 toner, ythig, mae'r ystafell ydyniaid ynllewr yn yne yr ffodol 18-35304 yn yny o Angela Constance, ond gan y bydd y siaradau ar y Cymru, Scotland Bill. Rym twfn i'w cwyso o'i ddiwediad i'r cynnigos ar gweithio, i'w ddebyg o'r bwysig o'r eich rydw i'w ddifuig i'w bwysig bwysig, a rydw i'w ddweud nad bydd da i Angela Constance i'w ddiw i ddim yn gystafell ar y ffodol, Cabinet Secretary, 10 minUT. Thank you, Presiding Officer! I'm delighted to open today's debate, and I want to start by thanking the Education and Culture Committee for their Stage 1 report and also the Finance and Delegated Powers and Law Reform committees for their contribution to the lead committee's work. I want to emphasise three points in my opening remarks, firstly, why the Scottish Government believes that this bill will enable more modern, inclusive and transparent governance in our higher education institutions, secondly, I want to highlight the constructive engagement that we have had with stakeholders, and finally, I want to provide a summary of the amendments that we intend to lodge at stage 2 should Parliament vote for the bill to pass at stage 1. I consider this bill to be focused and discreet, featuring provisions informed by the review of higher education governance, published in 2012 and chaired by Professor Ferdinand Von Ponzynski. Ministers commissioned that report to obtain evidence on how higher education governance could be refined as we move further into the 21st century. Higher education institutions are autonomous, and I'm crystal clear on that. However, in tough economic times the Scottish Government has and its draft budget again identified over £1 billion of investment in our higher education sector next year, and as part of the return on that investment, we expect institutions to adhere to the highest standards of governance. Our higher education institutions are a great source of pride to Scotland. They enjoy a worldwide reputation for excellent teaching and research, but they, like any other group of high-performing organisations, are capable of change and improvement. I want our institutions to embrace the changes that the bill will introduce at its heart. The bill is about ensuring that all voices on campus are heard and empowered to contribute to decision making. I am grateful to the cabinet secretary for taking intervention. I welcome the thrust of the bill in seeking to make the governance arrangements of our universities more inclusive and accountable. She will be aware of the evidence that was given by Professor Tim O'Shea when he stated that, as I quote, the success of UK universities in comparison with universities in other parts of Europe is put down to our autonomy and our ability to operate. What further assurances can she provide that the wide scope of the proposed secondary legislative powers will not undermine the independence of our world-leading universities? As I have said to repeated people on repeated occasions, our universities are autonomous and will indeed remain autonomous. There is nothing in this bill as introduced, nor will there be anything in this bill post stage 2 that will advance ministerial control in any way. As I proceed with my opening remarks, I hope to outline fully to chamber how this Government will remove, reduce any regulatory powers that are deemed no longer necessary. As noted in stage 1, the bill contains relatively few provisions but has generated considerable comment. Our response to that has been to listen to those who support the proposed legislation and those who do not. I am grateful to all stakeholders for the reviews that they have offered and for their participation in meetings and workshops that we have hosted. I very much welcome the committee's support for the general principles of the bill. I wrote to committee on Monday in response to that report. I also wrote to the committee on the same day to set out the Scottish Government's full analysis of any risk presented by the bill to the status of our higher education institutions as private not-for-profit bodies, as classified by the Office for National Statistics. The Scottish Government does not hold the view that the bill adds to any existing risk of reclassification of HAIs as public bodies. Will the cabinet secretary be able to tell us where the mathematics are arithmetic or to back up that point? We can all have a good, old, robust debate about mathematics and some of the arithmetic and some of the evidence that was presented to committee I could indeed take issue with. The important thing is when you look at university Scotland's evidence and the sort of action that they are calling for to reassure it that there is nothing in the bill that increases the risk of O&S reclassification, you will find that the Government is responding to those requests for reassurance, even though we do not think that they are required. We are taking very clear action to ensure that the sector can go forward as much as possible collegiately and as one where possible. Further and in line with the substantive view offered by the Office of the Scottish Charity Regulator, the Scottish Government does not believe that the charitable status of Scotland's higher education institutions is in any way jeopardised. However, we have considered whether any amendment of the bill put forward at stage 2 would assist, as I have said, in addressing concerns expressed by stakeholders. I have summarised our plans for potential Government stage 2 amendments in a moment, but let me repeat what the Scottish Government has made clear on many occasions. Reclassification of Scottish higher education institutions is an outcome that we would absolutely never want. Turning to planning for stage 2, while the Scottish Government is clear in its view that the bill does not advance any risk of reclassification by O&S, I will bring forward amendments to remove sections 8 and 13 of the bill, giving ministers the power to make regulations to alter provisions on the composition of governing bodies and academic boards. On elected chairs, the Scottish Government intends to bring forward an amendment to replace section 1 of the bill, as introduced with full provision for a model for the operation of elected chairs at stage 2. In summary, perhaps if I have time later, I am keen to make some more progress. In summary, we will require higher education institutions to advertise for those positions. Interested applicants would be selected for an interview based on their ability to carry out the duties associated with leading a modern Scottish higher education institution. If successful at an interview process, managed crucially by a nomination committee featuring staff and student representatives, candidates would then participate in an election in which all staff and all students in an institution would get to vote. I can also confirm that plans for elected chairs who would be the senior lay members of all governing bodies and are often called senior governors or vice conveners at present would result in no alteration of the statutory underpinning of existing rectors in our ancient universities. As now, the way in which rectors dovetail with the new elected senior governors will be a matter for each autonomous institution. Under remuneration of chairs, we plan to put forward an amendment to alter the current section 2 of the bill to provide only that higher education institutions must offer reasonable remuneration to an elected chair in connection with carrying out that role upon request by the chair. On balance, I do not consider retention of a power for ministers to set levels of remuneration or delegate this role to other persons necessary. On the composition of governing bodies having scrutinised all of the evidence provided by committee and stakeholders, I intend to put forward an amendment to remove the obligation for higher education institutions to have two alumni on each governing body. That would assist institutions to ensure staff, students and trade union members can be accommodated more easily on bodies with a maximum number of members set at 25 in the code of good HE governance. Turning to academic boards, I am minded to put forward an amendment to remove section 9 from the bill, meaning that higher education institutions need not be obliged to limit numbers on their academic boards or senates to 120. In order that those institutions with larger academic boards have a fair representation of students without being obliged to ensure 10 per cent of the body comprises elected students, a ceiling of 30 elected student members is a measure of a measure that the Scottish Government favours. On academic freedom, we have taken careful note of all the evidence presented. In light of that, we are considering the final form of the relevant provisions in this area. I have been struck in particular by the importance of ensuring that academic freedom cannot be cited as a cover for any views that are offensive or criminal. All of those potential amendments have been influenced by dialogue with stakeholders. Although stakeholders will be familiar with them, not all will support each proposed amendment. However, I am confident that broad support for a number of them will be evident, and I want to now draw to a close by emphasising three key points. The Scottish Government values Scotland's higher education institutions, the staff who work in them and the students who attend them on equal terms. I believe that this modest and focused bill can enable more modern, transparent and inclusive governance practice. I have been listening and will continue to do so, and I want to work with our universities and partnership in the years ahead. Presiding Officer, there is a strong consensus that our higher education institutions should uphold the highest standards of governance. However, there are differences of opinion about the roar of the Scottish Government, about current standards of governance in the sector and about some of the specific measures proposed in the bill. As we are aware from the chamber debate held during our stage 1 scrutiny, there has been extensive discussion of an issue not even mentioned in the bill, namely the possible risk of our universities being reclassified. According to many voices, higher education governance is currently in a good state. Certainly, universities were very keen to point out the link between their international success and their existing governance arrangements, while also highlighting their on-going work to make further improvements. Neither the review that led to the bill, chaired by Ferdinand Von Prenzinski, nor the cabinet secretary, provided specific examples of deficiencies within the sector. Even some unions, the strongest proponents of change, acknowledge that the bill would not be starting from a position of real weakness. For example, the university and college union Scotland said, no one is questioning that Scottish universities are good, they are good. Crucially, however, it added, what we are saying is that they could be so much better if staff, students and trade unions were fully involved in how they operate. That appears to us to be the nub of the bill. Will it help to make a good system even better? Will it help to reduce the risk of some of the poor instances of governance that were highlighted to us recurring? Overall, with the exception of two members, the committee supported the bill's general principles of strengthening governance in higher education. In doing so, however, we were clear that the Scottish Government needed to provide further information on various issues to fully inform the debate. That demand reflected the fact that much of the bill's detail was still under active consideration when we published our report. I thank the Scottish Government for responding to our report in good time for this debate. It is clear from that response that, should the bill progress to stage 2, there will be a significant number of amendments for us to consider. Many of the proposed changes reflect the recommendations from our stage 1 report, and it is welcome that the Scottish Government has responded positively to our concerns. The Scottish Government has also taken into account our view that it should have provided more justification for some of the provisions contained in the bill. For example, we queried the rationale for universities' academic boards being limited to 120 members. The Scottish Government's response says that it engaged with Professor von Brunsinske during stage 1, and has subsequently come to the view that it may be better to remove the cap. The Scottish Government has also clarified another key provision of the bill, namely that the Scottish ministers are to determine a process by which the institutions appoint the chairing member of their governing bodies. Our report expressed support for measures that would potentially increase the pool of suitable candidates for the post of chair. We also agreed that openness, transparency and consistency in the appointment process were desirable. However, we noted a lack of detail on how the chair is to be appointed, and I therefore welcome that the Scottish Government's response provides more information on the steps involved. On the specific issue of possible remuneration for governing body chairs, I again appreciate that the Scottish Government has responded to our concerns by flying up relevant amendments for stage 2. We also said that the role of Rector, a historic and often high-profile figure within Scotland's ancient universities, should be clarified. If there are to be elected chairs and elected directors, there should be no ambiguity about their respective roles, and both figures should be able to work together for the good of the institution. I thank the member for taking intervention on that last point that he made. Isn't it conceivable that the Rector having been elected by the wider franchise could indeed take a co-chair role in looking at perhaps the policy of the university, and that the chair, which must be elected by the court, would then be responsible for chairing many items of operational performance? Wouldn't that be a suitable conclusion to achieve the objectives of widening the franchise, making sure that the Rector is where he or she should be and allowing the elected chair of the court to participate? Stuart Maxwell, I can reimburse your time. I have a little bit in hand. That is one of the possible models that could arise from the suggestions of the Scottish Government and the work that will be taken on by the Government and the sector itself. Given that I am speaking as convener of the committee, I will not give a view as to whether that is the particular model that should be chosen. I think that there should be some flexibility, as all I will say, across the sector to allow them to figure out the best way of going forward, along with the Government, in subsequent discussions. I note that there will be amendments in this area and the Scottish Government's view that it will be up to institutions themselves to ensure that Rectors and elected chairs work effectively together. The bill proposes the inclusion of new members on institutions governing bodies, including trade union representatives. Higher education institutions stress that union representatives on governing bodies should be there in a representative capacity for all staff to avoid the possible accusation of a conflict of interests. We were not persuaded by such arguments, noting that all members of a governing body must act in its best interest. We also agreed with the principle that a diverse group of people should be included on the governing body and recognise that the bill's proposals would make governance more inclusive. That said, however, we recognise that such changes would not guarantee any of themselves improved governance. HEIs were also concerned about how they would accommodate the changes to governing body membership, given that such bodies are not supposed to have more than 25 members. Indeed, concerns about changes to the governing body were just one of the reasons cited by the Royal Conservatoire of Scotland in its recent letter to the Scottish Government, in which it asked to be excluded from the bill. I am sure that we would all very much welcome the cabinet secretary's views on that particular request. I would also like to know whether institutions are likely to be reassured by the Scottish Government's suggestion that governing bodies are not now to include two graduate members. That does not seem to be a major concern in our evidence taking. They may be more comforted by the Scottish funding council's response to a report, which in summary said that it would not be concerned by a short-term increase in governing body membership. I have already touched on the issue of reclassification. There is no specific reference to Scottish HEIs being included in the relevant work being carried out by the UNS. Nonetheless, we appreciate that reclassification would be in no one's interest and recommended that all reasonable measures be taken to minimise any risk of that occurring. In part, the HE sector's concerns stems from the sections of the bill that would give Scottish ministers power to make regulations about governing bodies and academic boards. We therefore welcome the cabinet secretary's commitment to amending or removing sections 8 and 13 of the bill. However, despite what the cabinet secretary said a moment ago, I am still disappointed, however, that the Scottish Government has still not adequately addressed our specific requests for further information on academic freedom, specifically around students' freedom, and I would expect a response to the committee on that issue as soon as possible. To conclude, Presiding Officer, a key consideration when scrutinising any proposed legislation is the improvement that it is likely to deliver. Such a judgment may be particularly difficult with this bill, as there are also separate efforts underway by HEIs to improve governance. We therefore ask the cabinet secretary how she would evaluate the bill's success and are pleased when she confirmed that the sector itself would play a role in monitoring the bill's impact. We expect to be a fully inclusive exercise involving all the relevant bodies in the higher education community. That would be consistent with the bill's aims and would also encourage everyone to continue to focus on improving our already world-class higher education sector. Thank you very much, Presiding Officer. It seems to me that we have debated this bill and its measures a number of times. It is quite hard to believe that we are, in fact, just at the stage one debate. Nonetheless, that is the case. There is some value in turning back to the first principles of the bill and the first principles of why we have, throughout the process, taken the position that we have. We support democratic and transparent governance in our higher education institutions. It is our view that they are the recipients of over £1 billion of public funding every year and that they are central to the future of Scotland, and therefore it is reasonable that we ensure that our governance is modern, transparent and fit for purpose. We also support trade union and student representation on council. There should be no surprise there. We are the Labour Party and, of course, we support trade union representation. We have never accepted the argument that some trade union representatives in a body such as the council will face a conflict of interest and sometimes difficult decisions, sometimes being collectively part of decisions in which those they represent might find hard to understand. The fact of the matter is that those of us who have been trade union activists in other lives know that wherever trade unions have representation, that is the kind of difficulty and contradiction that those representatives have to deal with every single day. We also, as a principle, support the autonomy and academic freedom of our universities in over centuries. That has been one of their greatest strengths and it must and should be preserved. Finally, we have been at pains to ensure that we do not support measures that would pose a risk to the fiscal basis of the higher education sector, either through jeopardising their charitable status or indeed jeopardising their classification by the ONS. Underpinning that, I suppose, is an argument that says that we do accept that this legislation is needed. That is largely because we would argue of the failure of the voluntary code. There has been a serious question over transparency of governance in the sector over recent years. That is perhaps most dramatically characterised by pay settlements for senior staff, particularly principles. While some in the process have argued that the voluntary code developed by the principle of one of our universities would be enough, we have not been convinced by that simply because the voluntary code is in place, but the transparency is not the UCU in their very helpful briefing that they have provided for today. It points out that, after the voluntary code had