 Good morning, and welcome to the 28th meeting in 2018 with the Finance and Constitution Committee. As usual, I can just ask members to put their phones in a mode that interferes with proceedings. The first item on agenda this morning is to take evidence of the Transport Scotland Bill financial memorandum. We have received 11 responses to our calls on the financial memorandum. Today, we will explore some of the issues that we received in these 11 responses, and we are joined by officials, Brendan Rooney, who is the bill manager, Revet Shepard, who is the environment and sustainability manager, Peter Grant, who is the bus policy team leader, and George Henry, who is the parking policy manager. I welcome you all warmly to the committee this morning. Members have received a summary of the responses to the calls for views, and I note from the clerks that I just proposed that we go straight into questions. To kick questions off, I would like to note from our written correspondence that some of the respondents have said that the cost of implementing low-emission zones has been underestimated and the reality of setting up and implementing those zones will cost much more than outlined in the financial memorandum, and others have said differently. Also, respondents have highlighted the cost of haulers to upgrade their fleets in line with the requirements of the low-emission zones, but those costs are not outlined in the financial memorandum. I just like your response to those views, and I will leave whoever the lead official is to decide who is going to answer them. It might be easier if I give a quick, broad overview of how that was arrived at and perhaps bring a vet in who is more immersed in LEZs and low-emission zones and implementation and how any costs align with that. The provisions in the bill on low-emission zones are subject to—well, the implementation further down the line will be subject to quite a number of variables that will be set out by regulation and set out through local authorities themselves who design a scheme, look at the geographical scope of that scheme, the roads that it will cover and certain elements like that. Again, the regulations will set the national vehicle emissions standard, which will dictate vehicles that are compliant or not compliant with the prohibitions that the bill allows for. Likewise, things like the technology that will be used for detection are also to be set out in regulations. Some of the provisions in the bill are quite framework in nature, which means that there is obviously quite a number of variables within those to get down to binary cost figures. The financial memorandum, as accompanying the bill introduction, aimed to give best estimates around those, taking those caveats into account. There was always an element of a window of cost and an element of fluidity, but I do not know if that on the specifics of implementation and how costs would arise might want to expand. The financial memorandum was based on work that was undertaken to support the Scottish Government in considering the introduction of LEZs, which, as Brendan has alluded to, is very difficult to make quantifiable predictions, because it will be very much based upon the design of the LEZ, which is being carried out by the local authorities at the moment. There are a number of variables around the scale of LEZs, the type of vehicles that will be included, the technology that will be used to enforce them, what the enforcement requirements will be, and at the moment that work is being undertaken by the local authorities. We will have more clarity as we move forward through the process, both from the Transport Bill published provisions and the regulations that will come forward, but also on the details that the local authorities bring forward in terms of their design. Each local authority is looking at the design and the development of the LEZ in relation to their own specific air quality issues, so the designs that will come forward will vary as the air quality issues vary within the different cities and towns across Scotland. As we move forward, we will have more clarity on that, and we are working very closely with the local authorities that are currently introducing LEZs, both individually and collectively, as a group, to further refine those costs and get a better understanding of what the likely costs will be. When you see two cities such as Aberdeen and Edinburgh, and there are obviously different views in Edinburgh, it did not seem to indicate in any way that there was an issue in terms of the overall cost, but in Aberdeen area there was a concern about the overall cost of introducing those zones. Is that because, in the way you have described it, they may all be envisaging different solutions for their own cities in that regard, and therefore there is a different cost envelope for each area? Is that what you are trying to tell me? There will be a different cost envelope for each area in terms of the eventual outcome. There are different stages of the process of design of the LEZ, so they perhaps have different reflections based on the work that they have done to date. One of Aberdeen's concerns was that the costings that were included in the financial memorandum did not specifically identify key things that they felt would be required to take forward the introduction of LEZs, but Edinburgh has taken a different view there, presuming that the scope for consideration of costs will be as wide as is required to deliver an LEZ. Certainly, in our dialogue with the local authorities again collectively and individually, we are not laying out restrictions in terms of the things that we think the local authorities should consider in terms of the costs of LEZs, so some of the things that specifically Aberdeen referred to are not ruled out of the costs, so it could be just reflective of the different stages of discussion in relation to design. In terms of the principle of how those are funded, I am making an assumption and correct me if I am wrong that they will be funded both by contributions from the Scottish Government but also from the local government themselves as well in terms of how finally the LEZs come to be in place. I think that the financial memorandum discusses it being a collaborative approach partnership working with costs being borne by the Scottish Government in relation to some aspects, but also by the local authority in terms of the local delivery