 Good morning, and welcome to the fourth meeting of 2024 of the Economy, Fair Work and Committee. Our first item of business is a decision to take items 4, 5 and 6 in private that our members could introduce. Our second item of business this morning is consideration of the legislative consent memorandum on the trade comprehensive and progressive agreement for Trans-Pacific Partnership Bill. I welcome Tom Arthur, Minister for Community Wealth and Public Finance and Alistair Hamilton, Procurement Policy Portfolio Manager wrth y Scottish Government. I invite the minister to make a brief opening statement before I take any questions from members. Thank you, convener, and good morning to the committee. The UK bill makes provisions in three areas, public procurement, technical barriers to trade and intellectual property, where legislative intervention is needed to give effect to the terms of the UK's accession to the comprehensive and progressive agreement for trans-specific partnership. Public procurement is a devolve matter and the implementation of international agreements is devolved to the extent that it relates to procurement. The bill therefore triggers the consent process in respect of the procurement provisions that apply to Scotland. Those are amendments to Scottish procurement regulations that are minor and technical in nature relating to contracts awarded under international rules and contract award notices. In contrast to the Trade Australia-New Zealand Act, which conferred delegated powers on UK ministers for the purpose of implementing the procurement chapters of those trade agreements and to which the Scottish Parliament withheld its consent, in this bill the UK Government has agreed to make necessary provision to amend the Scottish regulations on the face of this bill. We welcome this change of approach, which affords this Parliament the proper ability to scrutinise these proposals. We recommend that consent is given to this bill. My officials will continue to work with the UK Government officials to agree a pragmatic approach to preparations for commencement of those provisions of this bill that relate to Scotland. Minister, I will take questions from members. I remind members of my register of interests and my connection with the Scottish Whiskey Association. On that tone, can I ask the minister about how the Scottish Government views the opportunities from the CPTPP, specifically the opportunities for growing exports of Scotch whisky to what are very important and developing markets, and how the liberalisation of trade and the potential reduction in tariffs in countries such as Malaysia, which are currently an important market for Scotch whisky, but with very high tariffs, will benefit the Scottish economy? I think that we would welcome the opportunities that this agreement will afford. I think that the analysis that has been provided suggests that overall the impact will be on the UK economic growth over the next couple of decades, which will be relatively minor. However, any opportunities that are afforded for a key Scottish industry such as Scotch whisky are welcome, and I am conscious that my colleagues, the Cabinet Secretary for Rural Affairs and the Minister for Trade, have written to the committee that I am setting out in some detail the work that they have undertaken in terms of engagement for the UK Government on the broader policy intent of the agreement. Minister referred to correspondence that we have had from Cabinet Secretary for Rural Affairs. He has raised some concerns that there would be potential for competition from producers in countries with lower animal welfare standards. I don't know if the minister this morning is able to speak to that. I do appreciate it was the Cabinet Secretary for Rural Affairs who contacted about that issue, but if the Scottish Government is going to monitor the impact of the agreement on Scottish producers, is that still an area of concern? We will continue to seek to engage constructively with the UK Government on the implementation of this agreement and to continue to engage with stakeholders. I am sure that the convener will appreciate it as my colleague, the Cabinet Secretary for Rural Affairs, who leads in these particular matters. I just have a question. I know that you said that the relationship or the interest of Scotland is mainly around procurement, but I am just curious to know whether you have had any discussions with the UK Government about the ISDS provisions in this bill, because the UK Government has already agreed to exclude ISDS provisions and clauses in any future trade agreement with Canada. I am just wondering whether you have had those discussions and received any such assurances on this, too. With regards to the position in terms of the engagement that the Scottish Government has had with the UK Government, I think that I have broadly set out in the correspondence that I referred to earlier. Clearly, the matters before us today in terms of what triggered legislative concern are fairly narrow and technical and relate to the devolved aspects of procurement. Do you not see that there is a potential impact for some of the broader policy work that we are trying to achieve in Scotland if ISDS clauses remain in place and foreign investors can actually then sue the Scottish Government for certain policy proposals? It is enacting. I recognise that there will be a range of views on the provisions within any trade agreements that the UK Government enters into. What it would recognise is that this Parliament will have its opportunities and it will take its opportunity to express its views in these matters. Ultimately, decisions whether to enter into those agreements is a matter for the UK Government. We will appreciate the opportunities that we are afforded for engagement. We would obviously want to strengthen those opportunities for engagement with the UK Government. On the matter before us this morning, I am speaking to relatively narrow and technical aspects of the implementation through the act and how that triggers legislative concern with regards to procurement. I understand that, but it can be seen as broader support for issues that could actually trip the Scottish Government up in future. I appreciate that. I am not going to get any left further on this. The Cabinet Secretary for Rural Affairs, Land Reform and Islands has also raised the concern about the lack of a formal role for the Scottish Parliament in respect to scrutinising the free trade agreements generally. International relations are reserved in practice. Those agreements do impact on the competence of devolved administrations in a number of areas. How would the Scottish Government like to see any future agreements progressed to improve scrutiny? I am conscious that this is going beyond my remit on public procurement. I recognise that when the committee has last considered LCMs with regards to the ratification of trade agreements, its concern has been primarily with the contents of the LCM. The Scottish Government's position is well understood, both in terms of its constitutional aspirations and also our policy position as set out in the vision for trade paper published at the start of 2021. Our views are clearly set out with regards to how things operate at the moment. We would always seek to have the maximum possible engagement with the UK Government to ensure that Scottish interests are represented. The endeavours to that effect have been set out in the letter and the correspondence that the committee has received that I referred to earlier. It is a technical question about the LCM. The Scottish Government is saying that it is very minor. It does amount to material divergence from EU law. However, it is very minor. I am Assumption on Viwun's consent to the LCM. One of the regulations involves that way in which our contract is advertised. Currently, there is an option to include the value of successful tender or values of highest and lowest tenders. To comply with the membership, there is an option to include the highest and lower tenders instead of the actual contract value that will be removed. Does that have any impact or is there any significance to that change? Ieithi, eich my♡ dysgu ddaeth, ddod yawn i'w gweithio? D widerd y bident ar gyfer beth oedd yn feddwl fel gweld y bontref yw ideal o'i cyfrifloedd ac rydyn ni'n ddiddorol. Llywodraeth yn cwerd zdaf i ddod, oedd y cwyl i mewn gweld ddod oedd a oeddaf i rainu hefyd y mau dyma. Mae'r cwyl i'n gweithio ddod, yn ddod i ddod, oedd ddod i ddod uchydig ddaeth oedd sydd efallai hwnnw, ddod i ddod i ddod i ddod i ddod y hyn. ond, ond we do not anticipate any significant impact for authorities on this. To do neither of the figures, that's... Yes, it just removes that choice, so... Okay, so any other questions from the bridge? Nope, that brings us to the end of the session. Thank you to the minister for attending this morning. So I'll suppose to spend the meeting to allow for a change of witnesses. Our next item of business is an evidence session on the Scottish Government's 2024-25 budget. The budget was published on 19 December 2023. The committee's chamber of debate on the budget is taking place tomorrow. I welcome Neil Gray, cabinet secretary for wellbeing economy, fair work and energy, who is joined by Colin Cook, director of economic development, Aidan Griswold, director of economic strategy and Kathy Johnson, director of economic analysis and head of economic economics, profession of the Scottish Government. As always, members and witnesses should keep questions and answers as concise as possible. I invite Neil Gray to make an opening statement. Good morning, convener and colleagues. Thank you very much for inviting me this morning. Welcome the opportunity to be here to discuss the wellbeing economy, fair work and energy portfolio spending plan set out in the budget for 2024-25. You will have heard the Deputy First Minister speak about the challenging context for the recent budget as well as the many opportunities that lie ahead. The budget underlines our commitment to progressing the First Minister's three missions of equality, opportunity and community. Our focus on delivering a fair, green and growing economy is underpinned by investment in this portfolio and wider investment across Government of £5 billion that will make an economic difference. We are committed to green growth. We will scale up renewable energy with investment of £67 million as part of our commitment to provide up to £500 million to