come into place, it submitted FOI requests to try and ascertain how principles pay had been determined in remuneration committees, and none but a handful of the 19 higher education institutions in Scotland were willing to provide that information. Many of those who provided it in a form so redacted as to be completely useless. It is not the case that the voluntary code is enough. Given that we are at stage 1 in this debate, we are entitled to look at the bill before us, the bill as introduced. Although, as I have said, we support the principle of the bill, we have been very clear that the bill as drafted and introduced fails on many counts. It fails to describe the actual process and detail of how the elections of chairs, a measure we support, how that would actually take place. It includes, within it, sweeping ministerial discretionary powers which could be used to change the governance of the higher education institutions in future without reference back to Parliament. It veers into areas that seem to us completely unnecessary, such as the size of the academic court, and it ignored the historical position of rector. He will be aware that the University of Edinburgh has very strong and inclusive governance arrangements, which include the election of the rector by both students and staff. Does he agree with me that the bill provides an opportunity to roll out this exemplar of good practice across our higher education institutions? In the light of the amendments that the education secretary has promised to bring forward, it may well at least recognise the strength of the model that is already in place in Edinburgh. After many months of angst, the education secretary called it constructive engagement, but really much angst, she has finally explained to us how she intends to improve the bill by removing sections 8 and 13, which contain the discretionary ministerial powers, by detailing the elections and also removing discretionary powers there, all helpful in terms of the ons point, by removing the cap on the academic court and by recognising and ensuring that the bill doesn t in any way inadvertently end the rectoral system in the ancients where that exists. Not all of that has been done with good grace, of course. The education secretary continues to argue that there is no ons reclassification risk, as I have pointed out before. That is not good enough. We have been here before, we were promised that the ons issue with colleges would be resolved. It never has been, and as a result they have had to resort to the arms lines trust funds in an extremely unsatisfactory position. I would argue that all of that angst has been unnecessary. All of these things could have been avoided if only the bill had been properly drafted in the first instance. From the word go, the education secretary has said that ministers have no desire to use discretionary powers to change the governance of institutions in the future. That simply begs the question, why were they there in the bill in the first place? The truth is that we have lost a lot of time over this bill, not particularly but the sector itself, which would have been better spent on the things that they do best, which is educate our young people, carry out world-class research and make an enormous contribution to our economy. That has been a diversion far more than it necessarily would have been had it been delivered properly. We will give the bill the nod because we support the principle, but we will be shaking our heads as we do it at the incompetent shambles of its handling. When the bill was first mooted, the Scottish Government made it very clear that its only intention was to make some minor amendments to allow greater transparency when it came to the governance and management of universities and when it came to their accountability for very large sums of public money. Public money sits alongside lots of other income streams and accountability for which there does not seem to be any concerns about university governance. Of course, what has transpired is something very different, as is clearly set out in the Education Committee's report and in the committee chairman's comments just now. Notwithstanding the strong support from the UCU and the NUS, the bill has been met with an exceptionally hostile reaction from the university sector, a sector that, in my opinion, has always bent over backwards to work with the Government, but also, as the committee report says, from groups like the SEDI, the Institute of Directors and many in Civic Scotland. There are several reasons for that reaction, but one of the most important ones, again, as the committee report makes clear, is the stark lack of good quality data and analysis to demonstrate why the Scottish Government considered the bill to be necessary and its failure to provide bona fide evidence to support the key assertions within the bill. No fewer than six times do the Education Committee members castigate the Scottish Government for the lack of evidence and the lack of clarity in the Scottish Government's proposal, so that the main issue for many people remains the utter failure to demonstrate that there is a problem with the existing system of governance, which is somehow acting to the detriment of higher education. I won't, if you don't mind. Secondly, it was increasingly evident that there was some seriously flawed thinking within the bill when it came to the question of ministerial powers, ons reclassification and democratic accountability with the governance. The whole sector, unions included, were crystal clear that several key aspects of the bill, most of which related to sections 8 and 13, would change the very nature of our higher education institutions, specifically by increasing ministerial powers and by making universities into public sector bodies. The Scottish Government has denied that that was the intention, but that, indeed, was the interpretation from the wording of the bill. The University of Scotland had and still has substantive reasons for being concerned about the prospect of the Office of National Statistics reclassification of the universities. When the Government persisted in its claims that reclassification presented zero additional risk, there was no detailed independent advice—there still isn't—nor were there any estimates of the costs that universities might face. If you don't mind, I'm on a very short time this afternoon. It was a point that was very clearly expressed by Alistair Sim, Anton Muscatelli and Gary Coots at the Finance Committee, and we still don't have that information. That is a crucial point. The section in the bill, which, because of the wording, expressly gave ministers the power to amend universities' constitutions by altering the composition of their governing bodies. I'm afraid that you had a slight problem with the clock, so please don't think you're at 10 minutes, but I also have a little bit extra time in hand. It's your choice. I'll take 20 minutes, Deputy Presiding Officer, if you have a choice. Bless me. How long do I have? Of course, the third crucial issue is about democratic governance and accountability. Some commentators seem to argue that the university's criticism of this section of the bill is because they can't see behind their ivory towers that they're choosing to hide behind some convenient protection of autonomy that they don't want to see any change. Nothing could be further from the truth. Indeed, universities have gone to great lengths to demonstrate why the current bill would diminish rather than enhance democratic accountability and to argue for the benefits of the code that has been designed by all stakeholders. They have explained to the Scottish Government many times why the crucial trust between a chair and the board might be compromised by the particular system of elected chairs that the Government is proposing. They ask why on earth a Government wants to legislate when it comes to the size of academic boards and the definition of academic freedom, why there is a complete lack of clarity about how the post of rector will fit into the new proposals and the nonsensical commitments to the stipulations about the size of governing bodies when it would mean that certain posts, elected by staff, would actually disappear. They have asked questions of the Government to address concerns about whether a good range of candidates will actually come forward, given the experiences that have been flagged up by the NUS. Yet again, they have asked the Scottish Government to answer, with evidence, the 17 concerns of the education committee. To date, there has been an entirely unsatisfactory response. Indeed, when it comes to the question about maintaining the strong link between chair and board, the Scottish Government woefully admits that it has not, and I quote, not undertaken any specific research in this area. It seems in the question of academic boards that the Scottish Government thought only to consult with Ferdinand Von Pradinski after the bill had been published and after the stage 1 evidence. I am in my last minute. Government arrangements that minimise the likelihood of serious conflict with the governing body are those most likely to promote good governance. The bill does not do that. There are some who believe that the original bill could pave the way for a sector that would be bound by a new and, in their eyes, better approach to governance, making the 19 higher education institutions much more uniform in their structures, much easier to control and therefore better able to deliver best value for students and staff. The evidence is simply not there, which is why there is such a song, public outcry, at what the bill could do, wittingly or unwittingly, to one of the real jewels in the crown of Scottish life. That is to undermine the very foundations and principles on which the sector has thrived and thrived for hundreds of years. On that basis, we cannot support it at stage 1. Thank you. We now turn to the open debate and I can give members up to five minutes. I call George Adam to be followed by Cara Hilton. Thank you, Presiding Officer. Once again, I welcome this debate, a stage 1 debate, and like Ian Gray, I feel as if we have already had this debate on a number of occasions. However, there are a couple of issues that I would like to bring up at this point, Presiding Officer. The first being that the Scottish Government is clear that our very successful international renowned universities are and will remain autonomous bodies. It is only right that they remain so, but the important point for me is how we help them to become better, how we make them grow and how they become even better than what they are at the moment. I do not believe that the Scottish Government has been unreasonable when it asks for the highest standards of governance, considering that the Scottish Government invests over £1 billion every year, so it is only right that it would expect these high standards. Surely that is not too much to ask. I could stop at that point, and some people in here might think that that is a good idea, but I will not. I have too much more to mention. The debate in the bill is about ensuring that our universities continue to succeed. I have already said that before. That was agreed by many who provided evidence to the committee. Mary senior, Stuart Maxwell, the convener, has already mentioned this quote, but I think that it is a very important quote that the UCU Scotland Mary senior said that no one is questioning that Scottish universities are good. They are good. What we are saying is that they could be so much better if staff, students and trade unions were fully involved in how they operate. I believe that this quote from UCU Scotland shows the enthusiasm for this bill in the sector and the enthusiasm for the sector to work and make it even better. We also heard from Professor von Brondinski, principal and vice chancellor of Robert Gordon University, and he said that universities are autonomous bodies and should be, but their autonomy should not shield them from legitimate expectations that they engage with staff, students and external partners, or from the need to behave in an accountable manner. Do both of those quotes not explain the position perfectly? Here are two individuals who work in different parts of the sector. Both are coming to the conclusion that we must move forward. We cannot allow these world-renowned universities to be left behind. The world continues to spin, time moves on and we all need to move forward and progress. That brings me to the ONS question. In all honesty, I believe that this argument has been used in order to keep us away from talking about the many positives of the bill. That does not mean that I take the threat of ONS reclassification lightly, nor do the Scottish Government. It has stated continually that it does not believe that these parts of the bill would lead to reclassification, and if it did, it would do all in their power to fight against it. I agree with the cabinet secretary, which she states in her letter of 11 January to the committee. The Scottish Government concluded that the bill did not propose any additional risk of reclassification with specific reference to the secondary indicators of control. We do not agree with the conclusions that were reached in the advice provided by Anderson Schrethern on what is a primary matter of statistical reclassification. However, we have taken careful note of the evidence that was shared by both the Finance Committee and the Education and Culture Committee. In light of that, I plan to lodge a number of Scottish Government amendments to stage 2 of the bill's consideration. A number of those are relevant to the points that the committee made in stage 1 report. Specifically, the Scottish Government will consider removal sections 8 and 13 in the bill. That is very welcome because it gives us the opportunity to discuss the important parts of the bill. Too much time was spent on what could have, what should have, what... Yes? Sandra White I thank the member very much for taking an intervention when you are talking about the amendments that we are putting forward in stage 2. Can you perhaps enlighten me whether that would be effective in the case of the Conservatoire and the Glasgow School of Art, which have made representation to the committee? George Adam I remember the evidence well. At this stage, I need to see what comes forward at stage 2 in order to see where we go with that. However, some of the things that we have already discussed, as I was saying earlier on, we have been talking about what might have happened, could have happened, should have happened with the higher education governance bill, and not enough about what it actually delivers. It will deliver a democratic structure of accountability for all our institutions, whether they are relatively new institutions or one of the ancient establishment. It will bring all their government structures into the modern era. That is not only the need for accountability of the money invested by the taxpayer, but there is also a need for a more diverse governance model. In closing, I would like to say that, for me, that is the prize. We can only make a difference, move our institutions forward and move them away from what appears to be like a Victorian gentlemen's club. It gives us an opportunity to take our very successful universities and not only make them more transparent but ensure that they are fit for purpose for the current century. I hope that we can all agree that this is a starting point for the future of our higher education sector, and that we encourage my fellow MSPs to work together to make this vision a workable reality. I am pleased to follow George Adam. It is the first time that he has not mentioned Paisley in a speech, so it is very novel. I am pleased to have an opportunity to speak in today's debate. Our universities make an outstanding contribution to the academic, economic, social and cultural life of our country, and Scottish Labour welcomes their continued success in the face of budget pressures, attracting high-quality staff and students from right across the world and producing ground-baking research. We value the vital role that our universities play in the economy in employing more than 42,000 people and supporting more than 144,000 jobs across Scotland. However, there is no doubt that our higher education institutions could benefit from being a lot more open and more accountable. Will universities rightly value their academic freedom, and that has got to be protected? That does not exempt them from the need to be governed properly and run effectively. The bill provides real opportunities to address the shortfalls in university governance, and in particular I welcome the measures in the bill. Liz Smith, I thank the member for doing so. Universities Scotland are adamant that there are around 500 lines of accountability with other bodies rather than the Scottish Government. None of them seem to have any problem with that. What is your comment on that? If the member waits until further in my speech, she will see the reason why I think this issue does need to be addressed, if you just be a wee bit patient. I welcome the measures in the bill to improve accountability and transparency in the decision-making structures. Given staff, students and trade unions, a real voice and a real say in the future of the universities that they learn, teach and work in, it is only right that public institutions that receive many millions of pounds from the taxpayer are running away that is open, democratic and transparent. When we consider some of the issues that have hit the headlines in recent months and years, notably the investment decisions of universities, job losses and senior management pay, we get a flavour of why democracy and more transparency is so important. I have no doubt that Government boards would make better decisions if they better reflected the student and staff bodies. The proposed changes here are very welcome, but I think, too, that there is more that we can do to make university governance better, more representative and more inclusive. In the briefing for today's debate, NUS Scotland highlighted the fact that, while women make up more than half the student population, only a third of Government board members are women. I would like to see the bill go further here to introduce some sort of quotas on university boards to ensure fairer representation. I think that that was recommended in the 2012 review, and not including that requirement in the bill, I think that it would be a missed opportunity. Ian Gray highlighted, too, the issue of senior management pay, and while I hope that that will come under greater scrutiny with more student and trade union involvement on governing bodies, I do not think that that alone is enough to tackle the unreasonable pay increases that we have seen in the sector. Research by NUS Scotland found that there are 88 individuals at Scottish universities who are more than the First Minister. Only one principle earns less than 140,000 a year. I do not think that it can be right that university principles on three-figure salaries are taking huge pay increases of up to 13 per cent, along with further expenses, often worth tens of thousands of pounds, while their staff are being told to accept less than inflation year-in, year-out, and represent their real-term pay cuts. Iain Gray highlighted, too, the secrecy that surrounds those decisions, and that cannot be right, either. At the UCU, I have highlighted in the briefing for today's debate that over two-thirds of higher education institutions failed to respond to their FOI request on the rationale between those out-of-touch pay rises for university principles. Given that over £1 billion of public money goes to support our universities quite rightly every year, it is only right that there should be much greater public scrutiny over the excessive wages that many at the top of our universities receive, while staff at the lower end of the scale struggle to get by. I hope that we will look at strengthening the bill at stage 2 to ensure fairness and pay structures, or at least some sort of guidance on the issue. The bill is not perfect by any stretch of the imagination and the limitations that have been raised by members today and in the previous debates that we have had. However, I think that it is a welcome step forward. I think that it provides a real opportunity to improve university governance for the better. I am pleased that the cabinet secretary and the Scottish Government have listened to the concerns that are expressed by Scottish Labour and by others about some of the more controversial aspects such as the election of chairs and ministerial powers. I do think that there are still some unresolved issues in relation to ONS classification that I hope can be resolved before the bill is passed. I hope, too, that we will see progress on the issues that are raised about gender balance and fair pay, and that we can work together to ensure the best possible outcome for staff and students and for