and local authorities, which provide a picture on a local authority by local authority basis. What we have also introduced is annual reports that report on city region deal geographies and are able to monitor that on an on-going basis. That is helpful. We will move on to our next question in Graham Simpson. Thanks. I just want to explore the inclusivity element of your proposals. Mr Wiggins, in your submission, you say that inclusive growth runs right through our proposals. We do not actually give any examples, so I wonder if you could do that. Also, for all of you, are any of the ideas, proposals in them, do any of them come from the community, do they come from businesses or are they top down? Because the evidence that we have heard so far, certainly from the previous panel, is that it is very top down and you might engage with the community some way down the line, but you are not asking for ideas from people or businesses. Mr Wiggins, you were mentioned during that question. Yes, I think that in terms of inclusive growth, again, there is a number of ways that we have tried to tackle this. I have mentioned the pathfinder and we need to see this within the context of the pathfinder and the services that it is going to deliver and the fact that at the core of that we are looking at the barriers to inclusive growth and making sure that the span of services and offer that it has will be able to address those barriers. The second thing is that within all those 18 projects at the moment in the Ayrshire growth deal and all of those projects when they have been developed, the questions being asked to them, how can they begin to tackle some of the issues in terms of access to employment, inclusivity and to make sure that they are projects that are developed in a way that addresses some of the barriers that we have to inclusive growth. Within those 18 projects, we have a set of projects that are primarily looking at employability type services. How can we work alongside the employability initiatives that are already there but hone them and make them much more specific and target some of the harder to reach communities? We have a project, for example, working for a healthy economy, which is looking at those people who are struggling to access employment at the moment because of health issues or to maintain employment because of health issues, working with the NHS to put together a bespoke set of services to help them to sustain employment or get to that first point of entering the labour market. We are also looking at something called co-hubs, which is community-based hubs, which again will have a physical representation in the communities, which we think will open up access to services, access to support, access to employment opportunities and access to community development and outreach. The critical part of what we are proposing to do. There is almost like a matrix of individual projects. We are asking them to identify how they can link into inclusive growth opportunities, whether that is the spaceport or one of the community projects. We have community projects themselves and the whole structure that we are putting around that in terms of delivery, which is the pathfinder. We are hoping that, with those different levels, we are tackling or going to tackle head-on the issue of inclusive growth and the barriers to economic activity. In terms of inclusivity, we certainly have involved the business community in the development of our projects. We have had workshops, we have had briefing sessions, and the private sector is involved directly in a number of the projects and the development of those projects. As I said previously, we have had some engagement with community organisations primarily through the community development teams of the three local authorities and some of the events that they are holding. We go along and we speak to those community groups and representations about the deal and what we are proposing to do and to take some feedback from them so that we can play that back into the evolving deal proposals. Briefly, to come back to the point that I made about community planning earlier, our work aligns with the community plan. That has a very strong component of community engagement that has shaped the community plan and shaped its priorities. One of the key messages that came back in the early days of putting the community plan together was the concern about jobs that people want to see jobs, particularly youth unemployment. Youth unemployment is one of the priorities in our outcomes agreement. That has, as a consequence, meant that programmes have been designed to align with that activity and to tackle youth unemployment where we can. Increasingly, we focus on those who are most disadvantaged in the labour market. We have done extensive research to look at how we can target that and build on national best practice to achieve it. The community plan is an important component to that. The other component for us is the latest work on investment zone. Investment zone is something that tries to capture our prospects for a city deal. It is our equivalent of that, but it is about looking at the next phase of investment in prospects for our economy and for the community. That has to be vital to it. I would point to the situation back on the day in 2013, when the NAOS announcement was made. Immediately, TV crews were running down into Grangemouth town centre, speaking to the people in the community about what the prospect was for that community and their key concerns were jobs. The whole point about that exercise, about the economic strategy that was put together, was to enable us to secure jobs, to diversify the areas of the economy so that we had strength in it that we do not have that kind of shock occurring again in the future, and to make sure that people in the community can access those jobs. What we are doing is introducing the diagnostic tool to look at how our inclusion services work, align those with our community planning partners. SDS is actively involved in that, but the health service and the third sector are active players in those inclusion packages, and they will be a key underpinning to the work on the investment zone. I want to ask you a bit about that investment zone. Obviously, Folkirk is not part of a city deal. It is quite a small council, but you are right that Grangemouth is important to the national economy. When you think about Grangemouth, all you think about is the chemical plant. Perhaps you can tell us a bit more about the proposals. Full Grangemouth, I presume, involves more than the chemical plant. Basically, Grangemouth is important to the national economy. The annualist plant supports estimated around 10,000 jobs across Scotland. Every chemical's job supports about seven jobs elsewhere, so it is important in that sense. Probably it supports around 4 per cent of GDP across the country. What I would highlight is that Grangemouth port is also significant. It has a symbiotic relationship with the chemical's operations down there, but it is Scotland's largest port, and it is significant in terms of the container traffic that goes through the port, carrying about a third of Scotland's exports going through the port. It is an important tool for the nation's economy, and the investment zone work goes to build on that. It is about seeing the forward prospect for the port and for the chemical's complex. Any other investing significant sums currently. They have just completed the spend of probably about half a billion pounds in the importation of new ethane feedstocks to the site. That has doubled the productivity of their cracker, the cracker that produces the plastics that feed other manufacturers around the country. They have plans for further investment at that site, so they are looking to carry those forward. However, there are other important chemicals operators down at Grangemouth, so companies such as Calachem, like Syngenta, like Fujifilm, who are active players in the area's economy. It works as a cluster as a sector, and there is good practice in there that we would want to see fostered through the work on the zone. We have called it an investment zone just to be sufficiently flexible to take account of the variety of measures that can come forward here, to galvanise support from the business community, from the local community, and from the public sector to help to carry that forward. However, we see significant further investment in prospects. The business case that we are working on anticipates that. Investment new energy kit. The current energy plant is ageing and replaced, and there are a number of prospects there that are being looked to come forward. Right in the midst of it, communities where 40 per cent of people are in fuel poverty, so we are looking at how, in investing in energy, we can enable the community to benefit, and we have looked extensively at the street heating networks and so on as a way of carrying that forward. Those are among the plans that we are making with the investment zone, but, fundamentally, we see that as seeing another significant stage in Grangemouth's development and in its prospects to contribute to the nation's economy. That is really interesting. You are saying that there is a submission that is an over-emphasis on the role of cities. As I said earlier, there is a small council in Falkirk, but Grangemouth is so important, as you have expressed. Do you feel that Falkirk would benefit by being part of a city deal that you currently are not? You are out on your own. Do you think that you have benefited by being part of something bigger? I think that we play into those things anyway. We are an open economy, and a lot of in-and-out commuting takes place day in, day out. Our relationship is with the whole of Scotland, particularly in the central belt. For us, this is about all boats rising together. It is about trying to make sure that all of the benefits of whatever initiative comes forward, west or east, benefits the whole of the central belt and the nation's economy, and play to our strengths. We have really been looking to make sure that the opportunity is really at this point in time with what is coming forward at Grangemouth and to make the most of that that will enable Scotland's overall economy to grow. Our suggestion in the submission was a need for more consistency of approach and clarity on how that should come forward. We do not want to be bound by any particular structure around city deals and align to any particular city. We see ourselves as playing a national role, and it is important to make sure that, at this point in time, that opportunity is seized. Before we move to Jenny Gilruth, I can address a small pop-up line of questioning. I am conscious that there is an overlap to SDS on some of those questions. The other line of questioning there was in relation to how some projects are identified and selected in the role of the business community or the wider local communities and around inclusive growth. At what point would Skills Development Scotland get involved in those conversations? In particular, I was thinking about there could be two or three different competing projects, but your consideration might be given to which projects. The type of work that will be created, the nature of that work, the skills level of that work, the long-term nature of that work but also the readiness of the local labour market to access it. 100 jobs created around the Falkirk area or in Ayrshire could be 100 people who are skills ready moving to the Ayrshire area of the Falkirk area, which is good for inward migration, but it squeezes out the local labour market that wants to be upskilled. At what point would Skills Development Scotland be involved in those discussions? Would you ever get involved in discussions ahead of projects being selected to make sure that the local labour market