anchor a new offshore wind supply chain in Scotland. Combined with the funding for the Enterprise Agencies and the Scottish National Investment Bank, the total support for offshore wind in Scotland for 24-25 is £87 million. This investment will stimulate and support private investment critical to the growth of the sector. That is one of the greatest areas for us to achieve growth, transform our economy and leverage private capital as was identified by the First Minister's investor panel and to help realise that we will this year set out a green industrial strategy to ensure that we seize the economic opportunities of the transition to net zero. The budget is focused on funding that will have the biggest economic impact possible. It will increase investment in digital connectivity by more than 50 per cent. We will expand our tech scaler programme, progress the implementation of the national innovation strategy and begin delivery of the pathways report to diversify and encourage more entrepreneurship, particularly to see more women start and scale their own business. Our tech scaler and digital rollout programmes are examples of our strong progress in delivering our national strategy for economic transformation ambitions. I wrote to you last week advising that the national strategy for economic transformation is being refreshed, so it remains fit for purpose in a changing landscape and is focused on delivering as fast as possible in the areas that we have competitive advantage in. We continue to support business, including by freezing the basic property rate, delivering the lowest such rate in the UK for the sixth year in a row and providing a package of reliefs worth an estimated £685 million. The small business bonus scheme remains and is the most generous of its kind in the UK. In all, taking an estimated 100,000 business properties out of rates altogether and across all elements, 95 per cent of businesses in Scotland are estimated to be paying lower rates than anywhere else in the UK. Our missions and values are the guiding principles of this budget and this is clear through the actions we are taking to promote a fair economy, including recognising the critical role employability has in achieving the First Minister's three missions. I believe that, despite the challenging fiscal context that we are faced with, we have developed a package that will help to deliver a fair, green and growing wellbeing economy. I thank you and look forward to the discussion that we will have before us. Thank you Cabinet Secretary. While you have outlined areas of investment and spoken about energy policy, the wellbeing economy and fair work budget has seen a reduction of 8 per cent in real terms compared to last year. The committee has recognised the difficult financial decisions the Government are having to make, but within this portfolio we are seeing a reduction. When we look at what the Scottish Fiscal Commission is looking at the longer-term prospects for the Scottish economy, they are seeing still subdued long-term GDP growth, a lack of productivity growth, we also have population challenges, and that comes from an ageing population. How does an 8 per cent cut to this budget align with ways in which we are trying to address those long-term challenges that Scotland is facing? There are a few things that I would say in answer to that. First of all, in recognising what you have just said, we have been faced with a real-come terms cut to our budget for the block grant allocation is down, as is confirmed by the Scottish Fiscal Commission. We have had to take very challenging decisions, but we are focused, as I said in my introduction, on areas that we think we can generate the most economic activity and see the economic transformation developing a green, growing, well-being economy, and that is where the decisions that are relevant for my portfolio have been focused in on. In terms of our economic performance, I think that the SFC's analysis is fair. Of course, we are tied to a UK economy that is underperforming. When we compare ourselves to many of our European neighbours, we see lower GDP growth, lower productivity, lower fairness, lower rates of poverty in those countries. My aspiration is for us to match those countries. The GDP figures out this morning show that, for the last quarter that is available, quarter three for 2023, we had higher GDP growth than elsewhere in the UK, but I accept that that is still low growth. It is not the areas that we would want to see it in. We have also seen over the recent period that the Scottish productivity rate is growing faster, admittedly, still slow, but growing faster than the rest of the UK. We have lower rates of unemployment. On the areas that we can make a difference, we are investing to do so, and we are seeing results off the back of that. The problem that we have is that we do not have the full levers of control over the wider economy, and we are tagged to a UK economy that is grossly underperforming. Last week, you might be aware, we had the retail, hospitality and leisure industries in front of the committee. An area where the Government does have responsibility is business rates. They raised concerns over other factors that we do not have responsibility for, such as energy costs. They are pretty robust in their criticism of the Government in terms of the consequentials that came to us because of the 75 per cent discount on business rates that is in the UK Government. £260 million came to the Scottish Government through Barnett consequentials. Over those two years, we have not reduced to any kind of similar or equivalent scheme. I understand that Wales has, it is not as generous as the UK scheme, but it has used some of the money to do that. You might have heard the evidence last week that some of the criticism was around lack of engagement from the Government, a lack of the ability to have a discussion about those consequentials and what way they could be targeted to that sector. Because, while you are right, we are seeing increased productivity and activity in some areas. That is a sector where the pressures on them is eating into the profits. While they are seen as a busy sector that is recovering from the pandemic, it is difficult for them to invest in their businesses on investing skills because of the extreme margins that they are operating in. I want to respond to the comments last week around the business rates, why the Government is not looking at some business relief for that sector that would bring them in line with the rest of the UK. Thank you. I did see the evidence that came through and I understand the challenge that the retail, hospitality and leisure sectors are facing, not least because the Deputy First Minister and Tom Arthur met industry representatives last week to discuss just that and the Deputy First Minister set out that the challenge that was before us in this budget is that if we passed on the rates relief consequentials that came from the UK Government's decision, not only would it not fully cover the consequentials would not fully cover a similar discount here in Scotland but we would have had no further increased investment potential for our NHS or other elements of the public service. So there was a difficult decision taken on the decision that was... I accept that but it's £260 million and the scheme of the things for the NHS that's not going to solve the challenges that we're facing in the NHS. I'm not arguing that we replicate the scheme at UK level but to give some kind of relief to that sector. As I said, Wales is going for a different model and the Fraser Valander are saying that the money 260 is not enough to cover an equivalent scheme but there seems to have been a lack of discussion or consideration on whether we should provide some relief to that sector. We have provided relief and acknowledged the challenge that there is in our island communities and provided 100 per cent relief to island community businesses in that sector, acknowledging the fact that there are challenges and if we could have done something more we would have. The decision that we have taken is evidenced by the fact that in England the NHS budget, at a time of challenge for our NHS recovering from the pandemic it was the right decision that was taken. That's not to say that we are not looking at all that we can do looking at other opportunities that might be available and that was part of the reason for the meeting that myself, Tom Arthur and the Deputy First Minister had with industry representatives last week. It was very constructive to look at what more we can do in the devolved and reserved space looking ahead of the UK budget that might be able to provide relief to them and support them because I absolutely appreciate and was able to articulate to them my understanding of the challenges that industry is currently facing and had we the finance available to look at alternative support arrangements clearly that would have been something that we would have considered but at this stage the fiscal context was such that we weren't able to do it. Before I bring Murdo Fraser in it's just a comment that last year was the budget, the committee raised similar concerns for that sector for tourism and hospitality and we did receive a similar response at the point of the budget there was no additional resource for that sector but if there was any flexibilities in year that would be a sector that would be considered that didn't materialise to any extent can you give us some clear indication today that you are here and the concerns of that sector and that if there was to be some flexibility that is a sector that would be engaged in considering how they could be supported? Yes Last year's budget situation with continued inflation meant that there was on-going inflation related pressures that meant that we had to make in-year savings so the opportunity for further flexibility in year was not possible of course both through this budget process and going forward we would continue to consider industry representations as we did last week and we've committed to further engagement with the industry on that basis of course the UK Government hasn't committed to provide that relief beyond this year so there is going to be a cliff edge moment there and I'm interested to see what plans there are to provide continued support to the industry which is what we're looking to do provide long-term, sustainable support considering the option of long-term rates reform that would assist