aspects of the LEZs. Thank you very much, convener. We will question the methodology of a pavement parking, pavement parking and double parking. You explained with the estimated cost of the issues of how you are arriving and the lack of data and that you engage with the City of Edinburgh and Aberdeenshire Council to get that data, but Aberdeenshire Council replied stating that the figures within the memorandum on pavement and double parking do not reflect those that were provided by them. Given that they and South Ayrshire Council and East Ayrshire Council are all questioning the methodology and given the huge difference between enforcement in a city and rural Aberdeenshire, where I represent where you have multiple small settlements and a very different landscape. Can you comment on that? Yes, I will take that. The forecast of the financial memorandum came from Aberdeenshire in the City of Edinburgh Council. Through our stakeholder engagement, we asked all the local authorities at our parking stakeholder groups to see if we could work with them to help develop the costs for the financial memorandum. Aberdeenshire Council and City of Edinburgh Council helped us as we developed those. We discussed the draft criteria of what would actually be of the national ban on parking and double parking and whether exemptions would be taken forward and how they would be assessed, etc. The two councils that we did engage with know a bit more about the criteria of what others did. Officials from Aberdeenshire Council submitted the figures. In the financial memorandum, they were regarded as the best estimate at that time. If Aberdeenshire Council now feels that they are not representative of the figures that were there, then I am happy to discuss that further with them. We actually have the next parking stakeholder working group on Monday and I will raise that with Aberdeenshire and we will get some clarity on that. It is my fault that I should have asked you a bit more explicitly. So, we are back to L.E.Z. now in Patrick. Just to follow up on the convener's point before I come on to my own, Bruce Crawford was asking about the balance of the costs being borne by both the Scottish Government and local authorities. Obviously, some of the savings as a result of L.E.Z. will come through impacts on health, if it works, and that is more about the Scottish Government's budget than local authorities, not exclusively, but more so. Some of the potential reductions in revenue might come from parking. Again, if it is successful in changing the modes that people choose to use to travel, local councils might actually see reduced revenue. It is not an argument for more of the costs being borne by central government budgets than by local government budgets, given where the savings and potential reductions in revenue might come in the future. At this stage, we have not identified what proportion of costs would be borne by the local authorities and what proportion of costs would be borne by central government. Certainly, the funding that we have put in place this year has been primarily to support local authority in terms of the resource for delivering the design of L.E.Z. We have three out of the four local authorities that have a current commitment to introducing L.E.Z. have taken up that funding. At this stage, in terms of the delivery of the design and the implementation work, the costs that have been borne by the local authorities at this stage are in terms of resource, so they are providing, to some extent, the staff resource to do the implementation work. At the current stage, where we have a little bit more clarity on and where that split is, that tends to be how it is sitting. We need to better understand what the implementation costs are around the actual introduction, the infrastructure, the back-office enforcement, the sport systems. Again, that will be different for different local authorities. It will depend very much on the scale of the L.E.Z. That future balance will be agreed by negotiation with councils? We will continue to work with the local authorities on that. The modelling that has been done that has developed some cost estimates has been done by Jacob's in a report. The key findings of which are in the financial memorandum, but the report itself has not been published. Why has not that been published? It is technically still classed as a work in progress. It was a piece of work that was prepared to inform consideration of the introduction of L.E.Z.'s. We can certainly clarify whether that will be the case. That would be helpful to know. It seems to rely heavily on the London ultra-low emission zone to draw its theoretical conclusions from. That is obviously a very different city than we have in Scotland. Even our biggest city that might consider what has been described as a large low emission zone, it would not be talking about a density of traffic as much as London was before the introduction of its congestion charge, for example. Also, Glasgow might consider areas like Great Western Road or Dunbarton Road are some of the most polluted parts of the city, areas along the motorway or expressway might be covered in a low emission zone, so it might be talking about a different shape than just a blob in the middle of the city centre. Is it not a bit of a stretch to say that you just scaled down the London model, the ultra-low emission zone in London, given that a different shape or configuration in Glasgow might result in a very different ratio between the amount of work that needs to be done to administer this thing and the proportion of vehicles in the city that is being captured by it? Yes, and that goes back to the information in the financial memorandum that comes out of the Jacob's work, which did make heavy use of the data coming out of the London low emission zone, but it also looked at other work that was undertaken by Edinburgh and Glasgow around the potential introduction of leeds in a Scottish context from work that they had done previously as part of the rare quality management work, and it did take into account information from other European leeds, but it was focused on work that had been done in London. That reflects the indicative nature of the costs that are included in the financial memorandum. As a best estimate based on data that we have and a series of reasonable assumptions around the likely outcomes of leeds, but ultimately the costs will be dependent upon the leeds