is skills ready or a bit of input into competing projects out there? What project might be best for the local labour market? Mr Ford. I think that we have come in at the city region deals and growth deals at different stages, so at some points we have become involved when the deals have been signed or when it is further down the track, but at that point we would still be able to help shape and refine perhaps some of the proposals. So we would bring the labour market information to bear, we would look at the sector where there are going to be opportunities, we would look at where there would be opportunities for local people and then we would look through the support that we give to young people in school to provide information about those opportunities as they consider career options and other city deals like the Tay. City's deal, we were involved pretty much right from the start and we had an opportunity to shape some of the thinking around that and test some of the assumptions and effectively the projects went through a filter, so there was a wide range of projects and there was a process of narrowing those projects down into what turned into the submission to government, so we were able to bring together the information that we have in terms of the labour market and the opportunities to help them select which we are going to have the greatest impact across that particular region. I apologise for asking a brief follow-up question, almost if I am putting words in your mouth, Mr Ford or Mr Sealy, but does it become self-evident that the earlier skills development in Scotland is involved in those discussions? Because we are learning as this process works through across the country, the better it would be for inclusive growth and maximising the benefit to local labour markets. I think it certainly helps. The regional skills assessments have been around for a few years now. We are refining and updating those all the time and the local authorities and economic development partners within the local authorities are using that, but as we have started to develop and strengthen the relationships with the partners and we have entered into quite open and frank discussions about what that data is saying and what can be done about it, it has taken us to a very positive place in terms of how we actually move forward with them to agree a set of priorities that will make a difference in our region. That is very helpful. I want to drill down a bit in terms of SDS's involvement in the city deals and particularly with regard to the Edinburgh deal. Mr Ford, I appreciate that you said that you come in at different points depending on different deals, but as you will know, the Edinburgh city deal includes investment of up to £25 million over eight years for integrated regional employability and skills programme. Within the heads and terms, it states that this will reduce skill shortages and gaps and deliver incremental support-wide improvements to boost the flow of individuals from disadvantaged groups such as carer leavers or the unemployed. In the SDS written submission, it highlights work in Midlothian, Westlothian and Borders, but I do not see any reference specifically to Fife. I wonder if you might be able to give some Fife examples. We work with all the local authority partners across the city region deal and within that suite of integrated regional employability and skills projects, there are projects that each of the local authorities will have a particular focus and lead on. Fife has been involved in the projects around developing the young workforce. They sit with us on the skills and innovation working group. As we have developed the regional skills investment plan, as we have supported partners to take forward the proposals, we have been able to work closely with all the local authorities and linking in with Adam Duncly at Fife Council quite closely around some of those proposals. We work with Fife and all the local authorities very closely, and they have been fully involved in working towards the regional skills investment plan that we launched fairly recently. The reason that I ask is that there are discussions on going at the moment as to whether Fife has benefited out of the Edinburgh city deal, and I get serious concerns about my constituency. I wonder if you cannot point to any specific projects or information that you might be able to share with me after the committee. No, I can share. Obviously, there is some confidentiality within what is in the deal and the discussions are still under way, but there are proposals to share information and employability services between local authority partners to try to join up and have a more integrated employability approach across all the different agencies. Fife is heavily involved in, and we are working through opportunities for Fife and the economy partnership around that. Can I ask whether that work will be happening? Were it not for the city region deal anyway? There is a question mark around whether or not the city region deals are providing additionality, or are they plugging gaps? Was it something that SES would have been doing anyway, or is it something that has only come about because of the city deal? We will be working with the local authorities in addressing some of the challenges within the labour market, but I think that what the city deal gives is a framework for local authorities to come together and tackle problems that are common across the region, and to look at how things can be joined up a bit better, and to look at where that additional investment could lead to a step change to address employment outcomes that are under performance in the labour market. Fife is cutting two in terms of the city region deals, with North East Fife being part of the state deal and the rest of Fife being lumped in with Edinburgh. Does that mean that SES has to develop its own specific programmes that reflect the city region deal make-up in that context? We work with both the Tay cities deal and the Edinburgh in South East Scotland city deal, and my understanding is that the north-east section of Fife is in with the Tay cities deal. The service that we provide is specific to what is required within the region, so we would look at the Tay cities region, the needs of north-east Fife, and we would look to target resource and support where it is most appropriate to have that support targeted in the same way as we would with the rest of Fife as part of the city region. We do not draw hard boundaries. We look at what is required and we deliver the service to meet those requirements. We have touched on the growth, investment, inclusion and skills, and all the projects that are being talked about will have identified one of those or not all of those to come part of the projects that are going forward. Can I ask about the projects? Are they truly new? Are they re-developed, recycled or rehashed? What would have happened if the deals had not come along? I suppose that the answer is a bit of a mixture. City deals and growth deals are meant to be additional, so there are things that can go beyond what you would normally expect local partners to be able to have the capacity to deliver. There is something about scale, but there is also something about additional and new projects. What we have in the Ayrshire growth deal is some genuinely new projects. The spaceport is exciting new opportunity for the whole of the UK. That is certainly a new project. We are bidding to secure something called the Medicines Manufacturing Innovation Centre, which would be a one-off facility for the UK. It is, again, a new and exciting project and one that plays to our particular strengths in the local economy. We have long, deep-seated problems that we have been struggling to address for a long period of time. One of the earlier questions that we had about market failure in terms of the commercial sector is the things that we can do to try and overcome those issues, but it is expensive. We have to go and invest significant amounts of money to begin to provide the types of accommodation that modern businesses need. However, we also need to tie it up with some of those bigger projects such as spaceport, such as MMOIC, because they in themselves will become a magnet and that will begin to attract new rounds of investment. If we have a chance of reducing the scale of that market failure, we need to marry some of those larger, more significant projects with that kind of base infrastructure. That allows us to draw the commercial property world in and secure further rounds of investment based on the pump priming that we hope that the growth deal will provide. As far as we are concerned, there is a large part of this about where we sit internationally. In Graingebous terms, Graingebous competition is in Europe, in Rotterdam, in Antwerp, in France, in Italy, in Scandinavia or in the Far East or in the United States. We are competing to try to attract business and investment to Scotland that will strengthen the capacity of the chemicals sector, particularly that will benefit the whole of the nation's economy. An important signal is given to any investor about the capacity locally to make that investment a success. When they come, they want to see the best prospects to access the site, to deliver the site, to deliver the workforce and the productivity that they expect. That is where, in our terms, this investment zone has to play in. We have to see that as enabling that kind of investment and demonstrating that there is an environment that these companies can be attracted to successfully. That has been the play that we have made with the proposition that we have on the investment zone. There are a number of investments that are needed to upgrade the infrastructure and to create the development platforms that will enable that kind of investment to succeed and to deliver skills, enterprise and promotional support that will ensure that that works. Given the uncertainties in the national economy, that is vitally important and it is important that we make a success of that. However, there is an important part about making sure that that package respects the needs of the community and helps it to move forward. The point that I have been making about fuel poverty for instance is that this is the point in time when we should be looking at the locality for its next 20, 30 years and make the best prospect for investment then that safeguards act. Some of those projects have been in gestation but this is about galvanising that into a combined package, demonstrating what the economic gains are in jobs and investment in productivity and using that as a justification. Part of that is what we are already doing through TIF. We have seen through the TIF that there have been new jobs, about 600 odd jobs created in the TIF area currently and some new business space that has been provided, but this is about a next generation to that. That takes us beyond that. I am trying to exclude the SDS but that seems to be a question specifically focused on the deals themselves. Do you want to follow-up on that, Mr Struth? Just to carry on, the robustness of all of that that you have identified, but if there is political change or there is policy change in the future, how robust are we going to be to say that we have the EU situation coming across us in the next few years? We could have a change of government, we could have a change of dimension. How robust are you to manage that if there is a change of policy or direction to ensure that they will continue to be progressive and going forward and have the opportunities that you expect for the communities? Within all of that, there is a massive expectation for communities that they are going to receive something and that that is going to make life better and give them opportunities going forward, but that has been dashed in the past when