the sector as opposed to one-off or a support package that is only worth a couple of years OK, thank you Murdo Fraser to be followed by Maggie Chapman Thank you, cabinet secretary I want to follow up some of the lines of questioning from the convener I want to start by asking you about the overall budget because according to the SPICE briefing we have the Scottish Government's budget for the coming year has increased in cash terms by 4.5% and in real terms by 2.8% over the previous year Would you agree with those figures? I thank Murdo Fraser for pointing out the difference that is made by our tax decisions and Scotland tax decisions that Mr Fraser has opposed Our block grant has been cut in real terms by the UK Government so we're having to take decisions in Scotland to try to ameliorate the impact that austerity has made so our budget is up in real terms but only because of the decisions that we have taken on tax I'm glad that we agree that our budget is up in real terms because of the tax decisions that we have taken Mr Fraser has opposed 2.8% so in that context therefore with the budget overall up this is about choices being made by the Government and as the convener has pointed out in the portfolio that you cover in cabinet it has been cut 8.3% in real terms so we see tourism down 12.3% Scottish National Investment Bank down 29.2% employability down 24.2% enterprise trade investment down 16.7% all in real terms that's overall cuts of £118 million in cash terms against a backdrop where the overall budget has increased what does that tell us about the priority that the Government gives to growing the economy as I said in my introduction we're spending £5 billion to support the economy the decisions that we have taken unlike the UK Government are to prioritise public services we cannot have a strong economy without a strong society the two are mutually dependent and so ensuring that we have strong public services at a time where our NHS is recovering from the pandemic making sure that we have a healthy workforce that is available to our businesses and employers is incredibly important to strike the balance between the difficult decisions of having to find savings in order to ensure that we are investing in public services investing in giving a real-terms increase to our NHS but I recognise that this is a challenging time for our business community and for others not just through this budget but because of 13.5 years of UK Government austerity that has meant that the resilience in the economy resilience in our public sector is much reduced we are doing what we can to ensure that our public services and our wider economy is supported which is why we are making the investments that we are in the likes of the tech scaler network which is why we are looking to implement the pathways report from Mark Logan and Anna Stewart to see greater diversity in entrepreneurship so that women start and scale their own businesses it is why we are investing increased amounts in green energy to establish a supply chain rooted here in Scotland we are making decisions that I hope will see the transformation and further growth of our economy just told me that the Government has chosen to prioritise other areas and not the economy in fact the spice briefing confirms that there are eight portfolios we are spending cut in real terms including the one that you represent economy, fair work and energy do you not think that your job in cabinet is to fight for the Scottish economy and to fight for a fair share of the cake you are clearly not doing a very good job I thank Murdo Fraser for that personal slide I have obviously been arguing in cabinet and the budget rounds as I am sure the Deputy First Minister would attest for ensuring that we are investing in areas of priority that are going to see economic activity and economic growth economic transformation I believe that we have achieved that of course it is a challenging budget but it is across the board there is no area where I think we are finding an easy situation or a situation of plenty and that I say comes back to the fact that we have endured 13 and a half years in a real terms block grant cut to our budget this year 1.2% down and we are having to make difficult choices including on taxation in order to try to ameliorate that but it shouldn't be for us in the Scottish government to continue mitigating for the mistakes and the trouble that has been caused by UK Government decisions we should be looking to seize the opportunities that are available to us sadly we do not have that luxury at this present time and yet your government is making the choice to cut the enterprise aspects of the budget and prioritise other areas and that's a choice you are making and it's having consequences that the convener referred to the evidence we had last week from the hospitality sector there's a survey being published this morning by the Scottish Licence Trade Association I don't know if you've seen that but in a survey of over £500 of their members 96% of respondents feel the Scottish government is out of touch with the business community how's that? New deal with business going so at the first point Mr Fraser raised the support that we give to enterprise agencies of course enterprise agencies don't exist in other parts of the UK we have an enterprise agency network here in Scotland because we value the support that we can give to our business community that is not available in the UK not available elsewhere in the UK I recognise and I'm sad about the survey from the Scottish Licence Trade Association this morning that's precisely why the First Minister made it an early priority of his to establish the new deal for business that's going to take time to ensure that we rebuild that relationship with the business community that has been one of my top priorities since coming into office and it's not something that I take for granted I will work to regain and re-earn that trust over the time that I am in office and ensure that the relationship between business and government is a strong one where we give as early sight as possible on policy decisions where we support the business community to have the best possible trading landscape within which to operate which is why we've given the rates relief package that we have and to ensure that their representations on area issues that matter to them are heard of course we're not going to agree on everything we are going to disagree that's going to be the nature of business and government but where there is disagreement I want to at least ensure that the business community understand why we're taking the decisions that we are and to continue to ensure that we are advocating for the business community where there are areas that we can advocate on their behalf for the decisions that have been taken for us by the UK Government well it doesn't sound like you're agreeing with the business community on very much and they're not very impressed so far let me just ask you one more question about income tax divergence because amongst the evidence we heard last week from the hospitality sector is that the impact of income tax divergence is that they are now having to pay higher salaries to attract people to Scotland because tax rates here are higher than they are south of the border and I've heard this many times from people in business particularly from the finance sector that they now struggle to encourage people to relocate to Scotland because of the tax differential so what assessment have you done of the impact income tax differential will have on the long term growth of the Scottish economy? Obviously that is something that we take into consideration whenever we take a decision on tax and it's something that the Scottish Fiscal Commission assesses on likely behavioural changes and we do everything we can to make sure that that is balanced of course there is going to be the potential for behavioural change however I haven't seen evidence of that there is anecdotal evidence but there is no direct evidence what it does allow us to do is ensure that we have an investment opportunity into our public services the whole reason why the premise of Mr Fraser's first question was possible around a larger budget being available to the Scottish Government was because of our tax decisions that we have taken however the discussions that I had last week with the hospitality industry pointed to much wider challenges on recruitment they pointed directly to the impact that Brexit has had with the loss of access to labour both people moving away and people not coming to work here in Scotland and the stringent UK Government on the migration system which is not supporting the needs of the Scottish economy I'm willing to work with them I gave that commitment to look at providing that evidence of how they are struggling to recruit internationally to make representation to the UK Government ahead of its budget and I'll continue to work with them to do so but in terms of migration within the UK of course for every year of the last 20 years there has been a net inward migration from the rest of the UK into Scotland I'm not complacent about that but it points to the fact that Scotland is indeed a very attractive place to live, work and to do business and yet net immigration into the UK is at record high levels but Scotland does worse than every part of England apart from the north west are attracting new immigrants to come and live and work here so clearly there's an issue that needs to be addressed I would point to the fact that it's a migration system that is working for one part of the UK, not for the whole of the UK, we need a much more flexible migration system that is tailored to the needs of the composite parts of the UK short of independence I think that would be the right thing to do, it's possible in Canada it's also been possible for us to have Scottish only elements of the UK migration system such as on the super sponsor scheme for Ukrainian, displaced Ukrainians that I had previously had a responsibility for blows my mind at bigger's belief that the UK Government continues to have a one size fits all migration system that means Scotland is not able to attract the people from around the world that we want to and my appeal once again would be for the UK Government to accept proposals such as the rural visit visa pilot that isn't just being proposed or supported by the Scottish Government but has been supported by other parts of the UK as well as a way of ensuring that we have