design, and there is a fair amount of variability. It could potentially come out of the different cities approaches that are being encouraged to consider locally specific solutions for the air quality issues that they have, which may result in, as you say, very different leeds in different cities and different costs associated with that. I should have just declared that an interest can be done on 11 Dumbarton Road in the middle of one of the air quality management areas. What is the general approach when you have a Government bill and a best faith attempt to construct some costing but an acknowledgement that those are not the actual costs that will emerge? What is the general approach to trying to revise what is agreed if Parliament agrees with the financial memorandum and make sure that we actually get funding in place that will meet whatever costs emerge, which are unlikely to be what the numbers are in this document? I think that that is mainly founded on the work that we are doing, the approach to leeds in terms of the commitment in the four cities that we have at the moment is based on working in partnership and collaboratively with those four local authorities, so we are working very closely with all of the individual authorities as part of their delivery groups, and we are also working with them collectively through the leadership group, through the consistency group to try and better understand what these costs will be going forward as the design emerges so that we can track increased clarity around costs and also so that we can identify with the local authorities collectively how to get best efficiencies around how to get best value for the money that we do invest in, particularly infrastructure. It will continue to work with the local authorities in order to understand the emerging designs and that will help to give clarity on what the actual costs will be, and that will be a big part in shaping the funding packages going forward. Angela, you have got a supplementary in this area, right? Yes. I suppose that, like other members, I am looking at a financial memorandum of 46 pages, and at the end of the day we are resting on our best estimates thus far to costs. I wonder if you could say a little bit more about the feasibility studies that were conducted not just in Scotland but in England, and whether the findings from the feasibility studies, whether that complements the work undertaken by Jacobs and the 11 submissions that the committee has had, appreciates not a large number of written pieces of evidence, or whether the feasibility studies, whether the work done by Jacobs and the written information that the committee has, is pulling things in different directions or whether there is a point of convergence? The feasibility studies, particularly in relation to the work in Scotland, were done some time ago, so there is obviously not necessarily parity in relation to exactly what they were looking at. They were looking at similar models but not necessarily the same around what we would be introducing. There is some information in the financial memorandum that talks about the variability and costs in terms of what was being allowed for the automatic number plate recognition camera systems. That is quite a range of costs. The Jacobs work that we looked at came out with a cost of around £20,000. The Edinburgh Feasibility Study had the camera costs at around £37,000, so there is quite a range there. Again, the work that we are doing with the local authorities at the moment is coming up with, to some extent, a different set of figures around that particular aspect. They did not contradict the Jacobs work, but there is not necessarily identical alignment with the costs that are coming out, but that is partly reflected on the assumptions that were being made around what the LAZ would be, what the scope of the vehicles would be and what the geographic spread would be. Different assumptions were made in relation to all the different studies that have been undertaken. The financial memorandum talks about an optimism bias of 44 per cent and a 10 per cent risk assumption of 10 per cent or year one costs. Would that be the norm or is that quite a generous calculation? That is not something that I can directly comment on. I think that that aligns with a general approach that we would take in relation to transport projects more generally, so it does not seem particularly out of kilter with the approach that we would normally adopt, but we can certainly clarify that and come back to the committee if that would be useful. You very helpfully described your on-going work and dialogue with local authorities. I could not find in the paper a formal response from COSLA. Has there been a written response from COSLA? There has been a written response from COSLA to the lead committee on the bill in its entirety. There is, I think, not in the call to evidence for this committee, being a response directly from COSLA. And to the Government's consultation on the bill? Well, the Government did not consult on the bill in its entirety. It took forward a series of consultations based on it. It is quite a multi-topic broad scope bill, and they were taken forward. I am afraid that I do not have in front of me whether COSLA directly responded in writing, but I do know as if it is alluded to that there is a lot of engagement with local authorities and engagement with COSLA on-going. My final question, convener, is notwithstanding that many of the costs depend on design and implementation, and some of the actions will be within the gift of the Scottish Government, but a lot depends on the actions taken forward by our partners and local government as well. However, it is the case that, where something is a new burden, it would be the norm for that to be factored into matters as they proceed if there are new burdens on local government that they will have to be accommodated financially from the Scottish Government within the block grant. Is that right? That is my understanding of the agreement with COSLA on new burdens that are set via legislation. Obviously, some of the joint commitments stem from the programme for government commitment that the Scottish Government has made around the key four cities, so those are the ones that are being looked at in the short term. Whether or not other local authorities subsequently choose to implement low-missions on the further down the line, that is not mandated