things have not always come to fruition. That is the crux of the two that I am looking at here, because you are in a situation where you are attempting to move yourselves forward. You are not part of the bigger ones but you have the opportunity, but at the end of the day you need to make sure that you are successful. So any concerns, long-term financial sustainability is one of the great strengths of this, but Governments come and go, politicians come and go, partners come and go, how can you guarantee that that continues? I think that that is a really important point. I think that that goes to the heart of the deal, isn't it? The deal is going to be a long-term relationship between governments and the local areas, local regional partnerships or however it is constructed. I think that long-term view and that long-term commitment is the critical thing that can transcend individual policy changes or maybe changes of government. I think that probably some of this ties back to Douglas's point that what we are trying to do is make Scotland as a whole more competitive and the regions within Scotland more competitive. The heart of a lot of the city deal proposals or the types of mechanisms is putting in place that infrastructure to allow them to compete. So just as in Falkirk and the developments ran about, Grangemouth, you are competing on a European and world basis for inward investment, then actually so is Ayrshire, whether that's in pharmaceuticals or in aerospace or in space technology. We need to make sure that we have the best possible chance of securing that investment and it's a long-term game. These things take a long time but we need to put in place the infrastructure, we need to develop the sites, we need to have the premises which they can move into and we need to surround that with the skills and all the other supporting services to make sure that we have the most viable, most attractive and ready to invest in proposition that we can possibly put forward. If we can do that and we know about the backing of Governments over a period of time, we can continue to refresh that and of course policies will change and we can adapt over time, but that core infrastructure is absolutely essential to what we need to be able to offer. Mr Durr? To add to that, I would not belittle the importance of that in speaking to investors. As far as they are concerned, if they see a properly galvanised support from the public bodies, from the business community, from the wider community, in a locality that says that this area is moving forward, that this infrastructure that is needed will be provided, that there is a package of support that is aligned, we do hear from investors that they see this in Scotland that we do relatively well. We probably hide the joints quite often for them, but it is important that that is done well and that sense of commitment is there to them because they are doing their risk matrix back in whether that is in the Far East or the US or whatever that says, is this aligned? Will it work? Will this investment work? To make that easy for them is vital and important. Having a signal that there is that commitment will help to secure a positive decision. I want to give my word to Deputy Commander to finish off a line of questioning in relation to skills. A brief question will take you in a second. A lot of the themes of questions have been around how we get community buy in and how we get community benefit, how there is that inclusive growth. Last week, I was very fortunate and unprompted with the Llywodraig-Glasgow City Council and it specifically picked areas in my constituency where there had been market failure, because in the likes of Ruck Hill and Hamilton Hill and Posso Park and Sight Hill and Cowlayers, the market was inviting to develop. That was partially because of significant issues with the relation to drainage. City deal will be used in my constituency to make that land much more market ready. I would anticipate seeing in the years ahead a significant number of both social and mid-market rent and other occupar houses coming into that area. I will be able to point to that, saying that here's how city deal was delivered for my area and inclusive growth. I guess what we're all looking for around this table has been able to point to very specific examples in each of our areas and across Scotland. I suppose my question then to Mr Wiggins and Mr Duff is when we roll the clock forward two or three years, can you give me an example of identifiable communities where you think that they will say, this deal has benefited us and here's how it's done it? Mr Wiggins. Okay, I'll do my best. I'll come back to the timescale in a minute, because sometimes these things— Five or ten years, Mr Wiggins. Whatever the timescale is. I think I'd point to two or three examples. One would be, there's no doubt about it, it's something like the spaceport. The UK is committed to have a spaceport operational by 2020. We think Presswick is best placed to be able to deliver that for the UK and generate most economic benefit because we have 50% of Scotland's aerospace employment in and around Presswick. That would be a very iconic development and that would be something which we could point to and say that's what the growth deal delivered. If you go look at some of the other projects that we have, we have regeneration projects. We have probably the largest regeneration site in the whole of Scotland, which is the former Ardir works, the ICI works, the Nobel Explosives Plant, and we're working closely with NPL Estates who own that site to bring forward a very large mixed-use scheme, which would have a mixture of housing, a mixture of leisure opportunities, a mixture of employment opportunities and indeed some energy opportunities and the opportunity to look at district heating and so on and so forth. The unlocking of that site, which I'm not sure to give you some sense of scale of it, is twice the size of a former Ravens Clake plant. It's 2,500 acres of land. It would be a huge impact not just in terms of locality but in terms of the whole of the west of Scotland and indeed the whole of Scotland. What it needs is some key bits of infrastructure to open it up and that's the components of the deal that we want to put in place. Once we've done that, of course, to develop out 2,500 acres of land will take a very, very long time but actually if you can put those bits of infrastructure in and begin to see development happen then that's a big marker for the community as well because seeing things happen, seeing activity on the ground is a real boost for confidence and we want to try and build on that wherever we can. Three or four years might be a challenge. Some of this does take long and I wouldn't be a little just how long it does take to deliver on these things. I think that tangible changes that we would expect to see are in Grangemouth. We are looking towards new chemicals operations coming forward at that site and some active discussions taking place around that, hopefully more to come. I think that arising from the investments that we would see taking place, we would hope to see those delivered and jobs created as a consequence of that. In and amongst that, we are keen to look towards the energy solutions for Grangemouth. It's the largest concentration of heat in Scotland. It emits about 4 million tonnes of carbon a year currently. We have to do something about that and there are active discussions and activities that take place to resolve that. I mentioned fuel poverty in the course of coming forward with energy solutions down there. We should also look towards the community benefit and district heating as one means of delivering on that. I would hope in the course of this that we can see a solution there in the relatively short to medium term. I think that another component to what we are doing is that town centres need to benefit. Very often they are the witness test of an areas economy. People walking down the areas high street want to see it healthy and performing well. We would look through the work that is tackled in some way. We can't overcome all the travails of the retail sector in recent years but we want to do what we can to enhance it and benefit from a variety of uses in town centres and look towards the night time economy and so on. We would look to see benefits there. What we would be looking to do is bolster our performance in tourism. The Kelpies have just had their 3 millionth visitor since opening in 2014. We have to sustain that and hopefully to grow it. We are thinking about next generation types of tourism activities that will help to sustain that and grow. That would certainly be involving the community in how that comes forward and they would hopefully see the benefit of it. To close this particular evidence session, we will have a focus on skills. We are probably overrunning by about 10 minutes, so in about 10 minutes I will have to close this session. I apologise to everyone and I apologise to those who are waiting for the next evidence session. You are both on skills. I am just wanting to ask what the deals will do for people at workers aged over 50 because there are many people who have been in the labour force for 20, 30 years, de-industrialisation over the last two decades has meant they are no longer in the workforce but they have still got a commitment and want to work. I think that a lot of them feel that they are perhaps being left behind by perhaps the focus on youth unemployment, which we discussed earlier on. I am just wondering what Skills Development Scotland is doing through the deals to try and get older workers reskilled and back into the workforce. It is a theme that came out very strongly when we developed the regional skills investment plan for the city region deal in Edinburgh and the south-east. It is definitely recognised as an issue. I think that it is also recognising that there are people who are working for longer who cannot retire or do not wish to retire and how their skills can be best used within the labour market. I think that part of the solution to that is to look at perhaps job redesign, re-evaluation, perhaps mentoring or even reverse mentoring in some cases, to look at how those skills can be used and to encourage businesses to think about succession planning going forward. By putting some effort and resource into that particular question, it will affect productivity and growth within the economy, because those are people who have a lot of useful skills to contribute. For those who are not working and wishing to go back into the labour market, there is resource and support to help them to understand what opportunities are and what skills they might need to acquire to move back in and support to move them along the different stages of the employability and skills pipeline towards a different type of work using the skills that they have. That can be particularly true for people who have worked in construction and who have come out of that through recession or through fault or choice of their own and wished to move back in looking at the skills that they have. We also have the transition fund for oil and gas workers to try and help them to move in the north-east back into other opportunities. There are a number of initiatives that are there to try and support and help people in that particular category. In your written submission, when you talked about the Glasgow and Clyde Valley city deal, you mentioned that you have worked with the group to develop a comprehensive skills investment plan and you talked about the wider economic development opportunities for the city region. I wonder whether you could tell us a bit more about those wider opportunities that are out with the city itself. I am also interested in the point that Mr Duff made about town centres, because, out with Glasgow city, there are a number