a flexible migration system that responds to the economic needs of those communities that we need to ensure we have suitable labour market access to ensure our public services and also our businesses are able to continue to thrive. Perhaps immigrants are not coming here because they don't see the economic opportunities and they don't see a Government that is prioritising the economy that we have just seen from your budget. I have no more questions. I think that that is belied by the fact that we have record levels of foreign direct investment that we have a foreign direct investment rate that outstrips growth that outstrips the rest of Ukraine outside outstrips the rest of Europe and as I repeat every year for the last 20 years Scotland has had net inward migration from the rest of the UK so perhaps some of those people are arriving in other parts of the UK and then choosing to move to Scotland. We will get some progress. Maggie Charland, before by Kevin Stewart. Thanks very much. Good morning to the cabinet secretary. Thank you for being here. Thank you for what you have said so far. We heard just this morning at a briefing from the Scottish Fiscal Commission that when you were talking about income tax that we have got over £700 million more to spend thanks to our income tax proposal. So Murdo Fraser might be interested in looking particularly to invest in our public services. I want to focus though on employability and workforce development. I note that in the SPICE briefing and in other documentation that we have received we know that employability funding has fallen in the proposed budget. We are closing Fair Start Scotland to new referrals. There has been a reduction in the fair work and labour strategy line because of the closed workplace equality fund closing the disability public social partnership. I wonder what assessments have you done on the impact of these reductions both in terms of economic outcomes and equality outcomes? I thank Maggie Chapman for those questions. It is true to say that our employability funding has had to reduce this year to £90 million. We are confident in working with our regional economic partnerships and our local employability partnerships that we can continue to see strong employability support provided. That is person-centred. That is focused on ensuring that we continue to close the disability employment gap and do all that we can to work in a collaborative approach with third sector partners. I was able to see in Dundee for example evidence of a group of eight different third sector partners that came together to provide a employability service that was truly person-centred because each of those third sector partners was representing a different interest group and specialist group for disability services, mental health support and other elements. I have been incredibly impressed by the work that has been done. I am keen that we do all we can to continue to support that in a way that continues to be voluntary. We are seeing evidence, both anecdotal and clear evidence, that that is making a real difference, that the lack of or not having a mandation and a sanctioning regime as part of the work that we do is making a discernible impact on people being willing to engage and engage for a longer period of time and we are having strong results of the back of that engagement work as well. We will continue to assess the impact that our positive and potential negative impact that our spending decisions have in areas such as employability and I would obviously be keen to ensure that the committee is furnished with further information as those assessments are carried out. Thank you for that offer of ongoing engagement on impacts of these decisions. I suppose as you started this morning, the desire to have equality opportunity and community at the heart of all Government decisions, those missions or those challenges cut across portfolios and I am wondering how conversations in budget discussions that you have had with the Deputy First Minister and others how those conversations have gone. Are you able to talk about the impact on black and minority ethnic people of the employability cuts, for instance? Cutting across and maybe I am putting on my Equalities Committee hat here but if we are thinking about equalities across the board and equality of opportunity and fundamental equality as the missions state, how is it that we are actually tracking across the impact of decisions right now and never mind further down the line? What assessment have you done of those kinds of impacts on previous decisions and how have they informed current decisions? Yes, to answer Maggie Chapman's question directly about a discussion, I don't think it was in this committee room but it was in another committee room with cabinet secretaries and the Deputy First Minister as Maggie Chapman would expect looking at our fairer Scotland duties and ensuring that the decisions we were taking were taking cognisance of those duties and were informed by them so we had discussions in this area and other elements of the portfolio considering our impact on child poverty and other elements so those were part of the decision making process, yes. Given the project or expected increase in unemployment not the loss of the flexible workplace development fund for upskilling workers that seems counter-intuitive given also what we're hearing across different sectors about the need for skills training, the need for upskilling how, where do you see that those gaps being plugged in the decisions that you've made? So the first thing to say is that in Scotland we have near record low levels of unemployment sitting at 3.8% compared to 4.2% for the rest of the UK again I'm not complacent about that and it brings with it its own challenges for employers including on skills and access to labour and so it is important that we continue to take an assessment of the skills landscape which is what Graham Day is currently doing in response to the weather's review in order to ensure that we have a skills system that is as responsive as possible to the needs of employers but also the needs of those that are either looking to enter the employment market for the first time or are looking to transition within the labour market and move on such as in the energy sector and that is an area that we will continue to focus in on and Graham Day is obviously very exercising and is going round employer networks and others to ensure as well as the skills sector to ensure that our response to weather's is as informed as possible and that we are coming forward with a landscape that is going to be as supportive as possible both for those that are seeking to get access to skilled employees but also those that are looking to retrain Okay and I suppose linked to that the flexible workforce development fund drew on the apprenticeship levees that we got if they aren't being used for that where are those levees being directed to support employability In the employability sense this is obviously going to be a share of responsibility between myself and Mr Day but the investments that we're making both in the college the university sector our school sector the increase of I think it was a £158 million in further higher education that came through this budget I'll need to get that checked we're continuing to invest in the skill system to ensure that we are meeting the needs both of those that are needing to get on in work but also those that are looking to get access to labour market I might come back in later on but I'll leave it there now Thank you Good morning Just following on from Maggie Chapman in terms of employability and recognising the severe pressures that are on the budget I think there are things that can be done that do not require huge amounts of money let me give you an example we have a huge pool of talent within our neurodiverse population and yet so many folks with a neurodiversity find it very difficult to get into employment we have seen over the years the difference that the carer positive employer scheme has made in getting carers into employment would the cabinet secretary and his colleagues consider looking at seeing if a neurodiverse positive employer scheme could be established to try and get folk into the workforce and a workforce that would be better for having them I thank him for that question which comes from quite a bit of experience in this set that Mr Stewart has and he will be aware having started this process of the work that has been done in Government to advance the rights but also the advocacy that is available for people with neurodivergent conditions through the new champion that is coming through and other areas and I think he makes a very sensible suggestion on one that I would be more unhappy to consider I see from my constituency casework the challenges that there are for families with children with neurodivergence but also as they grow older as Mr Stewart points out getting access to employment market when in many cases majority of cases they have a substantial amount to offer with very minor adjustments to the workplace and I think this is where ensuring the best kept secret in Whitehall access to work scheme is better promoted but also other elements of is also tailored to ensuring that we are taking full advantage of the economic potential that better support and access to work for people with neurodivergence can have Thanks for that positive response I am going to change tack a little bit convener Obviously a priority for myself as a north-east MSP is ensuring that just transition and I certainly welcome the Government's commitment to the north-east just transition fund I wish the UK Government would act in a similar manner and match the monies that the Scottish Government has allocated for this but one of the things which is missing from the budget cabinet secretary is the £80 million that was committed by the Scottish Government for the Scottish cluster for carbon capture and storage and I recognise that we are still waiting on track 2 decisions from the UK Government but could you give us an indication of what will happen here because there is no allocation if there is a move from the UK Government will the Scottish Government make money that has been promised to ensure that Scottish cluster goes ahead In short yes that commitment stands it isn't a single year commitment I fully expect through discussions with the cluster that that £80 million will be deployed in a strategic way that ensures best value and