via the bill. I would like to ask about the potential impact of LEZs on small business. It is an issue that has been raised with me by the Federation of Small Businesses and others. One of their concerns is that, for example, you might have a self-employed tradesman who is buzzing in and out of LEZs in a diesel van of five or six years old that does not meet the requirements and the impact that that is likely to have on the operation of a very small business. I am wondering in the financial memorandum has there been any specific work done looking at the likely impact on very small businesses like that? There has not been any specific quantified work done in relation to small businesses. We have been having fairly extensive engagement with Federation small businesses, with trade bodies, with chambers of commerce to try and understand broadly what the issues are for their members. We did obviously have the consultation on building Scotland's low-missions zone, so we have taken account of responses to that consultation. However, there are no quantified costs associated with the impact on small businesses to present in the financial memorandum. In the bill and in the financial memorandum, there are proposals around potential grant schemes that might assist. Can you say any more about how that is likely to be able to assist a small business that is impacted by that? The most recent programme for government included the creation of a low-emissions zone support fund. We are currently looking at how that could support a range of cohorts of those affected by the introduction of LAZs. That includes those users of likely goods vehicles, which is the predominant vehicle used by small businesses. That work is under way at the moment to look at how those cohorts could be best supported through the introduction of LAZs, those who would be most difficult to comply with the requirements when they come forward. Do we know when we will get a clearer picture as to how all that will be finalised? We are targeting the LAZ support fund details for April 2019. There is overlap again around the issues of how the LAZs design. Local authorities have come forward with proposals that would see all vehicle types included in the LAZ requirements. That stage has not been reached yet for Dundee, Aberdeen or Edinburgh, so we are not certain at the moment which cohorts of vehicles would be most affected by LAZs at this stage. There is the potential for different decisions to be taken in different cities, depending on which vehicles are deemed to be the ones that are impacting on their quality. There is an element of variability in terms of the impact on small businesses related to the design of the LAZs, which we will be more clear on as we move forward. I thank you, convener, and good morning. One of the aspects of this in relation to bus operators is the costs of retrofitting. First bus has stated that the cost of retrofitting a bus would be £25,000, and if they did that through their whole fleet, it would come in at £5.8 million. One of the issues with that is that, if there are additional costs like that, they might be passed on to passengers in terms of higher fares, and you might see reduction in bus routes. In terms of the financial memorandum, what account has been taken in terms of public funding support that would be available to bus companies that were retrofitting? The scenarios presented in the financial memorandum from the Jacob's work include an allowance for support and bus operators to become compliant. It summits the costs presented are a mixture of retrofit and scapage for older vehicles that may be reaching the end of their life for other reasons separate to the LAZ. Those that are included within the costs presented in the financial memorandum are taken forward in a practical sense in relation to the policy rather than the bill. For the LAZs that are already in play, there is currently a bus emissions abatement retrofit programme under way. Phase 2 of that programme was launched a few weeks ago, and it offers support to bus operators for retrofit. Phase 2 includes for scapage in relation to those who are going to have to meet LAZ requirements. You might not have this figure to hand, but roughly what percentage of support is available to a bus operator if they are taking part in the retrofit programme? The Bayer phase 2 scheme will offer 40 per cent of funding to large operators, rising to 60 per cent for smaller operators of the total cost of retrofit, so that includes the cost of the kit itself and its installation and it also for ancillary costs up to five years, so the other costs that go along with the retrofitted vehicle operation, telematics and maintenance and those sorts of issues. They will be offered 40 per cent of those costs. The actual cost to a bus operator will vary because it will depend upon the contractual arrangements that they make with whichever partner in the industry that they choose to go with for retrofit. I appreciate the contribution that you have outlined and I also appreciate that there is a balance about those things. Has there any account been taken of the fact that, because of the increased costs involved to bus operators, they may reduce bus routes and that might lead to a contradiction with the policy objective of the bill in terms of lowering emissions zones because of people who are unable to go on bus routes, they may if they've got cars, take the cars and you end up with a conflict in terms of the policy objective? Certainly not in the financial memorandum that it doesn't reflect that. I'm not sure that we would have an understanding of the potential costs associated with that at this stage and we are obviously engaging with the bus industry around early Zs more generally and on the financial implications in particular. The supplementary and dom's got the supplementary, I think, as well. Just very briefly, I don't think that anybody would have a huge problem with the fact that there are some uncertainties around many aspects of that, including the costing, but the Scottish Government says that it is committed to introducing low-emission zones into Scotland's four biggest cities over the next couple of years. If one of those local authorities comes back and says that some aspect of this uncertainty means that we are not able to go ahead, whether it's on the grounds of costs or anything else, is it the Government's position that the Scottish Government