the higher education sector in Scotland. Thank you. I now call Clare Adamson to be followed by Liam McArthur. Thank you very much. I was a member of the committee at the start of this process, although I left some months ago. I was very glad to see the progress that had been made in the stage 1 report and, indeed, the Government's response to the stage 1 report, which I think reflects that this has been a very open and inclusive process through the committee stages and that the stakeholders have been able to make their concerns and voices known throughout that process. That reflects a collegiate approach to where the governance bill will be going as it progresses through stage 2 and stage 3 processes. Of course, it began with the commissioning of the review by Professor von Prondinske, which was published in January 2012. I have already had one quote from the professor, but I would like to have another one to say in March of last year, rather. He said that none of this is about government control, none of our recommendations and, indeed, none of the proposed elements of the Government's planned legislation would give any power to ministers to interfere in the running of institutions. Indeed, the Government has made it clear that it has no wish to exercise any such powers. I think that that is a really important principle that has been established as we are going forward, that this is about the academic freedom of the higher education institutes will not be compromised by the proposed changes in governance. Nonetheless, we have to make progress as a 21st century. I agree with some of the comments that Kara Hilton made about diversity in our universities. If I look to the contributions towards today's debate from the University and Colleges Union, where they say that they welcome the decision of the Education and Culture Committee to support this bill at stage 1, the measures contained in this bill, particularly those to introduce elected chairs of governing bodies and for trade unions and student nominees to have places in governing bodies and areas where the United States Union has campaigned for over many years. We are supportive of the limited proposal to extend the 2020-05 definition of academic freedom contained in the bill. When we see responses like that to the proposals and the stage 1 report, we can see that we are moving in the right direction of diversity, transparency and openness in the governing of our bodies. It has been asked and there has been some comment about why this has been necessary legislation and whether this has been a way forward that should have been adopted at any stage. I think that when you look to the NUS submission for today, which has already been quoted, they say that we believe that an inclusive governing body can only be so when it accurately represents the community at governance. As the higher education governance bill currently stands, it would fall short of the desired benefits. NUS Scotland would welcome an opportunity to work with MSPs to explore amendments at stage 2 concerning fairer representation governing bodies. I am not sure that those are needed at stage 2 because there will be a lot of guidance associated with that that could achieve some of the equalities issues that NUS Scotland is looking for. However, their comment shows that when we look at our universities, they do not reflect the communities of the universities. However, the move to include the trade unions, the students in the governance and the academic boards of the universities will be a positive measure going forward. I hope that the guidance and that the organisations that are contributing and will be nominating people on to those boards and into the governing bodies will consider all aspects of diversity and equality when doing so. I echo the thanks of the convener to all those who helped the committee in our stage 1 scrutiny of the bill. Earlier this week, we debated how to create a world-class education system. I said then that there are examples of where that is already the case and nowhere is it more evident than in our university sector where the figures I believe speak for themselves. Constant improvement is essential, I accept. Adaptation to changing needs, expectations and circumstances is the only way of safeguarding and enhancing both standards and indeed reputation. However, we have something to celebrate, to value, to respect. Unfortunately, I believe that this bill fails to do that. In George Adam's description of our universities is sometimes akin to a Victorian gentleman's club, which is one that the sector would fiercely reject, and one that Mr Adam might come to regret. One of the sector's great strengths are its differences from the variety of its institutions through to the diversity of staff and student populations. The governance of our universities should reflect that diversity. Given the significant public investment in the sector, it is also something in which Parliament and Government have a legitimate interest, but ministers, indeed all politicians, should tread with care. Sadly, in this bill, care has been abandoned as ministers appear intent on putting into statute things that do not belong there. This Government is legislating not because it should or it needs to, but because it can. Time and again, as the convener quite fairly pointed out, our committee sought evidence for why ministers are acting in this way. What governance models elsewhere in the world are we trying to emulate? How can we be assured that ministerial meddling will make things better, not worse? None of that has been provided to any satisfactory extent. On the upside, I note that the education secretary is minded to remove sections 8 and 13 that risk-seeing universities reclassified. Whatever the scale of that risk, given the serious financial consequences for our HE sector, ministers should not be playing a game of chicken with ons. Likewise, it is good to see that the Government does not now plan to legislate on the size of university senates, but why on earth were they meddling there in the first place? As for elected chairs of governing bodies, the plans arrived at look like the dog's breakfast many predicted. The convener, during stage 1 evidence, expressed his curiosity about how the Government would, quote, square the circle of elected chairs on the one hand and the minister's commitment not to diminish the role of rectors on the other. Frankly, it still looks pretty circulate to me. We now have a mix of legislating for what happens already with a potential arm wrestle between chairs and rectors over whose democratic mandate is the bigger. Even on union and student representation, with the funding levers at ministers disposal and the direction that the existing code of governance is going, it is not clear why legislation is seen as essential. I will give way to the minister. Could I have the minister's… Minister, could you put your card in please? Will the member concede that both at the moment and under the legislation proposed, the role of the day-to-day function of rectors and chairs is so sufficiently distinctive that any day-to-day confusion about their jobs is unlikely? What we appear to have now is a pre-selection process for candidates, which is very much in line with what happens already. It is not clear how this is going to expand the pool of applicants, although I am fairly sure that students and indeed unions will be alive to the opportunities there. In terms of the role of rectors, it is just not clear to me what it is that is going to settle who has the democratic mandate to do what within our universities. The Royal Conservatoire staff, students, management and stakeholders have all made clear their outright opposition. They have demanded, as others have mentioned, an exemption from the legislation, something that Glasgow School of Art, Rural College and even the UHI might feel should apply to them as well. All the evidence shows that the best-performing universities worldwide, as Jim Eadie rightly indicated earlier, are those exercising the greatest level of responsible autonomy. They should be accountable, transparent and reflect the diversity of the communities that they serve. How this is best achieved should not be second guessed by ministers using the blunt instrument of legislation. Previously, Stuart Maxwell described that as a thin bill. The minister plans to make it thinner still. Given the complete absence of any evidence to justify it, the potential for it to harm not help our world-class universities, I respectfully suggest that it is time to make this bill vanish completely. I think that I should start by declaring an interest in my former partner and the father of my children's, a former rector of Glasgow University. I welcome the chance to speak in today's debate and I am proud of Scotland's reputation for providing accessible world-leading education. I support the aim of the bill to make our institutions more effective, inclusive and transparent by creating a framework to strengthen the practice of governance in universities and other higher education institutions. It seems to me that the bill seeks to safeguard the autonomy of institutions while ensuring the accountability to the key stakeholders that they serve, namely their staff and students. I am pleased to note that the bill has the backing of the STUC, the UCU and the student body in US Scotland. While it is right that we also listen to the concerns of those at the top of our institutions, it is vital that we assert from the outset the point that, on many issues, self-regulation has been shown to be somewhat insufficient. I want to take the opportunity to highlight a fundamental aspect of accountability, the question of remuneration, an issue that I previously raised when I was a member of the education committee in 2013, when we took evidence of what was then the draft Scottish code of good higher education governance. At the time, I asked the vice-chair of Edinburgh University Court if it was right that a university principle was paid more than the Prime Minister at that time. He told us that he actually had concerns at having to cap the principle salary at £227,000. Professor Stuart Monroe, in that evidence session, he was one of three senior university figures to address the committee. He made those comments after that group had caused caught controversy by suggesting that it was also unnecessary to introduce legislation to cap tuition fees at £9,000 for our UK students. At the session, Professor Monroe said that he did not think that he could recruit another principle on the same salary as the Prime Minister. I do not know whether that reflects his view on the Prime Minister or not, but he may well be right. I think that the issue is that it has to be discussed in an accountable manner. I think that those processes by introducing trade union members and students on to the boards will allow far more discussion about how those salaries are reached. £227,000 for the principle of Edinburgh University is not actually the highest salary Scotland's rural university college was mentioned. The principle salary there is £290,000, which many will blink at, I think. I just say that many of our senior managers and councils, the NHS, and right across the public sector, many are paid more than the Prime Minister should be bringing in legislation to make sure that does not happen as well. I think that those decisions should be reached through democratic accountability. As I said, who knows, maybe those figures are correct, but the way that they are reached leaves a lot of people questioning them and feeling that the measures that are being put into place by this bill will allow university governing bodies to come to those decisions in a more democratic manner. I am not saying that the people that work at the top of the universities and colleges should not be well paid far from it. They have had a vital contribution to the success of our universities. I want to say a word about rectors. I declared an interest at the beginning of my speech. Obviously, I watched at close hand the job of a working rector. Recently, we have had the example of Mr Ian McWhorter, the journalist at Edinburgh University, who includes staff in electing the rector. He did a fantastic job in campaigning for staff and students around issues such as fees. Mr Cain, who I mentioned earlier—Patrick Cain, who was Lord rector of Glasgow University in the 1990s—has recently written about his experience at the university as a rector. When he campaigned for the post, he did so on the basis of things like introducing creches and introducing more disability access, which at that time was quite revolutionary. I think that he and other working rectors showed how important it was to have those other voices, not just the voices but the influence. He wrote recently that the bill contains the spirit of the rectorship, the democratic nature of Scottish education, going back many centuries and avoids universities becoming knowledge PLC rather than communities. Thank you very much. I now call John Mason to be followed by Hans Alam Alec. I want to speak this afternoon mainly from the angle of the finance committee, where we spent a fair bit of time on the committee looking at the bill and especially the financial memorandum and came up with a fairly serious report as a result of that. There were a number of points that came up of financial nature, including firstly the cost of the universities amending their governing instruments, where the costs were not included in the financial memorandum, referred to page 14 of our report. Secondly, the cost of recruiting a chair, where commitment was given to undertake further work, which we welcomed on page 16, and the time commitment. Therefore, because of the time commitment, what would the cost be for a chair? There seemed to be quite a lot of disparity while we looked at it between the Government's view of the time commitment and the HCI's views, which referred to on page 17. Again, further work was promised on that point. However, it has to be said that the main concerns and the main focus for the finance committee were on, to other areas, the potential loss of charitable status and the potential reclassification as public sector bodies by ONS. I think that one of the main challenges for myself and the finance committee was whether those were real financial concerns or whether they were just a smoke screen for not wanting any interference or any accountability whatsoever by the university's two-wider society, depending on which way you look at it. Taking the charity point first, Oscar had given a response by the time we met as a committee, and that seemed reassuring that there was not going to be a problem with charitable status. We reached the conclusion that the committee notes that a number of concerns were raised in written evidence in relation to HCI's charitable status, but it is satisfied that those were addressed in Oscar's submission to the lead committee. Given that the charitable status point seemed to have been overstated by the universities, the question for us then was, has the ONS reclassification point been overstated as well? There was a lot of talk of ministerial control, but this control seemed to me to be in the wider sense that the Government could set out the structure and, of course, the reality is that the Government set out the structures of many organisations and can get involved in them, be they commercial businesses, third sector organisations or whatever. That is quite different from saying that ministers would appoint Mr Jones or Ms Jones to a university board. For me, that is quite a crucial difference as to the way there is Government involvement. The whole question of what the ONS thought was a difficult one for us as a committee, because they do not give their opinions beforehand. Even going to ask them, as some had suggested we should, could have raised the risk of putting more doubt in their minds like going to the police when you have been driving at 32mph and asking if you might have broken the speed limit. There were also vague suggestions that Government or Parliament should take advice from some theoretical experts on reclassification. I notice that Liz Smith mentioned that again today, but she would not take an intervention from me on that point. It also became apparent that, even though the ONS considered the Scottish Government to be one of the main experts in this field, and at the time of the committee, nobody could suggest an expert that we could go to for better advice. Liz Smith is going to tell us who the expert is. Liz Smith? Yes, I'm very happy to do that. Can I first praise the member for his assiduous scrutiny in the finance committee, which I listened to very carefully? Would the member accept that, when it comes to the debate that he's just outlined and the challenges faced by it as to who's right and who's perhaps not right, would it not have been helpful if the Government could have come forward with some sort of evidence that backed up what the Anderson Strothern evidence had said in University Scotland or to contradict it? John Mason? That was just the point that I was trying to make. I have not heard who those great experts are in the field that know more about it than the Scottish Government do. As I understand it, we took quite detailed evidence from the bill committee, and I thought that they were quite good in explaining it. In a lot of detail, as to how much study they have frequently met with the ONS—I suspect that that is unusual. I don't assume that many Joe blogs out there meet regularly with the ONS and going through how the ONS think, how the ONS look at things, and it seems to me that the Government has a pretty good understanding of this issue. As I was going to say later, the Government does not want reclassification. The Government has been perfectly clear about that, and I think that so is our committee and so is everybody else. I will run at a time, but another key point that came up in all of this was that if reclassification was proposed, it does not have a major effect. You have a time period to go and look at it and see how you can change the way that you are doing things. In its conclusion on this topic on pages 9 and 10, the committee noted the financial concerns of reclassification and also noted the Government's clear desire not to see reclassification. The point that has been made is that, in our report in paragraph 47, primary legislation was seen as a safer than statutory instrument because that gave less scope to ministers. I am certainly happy to welcome that proposal from the minister. On behalf of the DPLR committee, which I also sit on, we are also very happy that more is in primary legislation and less is in secondary. Many thanks. I now call Hanzala Malik to be followed by Colin Beattie. Thank you very much and good afternoon, Presiding Officer. It is an honour to speak in the debate about higher education governance bill. There is widespread agreement both in this chamber and outside that Scotland's universities plunge above their weight, that they make a major contribution to our economy directly and indirectly in the human capital that they help to develop in Scotland. I believe that every organisation, however successful, needs to review and reform to ensure that they are fit for purpose. The higher education sector is no different from any other. We need to get a balance between reform and increase transparency and accountability while maintaining autonomy. Now that the Scottish Government has proposed changes at stage 1 and 2 of the bill, remove the ministerial powers and therefore remove the threat of the UNS reclassifications universities and, leading to the loss of funding routes, I do not feel that the higher education governance bill compromises academic autonomy. In terms of financial decisions, higher education institutes that receive higher amounts of public funds should be open to greater financial accountability. The lack of accountability has been symbolic by the reports of high levels of pay and bonuses for principles while junior staff suffer low pay and insecurity due to zero hour contracts. The zero hour contracts are scourge in our industry just now and education in particular suffers very badly in this area because of how important this industry is not only to our country, not only to our teaching academic staff, but more importantly the future students who will play the role of running our country and taking us forward. I do not believe that voluntary introduction of the governance review will automatically provide the required transparency and accountability. However, as each university is different, we should not assume one side fits all. We need reforms that provides a basic and clear governance structure that has the means to balance and correct themselves. The election of chairs could probably help to provide checks and balances as well as greater diversity on ruling bodies. I welcome the government's clarification for the proposal of elections of chairs and the presentation