the best strategic advantage for the cluster going forward but it is entirely dependent and predicated on clearly it has to be because there can't be CCUS in this state without the UK Government decision it's entirely predicated on track 2 making progress on that we would encourage the UK Government to move much faster to ensure that the opportunity that has been lost over the last decade or more of promises lost opportunities gone that we finally make up for that and see the Scottish cluster advancing we need it in Scotland for our own net zero ambitions for our industrial decarbonisation of the Scottish cluster but so does the UK this is entirely mutually beneficial and an investment that we need to see coming forward as soon as possible and our £80 million commitment continues to stand moving forward to net zero in order to achieve that just transition we're going to have to invest in innovation and I've heard you and other members of the Government say that we're going to have to be much more focused in terms of investment we've seen unfortunately those budget decisions around about reducing enterprise agency money but looking everything around with enterprise agency investment with just transition fund investment how do we ensure that we are actually allocating the resource to the right companies to the right entrepreneurs to ensure that we reach our goal of net zero and that just transition and I'll give you an example I met the other week with a very smart tech company in my constituency Zephyrus Aerolabs sometimes these companies have got difficulty in getting seed funding for that initial spurt of growth how are we going to ensure that the enterprise agencies and the other moneys that are allocated are going to the right places to create that spark to get what we all want to see that growing green economy I thank Mr Stewart for that and for highlighting the very good work of the business in his constituency there are a number of things that I would say first of all I was in the northeast in Aberdeen for the launch with the first minister of Scottish Enterprise's new corporate plan which is focused on three key priorities one of which is inspiring innovation and so their investment decisions are filtered through those lenses and one is around inspiring continued innovation we are looking at and continue to expand actually through this budget the likes of the tech scaler network which is about new business startups it's about supporting and providing the ecosystem to ensure that those businesses are able to establish and we're also continued to support the likes of SNP and others who provide some of the early stage investment but there are other opportunities other areas that I'm happy to follow up and writing on regarding early stage investment opportunities that there are here in Scotland the last thing that I would say particularly in the energy space is that we're cognisant of the fact that we need to plot a path we need to set a direction of travel in terms of what it is that we are looking to focus our public sector funding on not just for the new renewable energy supply chain that we're looking to see established the offshore wind supply chain established in Scotland but also what catalytic impact those investments can have to leverage private investment that's why the green industrial strategy this year that will be publishing before the summer is going to be so important it's going to be taking decisions it's going to be saying that we are going to be prioritising certain sectors in some cases that's going to mean that some people aren't happy but we're going to be taking that on the basis of the evidence that we have received from our engagement and the support that we've received from the likes of the First Minister's investor panel at the back of all this however Mr Stewart will understand that when we are talking about innovation when we're talking about early stage investment support there is a risk attached to that and we have to accept that there is going to be an element of risk some of these innovations will flourish will do incredibly well the businesses will do incredibly well and we want to see that in Scotland others in some cases will not will not do as well I want to make sure that we have an ecosystem that is supportive of new innovation, that is supportive of new businesses establishing and of attracting further capital and private sector investment as well we're already seeing early stages of that good work coming through but I want to see more coming forward I have a question and it fits in well with your answer there about the green industrial strategy and our investment proposals coming from that because obviously we know that in certain sectors there is huge potential hydrogen we have huge potential and particularly for export we know that the German economy will require substantial amounts of hydrogen and we have the ability to produce that here in Scotland obviously we have to get that to Germany but I know that other colleagues including Mr Beattie and I have had conversations with folk who are very excited about our potential and what can be done here and I think that it would not be difficult to get private investment for a number of these projects if the seed corn money was there initially I wonder if the cabinet secretary would make comment on that and whether we will peruse and pick some of these projects to ensure that we get that private sector investment that's required to move some of these things forward I think that Mr Stewart's right he tempts me to pre-empt what will be in the green industrial strategy but we're already investing in the likes of the net zero technology centre in Aberdeen which is bringing together interested private sector parties on demonstrating the business case for a fixed link of a hydrogen pipeline between not just Scotland but other neighbouring countries and Germany because he's right and I was in Germany last year at the day of the signing of the UK-Germany hydrogen accord and there is massive interest in industrial decarbonisation in Germany based upon green hydrogen and they're wanting for obvious geopolitical reasons to diversify where they're getting their energy from and we feel that we have an opportunity there with the abundance of renewable energy at the moment but also going forward to see some of that offtake did not necessarily go to the grid but to go into other elements such as the production of green hydrogen and I think there are huge opportunities for us here to use hydrogen domestically for industrial decarbonisation but also for export and I think this will be an element that we'll be looking at as part of the green industrial strategy process and continue to work with industry that's already happening as I say through the next zero technology centre and others around the feasibility of how we get to that point. I have been generous with members' time so far but if you want to get through the business this morning and ask people to be as concise as possible if the cabinet secretary could maybe consider his answers a bit shorter that would be helpful. Colin Beattie to be followed by Colin Smyth. Thank you, convener. I'd like to talk a little bit about enterprise agencies and their budgets. There have been significant reductions in the budgets for the enterprise agencies. The Scottish Enterprise nearly 17 per cent in real terms. Highlands and Islands Enterprise 14 per cent. South of Scotland nearly 22 per cent. How will these reductions affect the support which is going to be available to businesses in Scotland in 24, 25 and what types of activities will be prioritised and which will be deprioritised? I appreciate the question from Colin Beattie. We've had to take very difficult decisions because of the fiscal context that we are operating within. I think it's widely appreciated by most reasonable commentators that this was one of the most challenging budgets in the devolution era. Rampant inflation a constrained public sector investment from the UK Government has passed on a significantly very challenging budget situation. For all of our public bodies, we have been looking to ensure that there is efficient as possible. There has been an ask to achieve savings almost universally across the board and our enterprise agencies are not immune from that. I think that obviously I am working with all three in terms of how we ensure a very challenging budget situation can be navigated and ensure that we can see the economic activity and transformation that they help and support us can be achieved. I would point Mr Beattie as I did to Mr Stewart to the launch of the Scottish Enterprise's new corporate plan which provides a refocusing of their activities on the energy transformation that we are required to see on ensuring that there is increased capital investment to ensure that there is greater productivity of our business community and also on innovation on seeing our businesses continue to innovate. Those are the areas that I would expect to see continued investment coming forward from our enterprise agencies. The enterprise agencies themselves are going to decide what their priority is for their area of responsibility. In collaboration with myself and officials, yes. Are there any guidelines that they are working under? No, not particularly. As I said, I point to the work that has been done by Scottish Enterprise and the priorities that they are taking forward making sure that we are taking the greatest economic opportunity that we have before us which is our energy transition. That is obviously a climate imperative and we need to make sure that we are tackling climate change. We have clear responsibilities there but it is also the greatest economic opportunity that we have as well the recommendations that I have come through from the investor panel which point to the fact that Scotland is the greatest opportunity for us to leverage private capital but to provide greater detail, happy to bring in Colin Cook. Thank you, cabinet secretary. I just thought it might be worth explaining the process. One of my roles is as the sponsor directorate of our enterprise agencies and Visit Scotland. That gives me a role of setting out ministerial priorities and they are defined in the National Strategy for Economic Transformation and we set those out on an annual basis and an ongoing basis to make sure that the agencies are working to the core government economic strategy. Responsible therefore following that for performance