of town centres that are in decline, so I suppose that you could tell us a little bit more about that. I was pointed earlier on that it was made around the nature of delivery of the deals and when SDS was able to be involved. The Glasgow and Clyde Valley deal was obviously the first one that was signed in Scotland in 2014. It was very much a partnership amongst the local authorities in the UK and Scottish Governments, but I have been very pleased that it is the way in which partners have been open to SDS, NED, DWP and the colleges and others being involved in the structures that were set up initially around the assurance framework for the city deal to be more proactive in an approach to regional economic development, particularly for a skills plan for the city region. Where we have come since 2014 is a situation where we now have a city deal, but we also have a regional economic strategy and a regional skills plan. In both the regional economic strategy and the skills plan, the city deal and the city deal funded projects are important, but they are not exclusively about where the ambition lies in terms of the way forward and the work going forward. The city deal itself funds, in Glasgow's case, primarily infrastructure projects. There are three innovation projects, three employability projects, but the vast majority are infrastructure projects. They have been described elsewhere as drains, cranes and trains, referring to the airport link. What the skills plan has tried to do is to add particular value to that and look beyond that piece. Beyond the specific infrastructure things funded by city deal, there is a range of other projects, many that are private sector led, many which are public sector led. The investment by a range of partners network rail around the Queen Street development would be one in the city centre. The work that Renfrewshire Council has led around some infrastructure around the design museum, pasting museum link to the 2021 bid would be another one. There is work aligned to the port's work out in the Clyde that is in place there. There is the remediation of the former Exxon site of Western Bardshire. In all of those cases, the city deal investment is but a trigger for a range of other activities that are in place there. The regional economic strategy and the skills plan look at both the investments that go through the city region piece but also much more widely than that. What the skills plan tries to do is to pick up on a number of things that work in collectively and collaboratively all partners can do to ensure that we do secure inclusive growth, we do secure prosperity and we look to increase GVA for the city region. I have an understanding of the nature of the pipeline of projects and the jobs that will come forward from construction and ancillary trades and ensuring that our training providers and colleges are preparing people for moving forward in that that is something that has not been done on this scale before. A sense around the key sectors that are still crucially important, which yes, are concentrated on Glasgow city region but which actually have a footprint right beyond that and how we ensure that there is a regional approach to that. For example, within life and chemical sciences, we absolutely look to Ayrshire and some of the investments that are being talked around there and how the supply chain will benefit Glasgow city region companies across the region and Ayrshire and indeed out to Grangemouth as well beyond because that is the access point for some of those works. I mentioned earlier on around financial and business services and again there is a cluster in Glasgow city but there are contact centres and other installations that run right down through Inverclyde and elsewhere as well. The visitor strategy is very explicitly around doubling the number of tourist visits by making the city region a destination rather than the city itself and playing on the regional assets and the wider range of things that are in place there. Further development around some of the work in Balloch at Loch Lom and around innovative visitor attractions that might be there. The whole point being that it is not just an investment and development that will benefit Western Barnshere, it is one that will add to the value of the city region piece and that is a theme that runs right through that. Our skills piece is looking at how we train up young people and retrain order and other people into the jobs that we know are coming forward, both in terms of replacement demand as things move forward but crucially in terms of where those growth sectors are and ensuring that there is a pipeline of talent that can come through that matches both to public sector investment but critically also to the private sector attractions that will come forward and that is region wide not just city centre itself. I think that you have possibly answered that question in terms of your response to Mr Gibson to a certain extent, but is there anything that Skills Development Scotland would like to suggest that it might make improvements to enhance skills and employability activity across the city region deals or is it usually the convener that would ask if there is anything else that you feel has not been asked that you want to add at this point? I will comment on the alignment around that. One of the things that I have been really keen to see is the willingness of the aid authorities to work together in partnership with SDS and with other agencies to try and look at a proposition that is fit for the current and future economy of that area. There have been some demonstrator projects that are funded through city deal in Glasgow and Clyde Valley working matters that address people who are long-term away from the labour market around upskilling in care jobs so that people can move out of the poverty trap of low-wage employment and develop, as well as the projects around youth gateway, which have been a focus across the country. There are things that we can absolutely learn from that. The ambition going forward is that we continue to work in partnership and really realise the possibilities for the whole of the region. The wrapped-up in that deputy convener that you had asked at the given name check to town centres, I do not know if there was a reply that you were waiting on that. If you want to add anything specifically about town centres, particularly those that are in decline? I think that it was Mr Duff that was named check there, yes. Town centre scars. They are integral to our economic strategy. We have, as a council and I know many councils up and down the country, actively seeking to tackle the needs and meet the needs of our town centres. I would highlight the work of Scotland's townspartship, which sits alongside the work of the city's alliance, and I think that that relationship would sometimes we do not quite get. I think that they have done quite considerable work to highlight the needs of town centres across the country and that they need to galvanise support for them to promote the likes of the work of bits. Business improvement districts are highlighted in the briefing. They have created very strong networks of business interests that are keen to promote their town centre, and councils work very actively with them around the country. Probably more to come there, more potential, but we certainly see town centres as integral to the needs of an economy, and we expect, through the work on the likes of investment zones, to see that investment channel towards sustaining them. I will not take you in here, Mr Wiggins, because time is upon us, but I just want to get the opportunity to put something about town centres on the record. Every time that town centres are mentioned, I should say that I also note that town centres, a planning definition in the cities, have also got town centres out with the city centres, so we look at town centres, we need to look at them around, and it did give me the opportunity to put that on the record. It is also very helpful evidence session. We very much appreciate your input here today. I would normally give you the opportunity to make final comments, but we are now way beyond time. Please do follow the inquiry, please do email the clarity with any additional comments that you wish to make. Thank you very much. We move now from agenda item 1, but we will suspend briefly before we move to agenda item 2. Thank you. Welcome back when I move to agenda item 2, which is Scottish Housing Regulator and your report on accounts 2016-17. We will take evidence from Scottish Housing Regulator on annual reporting accounts. I welcome George Walker, chair and Michael Cameron, chief executive Scottish Housing Regulator. Thank you gentlemen for coming along and thank you for your patience, slightly overrunning today. I invite the chair an opportunity to make some opening remarks, please, Mr Walker. Thank you, convener. Well, convener, vice-community committee, thank you very much for inviting us along today to present the annual reporting accounts for the last year, 2016-17. As you will know, I took over as chair of the Scottish Housing Regulator from Mrs Cableair in July, where I had a good effective handover period and I stepped into the chair, if you like, from August this year, so I am a relatively new boy there. I enjoyed a great handover, was pleased to find a well-run and effective regulator with a high-quality board, I must say, and more importantly, with very clear focus on protecting tenants and service users' interests. That's what we're about, after all. So I'm delighted to present the annual report and accounts for 2016-17 to you this morning. I'd like to highlight just a few things. First, the work that SHR did to empower tenants and draw landlord attention to the issues that are important to tenants, like rent affordability, for example. Next, the positive practice that SHR has highlighted to help landlords develop new homes sustainably and, of course, contribute to the Scottish Government's affordable housing target. SHR has also worked hard to maintain the confidence of those who invest and lend to the sector. That's vital. Lastly, SHR has used the statutory intervention powers given to it by Parliament to protect the interests of tenants and, of course, the good reputation of the sector. We're very pleased to take any questions that you might have for us in the annual report, but if I may, I'd like to just highlight some more current issues and emerging issues for the regulator. First, we started a review of our regulatory framework. That's the framework around which we regulate. It was published in 2012, and we committed at that time that we would review this framework as we went forward. Right now, we're generating ideas with our stakeholders. In January, we'll publish a discussion paper, and we'll then follow with a formal proposal and consultation in the second half of 2018. This works timely. It will reflect our experience and what we've learned as regulators over the past five years and on the changes in the operating context for social landlords over that time. We want to build on the successes of our framework and, of course, strengthen to adjust and respond to new challenges. We know that social landlords continue to perform well across almost all of the standards and outcomes of the charter. 