of the post of rectors for our older institutions. As with stage one debate, we can agree on general principles, but the details are important. There are still a bit more clarification and tidying up to be done before we can be clear that the Education Governance Bill will deliver the desire, implementations and accountability. Presiding Officer, there are a number of things I wanted to add over and above what I've just said, and that is that many of us have felt, particularly since the government first, and if I can use the phrase interfered in the education sector, was that many principles and boards had been gagged, they had been put in a position where they could not speak freely, they felt trapped, they felt they were unable to speak up the real realities of the conditions that are facing them, and the fact that the hiring and firing of people's powers laid with the minister meant that the universities in particular were in danger of losing some of the very high educated academia to join the universities because they felt insecure with what was happening, but the new proposals that have been proposed are very welcome. I think we are going in the right direction. I do feel that there is still a lot of work to be done. We have to ensure that we are in a position to demonstrate to our universities that we will take their interests at heart, and we will deliver a workable programme for them so that they are transparent and they are able to be accountable than they are just now. The SNP's continuous commitment to higher education has proven to be extremely effective in advancing Scotland's students and, indeed, society as a whole. For example, in the past four years, the Scottish Government has invested over £4 billion into the higher education sector, which partly resulted in the lowest-average student loan debt in the United Kingdom, and that has ensured that university education is based on the ability to learn rather than the ability to pay. The commitment to higher education has strengthened the reputation of our universities as a whole. The funding has helped to sustain Scotland, having five universities in the top 200 in the world, the University of Edinburgh standing at number 24. In research, Scotland's universities are outperforming the rest of the United Kingdom, and are competing at an extremely high level of academia on a global scale. Given that taxpayers invest £1 billion every year into higher education and that enrollment and acceptance of young Scottish adults to our own universities is on the rise, with university applications increasing 50 per cent since 2006, the SNP expects the highest standards of governance in those institutions. Although the previous agenda has proved successful in many ways, there is more that we can do for our youth through the Higher Education Governance Bill. The previously used Scottish Code of Good Higher Education Governance has failed to address the need for a modern democratic culture in governing bodies, transparency in who and how decisions are made and fair representation and diversity in governance. The SNP argues that further legislation is now required in order to define places on governing bodies for staff and student unions, as well as to support the principle of elected chairs. The Higher Education Governance Bill would result in genuine democratic say for students and staff in the leadership of universities. It is my contention that this bill provides the transparency that our higher education systems require to maintain their global reputation and effectiveness with our youth. Published by the University and College Union in 2012, Professor von Prenzinski's review on governance in higher education identifies certain issues and recommendations towards strengthening Scotland's higher education system. As the principal and vice chancellor of the Robert Gordon University in Aberdeen, Professor Prenzinski has a considerable understanding of the needs of students and faculty in those institutions. He begins his review by addressing the necessity for autonomy, democracy and transparency in higher education, all of which I personally support. Using Professor von Prenzinski's review as an outline, the goal of the Higher Education Governance Bill is to modernise and strengthen governance in order to instill principles of democracy and accountability in the higher education sector. I am grateful to Colin Beattie for taking an intervention. He will be aware, as I am, that there have been questions about the evidence based on which Professor von Prenzinski was drawing, and indeed the international comparators that we are aspiring to. Neither he nor the minister has been able to point to those international comparators that would give us some confidence that what we were aspiring to has been working in practice and working better than what is already in place. There is no doubt that Professor von Prenzinski's reputation in the higher education sphere is pretty much undoubted, and I, for one, accept his approach and his review on that. Using his review as an outline, the goal of the Higher Education Governance Bill is to modernise and strengthen governance in order to instill principles of democracy and accountability in the higher education sector. Firstly, greater democratic culture in governing bodies will be emphasised by the right of staff and students to elect a single voice in order to advocate for their interests in a governing body. That feature complements the democratic approach that the bill proposes. Secondly, greater transparency in the decision making process will be ensured through greater involvement of stakeholders across the board. Finally, the bill will also establish fair representation and diversity in governing bodies, and it should be noted that, according to research conducted by NUS Scotland in 2014, university courts are overwhelmingly dominated by men, although the Higher Education Code of Good Governance recommended changes to that. There is no evidence that such changes have been made, and it is clearly stated in Professor von Prenzinski's report that quotas should be utilised to enhance diversity, considering that women make up the majority of our university populations that are exceedingly underrepresentative in governing ones. With all those benefits in mind, many criticise the potential of reclassification and other governance issues in universities as a result of the bill. Some even go as far as assuming the bill will remove rectors, severing the historic ties between the voice of students and their primary advocate by eliminating their right to chair court. Autonomy in Scotland's higher education institutions is a central aspect to the success of our universities and should be explicit in the bill itself. In conclusion, the principal objective of the higher education governance bill is to establish a high-level framework in Scottish universities that is more modern, inclusive and transparent, not only is it in line with the SNP's commitment to a fairer Scotland, but it is right to do so. Thank you. I turn to our closing speeches under Colin Mary Scanlon. Up to five minutes, please. Thank you, Deputy Presiding Officer. I have scrutinised many bills going through this Parliament, from free personal care to mental health, anti-social behaviours, Scottish Charity regulator and, without looking at the attainment gap in schools. Although across the parties, we always had differing views on how to address the problems, at least we all knew what the problem was. In this case, the bill that we have today, we have a solution looking for a problem. That is not just me saying that. That was acknowledged by the principal and vice chancellor of the University of Edinburgh, who stated that we do not think that there has been any compelling explanation of what the problem is that needs to be fixed. Of course, our university should uphold the highest standards of accountability, transparency and inclusion in their governance, which at all times should be modern, inclusive and accountable. So, if the Scottish universities were the worst offenders on those issues and principles, and if nothing was happening to address the deficit, then I could and I probably would support legislation. However, the code of governance introduced in the summer of 2013, which is due to be reviewed this year, has brought changes. According to the University of Scotland briefing paper, the code has delivered 350 positive changes to enhance higher education governance. It has also been adopted by the Scottish funding council as encapsulating the standards of good higher education governance. Examples of that progress are that every Scottish higher education institution has staff and students as full members of court, 72 per cent have two or more student governors and 94 per cent have two or more staff governors. Despite what Colin Beattie said—I have huge respect for Colin Beattie sitting on two separate committees with him—on the issue of gender balance, eight out of the last 10 appointments to the role of chair have been women, taking the gender balance to over 44 per cent. There are many organisations including this Parliament that I think we would be very proud if we had 44 per cent women, so I do not think that we should be too critical of that. Even the Cabinet Secretary acknowledged, and again I quote, the premise that I am starting from is not the premise that there is a deficit. I am not for a minute saying that governance in our university sector is poor, which begs the question why are we here? Why do we have the legislation? The education committee report, which, of course, is 27 pages long compared to a bill of 10 pages, but this was necessary because of the lack of clarity and the lack of reason on so many issues. There are 17 separate issues where the committee reasonably seeks more information, and reading the Scottish Government's response—I think that I read it about three times—it might be trying to be helpful, I am not quite sure, but the promise of further amendments to address our concerns in my book is a further worrying feature given what we have seen so far. The SNP backbenchers would have been wise today to listen to their SNP convener of the committee, rather than to be fed the party line. I would commend Jim Eadie—I thought that Jim Eadie and both Sandra White had obviously been talking to the University of Edinburgh and the Conservatoire, and I commend both of them because they are listening to the reasonable concerns of the higher education institutions. Stuart Maxwell has to be commended for steering the committee this far, and his speech today, in my view, was a very fair reflection of the cross-party concerns. I would also add that Chick Brody has to be commended, because I think that Chick Brody's scrutiny of the bill has been first-class. However, the concerns that Stuart has raised today on behalf of the committee is including acknowledging the cabinet secretary had not provided specific examples of deficiencies in the sector. The fact that the bill's detail is much of it still under consideration, amendments are needed, etc. It is quite incredible that every higher education institution in Scotland is against the bill, so I think that we should be listening more carefully to what they are saying. Set out by Ian Gray at the start of the debate, we will be supporting the general principles of the bill. It is a bill with the laudable aims of ensuring that the structure of governance of our universities continues to develop and adapt to maintain the first-class university provision in which we should all take pride. In particular, from the start of the process, we have offered support for the inclusion of trade union reps and student reps on governing bodies as a democratisation of higher education institutions. That support has been echoed by all my Labour colleagues in the debate today. All parties in members' speeches in the chamber this afternoon have recognised the importance of the higher education sector to Scotland's economy and its international standards, so we should listen to the sector's views and respond to those concerns. The value that we place on our higher education system in Scotland is part of our cultural DNA. We extol the virtues of our historic and new universities, and it is with great pride that we talk about our contribution to the world, not just in educating our own young people, but in the world-leading research and dynamic entrepreneurship that is recognised across the globe. It is in that context that we must view the bill as a context that has seen our universities to continue to succeed in an increasingly competitive international climate. We have to be cautious then that, in attempting to improve the way our esteemed institutions operate, we avoid diminishing or restricting the freedom that is contributed to that success. Scottish higher education has a long history of having staff and students at the heart of its mechanisms of governance. Staff and students are full members of university's governing body, the court at every institution. According to university Scotland, 94 per cent of institutions have two or more staff members, 72 per cent have two or more student members of court. I think that we all recognise that the approach that we should take is to seek to build on that record rather than to suggest that there is a problem with university governance that requires a top-down overhaul. There were a significant number of unintended consequences and unanswered questions relating to the bill. Many of them were highlighted through committee scrutiny and the evidence that was provided. In committee, I said that the issue of ONS reclassification was quickly becoming a key issue for the Government, understandably giving its potential impact on the sector. It is rare in politics in these days for someone to take responsibility stand up and say that they have got it wrong. I commend the cabinet secretary for doing just that today. University Scotland has suggested that, if the ONS were to reclassify Scotland's universities as public bodies, the sector stood and stands to lose competitively one income from charities, from philanthropy income, which is earned by universities entrepreneurially, and reduce or remove institutions' capacity to borrow. That could have cost the sector well in excess of £400 million per year at a Conservative estimate. I note from the Government response that it is minded to put forward amendments at stage 2 to remove sections A and 13 of the bill. In addition, the Government is also minded to put forward amendments that would reduce or remove the need for regulation-making powers in section 1 and 2 of the bill. It is fundamental to the sector that the Scottish Government takes action. The consequences of not doing so are stark. Removing sections A and 13 of the bill would also alleviate another concern raised in the committee and by the sector more widely. The Scottish Government has had to explicitly state that it does not want to advance ministerial control over universities. That is an indication of the worrying concern in the sector of the direction that the legislation was taking. The Government had to be so explicit in that declaration. Our universities must remain independent and autonomous bodies must be free from ministerial pressure and control. I am also pleased about the amendment that is scheduled to be tabled around the removal of the limit on the academic boards. We have heard a number of speakers talk about the situation in universities across Scotland, particularly the University of Edinburgh example, where the academic board function well, yes, certainly. Can I ask the member why he feels that legislation is necessary when it comes to academic boards? I do not feel that the legislation was necessary on the cap of the 120 members. I am glad that the Government is proposing to remove that legislation, but I still think that the option should still be there for legislating around the composition of student members on those academic boards. That is something that we would support. We would offer our conditional support at this stage of the bill. The amendments that the Scottish Government has suggested will bring forward. Certainly, at first glance, they appear to address the issues that are raised in committee. I have said to the cabinet secretary to be commended for the changes that she has made in listening to the committee, the sector and the voices in the chamber. The repercussions of the Government getting it wrong on higher education governance are so serious that we will watch carefully and scrutinise every amendment at stage 2. We will ensure that our world-class universities are supported with the freedom and the framework to continue to provide a first-class education and ground-breaking research that they are so well known for. I want to thank members for their contribution to this afternoon's debate. I am glad that both Mark Griffin and Cara Hilton are considered tones and contributions. Although they outline their views on the bill and how it could be improved further, they acknowledge that the Government had listened and worked with a range of stakeholders. Cara Hilton spoke about the importance of improving gender, the representation of women within Government bodies. Mary Scanlon pointed to fairly the recent progress that had been made, but it is very important that the progress that has been made in a wide area of governance following the Von Prinsinski review and the introduction of the code of good governance is maintained. The principles of the bill are, I believe, consistent with where modern Scotland sits. Stuart Maxwell and others recognise that the fundamental question is about how the bill helps to make a good system better. Modern-day governance is accepted by most that greater participation and greater diversity of people who have a shared interest in improving that institution and acting in the interests of staff and students. As a Government, we have set participation as one of our three key priorities. We set ourselves the challenge of finding ways of handing decision-making powers back to communities. The bill therefore is very much aligned with our commitment to a fairer, more inclusive Scotland, one that better reflects the diversity in our society and where everyone gets to have their say. The Higher Education Government's bill aims to reflect those priorities and values by strengthening community, in this case staff and students, and their participation in decision-making. At its heart, the bill seeks to enable every voice on campus to be heard. That is a principle that I hope that we can all endorse briefly. I thank the cabinet secretary for taking an invention and the point about what she just already said about students and staff being involved in decision-making. That already happens in the Conservatoire. I just wondered if she would reflect on that to perhaps answer the convener's questions about the update on the Conservatoire and the Glasgow School of Art. The reality is that the vast majority of institutions in Scotland already have five of the statutory members required. The bill, as amended, if it proceeds from stage one to stage two, will specify seven statutory members on a board. Most institutions, including the Royal Conservatoire, are well on their way to achieving that. I want to talk a little bit about ONS reclassification, although we have been around the houses on this one in a variety of forums. I want to try to strike a consensual note. John Mason helped to identify the issue as one about statistical classification, as opposed to, say, a legal issue. In both he, Liz Smith and, indeed, University of Scotland, although seeing things from a different side of the mountain admittedly, both acknowledge that, in many ways, this is a matter of interpretation and difference of opinion. I and the Government have our opinion. However, I want to refer to the University of Scotland brief, which says that we believe that the only complete way to address this risk is to remove sections 8 and 13 from the bill. I have been crystal clear on my intentions in this matter, although there has never been anything in this bill that advances ministerial control. I thank the cabinet secretary for that, and I made it very clear that we are delighted that the two sections, which should never have been there in the first place, are going. Could the cabinet secretary tell us again why the Government can take information and evidence about ONS for other projects in Scotland? The West Aberdeen peripheral was one that was set up. I think that it took four different occasions looking for that evidence, and yet we have not had that definitive information for this one. I beg to differ on that point, Ms Smith, because I have written to the respective committees twice on this matter and have identified how across Government, not just education officials, have looked closely at the ESA 10 and the indicators of Government control. There has never been anything in this bill that has, in our view, increased the risk of ONS