management for assessing the way in which the agencies are operating and I believe I am responsible for working with them and supporting our agencies to make the adjustments and to make the impact that we believe they can have. All four of those agencies that I have referenced are looking very closely at what the budget settlement means to them. They have a clear set of shared objectives which they share with the Scottish Government and I have been very encouraged by the way in which the leadership of those organisations is responding. What was anticipated? I have not had that communicated to me. Within the enterprise agencies? Yes. There is no... Obviously the enterprise agencies and Visit Scotland are looking at the overall budget that they have been given and in line with other public sector agencies they are looking at whether the numbers of people they employ is part of that solution. They are considering all options in order to make sure that they are as efficient as possible. If they are doing less then they need less resources to do that. I do not think it would be fair to say that they are doing less. They are prioritising the funding that they have on areas that are going to maximise the economic opportunities before them. As Colin Cook has set out their ability to invest the money that they have available to them is going to be balanced with the numbers in the workforce and whether or not the numbers that they have at present are going to be conducive to them spending against that. Those are going to be balances and decisions that are going to be taken by the enterprise agencies. As Mr Cook has set out we will continue to work with them to ensure that they are doing that in an efficient way as possible but also recognising the NSET priorities. Just an extension of that. The decrease in the resource budget on national bodies is partly driven by the wider public sector efficiency programme. Can you set out more detail on the progress made so far within your portfolio and what impact these deficiencies are expected to have on delivery and the final outcome he expects from the efficiency programme? Thank you. Rather than it being obviously, efficiencies are going to be important to public sector reform not just purely on reductions in spending. That is a process that has been led by the Deputy First Minister. We are embarked on a process of ensuring that our business support landscape is as efficient as possible. That includes looking at the work that is done by business gateway and done by our enterprise agencies. The role that our regional economic partnerships play within that is to ensure that we have a clear business support landscape and the response to the needs of business so that people understand what part of their journey they are on and what location they are in and what sector they are in to understand what door to turn to in order to receive the support that they need. I have had early discussions with COSLA because they have a responsibility clearly for business gateway and other parties on ensuring that we have a public sector reform piece that meets those ambitions. The direction of travel that we have given to our enterprise agencies is again a point back to the corporate plan that has been published by Scottish Enterprise that is ensuring that they are focused on the key areas of priority and making sure that those are aligned to our priorities and the national strategy for economic transformation which, as I outlined in my opening remarks we are also undergoing a refresh off to ensure that we are focused in prioritising those actions across that 10-year plan. My final question is really about a bit of a clarification. The level 4 spreadsheet that accompanies the Scottish budget notes that the overall capital budget for the enterprise agencies is at a quote the existing spending review capital plans. In real terms the capital budgets of the three enterprise agencies reduced by 4.6% in 24.25 or 24.6% if financial transactions are included. What is going to be the impact of that? It's undeniable that the reduction in the capital allocation that the Scottish Government has received and is receiving going forward. There's a projected 10% cut to our capital budget over the coming five years. It will have an impact, particularly when that's set against rising inflation and supply chain pressures. The financial transactions budget we have allocated almost all of the financial transaction budget to the Scottish National Investment Bank and that reduction is directly attributable to the reduction in the financial transactions taken by the UK Government. In both of those areas you can see a direct correlation between UK Government decisions and the impact that they are having on our budget and the decision making possibilities that we have available to us. It's undeniable that that will have an impact. In the energy space in the enterprise agency space I would far rather see an increase in capital expenditure particularly given the opportunities that we have before us with the energy transition. However, the potential for us to be able to do that at a time when our capital budget has been squeezed so hard by the UK Government is more than challenging. Colin Smyth will be followed by Gordon MacDonald. Can I just follow on from those questions? We know that this is a challenging budget but we've heard the overall budget is up. The department budget is down by 8%, and cuts to the enterprise agencies are three or four times higher than that overall cut in the budget in particular South of Scotland Enterprise which sees a cut of 22%. Given that we have huge economic inequalities across Scotland, for example South of Scotland has the lowest wages, the highest level of outward migration of young people because of the lack of high-paid, high-skilled jobs, what does this budget say about tackling those economic inequalities in those areas when you're cutting a peripheral area's enterprise budget by so much? Of course, we established the South of Scotland Enterprise because we recognised the fact that only a few years ago because we recognised the fact that we wanted to take great advantage of the economic potential of South of Scotland and I'm very pleased that the work that Russell Griggs and his team have done to do exactly that are not an area that Mr Smyth talks about. We have been very well engaged on supporting the real living wage campaign that there is in the South of Scotland and are seeing great results off the back of that, which I would continue to support them to do. I more than appreciate the challenge that there is for our enterprise agencies as there will be for others across Scotland as a result of this budget. There are major opportunities available, however. There are big economic opportunities coming through not just from the energy transition but from the innovation, the digital sector and the investment that we're making in increasing the digital budget is going to have a disproportionate impact on rural communities and is going to see broadband rolled out through the R100 programme making up for the shortfall and funding that has come for what is a reserved area. We'll continue to do what we can to invest, recognise not just the challenges but also the economic opportunities that there are in more rural areas including in the South of Scotland. I'll continue to work with Russell Gregg and his team for whom I have a very good working relationship to ensure that the opportunities that they are working towards can be met. We see those opportunities because the minister knows that we've got the highest number of windfans, for example, in the South of Scotland so far, so we see that change. As well as cuts in enterprise agency the Scottish National Investment Bank also sees its budget cut by a third to the lowest level since it began to operate. Despite the fact that the chair of the bank says that the plan £2 billion public capitalisation is not going to be sufficient to meet the bank's mission. Why is that cut so large and are the Scottish Government still on track to provide that £2 billion committed to SNP? For example, the bank to be self-financing by 2025? I hope so. On both counts as I said in response to Mr Beattie there can be a direct correlation on financial transactions for instance between the cut that the UK Government has taken and the ability that we have to be able to allocate. We've allocated almost all of the financial transactions available to us to the Scottish National Investment Bank. Obviously they are also hugely reliant upon capital funding and our capital budget is going down by 10 per cent over the next five years. Decisions at a UK level have direct consequences for our decision making opportunities here in Scotland. I would far rather we saw those problems cut off at source and we see an investment coming from the UK Government. I don't see that coming either from the Tory UK Government or from an incoming Labour Government and if we can't have that that makes the argument for Scottish independence all the greater. We will see more investment and what we will see from the UK Labour Government is growth, which we haven't seen in the Scottish Government. However sticking to the issue around financial transactions that you mentioned what progress do you expect on SNP being able to access capital beyond the existing capital beyond those financial transactions one of the issues that was raised at this committee by the chair was securing the regular permissions necessary to manage third party capital. What progress do you see taking place in the forth coming year to enable them to be able to do that and access other forms of funding? Firstly in response to Mr Smith's point around growth we've seen 10 per cent per capita growth in Scotland's economy since 2007 compared to 6 per cent in the rest of the UK so as assertion that we don't see growth in Scotland is wrong. I continue to support economic growth for a purpose which is to invest in a wellbeing economy however the point that Mr Smith made around SNP we continue to discuss asks of the chair and the chief executive around financial flexibilities we continue to grow and develop and we have given a commitment to them in a meeting only I think it was two weeks ago to explore just that this year so those discussions are on-going and we're looking at what we can do to ensure that they are able to operate in the way that Mr Smith has outlined both in those asks but in others as well. Scale for that? I can't put