will come back and solve that problem and ensure that the low-emission zones go ahead? That might be one to put to ministers, but if that's appropriate perhaps you could pass that on. I think that there's a nod to say that you're going to pass it on. Was it on the early Zs as well, Tom? Yes. Okay, when you go. Thank you, convener, and good morning. One of the issues that's clearly a very topical moment is the challenges faced by the high street, both from online retailers and out-of-town shopping centres. If early Zs are successful in their objectives, they will reduce congestion and increase air quality, which may make it a more attractive proposition to shop within a town centre or a city centre. Has any work been undertaken as part of this process to assess what impact it may have on economic activity and any net benefit that could be accrued by local authorities as a consequence? There's not been any quantified work undertaken in relation to that. We are in dialogue obviously with chambers of commerce across the four cities and more specifically at a national level as well to help to understand their issues and any concerns that they would have around that, but no, there isn't any quantified work being undertaken to look at that potential economic benefit. Thanks a lot for dealing with all those questions early Zs. We're going to let you off the hook a bit now and go on to pavements. Emma. Thank you, convener. Good morning, everybody. I'm interested in pavement parking and double parking and I guess the financial memorandum statements about how do you cost it or how do you make it accurate? I was reading in our brief that South Ayrshire Council, East Ayrshire Council and South Lara, all in my South Scotland region, are saying that there's a financial burden relating to the enforcement of pavement parking and double parking and they're concerned or they believe that making local exemptions could mean that the cost could escalate substantially from what was estimated in the financial memorandum. I'm wondering if any further detailed costing has been performed to create more accurate or more up-to-date view to determine further costs so that we can look at implementing pavement parking or restrictions in enforcement and exemptions. Has there been further costings done? Yes. Obviously, the policy is about making our roads and pavements accessible for all. The policy is very much about changing people's behaviours and parking on footways, etc. It's very difficult for us to really cost of the assessment and particularly implementation when it's covered with potentially the number of exemptions that local authorities wish to promote. We are continuing to work with local authorities and COSLA to develop, through our parking standards working group, to develop more robust costs for each of those respective areas. As I'd said previously, two of the local authority areas that it did offer up to work with us with the costs know a bit more about the criteria to which we are implementing and that assessment and implementation is on-going. It is the best estimates that we have provided when a bill was introduced, but we are very much committed to working with local authority and COSLA to develop more robust costs for each of those areas as we move forward through the parliamentary process. You said that there is a parking standards working group meeting coming up soon, so would that be part of your discussion on going to look at financial impact for local authorities? It very much is. The meeting, which takes place on Monday, we have asked all local authorities to join us and we have good representation at that group. It's very much talking about the exact criteria of footway widths, carriageway widths, what should be available for allowing footway parking to exist and what meets an exemption and otherwise, and we will very much talk about the costs around that as we go through that process. Each local authority needs to map out where their footways or pavements are so that they can feed into that assessment so that there would be a variable in some areas. I mean, understandably, local circumstances will vary. It makes the assessment so obviously difficult to represent right across on a national basis, so that's why we need the local authorities to join us at this group, to look at the criteria that is set for them to then go and carry out their assessments and provide to the financial figures, which will give us more robust costs for moving forward. Just on that same issue there, would you mind trying to clarify, see the estimates that you've provided £40,000 from Edinburgh and £10,000 from Aberdeen, and there's been disagreement about that, particularly from East Airshire, my own authority? Is that the cost of assessing the issue or implementing it? No, that was the cost that was for assessing. Therefore, streets where we know that footway parking exists can come from various areas, because there are a number of complaints that come through local authorities at this event just now, so they know where the footway parking problems do exist and how they would wish to address that. The local authorities, when we worked with them in the development of the financial memorandum, were purely around the assessment of that. Whether they choose to promote exemptions on those streets to allow footway parking to exist and still make sure that there is enough space for pedestrians and wheelchair users and families with prams, etc., to be able to use the footways in the way that they're there for remains to be seen, so they'll have to go through this assessment process. We did look at flexibility in the way that they can carry out assessments, so it may not necessarily need to be full site visits for everyone. People may be able to use inventory databases and other technologies to do desktop studies to identify where footway parking is a problem, first and foremost, and then do site visits after that. Supposing that Z-Starser says that it ends up much more, I mean much more could be 20 or 30 locations, for example, what about the implementation cost? Is there any estimate in the memorandum about the actual implementation cost? The implementation cost, we've certainly tried to minimise that as much as possible. There's the signs that will be required to allow footway parking to exist or already approved in the traffic signs regulations in general directions. Those signs could go on existing