classification because there was never anything in this bill that required autonomous institutions to ask Government permission for anything to conduct their day-to-day business. I want to address the issue of elected rectors. Both Stuart Maxwell, Chick Brody, Jim Eadie and Liam McArthur all raised issues. I want to emphasise that this Government is not altering the statutory rights, those existing rights that rectors currently have, and rectors currently have an existing right to chaircourt, should they choose to exercise that. As things stand just now, it is up to ancient universities how they work out, how they dovetail the role between that senior governor who would now be elected with that of an elected rector. It is really important to remember and be clear that there are very distinct roles between that of rector and that of an elected chair, or otherwise known as the senior governor. Rectors are part of the democratic tradition of our ancient universities. They have an ambassadorial role, they raise the profile of the sector, they have a role to represent staff and students, and it is a very influential role. The role of elected chair or the senior governor or vice-convina is very much to overview governance, they are steeped in day-to-day governance and they crucially appraise the principal's performance and they often serve on many of the working groups and subcommittees. They are in a very powerful role and therefore it is correct that they are elected in a transparent and modern process. I am running out of time. In terms of elected chairs, this would allow all staff and students to choose the candidate who can lead the entire campus community in a common purpose. However, they must also be equipped to perform the duties associated with a modern Scottish higher education institution. For this reason, there must be appropriate candidate selection. I note that, because other members have raised it, I note what has been said about the link between the chair and the institution's governing body. However, the selection phase should ensure that every electoral candidate fulfills the necessary leadership skills and qualities. I very much note the representation in the views of NUS Scotland and UCU who say that this should be about ensuring capacity and skills and not be used as a bar on suitable candidates. Stuart Maxwell raised a number of other issues of time short. I will write to the convener, but we are continuing to work through the issues in and around academic freedom. We removed the requirement to have alumni and graduate members on governing bodies very much at the request of post-92 institutions. In terms of the issue of evidence, the von Prandzinski review took evidence from a range of stakeholders at a UK evidence that was from the UK, European level and Scotland. I have to accept, with the best will in the world, that, on some occasions, nothing will satisfy those who are determined to oppose this bill. Liam McArthur says that the Government is legislating because we can. Can I say to Liam McArthur that I and the Government have not invested the time and energy and engagement that is acknowledged in both the briefings today from the UCU, the NUS and the University of Scotland? I would not have invested that time if I was merely going to rely on the size of my parliamentary group in comparison to his. Thank you very much, Presiding Officer, and I hope that the chamber can move forward and support this very important bill at stage 1. Many thanks. That concludes the debate on stage 1 of the Higher Education Governor and Scotland Bill. It is now time to move on to the next item of business, which is a debate on motion No. 15303, in the name of John Swinney, on the Scottish Fiscal Commission Bill. I would invite members who wish to speak in the debate. Please press the request to speak buttons now. I call on Minister Joe Fitzpatrick to speak to and move the motion in the name of John Swinney when you are ready. The Deputy First Minister is unable to participate today as he is attending a family funeral, so I will be representing the Scottish Government in this afternoon's debate. The Scottish Fiscal Commission Bill will secure a permanent role for the commission in strengthening the operation of Scotland's devolved fiscal framework. The bill delivers a long-standing commitment from this Government to give the Scottish Fiscal Commission a basis in statute and further demonstrates our commitment to fiscal discipline. The non-statutory commission has been in operation since June 2014, with a core function to scrutinise and report on the Scottish Government's forecasts of tax revenues that support the Scottish budget. The bill provides that this should remain the core function of the statutory commission and I will return to this issue later this afternoon. The core purpose of the commission should be to maximise the integrity of the forecasts and estimates prepared by the Scottish ministers to underpin the Scottish budget. By bringing independent scrutiny to bear on those forecasts, the commission provides Parliament and the public with independent assurances over the robustness of revenue and borrowing estimates, which, together with the block grant, determine the total resources available to ministers to deploy in the budget. As such, the work of the commission is central to the integrity of the Scottish budget process. The bill is a accumulation of years of work, including inquiries conducted by the Finance Committee and a Government consultation. We are grateful to all those who have taken the time to contribute evidence that has helped to shape the development and refinement of our policy. I would like to particularly thank the committee and all those who provided evidence at stage 1 for a detailed consideration of the bill and the underlying policy issues. The committee made a number of recommendations in its stage 1 report. The Deputy First Minister has provided a detailed written response to the committee on the legislative and government policy issues that it raised. The committee also made a number of recommendations pertaining to the operation of the commission and how it discharges its functions. Those are very much matters for the commission over which the Government rightly has no jurisdiction, and so my remarks today will focus on the issues for which the Scottish Government has responsibility. The Scottish Government remains of the view that the Scottish ministers should be responsible for preparing official tax revenue forecasts. The position set out in the bill whereby the commission independently assesses and reports on those forecasts maximises the transparency of the forecasting process and ensures that Scottish ministers are properly and democratically accountable to Parliament for those forecasts. The Government believes that the bill, as introduced, reflects the most effective solution in support of the responsible exercise of the modest tax powers devolved to this Parliament. Under current arrangements, a detailed account of the Scottish Government's forecasting approach, the findings of an independent evaluation of that approach and the changes that the Government has made in response to those findings are all publicly available. The comprehensive reports published by the Scottish Government and the Scottish Fiscal Commission, alongside the 2016-17 draft budget, are evidence of that, and I understand that the committee will have come to its deliberation in its remarks prior to those documents being available. The commission rightly challenges the Government to ensure that our forecasting methodologies are as robust as they can be, and that any observer of the budget process or reader of the Scottish Fiscal Commission's report on our forecasts would see exactly what the commission does. We are committed to acting upon recommendations that are made by the commission and Parliament can hold us to account for our response to issues raised by the commission. The independent checking function would be lost if the commission were to prepare official forecasts. There would be no formal institutional arrangements to provide timely assurances over the reasonableness of each forecast that is produced by the commission. I can finish this point and then I will bring the member in. It is not clear how Parliament, the Government or the public would be assured as to the robustness of forecasts that are critical to determining the level of resources available for allocation to the Scottish budget and to responsible management of Scotland's public finances. The committee recommendation would also lead to duplication of efforts and resources, a point that was recognised by ICAS as the Scottish Government would need to retain in-house forecasting. The resources that are required by the commission would increase without any commensurate decrease in forecasting resources that are required within the Scottish Government. Our policy position is supported by international evidence, including written evidence, which the international monetary fund submitted to the committee at stage 1. I will take the intervention. I am sure that the minister will be aware of the OECD principles that apply to financial institutions of this nature. It strikes me that other countries manage well that do forecasting outwith Government. I wonder whether he would give us an example of one that does not work and would support the Government's position. That brings me very briefly on to my next point. The SPICE briefing for the bill demonstrates that there are 23 independent fiscal institutions in OECD countries and only three have a role in preparing official forecasts with the remaining 20 assessing official forecasts. The UK office for budget responsibility is clearly a minority of fiscal institutions across the world producing official forecasts. I thank the minister very much for giving way. I wonder whether he shares my surprise, which we heard yesterday at the finance committee, that, when the OBR speaks to the DWP and the OBR speaks to the HMRC but they are not allowed to share information between them, it is a very disjointed process at the UK level. I think that everyone across the United Kingdom should thank the finance committee for the light that they have shown on the process in terms of how the OBR comes to their deliberations. I think that there are some very good quotes from the HMRC, for instance, about how the relationship that they have with OBR is very similar to the relationship that they previously had. What is clear is that there is very much a lack of transparency in that process south of the border. However, there is no question that it is possible to do it that way around. However, the evidence that is clearly illustrated in the SPICE document is that, overwhelmingly across the world, the countries whose IFI prepares the official fiscal forecasts are very much in a minority. However, nothing in the bill prohibits the fiscal commission from producing alternative forecasts. It is solely for the commission to determine whether it considers that production of such forecasts would be desirable to their ability to assess the reasonableness of the Government's forecasts very much in the commission's decision. That is the way it should be. However, I look forward to hearing members' points as I see time has flown. In the report, the Government recognises that it is critical for the effectiveness and credibility of the fiscal commission that it is structurally, operationally and visibly independent of government. We have been explicit in the provisions of the bill that the commission will not be subject to the direction or control of any member of the Scottish Government. However, in his response to the stage 1 report, the Deputy First Minister undertook to take further action to reassure Parliament that he is doing all that he can to promote the independence of the commission, and he will consider legislative and administrative changes to strengthen the transparency of the operations of the relationships and interactions between the Government and the commission. The Government welcomes the committee's support for the appointment process. The Deputy First Minister has again written to the committee and intimated that the Government will bring forward amendments at the bill at stage 2 to give effect to recommendations to include term length on the face of the bill and to allow members to serve two consecutive terms of appointment of no longer than five-year each, as recommended by the committee. The commission's remit was another area that the committee raised. We recognise that the process of devolution is on-going with the Scotland Guilt Bill before Westminster Parliament and the associated fiscal framework being negotiated. That is why we have provided that the functions of the commission may be expanded in future by regulation following consultation with the commission and with the express approval of the Parliament. The committee particularly talked about two areas—the adherence to fiscal rules and the long-term sustainability of devolved public finances. It is the view of the Government that those matters should be revisited following the devolution of further powers. However, it is the view of the Government that the assessment of sustainability of public finances is primarily a role for elected members of the Scottish Parliament who should hold ministers directly to account for the robustness of our financial judgments. In conclusion, taking together the provisions of the bill and the resourcing proposals in the financial memorandum will create a statutory commission that is well equipped to assure the robustness of tax forecasts that underpin the Scottish budget. The Government remains of the view that our approach whereby the commission independently assesses the review and reviews of official forecasts prepared by the Scottish ministers maximises transparency and delivers public value by offering the strongest safeguards over robustness and forecasts that underpin the Scottish budget. We are not persuaded by the committee's case, but we continue to listen to all the points that will be made today. I look forward to hearing members' views on those and other issues this afternoon. I move that the Parliament agrees with the general principles of the Scottish Fiscal Commission Bill. I now call on Kenny Gibson to speak on behalf of the finance committee. Mr Gibson, seven minutes please. Thank you, Presiding Officer. I am pleased to speak in this Scottish Fiscal Commission Bill debate and highlight some key areas that the finance committee considered during its scrutiny of the stage 1 evidence. The committee has taken a keen interest in the development of the Fiscal Commission for several years now and published the report on proposals for its creation in February 2014. The committee welcomes the Scottish Government's willingness to engage with the proposals that we put forward and we support the general principles of the bill. However, there are some fundamental issues where we disagree with the Government based on the extensive evidence received, including an excellent piece of research that we commissioned from Mr Ian Lienert, an independent consultant in public financial management. The committee also lends a lot from member visits to the Swedish and Irish independent fiscal bodies and I would like to thank everyone who supported us and our important work on that. The most common theme to emerge in evidence from across the board was the importance of the commission's independence from government, not only that it is independent but that it is seen to be so and the minister, of course, alluded to this just a few moments ago. The current non-statustory commission's approach has been described as being one of inquiry and challenge, followed by response, followed by further inquiry and suggested improvements. The bill seeks to put this role on a statutory basis and enable the commission to exert significant influence over the forecasts which underpin the Scottish draft budget. In evidence, witnesses spoke of the trade-off between exerting influence on forecasts and providing an independent assessment of them. That in the eyes of the committee was perhaps the most significant issue to arise during our scrutiny of the bill at stage 1. The international monetary fund, for example, noted that whilst early intervention would give the SFC greater influence over the forecast in the short term, it would involve some degree of ownership which would reduce its independence over the medium term. According to Ian Lienert, this position was undesirable as it could change the commission for being an independent assessor of the forecast to be an adviser to the government. Questions were raised in evidence about the timing of the publication of the SFC's report on the draft budget. The bill requires it to be published on the same day as the draft budget, but concerns were raised that this too could be seen as undermining the SFC's independence. In order to address such concerns, the committee recommended that a formal memorandum of understanding between the commission and the government setting out agreed processes and timings should be published. I am pleased that the government has agreed to consider amending the bill at stage 2 to acquire both parties to agree and publish such a protocol. The majority of witnesses from whom we heard expressed their view that the commission should produce its own forecasts, with some suggesting that they should constitute the official ones, others that they should be produced purely for comparative purposes, and yet others were of the view that having more than one set of forecasts would lead to duplication of effort and added little value to the annual budget process, as the minister touched on. The model proposed in the bill depends on a high level of behind-the-scenes interaction between the commission and the government. Indeed, the SFC's report on the draft budget helpfully provides minutes of the challenge meetings that took place between the commission and government staff prior to its publication. Those minutes show that provisional forecasts for residential land and buildings transaction tax were considered in a joint meeting on 27 August before an uprated provisional forecast was considered on 23 September. Further provisional forecasts were then considered on 20 November. The minutes for that meeting informed that the government revised its forecast following comments made by the commission on the August 27 challenge meeting. The committee believes that the committee needs to demonstrate how its role in exerting significant influence on the Scottish Government's forecasts can be combined with its role as an independent assessor. In particular, there must be greater clarity regarding how the commission works in practice. For example, the SFC told us that its role was to provide a challenge function early in the process and that it does not look at numbers and outputs. It is not clear how that fits with the SFC considering and commenting on a series of provisional forecasts for residential land and buildings transaction tax between August and November. The deputy First Minister also explained to the committee that he would reach agreement with the commission on the forecast methodology prior to the production of the official forecasts. The commission told us that it is up to the Scottish Government whether they take on board their suggestions or not, and at the end of the day is their choice. It is not clear, therefore, whether the commission is being asked to agree the provision of forecasts and the methodology in advance of the production of the official forecasts. The committee agrees with the OECD that there is a need for full transparency in this work. At present, there is no information provided of the extent to which the forecasts were changed following the challenge meetings. The committee recognises that there needs to be some interaction between the commission and the Scottish Government. However, in the other models that we looked at, this is primarily to share technical information, not to seek agreement on methods or consider provisional forecasts. It is not clear to the committee how this role can be combined with the commission's role as an independent assessor. The committee therefore recommends that, in order to ensure that the commission is seen to be independent, it should produce the official forecasts. The committee believes that, given the commission ownership of the forecasts in this way, addresses many of the concerns raised in relation to the perception of independence. If the commission does not produce the official forecasts, then those concerns could remain, even though the committee does accept that the SFC is independent of government. The IMF, for example, raised concerns about the role of the commission on influencing the forecasts that are part of publication. Others disagree. One argument against a proposal that we have already heard is that another independent body would have to scrutinise the commission's official