a timescale on that but those discussions are on-going. Something else you're not going to be able to put a timescale on so far is the fact that four years after the legislation was passed to establish the bank you haven't yet established the advisory board to oversee its work do you have an update on what the timescale for that would be? I think it's entirely fair that an advisory board that is going to be looking at the performance of the bank needs to wait for the bank to be established so that it can be functionable but the work is on-going in order to establish the advisory board that will provide that additional assurance measures beyond that that are already in place for a non-departmental public body and for a PLC to ensure that we have confidence as I do have no reason not to in the decisions and the performance of the bank. That process is on-going. Thank you very much, convener. Good morning, cabinet secretary. You mentioned earlier in your opening remarks that digital connectivity had increased by 50%. Looking at the numbers that it is indeed up from 93 million to 140 million would you expect to achieve from that increased budget on the forthcoming financial year? That is to ensure that we continue to roll out broadband capability that is part of the R100 programme. It's about providing that infrastructure to ensure that we are able to match the digitisation and innovation aspirations of our business community. As I said in response to Mr Smith, it is going to be disproportionately beneficial to rural and island communities where this roll-out is going to be needed the most. I look forward to continued expansion of the R100 programme coming forward in this financial year off the back of this 50% increase. It's also a good investment, I hope, in the supply chain and the business opportunities that are going to be available for our companies across Scotland as well. You touched upon the R100 programme and how important it is but, as you mentioned earlier, broadband is reserved to the Westminster Government. Why did you feel it was necessary for you to increase the budget in this area? Are we on target to complete the R100 programme by 2028 still? Yes, and the need for us to have an R100 programme at all as Mr MacDonald right through references for an area that is a reserved competence is because there has been an under investment there by the UK Government that we're not going to see the digital roll-out happen as quickly as we need it to for our rural businesses in particular. So we're making an increased commitment to see the target being met and to ensure that the economic growth opportunity that comes off the back of that is available to as many people as possible. Not just businesses but also domestic households that will have access to this as well. The other issue that I wanted to ask you about the R100 was the fact that Scotland has over 90 inhabited islands and I understand that Farrell was connected to full fibre two years ahead of its schedule and it used world-leading technology to boost the signal. Can you provide us an update on where the roll-out of R100 is in relation to the islands? As somebody originally from Orkney and having visited Orkney in the Christmas recess, I can confirm that the connectivity particularly on mobile data is much improved and Mr MacDonald is correct on the connectivity for Farrell and I'll be happy to provide a further update to the committee with more detail on the work that we've got proposed on the expansion of R100 to our island communities that would satisfy his inquiries. My final point is in relation to the final contracts for R100 that were signed fairly recently but it was prior to the price inflation of searing construction costs is there going to be any impact on the Scottish Government's budget of the fact that there has been increased construction costs recently in the economy? Is that something that the contract allows additional charges for or is that something to be borne by the supplier? Given Mr MacDonald's background, he'll understand the fact that supply chain price inflation has an impact on our spending power and our ability to be able to deliver as much with the budget that we have available to us. However, we are working with our suppliers to do what we can to ensure that that is mitigated as far as possible. It's not always going to be possible and in some cases we're going to be having to spend more in order to get less, that is the nature of inflation but again as part of that response that I give to the committee regarding the progress of our 100 I'll set out more in terms of his inquiry there. Thank you very much. Brian Whittle was before about Evelyn Tweed. Good morning, cabinet secretary. Cabinet Secretary, we are of my interest in longer-term strategies and preventable agenda, etc. Following on from some of the questioning earlier on, I want to dig in a little bit to the cuts to enterprise agencies and SNP and the no allocation to flexible workforce development fund. That will inevitably lead to less investment and it will lead to less support to established companies to grow companies which long-term will lead to less of a tax take with less money in the future budget. Where is the long-term economic strategy in the current budget? That comes from our national strategy for economic transformation that sets out our long-term economic aspirations. There is also the green industrial strategy coming forward. The innovation strategy that is available and was published last year. There are various plans and strategies that we have available to us but Mr Whittle must understand assuming that he, Mr Fraser continues to support UK Government spending plans that they have an impact on our ability to spend in those areas. We are allocating our resources best we can to ensure that we are maximising the economic opportunities before us. UK spending decisions have an impact. In reality for us they have a direct consequence and that has meant some very difficult spending decisions. If we had replicated UK spending plans we would have seen a real-terms cut to our NHS, which at this time and given Mr Whittle's interests in a healthier nation could not be comprehended. While it is admittedly a difficult spending decision for some of the reasons that he highlights we are working with our enterprise agencies to ensure that we are getting the maximum from that investment possible and that we are taking advantage of the maximum opportunities available to us. The cabinet secretary misses the fact that decisions made at Scottish level have consequences and what I am trying to get to here is that if you invest less in business you will have less money to invest in the public services. In fact, if you invest less you will require more investment in public services. You are talking about a long-term strategy and you have talked very well today about government targets but by cutting these particular agencies you are giving yourself less opportunity to create that wealth that will generate enough tax take to input into public services. I ask you where is the long-term strategy in this budget? For economic transformation it is a tenure strategy economic strategy for us to transform our economy to take advantage of the opportunities that we have available to us. I believe that you need a good economy and a good society. The two are mutually reliant. You cannot have a good economy without a good society so investment in public services is essential. We will do everything that we can to ensure that the money that has been prioritised for business such as £685 million of business rates relief, the maintenance of the small business bonus scheme which is taking an estimated 100,000 business properties out of rates relief altogether is the most generous in the UK 95% of businesses are paying less non-domestic rates than elsewhere in the UK. We are looking to ensure that the decisions that we have taken in this budget are balanced and continue to see economic activity and economic growth opportunities coming through but balanced against the need to ensure that we protect public services so that we have a healthy workforce that is supporting a growing economy. The reality on the ground is that the things that the Scottish Government has made have got a further education sector that is screaming for more investment and that the university sector now has to cut 1200 places to Scottish students. On the back of the Wither's review as well, how on earth does that help our Scottish economy? Surely that is a false economy if we are not creating and giving opportunity equally to our Scottish students to continue to support a wellbeing economy. I recognise the fact that we need to make sure that our skills landscape is supportive of, as I said in previous remarks to Maggie Chapman and to Kevin Stewart that we need a good skills landscape to ensure that we are providing the labour market that allows businesses to grow but also allows people to get on to take advantage of the just transition that we are seeing in the energy sector, for instance. The figure that Mr Whittle points to on higher education places was, of course, a temporary investment of the back of Covid so that the figures that we have now are returning to pre-Covid levels but, of course, we will continue to work with our university sector. Indeed, I have got a meeting with them next week to discuss how we can take full advantage of the innovation that is going on within our university sector, the investment that we are making on entrepreneurial campuses. I was able to see incredible work at Strathclyde University last week on the entrepreneurial support that they are providing their students and the benefit that that is providing not just to new business startups but also to the income potential that they are able to achieve and the work that is going on on a collaborative basis with our universities to see that level of investment grow. We have big opportunities. I recognise some of the challenges that there are but we will continue to work with our skills colleagues Mr Day, as I say, incredibly energised in making sure that our response to Whithers does have that supportive skills landscape going forward and we will make sure that the resource that we put behind it has a landscape that is supportive as possible not just for our employers but also for our workforce. If I could take this in a similar route and bring in the third sector here, the choices being made by the Government and the squeeze on