street furniture, so there might not necessarily be a requirement to put in new street furniture, i.e. poles, for those signs to go on. Then it would be white lining for to mark out bays on footways or parts of footways for to allow people to park. We've tried to have an efficient process as much as possible and as much as is cost-effective measures that are not too expensive for local authorities to put in. Thank you very much. I thank the bill team for giving us their evidence this morning. You were very candid about the challenges that you face about it and very knowledgeable obviously in terms of the responses that we got. The clerks will now draft a letter to send to the lead committee in that regard. I now suspend this meeting to allow a change over witnesses. The second item on today's agenda is to consider a Scottish statutory instrument that provides for the 2018 autumn budget revision. Before we come to the motion seeking a approval of agenda item 3, we have an evidence session on the order. We are joined for this session by Kate Forbes MSP, who is the Minister for Public Finance and Digital Economy, who is accompanied by Scott Mackay of the Scottish Government. I invite the minister to make an opening statement and welcome her to her first appearance before the Finance and Constitution Committee. Great, thank you very much. It took a promotion to be allowed back onto this committee, so it's great to be here. As the committee will know, the autumn budget revision provides the first of two opportunities to formally amend the Scottish budget for 1819. In order to assist the committee with their scrutiny, I have provided a brief guide to the autumn budget revision prepared by my officials, and that guide sets out the background to and details of the main changes proposed, which I hope the committee has found useful. As members will know, the First Minister announced a restructuring of the Scottish administration, and table 1.1 of the autumn budget revision supporting document provides a full reconciliation between the former Scottish Government portfolios and the new Scottish Government structure. This year's ABR deals with four different types of amendments to the budget. First, a couple of funding changes. Secondly, a couple of technical adjustments that have no impact on spending power. Thirdly, a small number of Whitehall transfers and finally some budget neutral transfers of resources between portfolio budgets. The net impact of all of those changes is an increase in the approved budget of £7.3 million to £40,505.9 million. Table 1.2 on page 5 of the supporting document shows the approved portfolio budgets following the changes sought in the ABR. The supporting document, prepared by the officials, provides background on the net changes. I would like to just briefly sketch out those changes and then move the motion. The first set of changes includes the deployment of funding across multiple portfolios to cover EU exit activity, additional funds for the Scottish Futures Trust, for the schools for the future initiative and further funding for raising attainment, and in total those changes increase the budget by £32.1 million. The second set of changes comprises a small number of technical adjustments to the budget, with a net impact of £31.2 million on the aggregate position. Those adjustments are necessary to reflect to ensure that the budget is consistent with the accounting requirements and with the final outturn that will be reported in our annual accounts. The main technical adjustment is the removal from budgets of £31 million in interest and repayments on capital borrowing, and those should be routed directly through the Scottish Consolidated Fund rather than through Scottish Government accounts, as per legislation that was set out in the Scotland Act 1998. That subsection states that amounts required for the repayment of principal and payment of interest in sums borrowed under this section are to be charged on the Scottish Consolidated Fund. With regard to whitehall transfers and allocations from treasury, there is a net positive impact on the budget of £6.5 million in relation to small transfers, which are all listed in the supporting documents. The final part of the budget revision concerns the transfer of funds within and between portfolios to better align the budgets with profiled spend. As in past years, there are a number of internal portfolio transfers, which have no effect on portfolio totals but ensure that internal budgets are monitored and managed effectively. The main transfers between portfolios are noted in the ABR supporting document and the guide. As we move towards the financial year end, we will continue in line with our normal practice to monitor forecast outturn against budget and wherever possible seek to utilise any emerging underspends to ensure that we make optimum use of the resources available in 1819 and to proactively manage the flexibility provided under the fiscal framework agreement between Treasury and the Scottish Government. I shall be providing committee with a mid-year report on revenue and spending to date alongside the spring budget revision when published to improve the transparency of the budget management process and decisions taken in year in line with the budget process review group recommendations. That is very helpful. My first question does not specifically relate to any of the areas that you have raised, but it is in the budget revision documentation under table 18A and the funding reconciliations and issues to do with the reserve. I am just curious about the Government's position in terms of the reserve. Specifically, to what extent the purpose of the reserve is to allow the Government to draw down additional funds for public expenditure and to what extent it sees it as a need to build up funds to address any potential shortfall that might come from arising from any tax forecast errors that might emerge. It is something that the committee has been very interested in around the whole issue of the tax forecast errors. You are an understanding of the Government's position on that. I think that it would be quite useful to us as part of this exercise. That table 1.8A is relatively a new addition, and I hope that committee members found it useful in terms of improving transparency. Of course, Scotland Act 2016 powers allow Scottish Government to build up funds when possible, and that serves a number of purposes. The