14 of 16 outcomes improved last year. We also know that most are managing the resources to ensure their own financial wellbeing. However, we're actively engaging with one in eight registered social landlords right now, primarily in serious governance issues. We've had to use a statutory intervention powers in seven landlords over the past three years. Throughout our review, we want to look at what more we can do, and maybe more importantly, what boards of social landlords themselves can do before we need to become involved. We'll also review and take account of the changes, of course, likely to be introduced by the Housing Amendment's Scotland Bill, and I understand we'll speak about that further when we meet the committee again on 29 November. Just very quickly, some early themes that are emerging from our discussion with stakeholders that you might be interested to hear about include issues such as self-assessment against the regulatory standards, strong internal audit, active risk management, and the positive use of whistle-blowing within organisations. Tenants remain at the heart of our work, and so it won't surprise you that a strong emerging theme from our early discussions is that of tenant safety. We're actively working now to promote this agenda, and we're pleased to see that, actually, this is very much at the forefront of our stakeholders' current agendas, too. We'll keep you certainly updated as we progress through the review. I wanted to mention homelessness just very quickly. I know it's an issue close to the hearts of this committee in particular. Like you, we certainly appreciate the complexity of homelessness and welcome its prominence in the recent programme for governance—government, rather. We're committed to doing all we can within the limitations of our remit and to use all our influence to drive the types of change that we all want to see. I would imagine that you may well have some questions for us on homelessness later in the session. Finally, just to wrap up, I want to highlight rent affordability. I think that the committee will be well aware that inflation has now hit 3 per cent that the October numbers were announced yesterday. Changes to the welfare system present real difficulties for many tenants, and tenants are absolutely telling us that they are concerned about future rent increases. We're looking to social landlords to understand what is affordable for their tenants and to consider this when determining rent levels. That will mean landlords giving tenants genuine options and choices during rent consultation, discussing the balance between value for money and service levels, and demonstrating to tenants and to us how they take tenant views into account. Convene, I don't want to hog the floor. I wanted to keep my remarks short, so I'll hand back to you, but thank you for the opportunity to meet with you this morning and present a report. I just wanted to cover those few issues that were at the top of my and SHR's agenda right now. Thank you very much, Mr Walker. I think that it's a very good context and mirror some of the thoughts that you'll find that the committee has as well, so that's very welcome. We'll move to questions now and to open up the questioning. Thanks for coming along today. You mentioned in your opening remarks empowering tenants, and I just want to ask a couple of questions on that. What are the key things that you, the regulators, are doing to empower tenants to hold landlords to account? There's a number of areas where we do that. I guess I'd summarise it by saying that we believe that active tenants working closely with landlords, scrutinising performance, place a crucial role in shaping and improving housing services ultimately. There's a number of things we do to empower tenants. First is that building on the concept of tenant-led scrutiny, and it's fast becoming a pretty well-established part of the social housing landscape in Scotland, if you like. We aim to empower tenants by giving them first good information on the performance of the landlords and promoting tenants having a very strong voice. Some examples of that would be that we publish a landlord report on every landlord last year. I think that we publish more than 180, 186, I think is the number, so that gives them background on their individual landlords. We've developed an online comparison tool so that tenants can compare their landlord with a landlord down the street or in the next area. That tool was visited about nearly 29,000 times last year, so it tells us that it's being well used, and certainly we hear from tenants that it helps them to better understand landlord's performance and where they look to improve. We did work with tenants to develop the landlord reports that I referred to, and we included in that the most important indicators that they told us were most important to them. They would be the primary focus of how we would look to empower tenants, largely driven by information and access to information. Thank you. That's very useful. I mean, I've looked at these landlord reports and the comparison tool, and I think that they are very useful. Beyond providing good information to enable tenants to find out more about their landlord and how it's providing, I was interested to look at the question of actual membership of registered social landlords. I noted that, in some of the larger RSLs, Beild housing and care, for example, has 4,690 homes, but only 74 members and only 21 people turned up to the AGM. Hillcrest, 6,101 homes, only 88 members, 32 turned up to the AGM. Among some of the smaller associations, Antonine housing association with 334 homes, 278 members. Virtually every tenant is a member of their RSL, and 53 turned up to the Angle General Meeting, rural sterling housing association. Ultimately, if tenants are empowered, arguably you don't need a regulator, because they are in control of their landlord. Are you satisfied with the level of membership that tenants have of the organisation that is their landlord? What are the trends over time? I've indicated that there may be trends whereby smaller housing associations have much, much better levels of membership compared to large ones. Not needing a regulator is not an official committee position, just before you answer that question. Even as chair of a regulator, if regulators weren't necessary in Scotland because everything was working so effectively, I don't think that too many of us would object to that thought. Let me make a couple of comments and then maybe Michael will have something to add as well. From a personal perspective, I think that we would always want membership participation to rise wherever possible. There is no doubt that among the smaller, perhaps one might describe, there is a more community-based RSLs that that level of participation, as you've highlighted, Mr Wightman, is a bit higher. Certainly one would worry that with the bigger or the more corporate-style RSLs, that connectivity to tenants is maybe a little less. Suffice to say, we would certainly want to actively encourage RSLs in a couple of areas. Firstly, to have tenants represented through their scrutiny panels. Secondly, absolutely to have tenants participating in boards, as indeed we do ourselves. Thirdly, to push up membership where they can. I think that those would be areas that we would agree and would want to encourage. Michael, I don't know if you had any thoughts on any of the trends or some of the more detailed aspects. Perhaps just to add that landlords in Scotland have a range of different roles and constitutions that affect the level of membership that they can have, but regardless of that, what we would look to landlords to do is to ensure that they maximise all opportunities for tenants and other service users to participate and to be involved in the organisation at the levels that they find most appropriate for them. We are seeing quite a significant development around tenant-led scrutiny panels in landlords that are, in addition to those more formal routes of participation through membership and becoming part of the organisation's boarder committee. We would look to landlords to continue to maximise those opportunities for all tenants to become involved in whatever way they feel is most appropriate for them. Do you have a view on the extent to which their constitution should allow tenants to become members of the organisation? It was difficult for me to find out some of the data, because some of them are co-operative in mutual associations and cost you £12 to download their annual return or accounts, so I didn't pay £12. It's quite difficult. For tenants, they can't even find out the constitution or the annual return of their Glasgow Housing Association, for example, as one of those, cost you £12 per item. Do you have a view on whether their constitution should allow tenants to be members? The whole movement started as a more community-based movement. I think that the view of the regulators is set out in regulatory standards, and all landlords have to ensure that their constitutional arrangements adhere to the regulatory standards. Those standards are well understood in the sector and supported entirely within the sector. From our perspective, a landlord needs to adhere to those regulatory standards. I should say that, as a regulator, we publish all annual accounts from all registered social landlords, so that's freely available on our website, as are a number of other constitutional documents that are set out for every landlord. Rather than paying £12 per item, we should visit our website. What evidence do you have that tenants are using the charter results to hold their landlords to account and scrutinise their performance, apart from the numbers of visits? It's interesting that people are looking at it, but what evidence do you have that people are using that information in a constructive way to engage with their landlord? I think that we have a number of sources of that. As you said, visits to the website and so on is part of that. More importantly, what we hear when we engage with a variety of tenant organisations, our own tenant panel—we have a panel of almost 500 tenants who we engage with, if you like, can guide us and give us feedback on our documentation, how we work, et cetera, et cetera. We hear from them on how useful the tools are, and I think that, really importantly, when we attend events, for example, I spoke at my first major speeches chair at the T-PASS conference, one of the major tenant bodies in St Andrew's a couple of weeks ago, and that was exactly the theme that I was talking about. In the Q&A there, a lot of the commentary that I was getting back from tenants was on how useful they found some of the tools that we gave them, to some extent giving them the confidence to ask some of those vital first questions. One man, I actually said to him, because I read my landlord's report at your website, the SHR website, that gave me the information and the confidence to start asking my landlord about things. Without that, I would have been a bit hesitant, so I think that we have a number of sources of that, and it is certainly something that we actively encourage is that level of engagement. Elaine Smith Thank you for joining us. As you thought, Mr Walker, I want to turn to homelessness, but first of all, I want to follow up on the line of questioning that Andy Wightman was taking with you. I just want to ask about the whistleblowing. You mentioned whistleblowing at the start of your presentation to us, and I noticed that Mr Cameron has specifically been quoted on whistleblowing as well. To get my head round why whistleblowing would be necessary, is tenants concerned that they would lose their tenancy if they were to officially complain about something? What sort of issues, if you can tell us that, I do not know how confidential some of that is, but what sort of issues might people whistleblow on? I think that there are a number of areas. I will make a couple of remarks, and I am sure that Michael might have some more specifics. We would see whistleblowing, if you like, as part of a suite of feedback loops, and part of that is feedback from tenants to landlords, feedback from tenants to us as a regulator, feedback between a regulator and a housing provider, but, importantly, feedback from staff. Often, in my experience, and certainly from my corporate background, open cultures