forecasts. It is not clear why, given that the committee heard that the most significant reason for establishing any fiscal commission is to provide reassurance that the forecast will not be subject to any optimism bias. There is also a need for full transparency in how they arrive at the forecast, and the Parliament and the Finance Committee in particular will have a role in holding them to account if the forecasts are off the mark. In conclusion, there are many sections of a report to which I have been unable to deal with in the short time available, but hopefully colleagues can cover some of those in the rest of the debate. In particular, the committee recommends that the bill should be amended to widen the functions of the commission to include assessing the performance of the Government against its fiscal rules and an assessment of the long-term sustainability of the public finances. I look forward to hearing the views of colleagues on this and other issues in our report as the debate progresses. I am grateful for the opportunity to speak in this debate on the Scottish Fiscal Commission and commend the Finance Committee that I have recently joined, the clerks and Spice for all their work. It is about one year ago that Scottish Labour set out our plans and thinking for a Scottish office of budget responsibility—a truly independent body, one with teeth that would ensure that we have greater transparency and greater scrutiny of Scotland's public finances. The Finance Committee itself undertook a substantial inquiry that has helped to shape thinking in this area, and I commend Kenny Gibson's speech to the chamber. I am sure that he will not hear me say that often, but I genuinely mean it. I know that I keep saying that it is an exciting time in Scottish politics, but it really is. We have substantial new powers coming over taxation and welfare, first from the Scotland Act of 2012 and now from the Smith commission, whose recommendations are contained in the new Scotland Bill. No longer will we just spend money that somebody gives us, we are now charged with raising it too, and that brings with it considerable new responsibility. Taking responsibility for being honest with the Scottish people about what the future holds in terms of the economy, taking that responsibility away from ministers, placing it in the hands of experts free of political manipulation, is the right thing to do, and that applies to Governments of all colours. With the new powers coming, we need to know that there is a watchdog holding ministers to account. The need for independent, reliable, impartial economic forecasting and analysis has never been more important. I am interested in the use of the word watchdog, because the watchdog would not do the work itself, it would watch somebody else doing it. Does she really mean watchdog? Also, does she not think that there is a cost involved if we have both the Government doing forecasting and the SFC? It sounded like that was Mr Mason's conversion to the commission actually doing the forecasting, if that is so. I very much welcome that. But just let me look at the context today, because I think that that is important. I heard on the radio this morning that oil, for the first time in more than a decade, is down below $30 a barrel, with all the negative consequences for our economy, which was demonstrated by the GDP figures released yesterday. Growth is effectively flat. We are increasingly diverging from the UK, where their growth is better than ours. It was, of course, just 18 months ago that oil was estimated by the Scottish Government's oil and gas bulletin at $113 a barrel. Perhaps we might not have foreseen what was to come, but having an independent body to do our forecasting is likely to enjoy much more confidence than having Government do it. When we called for a Scottish OBR, the Existing Fiscal Commission did have a limited remit, no role in producing forecasts. It was under resourced, all three members were appointed by the Cabinet Secretary and indeed two served on the Council for Economic Advisers. You cannot really be an adviser at the same time as providing independent scrutiny, so I am pleased to say that much of that has changed and is going to change further. I welcome the bill to give the Fiscal Commission statutory footing. The report from the Finance Committee gives a very considered view about where the bill needs to be strengthened and I would urge the Government to listen. Let me touch on two areas, first is the question of independence, second is the issue of who should do the forecasting. Independence from government is essential for the Fiscal Commission if it is to have any credibility yet it will interact regularly with Government officials and let me make some progress with Government officials and ministers in order to do its job. Witnesses to the committee stressed that the way to overcome any perception of bias was to be completely open and transparent. Discussion should be published, dispute should be in the public domain, outcomes should be shared. Where the Fiscal Commission and Government disagree, we should know about it and what is being done to resolve the disagreement. If the member has read the Fiscal Commission's report on the draft budget 2016-17. Indeed I have and if you have read the one before that you will note that they keep asking for information about behavioural forecasting in relation to LBTT and if they have yet to receive it, so could I invite the minister to go read last years and this years and then come to a conclusion as to what is going on. Focasting is not an exact science, I wish that it were, so there will be differences in approach, but we should not be afraid to test them to arrive at the best. Governance arrangements also matter to perceived independence of the Fiscal Commission, so the mechanism of appointment needs to command confidence. There must never be a circumstance where a commissioner acts as an advisor to the Government as they would be in direct conflict to their role of scrutiny and that needs to be made crystal clear. Let me turn to forecasting. It is really not separate to the discussion about independence. The finance committee took a considerable volume of evidence on this point, both in its original work on Scotland's fiscal framework and in its scrutiny of the bill. Many witnesses expressed a clear wish to see the commission undertake the forecasting. There was indeed a strong level of support among experts in the field, including many notable economists and the Royal Society of Edinburgh. I am really running out of time. We would be wise, including the minister, to listen to their view. They believe that the Scottish Fiscal Commission should be able to develop its own framework of analysis, its own data sources and methodology and be able to originate its own independent forecast. The finance committee agrees, but regrettably the Scottish Government does not yet. I respectfully ask them to think again. Frankly, the question of who challenges the commission is complete nonsense. Parliament can do it, Government can do it, external experts will all fulfil that role, so I really do respectfully ask you to think again. When you look at the principles for financial institutions that the OECD recommends and examples across the world, then the Scottish Government is much too limited in its approach to the Fiscal Commission. We should be seeking to be the best. Scotland is on the verge of gaining substantial new powers over taxation and welfare. With new powers comes new responsibilities. We should be open and transparent so that the people of Scotland have confidence in the stewardship of the nation's finances. To do that, we need a truly independent body to provide economic analysis and forecasting that will scrutinise Government whatever colour that Government might be. I thank the clerks, witnesses, experts and spies for all their efforts in helping us on this bill. Again, at the risk of hindering his career, I thank the convener, Kenneth Gibson, who, in my opinion, has shown personal leadership on this particular issue. We welcome the formation of the Scottish Fiscal Commission. I think that it is critical that we have one. It will become more critical with each year that passes, but that is why it is so vital that we get it right first time around. The bill, as it stands, is inadequate. The bill, as it stands, does little but put into statute the Fiscal Commission that we currently have, which will not be enough for next year and it will be nowhere near adequate for the years going forward. I want to focus on the most glaring weaknesses within the bill. The first one is this. The job given to the Fiscal Commission is simply to assess the reasonableness of the Scottish Minister's forecasts. That is it. Assess the reasonableness and ultimately decide whether or not the forecasts are reasonable. Most of the experts that were asked this question made it very clear that reasonableness is an extremely low threshold. It is difficult to find circumstances where the forecasts would be unreasonable. Indeed, that was confirmed last week when we spoke to the Fiscal Commission. I asked them quite simply that, given that the prediction for devolved taxes is £671 million next year, could they tell me approximately what sort of a number below that and above that could be classed as unreasonable? They told me that that was impossible to do. In the current format, it is impossible for the Fiscal Commission, who are extremely gifted and experienced individuals, to tell me what would be an unreasonable number. Perhaps Mr FitzPatrick will tell me what is an unreasonable number. We live and hope, Presiding Officer. If we look at the commission's reports on last year's budget, where the commission made it clear to the Deputy First Minister that they thought his predictions in terms of NDRI were buoyant and the Government then changed those predictions, then you can see how reasonableness works in real life. The minister would have been fresh to stay away from that example, Presiding Officer, because it contradicts hugely what he said in his opening speech and what the Deputy First Minister said to us. We were told by him that changes to the forecasts would be publicly available. That simply is not true. There was a dispute last year, but we do not know what the initial forecast was for non-domestic rates. We do not know the magnitude of the change 12 months later, as a consequence of that disagreement, and we were presented only with the final forecast. By his own words, it is made very clear that the changes to the forecasts are not made publicly available, and that is one of our problems again with the bill as it stands. On reasonableness, it is a low threshold, and the commission made clear and said in writing, that we are not looking at the outputs. The commission said to the committee that they do not even look at the final numbers, the outputs. They look purely at the methodology. The second problem is that he tried to suggest that the committee's position in wanting the forecast to be done by the Fiscal Commission is the outlier. Actually, that is not correct either. The true outlier is a commission proposed by this particular bill because some institutes do official forecasts, some prepare their own unofficial forecasts, and some rely on a number of different forecasts in order to reach their view. We would be the only commission on the planet that would rely solely on the official Government forecasts when looking at what we are likely to bring in. I could not find another example. When I asked the Government for examples of this, I was told that Sweden and Ireland were the examples to follow. We went to Sweden, Deputy Presiding Officer, and that was incorrect. In Sweden, there are at least six forecasts, which the institute examines in deciding how much is likely to be brought in. Other committee members went to Ireland, and that turned out not to be true either because the Irish Fiscal Institute, again, prepares not the official forecasts, but their own forecasts. There are clearly weaknesses in the bill as it stands. On top of that, there is a lack of transparency. It produced a report, but it was made clear to us by the Deputy First Minister himself that any disagreements between the SFC and the Scottish Government in terms of numbers would remain private. The Scottish Government said that it would refuse to publish any earlier figures showing the disparity and any figures explaining what changes in numerical terms had been made. The Government only wanted to show us the final forecast. The Government went as far as to say that it would try to prevent, if it could, the fiscal commission from publishing those disagreements over numbers of its own accord. So we would only ever end up with this bill as a certificate of reasonableness from the Scottish Fiscal Commission that we couldn't examine carefully and look into. That's why the committee reached the position that it did, Deputy Presiding Officer, while welcoming the bill and while supporting the bill at stage 1. There are huge changes that need to be made to stages 2 and 3. That's why the committee reached the view that it did, and I look forward to hearing the rest of the debate. We now move to the open debate. Colin Chick Brody to be followed by Dr Richard Simpson. Four minutes please. Thank you, Presiding Officer. I don't know how to compress the importance of this particular responsibility, this important function of the creation of an independent Scottish Fiscal Commission and an independent body on a statutory basis, as Kenneth Gibson pointed out, to review Scotland's proposed tax and borrowing powers, indeed the budget, so we'll try within that four minutes. This subject, of course, is a staging post and is a reflection of the journey we are on. That journey already has signposts of additional tax powers, as we know, and we know of those that will come. In my view, the Fiscal Commission will sit easily along with what will, I believe, eventually be an independent Scotland-Scotland Treasury, with interaction with Government, providing assessment, but not managing the forecasting process. The oversight of budgets of financial forecasting, a mirror or reflection on how our country's fiscal process rules and framework will work in its relationship initially with the UK, because we have more and more financial powers as they are devolved, then that will become even more critical as we take overall control of the Scottish financial fiscal landscape. What is just as critical is that, both at an interim and a full-sum level, is the commission's secured independence from government. I was interesting to hear Mr Brown talk about two countries, one with Sweden, and if he had read the independent consultants report, you will find that Sweden does not have an IFI. It is inconceivable, other than that the demand for purity of oversight on financial rules, processes and forecasting in a robust relationship to our overall economic strategy is paramount, as is its methodology and analytical professionalism. I cannot help, Presiding Officer, with that call. I draw a person with, as Ms Belly has talked about, the UK OBR, the Office for Budget Responsibility, which she will know because she knows of the 34 OECD countries, that the OBR is one of eight that is under the control of government. She robustly mentioned the oil forecast, which, of course, the OBR was responsible for producing for the UK budget. The OBR forecast a detailed projection of economic performance parameters, including the oil and gas outlook, as the basis of the chancellor's autumn statement in November. Those were all changed within seven weeks. Seven weeks of the UK GDP was changed, downwards the UK balance of payments was wrong, the UK increased borrowing, all in credence to what Alistair Darling said in 2010 that the OBR was a wing of the Tory party. Not only a significant impact may have had on the UK, but certainly on the Scottish fiscal and economic outlook, and it destroys confidence. Consider their statement in its November 2015 financial outlook report. We published a methodology note in March 2012 to describe how we plan to forecast Scottish tax receipts, in particular the macroeconomic data that we would need to produce a Scottish macroeconomic forecast, and economic determinants were generally not available at a Scottish level. That remains the case. They are producing a forecast that impacts on Scotland. We are therefore not able to produce a Scottish macroeconomic forecast to drive Scotland's tax forecasts. That remains the case in November 2015, two months ago. Therein lies the reason for a commission. One independent of government, qualified, experienced, robust, underpinned by clearly defined fiscal process and framework. The German lender can do it, the Belgian High Council can do it, the Irish fiscal advisory council can do it, and so can we. Independent, scrutiny, forecasting, fiscal projections, setting the fiscal rules, all of those are key to the foundations of what will be a strong Scottish economy. Thank you so much. I am getting tight for time now. Up to four minutes please, Dr Simpson, to be followed by Mark McDonald. First of all, I have read the finance committee's report, and I thought that it was one of the best that I have read. I thought that the speech given by the convener today actually got to the number of the problem, although he did say that there were other issues. I think that that is the central thing. Chick Brody's speech just now illustrates that. Forecasting is an inexact science. We all know that. Therefore, there are some areas in public life where duplication is appropriate. In that area, that duplication and understanding the differences between different forecasts is fundamental, in my view, to the Parliament's understanding. I welcome some of the aspects in John Swinney's letter to the committee in response. The independent review every five years, which is accepted, and I welcome that. I also welcome the fact that we are going to have an annual report from the SFC, and that is clearly important. However, the Government does, I think, endanger its own creation of the SFC by putting it into a greater advisory role, which, as the convener has pointed out to us, may in the short term be something that we would see as being okay, but in the medium to long term could damage the independence of the commission. If we were to have confidence in the new situation with the new taxation that we have, then that independence is absolutely important. I wonder if he would accept that Audit Scotland gives advice and that it is still independent. Yes, but its function is somewhat different because it is not forecasting. It is scrutinising in retrospect, and that is a quite different function. I think that the finance committee's report is useful in seeking clarity on the functions of scrutiny in a memorandum of understanding. I think that some of those issues might be clarified by agreeing the methodology, for example, because, again, methodologies can be different. The econometrics is not a precise science. The assessment of the forecasting methods, the testing of the suggested numbers and propositions, commenting on any provisional or initial assumptions, and forecasting assessing the reasonableness of the forecast. That is the only one that is assessing the reasonableness of any revised forecast. Even that duplication does not give me the comfort that I would like. I think that reasonableness, as was indicated by our Conservative colleague, is a fairly low threshold. The other thing that I would like to very briefly refer to is the fact that one of the biggest problems that we have had throughout my period in this Parliament has been that we have looked only one year ahead and that there has been a lack of looking forward to long-term strategies. If I can take the climate change, we have a long-term strategy for climate change, but the Government, for one reason or another, and I accept that it is not entirely their fault, has actually missed the annual targets. I think that the Scottish Fiscal Commission should be looking at not just the projected forecast from the Government in terms of its one-year budget, but that it should be insisting on a long-term scrutiny. How is that going to be made up over the long term? It is the same in health that, as Audit Scotland has said to us, our budgets have all been short-term, and we really need to think about what the long-term prospects are. We actually hold our health boards to only one-year accounts with a bit of brokerage. That actually does not serve as well as a country. We need to have a much longer perspective. I think that the independence of the Fiscal Commission, if it is really clear and is not going to be jeopardised by an advisory role, then I think that it will be very effective. I will finish by saying this. I think that this is a very welcome bill. I think that some of the issues could be addressed. I hope that the Finance Committee at stage 2 will continue the excellent work that it has done by