convener has set out a number of them. They are, of course, to address unforeseen budget pressures, to manage the obvious volatility in tax receipts and shortfalls in forecast related to forecast error and to smooth all types of spending. The Scottish Government has previously made clear that it intends to build up the balance in the reserve over time as resources allow it to do in order to have a financial cushion available to it and to prudently manage that underspend across financial years. That is particularly important with greater powers over taxation and the obvious volatility that comes with tax receipts. Of course, the Scottish Government cannot overspend its budget, so it is a prudent approach to manage the budget over a number of years, which has been endorsed by the Auditor General. The bottom line of that was that it is available for future deployment. It is £197.7 million in that table. Is that part of it or a significant part of it, some of the money that the Government is going to put away for a potential rainy day? Is that the intent of that future deployment cash? Well, that sum available for future deployment can be carried forward, but those figures will be seen more clearly when the Scottish Government publishes its draft budget on 12 December. I want to ask about one of the internal transfers that features in the instrument before us. There is a transfer from the Health and Sport Department to education and skills in respect of nursery and midwifery education of £58 million. That is a transfer that has appeared in accounts since, I think, 2008-9 on an annual recurring basis. Given that that appears in the accounts every year and every year appears as a transfer, I wonder whether it would not make more sense just to have that as a permanently part of the education and skills budget rather than the health budget. It is an issue that I raised this time last year with the cabinet secretary when he was sitting. He said at that point that I had made a valid point, but I see that nothing has changed, so perhaps it is time to reconsider. It is a very valid point, no A. I recognise that it is a question that the committee has asked a number of times before, and in my own preparation for this committee appearance it is one that I asked to. It is obviously an annual transfer. I think that a few quick points that I would say in response to it are that it is initially allocated to the ministerial portfolio where the policy decisions are taken and where there is ministerial responsibility over that area and then transferred to the portfolio where the spending occurs. Where there might be savings or where there might be changes to policy, it would impact the health budget and see the savings coming to the health budget. It would see the impact of any policy changes on the health budget. The way that it has been done for years and has been done again this year ensures consistency and transparency. Where there are policy changes or where there are savings flows to the health budget, but it is education's responsibility to deploy it through the Scottish Funding Council. I take the valid point. I think that I have been satisfied in asking the same question that this way of doing it ensures that there is transparency and consistency because the portfolio minister who is responsible for it would be Jeane Freeman as Cabinet Secretary for Health. Given everything that you have said about transparency, I wonder whether it would not be more transparent to present it as part of the education and skills budget. What it does in presenting it the way that it does is that it shows that the health and sport budget has been quite substantially higher to the tune of only £60 million than is the actual spend at the end of the year. We know that that happens on an annualised basis, but it would not improve transparency if it were to change the way that it is presented. I take that point. I think that where there is an important point is to make sure that we are completely upfront and transparent when particularly it comes to the budget revision and the spring budget revision in where these lines are where responsibility lies and then where spending actually happens. If there are other ways that we can improve the transparency, I would be very happy to consider those additional points. Having taken that point, the way that it has been done for years has happened for years because so long as there is transparency over the budget revision and so long as committee and others can see where these lines are being, where responsibility lies but then where spending lies as well, so long as there is transparency on that point, I think that that does meet the requirement for transparency. Aeol. What's up, convener? Thank you. Good morning. You're talking about transparency and that I think that it's quite transparent to see that the £58 million goes from health and sport to education, because doesn't that allow us to focus or see that the £58 million is spent on nursing and midwifery alone? I probably need to declare that I'm a nurse, but we can then see that it's specifically spent on education for nurses and midwifery rather than maybe this education spend going somewhere else within that education portfolio. I think that it comes back to the point around the importance of the budget revision and the importance of my officials and myself providing the committee with as much information as possible to be able to track those changes. I take the point that this is a question that will be raised probably every year and it maybe sounds a bit like a broken record, but it does mean that the committee has full sight on those internal transfers, which are at the end of the day budget neutral. Because of a serious people like Murdoch, this is probably the most transparent bit of the whole Scottish Government budget now, because I ask this question every year. Effectively—I've got this right as well—it means that, in terms of ensuring the outcomes that health needs, it provides a mechanism to ensure that it can get the amount of money that is spent on that area that it thinks is required to deliver the outcome of the number of nurses and midwifery we have. That's right, absolutely. It goes back to the point that I made earlier, where there would be changes in this policy, it would have an impact on health. Where there might be savings on this policy, it would have an impact on health, and that is why