are needed for whistleblowing to work effectively. What I have seen so far, and I will ask Michael to comment on that in more detail, is that a number of the statutory interventions that we as a regulator have made have been based on whistleblowing. For example, in the last year, the year that we are talking about in this annual report, we had eight instances of whistleblowers coming to SHR. What that tells me, as chair, is that the internal whistleblowing in the culture within the organisations themselves may not be as effective as they could be if those whistleblowers feel that they have to come to SHR. It is a very useful source of intelligence for us as a regulator, but it is a mechanism that we would like to see working even more effectively as we roll forward within organisations themselves. To add to that, particularly from the tenant perspective, we would not necessarily look or describe a tenant approaching us as a whistleblowing. We have a number of routes that tenants are able to take to raise concerns. The first thing that we would all encourage a tenant to do is to raise the concern directly with their landlord. We set out clear expectations on landlords around how they should be managing complaints, and we work closely with the ombudsman in that regard. We would also give tenants a route to raise what we describe as significant performance failures, where perhaps it is less about an individual tenant's complaint and more about tenants bringing forward evidence of where there is systemic failure on the part of a landlord, where it is failing to do something or where it is doing something ineffectively, and that has an impact on the wider body of tenants in that landlord. Those are other routes that we ensure that we provide. They tend to be used by tenants where either they have exhausted the routes that are available to them with the landlord, or they feel that those routes are not genuinely accessible. Clare, convener, you might be talking about a member of staff whistleblowing about a discriminatory allocations policy, for example, that kind of issue rather than tenants, because I was not clear why tenants might want to whistleblow. No, it is very much about members of staff, former or current members of staff, or indeed members of an organisation's governing body, bringing serious matters to our attention that would generally relate to a failure to comply with our regulatory standards. Thanks, and moving on to homelessness issues, if I may. Could I ask what evidence you have about the effectiveness of local authority homelessness services, because the committee has heard some evidence—we are doing an inquiry, as you will know—that people are not able to access their statutory homelessness rights in cases? What sort of evidence do you have about that? Has that been exercising you at all? Absolutely. It has been a key area of focus for us for a number of years now. It is probably worth saying that our sense is that many people who experience homelessness do get a good service from local authorities and an outcome that meets their needs at that point in time. However, that is not universally the case. We know that, for example, the use of temporary accommodation is increasing, and we know that there are more families with children being accommodated in temporary accommodation. This year, we are engaging with 18 councils around homelessness, and some of the issues that we are engaging on are about the increase in the use of temporary accommodation, particularly the increase in the use of bed and breakfast accommodation, issues around access to temporary and emergency accommodation, high levels of repeat applications, increasing time spent in temporary accommodation and high levels of lost contacts, where somebody has applied for assistance but then seems to lose contact with the council. Those are all issues that we are currently engaging with councils on in the current year. Your many reports of homelessness services that experienced the service users, have you found that useful in informing the way that you have been approaching that? Absolutely. The research gave us a fantastic insight into service users' experiences. Again, it is worth stressing that most told us that they had positive experiences and in particular they found their engagement with staff delivering the service to be positive and they felt supported. Perhaps one of the big conclusions that came out of that research was that many people who are experiencing homelessness suffer a level of distress that is caused by the amount of time that they may have to spend in temporary accommodation awaiting a permanent solution to their situation and that sense that their life is put on hold until that outcome is achieved. In the back of that, we have ensured that our annual risk assessment of local authorities' performance in homelessness identifies those councils where there are above average or lengthy waits in temporary accommodation and we have brought those issues to those councils. Although I note in the report that a minority of participants did report difficulties in accessing homeless services. On the back of what you said, Mr Cameron, if there are specific problems in areas where the local authorities have the statutory duty for homelessness but do not have any houses, for example in areas of stock chance fair where the local authority does not belong to the landlord, is that an area where there are specific issues? In some of the locations where that is the case, there can be particular issues and we are currently working with Glasgow City Council around some of the challenges that are being experienced by homeless people, particularly in terms of the movement from the assessment as requiring assistance into finding permanent solution. The council obviously looks to its RSL partners to help to discharge its duties in that regard and we are doing quite a bit of work in the council at the moment. We do stress the importance of RSLs recognising their responsibilities to assist councils, all councils, but particularly in those circumstances where the council has no housing stock of its own. It is critically important that those partnerships are effective and focused on delivering the right outcomes for homeless people. Going to be my final question on this issue as to whether or not you think you need to do more work on finding out whether RSLs are coming up to the mark in this regard and assisting local authorities to meet the statutory duty. That is an important part of our annual risk assessment. We look at the information that we have in relation to the level of lets that are made to homeless people by both local authorities and RSLs to help us to better understand where those arrangements are working well or where they are not working so well. In Glasgow, we are doing a piece of work where we are looking at the kind of end-to-end journey of a homeless person from the point where they are referred by the council to an RSL and sometimes back again so that we can better understand where that works well and where that works effectively, but also where there are some failure points in that process or some barriers to effective solutions. We are in the midst of that work, so it is too early to draw any firm conclusions at the moment. We will be feeding back to the relevant partners in Glasgow in December around our conclusions and, in particular, where we have identified improvements that are needed by the council or, indeed, by RSLs to ensure that the process works effectively. What we will also do is to share any positive practice that we find out of that more widely with other councils and RSLs to ensure that they can learn from that. We will continue to take account of all the information that we gather through that and how we then engage with individual RSLs and the local authority. Thanks. I think that the convener wanted to specifically ask about that, but maybe we could have the information on that once you finish the work that you are doing on it. I am happy to do that. Thank you. I will just mop up one or two things around that. Obviously, being a Glasgow member of the Scottish Parliament, I have a constituency interest in this area. The first thing that I suppose that we would ask is whether the Scottish housing regularly will report back to the local authority on how it is managing that homelessness pathway and undertaking its statutory duties and recommend areas of improvement, commend areas of good practice. However, there have obviously been issues within Glasgow that are self-evident. Will that report become public? That work will not necessarily deliver a formal report. We are trying to be very agile in terms of moving through quickly with this and getting the right information out. However, I am very happy to share the conclusions of that with the committee. That is helpful. I do not want to bounce the Scottish housing regulator into a commitment when you have to check with Glasgow City Council what the rules of engagement are, but I think that it would be helpful if we got public information. The committee might decide if a summary of themes, topics, issues, challenges or whatever emerged from that rather than a formal report. We might decide to get the relevant parts of Glasgow through the committee to discuss that in a constructive way. It would be important for that information not just to be extended in private to the committee but to become a public document. Would that be your intention? Absolutely. Right. That is very helpful. Is there any emerging themes that you want to share with the committee just now? Are we keeping your powder dry until you speak to the local authority in December? I think that I want to ensure that we have fully analysed all the information and tested our emerging conclusions fully before I put anything on the record. You will understand why I would ask that question, but I appreciate that as an relevant answer. I suppose that I should just check internal stats for duties. The vice convener mentioned the statutory sitting with local authorities. Is the housing regular sympathetic to making that a joint statutory duty along with other social landlords rather than sitting solely with the local authority? That would be a matter for government. If that were to be the position, we would absolutely regulate on that basis. Clearly, our expectations on RSLs are that they participate fully and contribute meaningfully to alleviating homelessness in their local areas and that they work constructively with the local authority to achieve that. That will continue to be the basis in which we engage in this important area. Just a little bit more on that. Does the regulator share or observe best practice in social landlords monitoring that they are meeting their responsibilities and not statutory duties in relation to homelessness? For one example, without naming the housing association, how that would be unfair in this public forum, the mechanism would be if the housing association accepted a section 5 referral on behalf of a homeless individual or family, then if under their choice-based letting system were only certain properties are put into the homelessness group, if the individual or family does not bid on a property and secure it within six weeks, the social landlord will do that on their behalf and they will be accepted to take it. Is there national guidance and rules that concern me? Is there national guidance and rules where the regulator would go that is acceptable, not acceptable, does not have concerns? That is just one example. There are lots of examples out there. Is that something that the regulator would take a view on? What we would look to in terms of how we would assess whether a landlord was meeting its statutory duties or its responsibilities in this regard is both the relevant legislation but also the guidance that is