the council budget is giving our councils almost impossible decisions to make. For example, even in my own area, I am speaking to two mental health third sector organisations that are now no longer funded and will have to shut. That of course means that those people that they support will still have to get treatment and what they will do is just join a queue at NHSQ. It might come out of the legislature but it will still come out of the budget for the Scottish Government in another portfolio. Do you not recognise that this is a false economy? Those kinds of cuts are a false economy and again it is a short term gain for long term pain and there is no real inter-portfolio working here to tackle that kind of issue. We have increased funding for local government and recognise that all elements of the public sector are facing fiscal challenges and that is born of the decisions that are taken at UK level. The challenge that is being faced by local government in England where we have local authorities going bankrupt is self-evident and the cuts that are happening to local authorities in England are of a far greater scale. We are not willing to follow that and that is why we have taken prioritised public spending. On my encouragement if Mr Whittle understands the consequence of UK spending decisions happening on Scottish Government spending decisions happening on local government spending decisions as he has just pointed out then I would far rather we worked together to see the initial damage being done to our public sector financial landscape by UK Government spending decisions whether it is on mental health or social work or education ensuring that we have preventive spending going in at an early stage that is exactly why we have prioritised ensuring that we are protecting as far as we possibly can our public sector budgets. The councils would disagree with your analogy there but I will also say that the decisions that Scottish Government have made continue to make to continue to see a huge reduction in our PISA scores and that is the reality on the ground I want to see a budget and I am not asking the cabinet secretary when is the budget going to address those kind of elements there which are actually a huge strain on our economy We are making substantial investments in education and in health both of those areas of the budget are up the local government settlement is up the NHS is also up because I recognise the assessment that Mr Whittle has made that we need to make sure that we have a healthy workforce that we are investing in areas to ensure that we do that but areas such as ensuring that we have minimum Europe pricing that we tackle the unhealthy products that are available are just some of the areas that we need to come forward with so I look forward to working with Mr Whittle on those areas to ensure that those areas are got right and where we have agreement that we can take those forward as quickly as possible even if those predominantly sit out with my portfolio responsibilities Outcomes are always matter I'll leave it there Evelyn Tweed Thank you convener and good morning cabinet secretary I completely understand the challenging fiscal context for the budget and the backdrop of austerity I note the reduction in Visit Scotland's budget cabinet secretary can you tell us what the impact of this is going to be and are Visit Scotland going to do things differently? We're working very closely with Visit Scotland to ensure that we maximise what is an incredibly important aspect of our economy The tourism sector contributes a substantial amount to our economy We're seeing international visitors up international spending up and not just on this year but pre Covid as well which is incredibly encouraging that people wish to come and Visit Scotland are spending their money here which is important for our economy so we'll work with Visit Scotland on the implications of the budget on what they are able to provide as a service to ensure that we continue to have Scotland as not just an international but a domestic destination of choice Thanks cabinet secretary In the interests of time convener I'll leave it there Thank you Ms Tweed I might just pick up on something that the committee have written to the Government about before which is a small business bonus scheme The Government did commission a report from Fraser of Allander to look at the scheme and there were changes introduced in April last year because one of the factors that they raised was while the scheme was valued it did risk restraining economic growth because businesses tended to group just below where the cut-off points were before so it maybe held back businesses or expanded their premises because they would lose the scheme The Government did commission the work but didn't really respond to Fraser of Allander's report in a significant way Have the changes in April made any differences to some of the issues that Fraser of Allander raised around the scheme? The Fraser of Allander assessments have been very helpful in demonstrating some of the positive elements of the small business bonus scheme in ensuring that some businesses continue to be viable and other elements of more challenge that you point out convener I think it's fair to say that across Government Tom Arthur as part of the new deal for business group is looking at what we can do to bring forward longer-term non-domestic rates reform Some of that work is challenging because where we make a change there will be winners and losers and there's a potential cost to be borne by Government or by the business sector so we're looking at taking forward a long-term evidence-based approach to non-domestic rates reform part of that discussion next week about what areas might be helpful for them what barriers to growth there may be through the current setup and looking at whether or not there are ways of bringing forward reform that don't have a wider unintended consequence and part of that assessment is going to be informed by the work that has been done by the Fraser of Allander Institute Thank you In your opening statement you referred to the Anasture report that you have a previous commitment of 50 million for a women's business centre in this budget you have set how the following the Anasture review a different approach will be taken and how we support women entrepreneurs Where in the budget I think it's what you said that it's to kind of find the actual quote you said it's work that has been taken forward stated that the 24-25 budget provides the resources necessary to make early progress on delivery and where where is that money where can we see that that investment has been put in in the budget? So I'll find out exactly where the budget line is but it's £1.5 million that we're starting with an investment on the implementation of I'll take Aidan Gricewood in shortly to point you in the exact place where this is being held as I set out in the letter to you to the committee I think it was on the 19th of December the Anasture review a pathways review alongside Mark Logan considered a dedicated women's business centre consulted widely upon it and concluded that that was not necessarily the best way of encouraging female participation in business now there's going to be opinions upon that but based on that quite wide range in consultation and feedback we've decided to accept Anasture's recommendations that the likes of pre-start centres and pop-up centres are going to be the most advantageous way of progressing a greater diversity in business startups and encouraging more women to get into business that's where the £1.5 million this year is going to start looking at expanding and I'll happily bring in Aidan to provide greater detail upon that because there was a 50 million commitment so the 1.5 in this year is that anticipated to increase in future years that would take us almost 20 years if we were going to go at the rate of 1.5 over 50 million is the 50 million commitment still there or that was for a business centre so it was a different commitment that was for a women's business centre as I said the consultation and engagement that Anasture and Mark Logan were engaged in that was not going to be the most effective way of getting women into business now there's 1.5 in this financial year to begin with anticipated that will increase in future years yes obviously I can't account for future budgets as yet because we don't have sight for that but yes I would hope that we'd be able to invest greater levels in this space because I recognise, the Government recognises that having greater diversity in business startups is an untapped economic opportunity and ensuring that we are releasing the full potential of women in this case but other groups as well to get into business to get on in the employment market is an area that we see as being a good opportunity for business growth and is also the right thing to do and I'll happily take Aiden in on the particular budget area of where it lands yes thanks cabinet secretary that served a very simple ask it's in the innovation industries line within the budget that also includes the increase in the tech scale of funding to 9.5 million year ahead and however we're going to monitor the impact of that 1.5 million investment and how is the Government going to measure the effectiveness of that investment in terms of encouraging women into business or? As with all Government investments there must be an appraisal of its efficacy and as we set out our plans for that investment this year of 1.5 million working with Anna Stewart, Mark Logan on how that will work so we'll set out how we will monitor and evaluate its progress with the committee in terms of how you've given me a rough idea of how the 1.5 is going to be spent but also we might have questions over the geographical spread of that or will we get a more detailed picture of how that money is something that the committee has had an interest in and will we get a more detailed picture of how that money will be invested? Absolutely, I'm happy to give that commitment we're still in discussions with Anna Stewart and Mark Logan as to the budget allocation that we have for the coming year to begin with and once we have further information I'd be more than happy to share that with the committee and to ensure that you're fully appraised of the decisions that are taken. Okay, thank you. That brings us to the end of the session. The cabinet secretary and his officials for attending this morning I now move into private session.