that line is a health line and has then moved through the year. Again, it's to do with transfers. It's time for the social security and older people budget to the communities and local government budget. There's three transfers coming to just about £102 million. I wonder if you can just give a bit more detail on that, minister. That's the £37.9 million, is it? The £12.1 million and the £5 million. There's a £52.1 million in relation to the bedroom tax, £37.9 million for the Scottish welfare fund and £12.1 million in mitigation of welfare reforms. Take them one by one. The £52 million is a transfer to meet manifesto commitments to fully mitigate bedroom tax. It's quite clear. The £37.9 million is Scottish welfare fund, which was established in April 2013, after UK Government decisions to abolish two elements of the social fund, community care grants and crisis loans. The powers and funding were devolved to the other administrations within the UK and it was at each administration's discretion whether to continue to have a fund and how it would be administered. That is a transfer to local government to fund that delivery. Last but not least, the £12.1 million is money to provide funding to local authorities for non-bedroom tax discretionary housing payments. DHPs are administered by the local authorities and are a key element of the wider mitigation of UK welfare reform. Are those transfers off in relation to this year or will the budget line continue in the future year? My understanding is that this is not the only year, having not been here last year. This is a regular transfer. It is the same challenge where responsibility and impact would lie with social security and older people budget line and ministerial responsibility, but delivery is local government. You will be aware of the upcoming budget. All budgets in recent years, local government funding is something that has been a big focus on. How will you ensure transparency in terms of those allocations so that one of the key issues will be baselining back to last year's local government settlement? Before we get into the political discussion, we do not want any misunderstanding about the figures and how we ensure transparency about the figures in relation to those allocations. It is a valid point. I hope that the discussion is improving the transparency of where budget lines will be shown on 12 December through the budget stages and the budget revision. Because ministerial responsibility for those budgets lies with the cabinet secretary for social security and older people, those lines will be included in her budget allocation. Obviously, in terms of deployment, because it is local government, those revisions will happen throughout the year. There were a couple of extra tables that I added in the budget document last year that looked to try and reconcile or add a bit of clarity on the overall local government position. Fourth coming transfers were part of that and we will certainly be looking at trying to maintain that improved clarity on the totality of the local government settlement in the budget document. I think that that is important, convener, because it is important that we all get a consistent understanding of the figures before we get into any further discussion. There is going to be further discussion with the local government, my goodness. Thank you very much, convener. Good morning, minister. I wonder if I could just ask you for some clarification on the technical transfer issue that you mentioned of the £31.2 million, which is to understand that it is to cover interest and repayments of loans. Can you just confirm that the overall effect of that is cost-neutral in the budget, because at first sight you would think, oh no, we are losing £31 million, but that money would surely always have to have been set aside at some point. Is it simply an accounting practice manoeuvre here to put it in the correct place in the accounts? I can assure you that those technical adjustments are budget-neutral. This is the first year—2017-18 was the first year that the Scottish Government undertook cash borrowing from the National Loans Fund. Previously, it was a notional borrowing arrangement agreed with Treasury. The Scotland Act explicitly states that a amount that is required for repayment of principal and interest should be charged on the consolidated fund, the Scottish Consolidated Fund, so it needs to be removed from the Scottish budgets and administered centrally, and it is reported through the Scottish Consolidated Fund's account. Those details will be shown in the budget-supporting document. I recognise that this is first, so we will ensure that any documentation that is published with the budget transparently reports that. We will see that in the future in the consolidated fund account, and it will be quite clearly indicated for us to see that. In terms of internal transfers, there is also movement to the higher education support student support budget, totaling £28.3 million. Can you tell us how that money will be spent? There is £16.8 million to fund additional places for widening access. Can you tell us how many places that fund might provide? That widening access fund started in 1314 as part of a four-year phased approach to increase student numbers. It has now reached a steady state, and the transfer is agreed based on the total places each year. The transfer covers fees and bursaries, and for 8,200 places in total. Can you provide a breakdown for us on what institutions benefit from that transfer? I do not have the breakdown to hand, but I know that £16.8 million from the SFC budget funds additional student places for widening access. I can provide the member with more of a breakdown if he is interested. I do not think that anyone else has any other questions, so we now move to agenda item 3, which is consideration of the motion on the order. I invite the minister to move motion S5M-14433 that the Finance and Constitution Committee recommends that the budget Scotland Act 2018 amendment regulations 2018 draft be approved to do. I move that the Finance and Constitution Committee recommends that the budget Scotland Act 2018 amendment regulations 18 be approved. Any other questions from members? Any other comments? Okay. I put the question. The question is that motion S5M-14433. We agreed to. Are we agreed? We are agreed. The committee will publish a short report to Parliament setting out our decision on the order.