being published by the Scottish Government, in particular in regard to the Code of Guidance on Homelessness. Having said that, there is a lot of activity going on in this area. Housing options as an approach is now becoming well developed. We have choice-based letings that operate across a number of different areas and landlords. There is also the work that will be emerging from the ministerial action group. All that suggests to me that there may be some value in looking at whether the Code of Guidance on Homelessness needs to be refreshed to ensure that it takes account of all the developments that we see happening in homelessness. I have two further questions, but one would be the terminology that I get again as a constituency MSP is that it has to be a reasonable offer for the offer to count, whether that means that it is an elderly person who would have to leave their local support network, or that a family of the children would have to move to the other side of the city and be taken out of school. There is a whole variety of criteria that might deem a reasonable offer. I am just wondering if your feeling is out there that when a housing officer or someone from the homeless team says to someone, this is your offer, you have to accept this or discharge your duty to house you under homelessness legislation, whether that is a light and shade conversation that says, do you accept that this is a reasonable offer and there is that dialogue over what a reasonable offer looks like? If I was a homeless individual and I thought that the local authority was going to walk away at that point, I might be scared to rock the boat and say, I do not feel that this is a reasonable offer. Those who do rock the boat come to their MSPs, of course, and good on them for doing that. Is there guidance and support and training in relation to local authorities and housing associations and what deems a reasonable offer and what monitoring is on the system to make sure that that happens on the ground in practice? There is guidance in relation to what constitutes a reasonable offer and that, again, is set out in the code of guidance. Whether that guidance is fully up-to-date in taking account of the different types of arrangements that there are now in terms of allocating social housing—you mentioned particular choice-based lettings—I think that the developments have been such over the past few years that we are probably approaching a point where a refreshed code of guidance would be of significant value. The type of dissemination and training of that guidance would follow on from that. MSPs only get the negative cases. People never come to us and say, Bob, I had a great experience on my pathway through this horrible homelessness situation with superb. That is not what happens. We only get the negative cases. I realise that people's experiences, our experiences are coloured by those who come to us. Specifically on homelessness, Mr Walker, I was very interested in your use of language in your opening statement, in which you said that you are keen to continue along this road based on the limitations of your remit. That begs the question whether you think that it would be helpful or, at least, to have a discussion about how the remit could be extended and, if so, what that extension could look like. That is a fair question. What I was really alluding to there is that we absolutely as a regulator recognise the complex area that is homelessness and therefore the multi-agency approach that needs to take place around that. It is not for us as a regulator to mandate particular things around it but to operate within the remit and the charter, etc. It was a recognition that we would want to work as part of a multi-agency approach to homelessness. As an example of that, as it happens, Michael and I were at a meeting with a significant RSL who was running out recently in Scotland, who was running a pilot on homes first. We are talking about that. One of the big points that they were making to us and they were seeing some good results in that pilot was about the need for all the support mechanisms that sat behind that. Of course, that discussion ensued and that was a recognition of there is a limit to where the regulator's role begins and ends around homelessness but we need to work with other bodies because it is such a complex area and I do not need to be patronising to a committee of this knowledge and experience because I know that you have done so much work on homelessness recently, so I am well aware that you know that. Will you just float the idea of additional remits for the regulator just to give you the opportunity there? We will move on to following the questioning at Graham Simpson. Thank you very much. I just want to quickly look at rents, if we can, and the level of rents and the affordability. I note that the average rent in the RSL sector is £11 a week higher than it is in council housing. You did a survey earlier this year where you found about a third of tenants had experienced rent affordability issues at some point. One in eight had had difficulties in the last year and 66 per cent were worried about future rent affordability problems. I just wonder if you can tell us what your remit is around rents and controlling them and looking at affordability issues. I might be open by just saying that what is interesting is that tenants certainly tell us that they are worried about rent affordability. The themes that come up in that are possible future rent increases, levels of income rising or not rising, as we know has been the case, and changes to benefits as an impact too. We are certainly hearing that. What feeds into that is the whole idea of value for money. In fact, the last piece of significant research that we published recently from a tenant panel that I referred to, the group of about 500, was around the whole idea of affordability and how they looked at that. It is certainly very much in our radar at the moment in as much of the reference that I made to inflation hitting 3 per cent recently. That is certainly something that we will be quite vocal about. We have always taken the view that we wanted housing providers to look at rent affordability for the long term. It is not a one-year gig. It is looking at long-term affordability. Indeed, I was speaking at that at a conference to housing providers on Friday. Michael, I think that that has quite a lot of detailed information around this and some of the work that we have been doing. It is important to say that we pay close attention to rent levels and, in particular, proposed increases in rent from the social landlords when we are undertaking our annual risk assessment of all landlords. We will engage with a landlord where we have concerns about the particular level of rent increased at baby getting proposed. Having said that, our sense at the moment is that current rent for most homes is affordable for most tenants. If we look at levels of arrears, we can see that they are relatively static at the moment. That may be evidence to support that sense. Having said that, and as George has already touched on, we are well aware of some of the challenges that are coming forward in terms of tenants' incomes and the sense that tenants are communicating to us around their concern about future rent affordability. That is why our messaging to landlords has very much been about considering the future affordability of tenants to continue to pay their rent. That is a theme that we will stay on as a regulator and continue to engage with landlords about. Is there anything to stop RSLs setting whatever rents they like? There is not a national rent policy in Scotland, and therefore there are not those type of constraints on landlords. We would take an interest if we saw what we considered to be excessive rent increases. We do not have a sense that this is on the agenda of landlords to look at very significant rent increases. We gather in financial projections from all registered social landlords, and in that we can determine a sense of the projected rent increases that they are thinking on. Over the last few years, the level of those projected rent increases has been reducing. Having said that, our analysis of the most recent set of projections is going up again to about 2.9 per cent. That is why we are flagging this as an important issue at this point. When landlords are considering rents for future years, they ensure that they have meaningful engagement with tenants. What tenants view is value for money in terms of the rent that they are getting and the level of service that they are getting, but also to ensure that they take account of the sustainability of those rent levels for tenants into the future. Do you think that there should be something in place to constrain any RSLs who want to impose massive rent increases? As you said, rent controls would be a matter for the Scottish Government and for this Parliament to consider. In terms of the regulatory position at the moment, we do not see any great rush by landlords to look at excessive rent increases. Most landlords are very mindful of the impact that rent increases have on their tenants, but we will look to engage with any landlord that we think may be pushing rent levels to such an extent that it will become challenging for tenants to sustain their tendencies in that context. Mr Simpson, you also asked about mechanisms. There is a really good and powerful mechanism, and that is tenant consultation. We see that good and responsible landlords consult in detail properly on subjects like that and come forward with options to get a real dialogue with their tenants on things such as rent increases, costs and value for money. There is a mechanism whereby the type of information that I talked about earlier that the regulator can provide can open that dialogue up around that area. When we talk about consultation, we mean real options and real dialogue with tenants, so we do not mean a nice letter. Can I just check briefly what evidence there is that that is happening? I have had the opportunity to meet Mr Walker a short while ago where I asked a very similar question, which was in relation to when rent policies go to the board for approval, whether one option goes to the board and it is voted through on the nod, because that is the culture within that housing association or whatever, or whether an options paper goes to the board based on consultation with tenants and residents and then there is an open dialogue and a decision is made based on that options paper. In other words, the board itself is empowered to choose option A over option B over option C rather than you can have your rent increase as long as you go for the one that is on the table, all say yes now. Is there any data collected where that does or does not happen? We published our thematic inquiry on how social landlords consult tenants about rent increases just about this time last year. We found that some landlords absolutely engage with their tenants in a very meaningful way, in a constructive way, where they present options and choices and have the type of dialogue that George has referred to, but we also found others that need to do more. We made a series of recommendations to landlords and we plan to follow up on that thematic inquiry in 2018 to see what landlords are doing differently to consult with their tenants. We also get feedback from our national panel. That indicates that many of the participants have received information and proposed rent increases from their landlord and that they were invited to provide their views. Although there was a bit more of a mixed picture on how clear and genuine they necessarily felt the process always was. The final thing that I would say is that we very much look to the significant performance failures route as a way for tenants to raise concerns with us, where they feel that