making some amendments to this bill, which at least challenge the Government at stage 3 to look at the alternative very closely in ensuring that the independence of this very important commission. Thank you very much, Presiding Officer. I will cover a couple of areas that the committee has taken evidence on. I know that my colleague John Mason descended in the report on areas around forecasting and has held some very strong views around that. I think that those members on the committee will know that I expressed a number of reservations without going to the extent of dissenting, and I will touch on that in my contribution. In terms of some of the discussion that has been so far, I am always interested in the world according to Jackie Baillie, because Jackie Baillie again held up the OBR as an example of an organisation to which we should aspire. She spoke of a lack of Government interference or intervention, and she spoke of oil forecasting. I wanted to look at a letter that the OBR sent to the committee in July 2014. If I can quote from that letter, our medium-term forecast for oil and gas production is based on projections by the Department for Energy and Climate Change. That strikes me as the OBR relying on Government projections and forecasting in order to facilitate its work. Later on, because the Scottish Government was predicting $113 barrel for oil or that it was some sort of outlier in terms of the international projections around oil price, later on in the letter it says on prices. In our central scenario, oil prices rise from $102 a barrel in 2015 to $160 a barrel in 2040. Under the EIA high price scenario shown above, oil prices rise from $138 a barrel in 2015 to $350 a barrel in 2040. Even later on, it says that, under the EIA low price scenario, it was predicting price drop to $77 a barrel in 2015. The idea that the Scottish Government was way out left field in terms of oil price projections and that there were a range of soothsayers out there who had correctly predicted what was going to happen in terms of oil price simply does not bear scrutiny in any way, shape or form. If I can have a little bit of time back, I will take the intervention. Will you have to take it out of your own time? Well, I will talk fast then. I think that the point that I was making is that perhaps nobody could have made that assessment and that judgment. Therefore, some of the independent of government would instill more confidence whether they get the actual thing right or not. I just make the note that the OBR actually predicted a lower level than the Scottish Government did. I am quite sure, Presiding Officer, that were the projections that the Scottish Government used based on something that was produced by the Scottish Fiscal Commission. Jackie Baillie would, in no way, criticise or impugn those projections, as I know that she would never seek to do that. Let us look at forecasting, Presiding Officer, because that is where the sort of nub of the disagreement arises in this. I share the reservations that John Mason has around this and, indeed, that the commissioners themselves have around this. I hear the point that is being raised around the role that the finance committee could perform in terms of scrutiny, but I have reservations about that. I do not think that I am in a better position than Professor Andrew Hughes Hallott to scrutinise forecasts that are made and to bring scrutiny to bear on those. What I think is important first and foremost is that the projections are analysed and scrutinised and that we can have confidence in those projections. I believe that, when the Scottish Fiscal Commission provides its sale of approval in relation to those, I believe that that is an important endorsement for those projections. I do believe, and I am listening to the evidence from academics who came before the committee, that there is a need for academic expertise and capacity to be built up in this area. I think that, as the powers come to this Parliament and as things develop, that is something that will happen and will enhance the work that is being done by the Scottish Government in terms of forecasting and the commission in terms of analysis. At this early stage, to give the commission the responsibility for the official forecasts, while that other capacity does not yet exist, I believe that we would be jumping the gun in relation to that. Thank you so much. I am now calling on John Mason to be forwarded by Dr Lane Murray. Up to four minutes please. Thank you, Presiding Officer. There's a lot of good comments and recommendations in this report and I completely associate myself with the bulk of them. Clearly, one of the main topics that we're discussing this afternoon and have been discussing in committee is who should do the forecasting. On this point, I descended from the committee's stage 1 report, as can be seen at paragraph 69 and 136, so I will focus most of my remarks on this. I have to say that I do find this a slightly unusual position to be in. The committee and the Government are disagreeing on this point and I, myself, am siding with the Government. I hope that members will believe that that is not out of my fear of challenging the Government, but comes from genuine belief. The OBR is a relatively unusual model whereby the Government has outsourced forecasting to them and the model proposed in the bill, whereby Government forecasts and commission comments on that, is much more common. I do not think that we should be fixated on the way that London does things and I do feel that some of the witnesses that came to our committee were slightly overawed by London. Jean Urquhart and myself visited the Irish Fiscal Advisory Council in Dublin and, broadly, this is the model that they have checking on challenging the Government forecasts. Sure, they are still developing, as our SFC is, and can do some forecasting along the way, but, essentially, they are looking at and challenging Government forecasts. This is the model that I used, as I suggested earlier, for audits and for Audit Scotland, which seems to me to work pretty well. Audit Scotland is an independent body that examines the Scottish Government, local government, NHS and so on, and it produces very challenging and respected reports, in my opinion, which often attract media attention with politicians on all sides, often referring to them and quoting them. It seems to me that this is a good model that we can follow where the Government produces the forecasts and the SFC does the checking and challenging. However, the need for independence is absolutely essential. However, independence is not linked to who does the forecasts. Rather, I suggest that independence comes from, firstly, having proper checks and balances in place and, secondly, having the right people on the commission, particularly meaning that they have the courage to challenge the Government, and that is referred to in paragraphs 41 and 42. The challenging of the forecast is really important. Just last week, at the Finance and Constitution Committee, we had the SFC with us, and we are examining its report on the draft budget. It runs, as members may have seen, to some 60 pages, and I thought that it was excellent. However, some of it is quite technical. For example, paragraph 3.32, it considers the pros and cons of univariate or multivariate modelling approach. I suspect that some members in this Parliament might be struggling to explain the difference. If the SFC was to produce the forecasts, who would challenge them? Clearly, Government is not independent enough, and the Finance Committee, as Mark McDonald has said, does not have the in-depth skills required. Would we then need another body? I asked the SFC themselves last week and the Cabinet Secretary yesterday about the question, and neither of them could give me an answer. In my opinion, that is because the OBR model is not a good model. We even heard yesterday, as I mentioned earlier, that the OBR is hampered by not being able to exchange information between different Government departments. Cost is a factor here, too. Are we saying that a relatively small country like Scotland, with pretty limited powers over tax and economy, needs two organisations doing the forecasting? That would cost us a bit. Should the Scottish Government just not do any forecasting, that would seem a bit strange. The SFC is a potential budget of £850,000, although it assures us that it will try not to spend at all. That compares very favourably with the Irish 800,000 euros and the Swedish 1 million euros. I feel that they are being well resourced, and I do not consider that we should be upping the budget more to duplicate the work. Although, quite a technical area, the subject has been fascinating, I think that we have carried out a pretty thorough study of the issues, and I can say of every respect for the three commission members, Lady Rice, Professor Hughes-Hallot and Professor Leith. I am happy to support the recommendations, the main recommendations, of the committee. Thank you. Many thanks. Excellent. No call on Dr Lane-Mode, followed by Joan McAlpine. Thank you, Deputy Presiding Officer. I start by congratulating the Finance Committee on the considerable amount of work that has undertaken on this issue. Not just on this bill that was introduced at the end of September last year, the committee also undertook a significant piece of work producing its own reports and proposals for a Scottish Fiscal Commission almost two years ago, and also undertook visits to Stockholm and Dublin last year to meet with the Swedish and Irish Equivalents of the Fiscal Committee, along with representatives of government, Parliament and fiscal forecasters. I thought that Brody's speech seemed to suggest that Sweden did not have an equivalent. If that is the case, I wonder what members of the committee were doing in Stockholm. I read the committee report with considerable interest. It raises some very important points that were eloquently summed up by the convener. The Scottish Fiscal Commission is intended to be an independent fiscal institution. The tension between the SFC being able to influence the Scottish Government's forecasts and providing an independent assessment of those forecasts was thoroughly discussed, and the report makes several recommendations, including a memorandum of understanding between the Scottish Government and the commission. The report points out that more clarity is required regarding the functions of the committee and greater transparency on how it carries out those functions. The bill requires the SFC to lay its report on the reasonableness of the Scottish Government's tax forecasts on the same day as the draft budget is lodged, and any other reports to Parliament must be copied to ministers in advance of their report being laid. Some witnesses, such as the Royal Society of Edinburgh, argued that, in order to ensure transparency, commission assessments of government forecasts should be carried out after the publication. The committee itself recommended that the SFC must be able to challenge and criticise Government publicly when necessary, and any disagreements that it has with the Government and the outcomes of discussions on those disagreements should be published, and I greet and welcome that. The financial memorandum to the bill states that it relates only to the powers transferred under the Scotland Act 2012. For understandable reasons, it does not relate to the additional powers that will be transferred as a result of the debate on the current Scotland Act. Resourcing of the SFC will therefore require to be reviewed in the light of the Scottish Government's additional tax-raising responsibility and the additional responsibilities that will therefore be placed on it. Resourcing does not seem to have been included to enable the commission to undertake its own forecasts. The majority of witnesses did argue that the SFC should produce their official forecasts. Professor McGregor and Swales pointed out that forecasting, whether official or otherwise, is international practice, and the experience of the Irish Fiscal Advisory Council was that it soon realised that it needed to produce its own forecasts in order to be able to endorse, or presumably not endorse, the Government's forecasts. Resourcing for forecasting therefore would need to appear to be necessary. The committee will report rightly questions the ability of the processes contained in the bill to demonstrate the independence of the SFC. The recommendations on page 12 state that it depends on a high level of behind-the-scenes interaction between that and the Government, including seeking agreement on methods or testing numbers and propositions. As has already been discussed, the committee has therefore recommended that commission should produce the official forecasts. On the issue of governance and who appoints the committee, I note that the committee supports the appointment process that is described by the bill and that members are appointed by ministers but approved by Parliament. I accept that the committee has perused that evidence and I respect that view. I would just comment that having recently been involved in the appointment of the chair of the Scottish Human Rights Commission, I feel that there is considerable merit in appointments being made by Parliament in order to secure cross-party agreement and cross-party confidence, and that latter will be essential if the SFC is to operate effectively, as I say. I accept the committee's view on that. Just in closing, I have been a member of the Justice Committee for the last two years, having previously been on the finance committee. It has influenced and changed legislation, and therefore I am hopeful that the finance committee will have that role here. I am happy to support the bill at stage 1, but I hope that the views of the finance committee prevail in the long run. I am going to take a slightly different tactic today and look more generally at forecasting and its reliability or rather unreliability. Others have mentioned oil forecasting, and I have in front of me the Department of Energy climate change July 2013 fossil fuel price projections. When they predicted a low of $92 per barrel and a high of $137 per barrel for 2015, so, even when predictions are made by experts, they often go wrong. In October 1929, for example, on 21 October 1929, the Yale economics professor, Ivan Fisher, said that stocks have reached what looks like a permanently high plateau. Three days later, it was black Thursday and the market collapsed and the Great Depression arrived. In 1984, the Economist newspaper conducted an unusual survey for its Christmas issue. It invited four former finance ministers, four chairmen of big multinational companies, four Oxford University students and four London bin men, or dustmen, as they call them down there, to offer their predictions on the economy over the next 10 years. A decade later, the accuracy of their forecast was checked and each group was given a mark for their predictions. The bin men scored a joint top along with the company bosses. In fact, the bin men demonstrated more foresight than any other group when it came to the price of oil, so perhaps that's where we all went wrong. As Economist John Kenneth Gilbrace once said, the only function of economic forecasting is to make astrology look respectable. I'm only half serious when I see those things, but even the independent OBR, as others have said, which has been suggested as a model for the commission to emulate, admitted in their 2012 forecast evaluation report that projections are always a best guess. They said that we have been at pains to point out that there is enormous uncertainty around any economic forecast and that policy makers and others need to recognise that when taking decisions based on them. In any event, HMRC, as others have noted, continues to produce tax forecasts on behalf of the OBR. In January last year, Edward Troop, second permanent secretary at HMRC, told the finance committee that we measured forecasts and the published forecasts are signed off by the OBR. Although the OBR has been praised for its independence from our perspective, the process feels very much the same as it was when the Treasury was doing the forecasting. We had the same conversations with colleagues in the Treasury, and the Treasury would make those forecasts. If the Scottish Fiscal Commission prepares official forecasts, it may be similarly reliant on Scottish Government and Revenue Scotland data and resources leading to duplication of efforts within the commission and the Government, as others have noted. The most important thing in my view is that its role as a commentator is right. Its independence must be assured and is being assured by the bill to make sure that it is fully resourced and duplication might not ensure that it is fully resourced. That is very important because it needs to develop analytical capability in order and capacity in order to provide a benchmark set of projections. Of course, it will be free to make its own forecasts and that offers a wider range of options. It is answerable to the Parliament, and I assume that it was the finance committee of its Parliament that has shown its independence in the report. I am confident that the initial remit of the commission will be expanded to reflect further powers as they are devolved to the Scottish Parliament. I welcome the bill. I note the purpose of the Fiscal Commission to provide independent scrutiny of Government tax forecasts and economic conditions. In passing, as I have done before, I put on my convener's hat and recognised that the ancillary powers and the other delegated powers were considered by the Delegated Powers and Law Reform Committee. We had no concerns whatsoever about what was being proposed. Clearly, there has been discussion about the independence of the forecasting. Before I turn to that, could I just look at the way in which it is suggested that the members of the commission will be appointed? As Dr Lane Murray has commented, they will be appointed by the Government. They will be removable. It is a matter of some concern that that should be on appropriate terms. However, I noticed looking at the bill in section 16, 1b1, that it is only when they are otherwise unfit or make themselves unavailable that they can be removed. Then it would only be with the approval of the Scottish Parliament. It seems to me that that is about as good as it is going to get in a parliamentary democracy, and that is probably the right way to do it. I welcome the minister's comments about allowing commission members to have a second term and having defined lengths and the already agreed point that they should be staggered, because continuity in this is extremely important. There have been some comments about whether or not the bill restricts the functions of the commission. The commission itself suggested that it would like to have other powers to be able to assess. That is in page 3 of the submission. Both the sustainability of Scotland's public finances and indeed the adherence of the Scottish Government to its own financial rules. It does seem to me, presiding off to section 2-3, probably covers all that. I would just like to read that the commission may from some time to time prepare reports setting out its assessment of the reasonableness of such financial factors, other than those mentioned in paragraph A to D of subsection 1 above, as it considers appropriate. It does seem to me that that is wide enough to cover precisely the things which they had mentioned and probably pretty much anything else that might come up. If I could skip on then, pass the discussion about the independence of forecast, which I don't think I really have time to add to, to look at the question of reasonableness, because I think it was Kevin Brown commented on whether or not that was appropriate. Indeed, Dr Richard Simpson mentioned methodology and final numbers. Can I suggest to the chamber that what is being proposed is probably very sensible? I was much struck a few years ago, back in the days when planes used to crash rather more often than they must fully do now, when our following a plane crash, the chairman of the company came on the TV and assured us that these planes were run with two parallel computer systems and it was quite impossible that both would have failed at the same time, demonstrating that he wasn't a systems man at all because he completely missed the point that if you give the same system the same data it will make the same mistake. The only way you will get different economic predictions is by having a different methodology because you will undoubtedly be putting in the same basic data assuming you've even got it. I think Professor Andrew Hughes Hallett put it very nicely in his evidence to the committee. When asked by the convener Kenneth Gibson about what reasonableness was about, he said that the prediction should get better from year to year to quote, they should be better than they were last year. He wants to see better data. We understand it's not there. It seems to me the