there is not a genuine rent consultation exercise happening. Indeed, we have had one or two such significant performance failures reported to us by tenants. That is helpful. We have got about 10 minutes or so left for questions if there are additional ones. No one had caught my eye, but I see that I have missed the bid from Alexander Stewart to ask a question. In the report, you go into some detail about risk and the risk assessments that you have. You have a risk committee, a risk framework, a risk task force, a risk plan. All of that sounds very good and gives confidence that you are tackling the issue. In the report, you talk about some low-risk areas that you found that were prioritised. Also, what can be the greatest risk issues to you as an organisation going forward? Just to clarify, Mr Stewart, when you are asking that, you are asking risk in terms of us as a regulator or risk as we see it in the outside world? There are two parts to how we look at risk. I would suggest that both come into the context. I suggest that I make some comments on how we look at risk for us as an organisation, but risk goes out into the risk assessments that we do of RSLs themselves. We just signed off the process for the coming year for that at our last but one board meeting. I will maybe have Michael comment on that aspect if I can. I am happy to report that, when I turned up at SHR, I found a very well-defined and in-place risk management process. I was happy to see that. We have a risk register. In fact, we reviewed it yesterday. We had a board meeting yesterday and we went through that in some detail. We set risk action plans for the risks that we deem higher to us as an organisation. Our management team then reviews that on a monthly basis, our Audit and Risk Committee reviews it quarterly. In fact, we have a major risk workshop as a board. As a new chair, I have not been part of that yet each year. We have a very clear way of managing risk for us as an organisation. As I said, risk assessment goes into the world of RSLs as well. I will get Michael to comment on that aspect for you. Every year, we undertake an extensive assessment of the risk that we see in each registered social landlord. In each local authority landlord, we do that along with our partner scrutiny bodies through the shared risk assessment. In relation to the registered social landlord, that is an annual exercise that we do where we come to a view on what we see as the principal risks to our ability to protect and safeguard the interests of tenants. Not necessarily the same risks that a landlord might have on its own risk register. This year, a number of risks that we have identified, some we have already spoken about around rent levels and affordability, welfare reform and the impact that that will have on landlords' income streams. The fact that more landlords are building more houses and getting back into development brings a range of risks, as well as all the opportunities that that brings. We are still very focused on some of the other challenges that there are to RSLs financial capacity, in particular around risks in pension liabilities and the impact that they can have on an individual landlord. We look at that full range of risks out in the landlord's operating environment and we come to a view on the level of risk that each landlord has. Then we construct an appropriate engagement for every landlord. We then publish in our regulation plans what that engagement will be. Last year, we had just shy of about 60 regulation plans, so we are engaging through this year with around about 60 landlords, where we have identified potential areas of risk. Fraud, and we have touched on whistleblowing. That is obviously something that you have dealt with in the past. The whole idea of anti bribery has come into the fore in recent times. You are identifying and you have a policy going forward to manage that. That is very much part of regulatory standards. We expect all landlords to comply with regulatory standards and to uphold the highest standards of behaviour and ethics in their organisation. We will absolutely respond where we find any instances of failure to comply with those standards. We have done so in the recent past in a number of the statutory interventions that we have had. There are other bits for questions, but there are definitely a couple of things that we want to get on the public record before we close this evidence session. We will just have a brief moping of pips exercise just for five minutes. We will try not to question brief answers if possible, which would be helpful. Mr Stewart mentioned risks to your own organisation. Of course, in the report notes, we are a smaller, we are smaller, have frozen recruitment throughout 15-16 to respond to reduction in our funding. We have also made savings in our other administrative costs wherever possible. All public bodies face funding pressures in the coming years, so that our revenue budget for 2017-18 is £3.8 million. It would be remiss not to ask about how you are getting on managing that budget, require the efficiency savings and that kind of thing, the opportunity for Mr Walker or Mr Cameron to put something on the record in relation to that. Short and quick for that, we did a half-year review this week. We believe that we will come in on budget in line with that £3.8 million that we discussed. It is fair to say that, as a regulator, we have taken out about £1 million—sorry, our budgets have been reduced by about £1 million—and we have taken out significant costs over the last five years. However, I do need to say that 80 per cent of our costs are staff-based. Although I said that we will come in in line with our budget, that is because we are running a number of vacancies. It would be a concern that we have, I have to say. I do not believe that there is any real fat left to trim. When 80 per cent of your costs are staff costs, when your staff are reduced from around 80 to around 50, you can see that those moves have been significant. I suppose that, as we move forward to the spending review, that is certainly on the board's minds as to how we would respond. Of course, we will respond appropriately once we see the outcome of that spending review. We have engaged with that, with the minister and the officials, and we are certainly comforted that they are aware of our issues, which is helpful. What the outcome will be, of course, is for others to decide not to ask. Okay. Of course, it is very good that that is put on the record here today, because that is obviously in the public interest. You mentioned one of the risk factors, which is the Scottish Government's target of 50,000 new affordable homes over the lifetime of this Parliament. It is a significant challenge for housing associations and local authorities to deliver on that task. A lot of that comes down to corporate governance and ability to manage large projects. Sometimes, the first time after a number of years for some of them, how content are you that the housing association movement and local authorities are well placed to deliver that target in terms of their ability to manage those kind of projects? I will take that one. Okay. It is absolutely something that we have had a strong focus on over the last couple of years, and you may be aware that one of the organisations that we had to use as a statutory intervention person got into trouble because it got back into building houses after a second period of time and did not have the capacity to manage that effectively. Partly in response to that, but also recognising that the target is there and that more landlords are getting back into developing and building new houses. We did a thematic inquiry last year where we published what has been a very well-received set of principles to guide landlords through their implementation of development programmes. We will keep an eye on whether that is having the type of impact that we would want it to have, and that is absolutely high on our risk agenda in terms of that assessment process that we go through for every single landlord. That is a positive thing. It is obviously good that landlords are back in the business of building affordable homes, but it has to be managed and delighted that the housing regulator is keeping a close eye on that. The final question is to make sure that we have a balance to where we are questioning in this evidence session. We have heard a bit about engagement with RSLs in the governance category in relation to that engagement. Are you able to introduce a little bit more about that, but just as importantly, not just the reasons for engagement in the governance category, but how you are seeking to improve practice and build capacity? You raised a matter that is very important and very dear to our hearts at the regulator, because in the main, where we are having engagement, and I talked about engaging with one and eight RSLs around issues of governance, we talked about uses of statutory intervention seven in the last three years, and in the main they have been about governance that has not been as effective as we would have liked it to be. That will be a very significant theme as we go through a regulatory framework review. We are already looking at issues around governance, because we absolutely believe that good governance is the core to that. We are now looking at some of the building blocks of good governance around areas such as internal audit whistleblowing that we have touched on, but we are really getting into the meat of that. Indeed, I will be talking about a major conference around this subject of governance on Friday, so it is a very important area for us. I will maybe see if Michael has something to add, because there is a regulator over the last five years. The fact that I am talking about it being a high-profile thing, I do not want to lead you to believe that there is not been a lot of activity going on in that regard currently, but make no mistake, it is a challenge. Just to add to that, where we engage with a landlord using our statutory intervention powers, we will publish a report and an account of that engagement when it is concluded. One of the important purposes of that type of reporting is to give all landlords an insight into what went wrong and to give them an opportunity to review their own approaches to ensure that they can learn any lessons that there may be coming out of that. We have published two such reports. We have just concluded a third statutory intervention, so we will be moving shortly to publish a third report. Then we will look to draw broader lessons out of those three situations to ensure that there are lessons learned both by the sector itself but also whether there is anything that we need to take out of that. As George says, that will feed into the review of the regulatory framework. Time is upon us, Mr Walker and Mr Cameron. Thank you very much for attending here today. It is very worth the 11th session for ourselves. If you would normally see additional comments, please do email the clerking team if there is something you really wanted to convey to us. You feel that you have not had the opportunity to do that, but hopefully you have had that opportunity. Thank you for attending and we now have to move directly on to agenda item 3. The committee will consider that a negative instrument 350 is listed on the agenda. The instrument is laid under the negative procedure, which means that its provisions will come into force unless the Parliament votes on a motion to annul the instrument. No motion to annul has been laid. I invite members to make any comments that they may have on the instrument before us today. I ask members whether they agree that they do not wish to make any recommendations in relation to the instruments. Are we agreed? I move to agenda item 4, which is previously agreed and will be in private session.