whole of this, Presiding Officer, is in its infancy. We are starting in a good place. We need to recognise that it will develop and what's before us now actually isn't the finished article but it seems to me to be a very good place to start. Thank you. Many thanks. Before we move to closing speeches just invite all members to return for the closing speeches, those who have taken part in the open debate. Now call on Gavin Brown, four minutes please. It's been interesting debate, Presiding Officer, and it's pleasing to hear a number of members praising the work of the Finance Committee. I think it's worth reflecting of a comment made by Jeremy Pete of the International Public Policy Institute at the University of Strathclyde. He published a paper just last month which said that the Finance Committee of the Scottish Parliament is to be praised for its continuing robust examination of the Government's proposals and willingness to seek and take full account of informed commentary. I think it's worth the Government reflecting again upon the report and the central conclusions reached by the majority of the Finance Committee in terms of looking at stage 2 and stage 3. If we proceed with the bill as it is without substantial change, we will in my view be left with a group of highly qualified advisers. It will be ultimately an advisory role which they will be performing. Yes, they will scrutinise in private, yes, they will challenge the Government, but if the only forecast ever published is the final result with which the commission says that it is deemed to be reasonable, then we are not getting the level of scrutiny that we require and we are not, in my view, getting what is defined internationally as an independent fiscal institution. That's what this Parliament I think wants and needs and I think it becomes more important with each extra power that we get. Of course I'll give it. Across the world, in OECD countries, the overwhelming majority of independent fiscal institutions do not produce the forecasts and the forecasts are produced by the Government and the institutions assess those forecasts. The minister needs to go into a bit more depth on that issue because, as I said by opening, some institutions do the official forecasts, some produce their own unofficial forecasts and others scrutinise the Government forecasts alongside several other independent forecasts. If we proceed with the bill as it is, we will be the only fiscal institution that I can find on the planet and I've put the question to the Government at least half a dozen times. We'll be the only one that scrutinises solely the official Government forecasts. As we've heard from the convener and many experts, Governments, by definition, regardless of their stripes, will have an optimism bias. Governments want to do things. Government don't want to have the blocks put upon them and therefore there is an optimism bias. I don't want to dwell on oil revenues but that was a clear example of this Government when they produced their oil revenue projections just before the referendum that optimism bias affects them as much as any other Government. I'm sure that I'm happy to give way to Mr McDonnell. At the same time, if we look at LBTT, for example, where the Scottish Government's projections on LBTT and the OBR's projections on LBTT were a long way apart and the OBR has had to continually revise its projections for LBTT and the other devolved taxes downward in order to bring it more in line with the Scottish Government's more realistic estimates. The Scottish Government, on a smaller tax, was closer to the mark but it was miles adrift on a far, far larger tax at a time that would have affected this country hugely. I just have to say to Mr McDonnell that I'm a little surprised and disappointed at his position in the debate today. The report was published a week ago and he signed up to that report going away from any paragraphs. He signed up to the entire report, including the central conclusions, eight days later. He tries to distance himself from the central conclusion. I leave it to him to defend that position, but I do think that if committee members in this Parliament sign up to a report, they ought to stand by that report and not fall away from it just a week later. The crucial point here is in relation to forecasting. There are big dangers of having only an official Government forecast. That's why we reached the conclusions that we did. The weaknesses in the bill go deeper than that. The idea of just assessing reasonableness, whether it's commenting on the final numbers, doesn't go anywhere near far enough. The idea that any disagreements over numbers are never published and put in the public domain so that they can be scrutinised to me is unacceptable and go against the basic OECD principles. Again, if we stick with the Government position, we would be the only fiscal institution on the planet that we've been able to find that looks only a Government forecast. We will vote for the bill. We support the setting up of the Scottish Fiscal Permission, but they have to be more than just advisers. If we want to get it right, but eventually we'll be talking about billions upon billions of pounds, we have to get it right, and that's why we'll need changes at stage 2 and stage 3. If we match now Colin Lewis Macdonald's six minutes thereby, please, Mr Macdonald. Thank you very much, Presiding Officer. This has been a productive debate. The convener of the Finance Committee and a number of its members have laid out the basis of their report very clearly and I think have pointed us towards the changes that we will undoubtedly debate at stage 2. Of course, we all agree on the need for an independent fiscal institution for a devolved Scotland. The nature of the Scottish Parliament is changing thanks to both the Scotland Act 2012 and the changes arising from the Smith agreement. The question is whether the Scottish Fiscal Commission as currently proposed is fit for purpose or whether more should still be done to give it the power that it needs to do its job. The 2012 act prompted the creation of the Scottish Fiscal Commission in 2014, which Jackie Baillie summarised initially as a non-statutory body to deal with issues surrounding the taxes devolved for the first time to the Scottish Parliament. With a further bill set to devolve much more extensive financial powers, it is clear that the role of the Fiscal Commission needs to be formalised, placed on a statutory footing, independent of ministers, so we welcome this bill, but we want to see its strength and further. The main functions of the Fiscal Commission as proposed would be to assess fiscal forecasts produced by other organisations principally and to commission research and appoint committees to consider relevant issues. Unlike the Office for Budget Responsibility, as members have said, it would not produce its own fiscal sustainability report nor would it have the power to examine the affordability or sustainability of policies. Even to carry out the more limited functions intended for it, the commission will require access to financial information from the Government. As we have heard, the bill does allow the commission to have access, but not to publish relevant information from the Government and other Government agencies such as Revenue Scotland. The committee has rightly called for that right of access to be established on a statutory basis. There could be no meaningful assessment of fiscal forecasts produced by the Scottish Government without the relevant information being to hand, and that, after all, is the point of creating this new body. Independence from the Scottish Government is another key aspect of this legislation and an issue that a number of members have touched on this afternoon. The organisation for economic cooperation and development has developed a number of minimum requirements for independent fiscal institutions, and the importance of that independence is covered in some depth. For example, the independence in the recruitment and management of staff was highlighted by the Scottish Government's own Council for Economic Advisers in its 2013 report on fiscal rules and fiscal commissions, when it said that an important aspect is to avoid institutional capture whereby those working in an independent fiscal commission are formally or informally part of the Government. That clearly is something to which we would all subscribe and is the whole point of our fiscal commission. Like Audit Scotland, which has also been mentioned today, it must be free to speak truth to those with power, and it must not depend on the goodwill of ministers to respect the proper boundaries. If the Government's own advisers understand that point, then ministers should accept it too. That is of particular importance during the transition period from the fiscal commission being on a non-statutory to a statutory basis. For example, seconding staff with relevant expertise and experience from the Scottish Government might be helpful to get the fiscal commission started, but that must not be done in a way that compromises its independence or makes it dependent on any Government directive. It is not just about staffing and recruitment. Without the powers that are enjoyed by the OBR to produce its own economic and fiscal forecasts, the Scottish Fiscal Commission will be wholly reliant on the figures that are produced by the Scottish Government in making its assessment. There has been some discussion about whether the capacity of the Office of Budget Responsibility to produce its own fiscal forecasts is unusual or whether that unusual character is significant. Of course, other such bodies do the same sort of thing in Belgium and the Netherlands. It is common for fiscal institutions in other countries to use information and focus from both Government and independent experts, as members of the committee have witnessed for themselves. Will the member recognise that the bill as drafted does not prohibit the Scottish Fiscal Commission from producing its own figures or looking at any other figures that it wishes to forecast? Indeed it does not, but, as we have heard in the debate today, some of those who resist the proposition that the Fiscal Commission should produce its own forecasts have said that for it to do so would be duplication. Of course, there is no statutory bar to it. What is being argued by the finance committee is that it should encourage it and make it possible and should specifically provide for it. That is what is the deficit here today. The minister in prior interventions has suggested that independent forecasting is not done by many other parallel bodies. In some way, that implies that it should not be done here. Surely in devising appropriate institutions for a modern devolved Scotland, we should be seeking not the weakest form of independence or power but the most robust. That is what the finance committee has proposed and that is what the Government should at least take back and consider again before stage 2. The commission should have the power to test the Government's fiscal rules and the long-term sustainability of the public finances. On transparency, the Scottish Government's reluctance to reveal details of disagreements is revealing in itself. All those matters have rightly been highlighted in today's debate, and I look forward to continuing cross-party efforts to improve the bill further at stage 2. Thank you very much, Presiding Officer. I genuinely thank members for their contributions in today's debate and for offering their views on the Scottish Fiscal Commission bill. The Government of course considers those views as the bill continues through its parliamentary process to passing at decision time today. I will cover some of the points that were raised. Richard Simpson and Nigel Don also talked about additional powers and additional functions. One of the points that Dr Simpson suggested was the idea of longer-term scrutiny. This year, we published a five-year forecast for the devolved taxes with the 2016-17 budget, which was scrutinised by the Scottish Fiscal Commission. However, he was perhaps also talking about additional powers coming to the Parliament. The Government is clear that, when those additional powers come to the Parliament, we will bring forward proposals to consult on how the commission's remit should be expanded. One of the areas that the committee talked about was the issue of long-term sustainability of public finances. The Government is very much of the view that that is primarily a role of members of the Scottish Parliament to hold the Government to account and to hold ministers directly to account for the robustness of our financial judgment. However, in doing that, I think that the Parliament, as an institution, will be looking to make sure that members have the resources so to do. I remember when I was a member of the finance committee in the last Parliament, there was no financial scrutiny unit, so that was an innovation of the Parliament in order to bolster the robustness of the support that could be given to members as the Parliament's powers grew. I think that that is a very important point. John Mason, Mark McDonald and Joe McAlpine all made reference to the arrangements around the office of budget responsibility. The fact is that that is not as transparent as people once perhaps thought it was. HMRC continues to produce tax forecasts on behalf of the OBR as the second permanent secretary at HMRC told the committee in January of last year. There is a lack of transparency over the nature or effect of the OBR scrutiny of forecasts prepared by HMRC. It is that transparency that the Scottish Government is determined to make sure exists in the process that we take forward. If the Government is so keen on transparency, why are they not going to publish any numerical disagreements between the fiscal commission and the Government? Why do I not come to that point right now? In his contribution earlier, Gavin Brown suggested that the DfFM had said that he would block the publication of such figures. I have got the official report, and I have got what the Deputy First Minister specifically said. The Deputy First Minister said that I do not think that the word for the Deputy First Minister specifically said that I would have a quick look at the bill because I suspect that it might be a conflict with section 7 if I was to block such a proposition, although I would argue strongly against its desirability. While the Deputy First Minister said that he was unconvinced about the desirability of publishing two sets of figures, he made it very clear that he was not in his power to block such things. He has gone further. I will go very quickly. If the Government is saying that the minister just said that it is keen on transparency, why is he not then encouraging transparency? I thank the member for helping me to come to my second point. In the letter from the Deputy First Minister to the committee, which I am sure the member has read, I shall quote again. The Deputy First Minister says in the letter in response to the stage of the report that, while I have reservations about the public interest that will be served by publishing multiple forecasts, I am willing to revisit the committee's recommendations that the original and revised forecasts should be published where changes are made to the Scottish Government's forecast following commission scrutiny. That is absolutely the way that the Deputy First Minister and the Government have approached this. We are listening to the committee. Dr Simpson praised the committee and the work that it has done and the way that the report is written. I echo that. There has been a very thorough piece of work being done here. It is fair to say that we remain unconvinced by the committee's central disagreement with the Government on who produces the forecasts, but we are very keen to work with the committee on helping to ensure that the commission is not just independent, but it is very much seemed to be independent to look to see where we can work with the committee to improve transparency, and those are very important points. One of the points that seem to have been suggested is that somehow it would be difficult for the commission or we should be suggesting to the commission that, as part of the process, it should be producing alternative forecasts. Jackie Baillie and her interventions in the committee session called it the third way, which is a way that is replicated in some of the countries that were visited in Sweden in particular. There are alternative forecasts produced by the institute, and that is absolutely something that is allowed for in the bill. The bill specifically has provisions that would allow the commission to publish those forecasts. However, it is very clear that it is not necessary. The Institute for Monetary Fund and its written evidence to stage 1 said that there is no need for the SFC to present its own forecasts, so it is really up to the commission to determine. The minister said that the bill has provisions that say that it can publish forecasts. Which provisions in the bill specifically say that the Scottish Fiscal Commission can publish forecasts? The bill clearly allows for the forecasts to be produced. Section 25 clearly allows for the commission to publish any writings that it wants to publish. The commission, as it has been brought forward, is an independent institution. One of the big suggestions is the idea of the secondary alternative forecasts. It is absolutely for the commission to determine whether it wants to do that. Clearly, the commissioners, Lady Susan Rice, are not of the view that that would be helpful. She said that we think that there needs to be one producer and one assessor of the official forecast. If you were to turn the fiscal commission and say that we have changed our minds, you do the forecast, we would need to be assessed by someone. If we did our own forecast, then we would need to defend it. We too might be biased. That was also concurred by Professor Andrew Hughes-Hallert, who, on 25 November, said that, then there is the question of second opinions. We are doing a kind of second opinion exercise. The Government will produce its forecast and we will provide a second opinion. Doing it this way around gives us freedom to compare the Government's forecast with other forecasts. I think that being asked to do the official forecast would seriously compromise our independence. Another thing that I think would seriously compromise the independence would be if we were to tell the commission that they had to produce alternative forecasts. In his report to the committee, Ian Leonard, who was the independent consultant that produced the report in public finance, was commissioned by the finance committee to produce a report into that. He said that it is rare for an independent fiscal institution to be obliged by legislation to prepare alternative fiscal forecasts. While it is absolutely clear that they can do it, it would, I think, be detrimental to their independence if we were to sit here and say, you must do that. I think that it has been a fantastic debate and I thank all members for their contributions and I hope that everyone will be able to support the general principles at decision time. Thank you. That concludes the debate on stage one of the Scottish Fiscal Commission Bill. The next item of business is consideration of motion number 14626. In the name of John Swin and the financial resolution for the Scottish Fiscal Commission Bill, I call on Jo Fitzpatrick to move the motion in the name of John Swinney. The next item of business is consideration of business motion 15324. In the name of Jo Fitzpatrick, on behalf of the parliamentary bureau, setting a revision to the business programme for Tuesday 19 January, any member who wishes to speak against the motion should press the request speak button now, and I call on Jo Fitzpatrick to move motion number 15324. Thank you. No member has asked to speak against the motion. Therefore, I now put the question to the chamber. The question is that motion number 15324 in the name of Jo Fitzpatrick be agreed to. Are we all agreed? The motion is therefore agreed to. We now come to decision time. The first question is that motion number 15304 in the name of Angela Constance, on the Higher Education Government Scotland Bill, be agreed to. Are we all agreed? The Parliament is not agreed. We move to vote. Members should cast their votes now. The result of the vote on motion number 15304 in the name of Angela Constance is as follows. Yes, 84. No, 20. There were no abstentions. The motion is therefore agreed to. The next question is that motion number 15303 in the name of John Swinney, on the Scottish Fiscal Commission Bill, be agreed to. Are we all agreed? The motion is therefore agreed to. The next question is that motion number 14626 in the name of John Swinney on the Financial Resolution for the Scottish Fiscal Commission Bill, be agreed to. Are we all agreed? The motion is therefore agreed to. That concludes decision time. I now close this meeting.